Vestas shares hit hard after results; EU growth outlook lifted
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.
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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.
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)