European Stocks Fall Amid Declines in Asia, Hawkish Fed Statements
Frankfurt (Mar 24) European stocks declined on Thursday, the last trading day before a four-day Easter break, in the wake of losses in Asia and a mounting chorus of hawkish commentary from Federal Reserve members.
After last week's market-pleasing rate call and monetary-policy assessment, Fed members have queued up to quash dovish assumptions, with St. Louis Fed President James Bullard on Wednesday telling Bloomberg that policymakers should consider a rate rise next month, noting that the central bank risks overshooting its inflation and unemployment targets.
In London, the FTSE 100 was down 1.07% at 6,133.06 by mid-morning with mining groups, led by Anglo American (AAUKF) , and financial services companies including Standard Chartered (SCBFF) , posting the worst losses.
In Frankfurt, the DAX dropped 1.05% to 9,917.44 and in Paris the CAC 40 tumbled 1.38% to 4,362.60.
Oil sunk below the psychologically important $40-per-barrel mark, with Brent crude trading down 1.53% at $39.85. Copper, gold, silver and platinum were also down, while "Brexit" fears pushed the pound down 0.30% against the dollar. One pound recently bought $1.4075.
S&P 500 futures were down 0.4%.
In Germany, the GfK consumer confidence index came in just short of consensus expectations, at 9.4, whereas analysts had predicted it would hold steady at 9.5. Also in Germany, government data showed that February import prices plunged 5.7% year-on-year, compared with a 3.8% decline in January. In the U.K., February retail sales figures came in better than expected.
U.K. clothing retailer Next (NXGPY) slumped more than 8% in London as it reported full-year results in line with recently reduced expectations and lowered guidance for the current fiscal year for the second time in three months. It said it has observed a shift in consumer spending away from clothing back to areas that suffered in the credit crisis, such as travel and eating out.
Next said full-price sales could decline as much as 1% in the current year, or in the best case, rise by 4%, while it expects pretax profit to come in somewhere between a year-on-year decline of 4.5% or an increase of that same amount.
Analysts at Peel Hunt, who cut their recommendation on Next to reduce from hold, warned of much slower underlying growth rates at the company in the future, particularly for its Directory catalog business.
Security services company Mitie Group (MITFY) was down almost 8% as it warned that revenue in the year ending March 31 will fall short of forecasts as clients delayed or canceled contracts because of economic pressures.
Probe, sensor and 3D printer maker Renishaw (RNSHF) tumbled 12% after cutting revenue and profit forecasts for the year ending June 30 after it missed out on large Asian orders that had inflated its performance in its previous financial year. It cut its forecast for full-year revenue to between £420 million and £440 million ($592 million to $619.9 million) -- it had flagged a range of £440 million to £465 million in January -- and for profit before tax to between £67 million and £83 million. That's down from the range of £85 million to £105 million it gave in January.
Premier Foods (PRRFY) was down more than 11% after surging 70% on Wednesday. The maker of Oxo stock cubes and Mr Kipling cakes said Japan's Nissin Food Holdings would take a 17.3% stake as part of a wider alliance. Investors saw the move, which is conditional on the company coming out of an offer period, as making it less likely that McCormick (MKC - Get Report) will come through with a bid after two unsuccessful takeover proposals.
In Milan, shares in Italy's Banco Popolare and Banca Popolare di Milano Scarl were both down marginally by mid-morning after the companies announced a widely anticipated merger.
In Frankfurt, building materials maker HeidelbergCement fell 1% after UBS cut its recommendation to neutral from buy.
Asian stocks ended the day predominantly in the red.
The CSI 300 composite index in China dropped 1.68% to 3,181.85 and in Hong Kong the Hang Seng closed down 1.31% at 20,345.61. The Nikkei 225 closed down 0.64% at 16,892.33 in Tokyo, and the Topix shed 0.70% to close at 1,354.61.
Japanese trading company Mitsui & Co. fell 7.5% on news that more than $2 billion of commodities-related write-downs will push it into a net loss of ¥70 billion ($621.1 million) in the fiscal year ending this month. Mitsui's earlier forecast was for net profit of ¥190 billion and the loss will be its first in almost 70 years.