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Europe: Shares ease ahead of Trump inauguration

Saturday, January 21, 2017 - 06:08

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[MILAN] European shares fell, posting their biggest weekly loss since before Donald Trump won the US presidential election in November, as investors grew cautious before his inauguration.

The Stoxx 600 closed 0.1 per cent lower, marking a five-day loss of almost one per cent. Britain's FTSE slipped 0.1 per cent and posted a weekly decline of 1.9 per cent. European markets closed before Mr Trump's inauguration speech.

The pan-European index has gained around 7 per cent over the last two months, but it has slipped from its early January peak amid concerns Mr Trump may struggle to deliver on his stimulus promises.

"I think markets now are attuned to expecting the unexpected, but by definition it means that there can be surprises along the way," Geoffrey Yu, head of investment office UK, at UBS, said.

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Market voices on:

"This is a very unorthodox presidency, so we just won't know and markets didn't pre-position themselves for tweets, either."

The broader market was weakened by some disappointing earnings updates, although merger and acquisition talk helped support the telecoms sector.

British pharma stock AstraZeneca was 3.4 per cent weaker, the biggest faller on the FTSE 100 index after rival Bristol-Myers Squibb Co decided not to seek accelerated US approval for a combination of two immunotherapy drugs as an initial treatment for lung cancer.

The fall weighed on Europe's health care index, down 0.8 per cent.

Danish insurer Tryg was also among the biggest Stoxx losers, down 2.9 per cent after its fourth-quarter profit missed expectations.

Britain's AA also dropped, falling 6.2 per cent on worries about costs.

Energy stocks were among the biggest gainers, however, with shares in Subsea 7, Amec Foster Wheeler and SBM Offshore all rising between 4.7 per cent to 5.4 per cent.

Amec Foster Wheeler benefited from a SocGen upgrade to "buy", citing the potential for the oil company's shares to re-rate.

TDC also rose, up 3.9 per cent after a report in Dagens Industri said telecom operator Telia was considering a bid for the Danish company, which is itself exploring a takeover of Swedish cable TV company Com Hem.

Telia and TDC both declined to comment on the report.

Gains in TDC drove Europe's Stoxx telco index up 0.6 per cent.

Banks were also firmer, with Commerzbank rising 2.8 per cent after a price target upgrade from analysts at Deutsche Bank.

Shares in Italy's UBI Banca were the biggest fallers among the banking stocks, ending 2.2 per cent lower after DBRS cut the trend on UBI Banca's debt ratings to negative following its acquisition of three banks.

REUTERS

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