European stocks struggle as Wall Street marches on

LONDON: European stock markets struggled on Thursday (Jul 27) while Wall Street marched relentlessly forward, boosted by strong earnings from US giant Facebook.

Logo of the London Stock Exchange

The London market buckled on sorely disappointing news from British pharmaceuticals giant AstraZeneca.

The world’s bourses meanwhile took in their stride an “uneventful” monetary policy announcement from the US Federal Reserve, dealers said.

AstraZeneca’s share price plunged 16 per cent as investors fretted over disappointing trial results for its next-generation lung cancer treatment.

Sentiment took another heavy blow as Astra’s first-half sales were hurt by the loss of US patent protection on two blockbuster drugs.

This despite the announcement also of a multi billion-dollar deal between Astra and US peer Merck to advance cancer drugs.

Also in London, shares in British bank Lloyds slid on falling net profits, in its first results since the bailed-out lender returned fully to the private sector.

On the upside, stock in Diageo – the British maker of alcoholic drinks like Guinness stout – rallied strongly as it unveiled a £1.5-billion (US$2.0-billion) share buyback.

Rising commodity prices meanwhile inspired a raft of gains across London’s mining sector, partly offsetting weakness elsewhere.

Anglo American jumped higher as the resources giant resumed shareholder dividends after rebounding into bumper net profits in the first half of 2017.

“The gains in the consumer goods, oil and gas and mining companies are being counteracted by the heavy losses in healthcare – because of AstraZeneca’s update,” said IG analyst David Madden.

“The largely uneventful update from the Federal Reserve last night has added to the lack of direction in European equities,” he added.

STRONG START BY WALL STREET

US equities meanwhile had another strong start to trading after Facebook reported a surge in profits in the past quarter, fuelled by strong growth in money-making ads to its more than two billion users.

On Wednesday, all three main American stock indices had already posted new record highs.

But Facebook’s social network rival Twitter plunged on a disappointing update in which it reported a loss of US$116 million amid flat user growth and falling revenues.

Procter & Gamble rose after better-than-expected results.

The Fed’s steady stance actually helped many stocks as current low interest rates ease the financing costs of corporates, while the weaker dollar boosts their international competitiveness.

The dollar wobbled after the Federal Reserve held interest rates, and its tepid inflation outlook fuelled speculation it will hold off further US hikes this year, but the greenback recouped some of its losses as Thursday’s session wore on.

Back in Europe, Paris won some modest support from Schneider Electric lifting its 2017 guidance and news it bought switch maker Asco Power Technologies for US$1.25 billion, pushing its share price up.

However, Airbus stock lost ground as the European aircraft manufacturer posted sliding first-half net profits – and blamed problems with the engines for the new version of its top-selling A320 jet.

Frankfurt stocks fell as earnings from both Deutsche Boerse and Deutsche Bank left investors unimpressed, with shares in both dropping.

Deutsche Bank, Germany’s biggest lender, said operating profit more than doubled, but posted a 10 per cent decline in revenue.

And Deutsche Boerse – whose ambitious takeover of the London Stock Exchange Group collapsed earlier this year – logged sliding net profits.

Earlier, Asia was in a good mood, with Hong Kong, Sydney and Tokyo all rising. Seoul was boosted by record-breaking profits from Samsung Electronics.

Key figures around 1540 GMT:

London – FTSE 100: DOWN 0.1 per cent at 7,443.01 points (close)

Tokyo – Nikkei 225: UP 0.2 per cent at 20,079.64 (close)

Euro/dollar: DOWN at US$1.1666 from US$1.1735 at 2100 GMT Wednesday

Oil – Brent North Sea: UP 21 cents at US$51.31 per barrel

Source AFP



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