Europe midday: Stocks nudge lower as investors await US data
European stocks edged lower as investors awaited US economic growth figures as well as the upcoming meeting between British Prime Minister Theresa May and US President Donald Trump.
At midday, the benchmark Stoxx Europe 600 fell 0.51%, Germany’s DAX was 0.25% lower and France’s CAC 40 dipped 0.55%.
Meanwhile, oil prices fell with West Texas Intermediate down by 0.69% at $53.41 per barrel and Brent crude 1.04% lower at $55.66.
Chief market analyst at CMC markets Michael Hewson said: “Despite a fairly positive week so far for European markets, we’ve slipped lower this morning in anticipation of the latest US Q4 GDP numbers and UK Prime Minister Theresa May’s and US President Trump’s meeting later, following the US Presidents inauguration last Friday.
“Whilst Trump and Mexico’s relations deteriorate, the relations between the UK and US appear to be heading in the right direction, with Donald Trump praising the UK’s Brexit move. However, investors may be harder to convince amidst the turbulence that Trumps first week as president has caused and the currency headwinds that Brexit has caused.”
On the data front, lending to companies and households in the euro-area rose at the end of 2016, according to data from the European Central Bank. Lending to households grew by 2% and 2.3% to companies in December compared to a year earlier.
The ECB’s broad money supply indicator M3 grew by 5% on the year in December compared to 4.8% in November, higher than the consensus of 4.9%.
On the corporate front, Swiss food and drink company Nestlé sweetened as it predicted its reduced sugar and a new advertising strategy will boost sales for its Nesquik chocolate drink after addressing consumers’ anger over its sugar content.
Airbus flew higher as it announced that its helicopter deliveries rose more than 5% in 2016 delivering 418 helicopters last year, up from 395 in 2015.
Elsewhere, telecoms company BT Group reversed earlier losses after it said third-quarter revenue rose but profit declined as it deals with an accounting scandal at its Italian business and faces a “challenging” outlook in the UK. For the quarter ended 31 December 2016, revenue was up 32% to £6.12bn, compared to the previous year, while pre-tax profit fell 37% to £526m.
M&A news kept things interesting in London, as the boards of food retailer Tesco and wholesaler Booker Group – which owns Londis and Budgens – announced an agreement on the terms of a recommended share and cash merger to create the UK's leading food business. Under the terms of the merger, each Booker scheme shareholder would receive 0.861 new Tesco shares and 42.6p in cash, representing a value of £3.7bn for Booker’s ordinary share capital. Shares in both companies surged.
Swiss bank UBS was under the cosh after it reported a 47% drop in full-year net profit for 2016, although its fourth-quarter net profit was ahead of expectations.
Spain’s Banco de Sabadell was also weaker after saying net profit declined 51% in the fourth quarter on the back of higher provisions.
Budget carrier Easyjet flew lower but British Airways parent International Consolidated Airlines was in the black after Goldman Sachs downgraded and upgraded the stocks to ‘neutral’ and ‘buy’, respectively. Easyjet was also hit by a downgrade to ‘underperform’ from ‘neutral’ by Davy.
Coming up, US fourth-quarter gross domestic product data is at 1330 GMT. Investors will also be eyeing a meeting between UK Prime Minister Theresa May and US President Donald Trump.