Vestas shares hit hard after results; EU growth outlook lifted
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European stock indexes ticked lower Thursday, putting blue-chip equities on track for the third straight day in the red, as earnings continued to stream in.
There were big moves in stock price for certain companies reporting results, including for Burberry Group PLC, whose shares tumbled by the most in five years.
What markets are doing: The Stoxx Europe 600 was off 0.1% at 393.95, led by the basic material and tech groups. The financial and health care sectors were the only ones moving higher. On Wednesday, the regional benchmark slipped less than 0.1% (http://www.marketwatch.com/story/european-shares-face-2nd-straight-loss-as-banks-fall-2017-11-08).
Action was choppy on the national indexes. Germany's DAX 30 index was down 0.1% at 13,366.21. France's CAC 40 shed 0.1% at 5,466.40 as they swayed between small gains and losses.
The U.K.'s FTSE 100 slipped 0.1% 7,525.51. Spain's IBEX 35 was down 0.1% at 10,221.40.
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The euro traded at $1.1606, up from $1.1596 late Wednesday in New York.
What's moving markets: Investors continued to juggle corporate earnings reports. Shares that were deeply punished included Burberry Group and Vestas Wind Systems A/S. But German lender Commerzbank AG and AstraZeneca PLC were among those whose shares advanced.
Looking at the 78% of companies on the Stoxx 600 that have delivered results, growth in per-share earnings has slowed, according to research from Deutsche Bank. Growth was at 7.6% in the third quarter, compared with 26% and 18% in the first and second quarters, respectively.
In addition, the ratio of companies beating earnings expectations is at 51%, the lowest since the fourth quarter of 2015, the bank's analysts noted. Euro strength "has offset the positive impact from a strong growth backdrop during the quarter," said Sebastian Raedler, head of European equity strategy at Deutsche Bank.
Exporters saw their beat ratio drop below 50% for the first time since 2016, in contrast to eurozone companies with high domestic revenues, which managed to beat expectations "comfortably," he said.
Stock movers: Burberry shares (BRBY.LN) (BRBY.LN) slid 9.4%, driving toward their worst session since September 2012, according to FactSet data, after the British company warned it doesn't expect sales growth until fiscal 2021 (http://www.marketwatch.com/story/burberry-shares-drop-as-it-warns-on-sales-2017-11-09). It also said it will sharpen its focus on the high-end market in part as it aims for high-single digit revenue growth and "meaningful operating margin expansion".
"It is the length of the lead time that the 161-year old luxury group envisages it will take to establish a position "firmly in luxury" that has frustrated investors," said Ken Odeluga, market analyst at City Index, in a note, adding that Burberry shares had climbed roughly 40% starting in mid-June.
Vestas Wind Systems A/S shares (VWS.KO) plunged 20% as the Danish wind-turbine maker cut a full-year margin forecast (http://www.marketwatch.com/story/vestas-profit-falls-missing-views-trims-guidance-2017-11-09) as it faces "a market that is seeing accelerated competition and decreasing profitability." Vestas third-quarter profit and earnings fell short of expectations.
Shares of Commerzbank AG (CBK.XE) popped up 3.1% as Germany's second-largest bank said it expects to post a small profit for the full year (http://www.marketwatch.com/story/commerzbank-swings-to-profit-but-misses-forecasts-2017-11-09). The company swung to a profit in the third quarter of EUR472 million euros, but that was less than an consensus estimate of EUR487 million.
AstraZeneca PLC (AZN.LN) (AZN.LN) rose 1.9% as the drugmaker said third-quarter operating profit 12% to $1.15 billion (http://www.marketwatch.com/story/astrazeneca-profit-up-despite-crestor-hit-to-sales-2017-11-09), boosted by a one-off tax benefit. But product sales fell 3% stemming from the loss of the company's exclusivity on Crestor and Seroquel.
Hikma Pharmaceuticals PLC (HIK.LN) (HIK.LN) was knocked down 6.3% as the company cut its guidance for its generics unit for a third time. (http://www.marketwatch.com/story/hikma-cuts-guidance-on-generics-unit-for-3rd-time-2017-11-09)
Economic data: The eurozone economy in 2017 is on track to grow at its fastest rate in a decade (http://www.marketwatch.com/story/eurozone-to-grow-at-fastest-rate-in-a-decade-in-2017-says-eu-2017-11-09), bolstered by robust job creation, rising investment and decreasing debt, the European Commission said Thursday. The EU body expects gross domestic product to expand by 2.2% in 2017, up from its 1.7% forecast in the spring.
France's economy is expected to grow 0.5% (http://www.marketwatch.com/story/bank-of-france-economy-to-grow-05-next-quarter-2017-11-09) in the fourth quarter, according to a survey by the Bank of France. That would continue a run of stronger growth over the past year for the eurozone's second-largest economy.
German exports and imports declined at the end of the third quarter (http://www.marketwatch.com/story/german-imports-exports-fall-in-september-2017-11-09), according to data from the Destatis statistics agency. Exports declined by 0.4% in September on the month in adjusted terms and imports fell 1%
The Royal Institution of Chartered Surveyors said its survey on U.K. house prices showed slowing growth in October (http://www.marketwatch.com/story/uk-house-price-growth-slows-misses-views-rics-2017-11-09)compared with September. Its monthly house price balance dropped 5 points, to plus 1 in October, below a Wall Street Journal consensus estimate of a reading of plus 3.
(END) Dow Jones Newswires
November 09, 2017 06:47 ET (11:47 GMT)