You are here

Europe: Shares recover after late rally in oil

Thursday, January 28, 2016 - 07:17

europestocks.jpg

[LONDON] European shares recovered to finish slightly higher on Wednesday as a late surge in oil prices helped offset pressure on the broader market from a spate of weak earnings updates.

Oil futures surged 5 per cent, having opened lower, after Russia referred to possible co-operation with other major oil producers and as US data showed a spike in demand for products such as heating oil last week when heavy blizzards hit.

That helped the oil and gas sector rise 1.1 per cent, and helped the pan-European FTSEurofirst 300 close up 0.4 per cent at 1,340.76 points. "The threat of the early sell-off for oil prices this morning failed to materialise with crude bouncing above the US$30 mark and this has in turn lent a raft of support to equity markets," said Tony Cross, market analyst at Trustnet Direct.

Britain's Sage was the top riser on the index, up 7.5 per cent after posting a solid set of results after a strong first quarter.

sentifi.com

Market voices on:

However, Royal Bank of Scotland dropped 2 per cent after the bank warned its profits would be hit by a pension charge and US litigation provisions.

A forecast of lower revenues from iPhone maker Apple also hit European technology and chipmaker stocks such as ARM and Dialog.

Novartis fell 3.7 per cent after its fourth-quarter core net income missed expectations, while BASF declined by 1.8 per cent after issuing a profit warning. "We're only just getting under way on the European earnings front, but it's been a pretty mixed bag so far with weak updates from Novartis and BASF," said Clairinvest fund manager Ion-Marc Valahu.

Sweden's Ericsson dropped 6.3 per cent, even after operating profit beat consensus. Analysts said that underlying negative growth was a concern, while the gross margin was narrower than expected.

"Underlying looks slightly weaker than expected... we believe consensus sales and GP estimates for 2016/2017 are likely to see downward revision of 2 to 3 per cent," analysts at Credit Suisse said in a note.

Elsewhere in Scandinavia, TDC dropped 9.6 per cent after the Danish telecom operator scrapped its dividend following a deterioration in its financial results.

Italy's FTSE MIB equity index underperformed, down 0.4 per cent, even though Italy reached a deal with the European Commission to help Italian banks sell some of their 200 billion euros of bad loans.

Traders said that while the deal was a step in the right direction, the mechanics on how it would work were unclear and could be costly for the banks.

REUTERS

Nespresso
Pair your daily business read with the perfect cup of espresso.

Subscribe to The Business Times today to receive your very own Nespresso Inissia coffee machine worth $188.

Find out more at btsub.sg/btdeal

Powered by GET.comGetCom