Stocks fell as disappointing earnings from European companies deepened investor concern that global growth is slowing. Oil extended this week’s slump and the euro strengthened with the yen.
BP was among the biggest losers in Europe after its quarterly earnings slumped 91 per cent and UBS Group slid after pretax profit at its investment bank trailed predictions.
Russia’s ruble and Malaysia’s ringgit led a retreat in high- yielding currencies after US oil dropped as much as 3.9 per cent.
Standard and Poor’s 500 Index futures slipped, while government bonds advanced, sending Germany’s 10-year bund yield toward the lowest since April. Add European companies’ results to the list of worries -- including China’s slowdown and oil’s slump -- that are roiling global financial markets in 2016.
Energy prices are crumbling as expanding US stockpiles reinforce concern over a global glut, and a Citigroup Economic Surprise Index shows data in Group- of-10 economies are falling short of estimates by the most since May 2013.
“People are very spooked about what they can’t see, and at the moment they can’t see where global growth will come from,” said Justin Urquhart Stewart, co-founder of Seven Investment Management in London, which oversees about $13 billion. “In a market like this, less certainty around the US election cycle will add further nerves. The last thing investors need is more background noise.”
The Stoxx Europe 600 Index slipped 1.3 per cent at 12:12 p.m. in London, with energy shares, miners and banks leading declines. West Texas Intermediate crude fell 3.4 per cent to $30.54 a barrel. Stocks BP slid 8.5 per cent and UBS lost 7.4 per cent. Alfa Laval AB tumbled 13 percent after its fourth-quarter pretax profit missed analysts' projections and Infineon Technologies AG dropped 2.9 per cent after its quarterly operating income declined. Danske Bank A/S gained 3.6 per cent after announcing a share buyback plan that's almost double its previous program.
US stock-index futures signaled equities will pull further away from a three-week high. Standard and Poor's 500 Index contracts expiring in March fell 0.6 per cent. Yahoo! Inc., and Exxon Mobil Corp. are among SandP 500 companies reporting results today. Class A shares in Google parent Alphabet Inc. rose 4.9 per cent after its main business reported profit and sales that topped estimates. Mattel Inc. gained in Germany after the toymaker's fourth-quarter earnings exceeded projections and sales rose for its flagship Barbie doll brand.
Currencies
The euro advanced against all major peers, posting the biggest gains versus the currencies of raw-material producing nations including South Africa's rand and the New Zealand and Australian dollars. It climbed 0.3 per cent to $1.0923, while the yen appreciated 0.2 per cent to 120.80 per dollar. The pound erased declines after European Union President Donald Tusk published a draft agreement on Tuesday aimed at satisfying UK Prime Minister David Cameron's demands for changes to the EU and paving the way for a referendum on Britain's membership in the bloc as early as June. It was little changed at $1.4443 after earlier sliding as much as 0.7 per cent.
Bonds
German government bonds gained as a gauge of the region’s inflation outlook reached the lowest in just over a year. The five-year, five-year forward inflation swap rate-- which measures the price-growth outlook for a half-decade starting five years from now -- dropped to the lowest since January 2015. Germany’s 10-year yield decreased three basis points to 0.32 per cent. It reached 0.30 per cent on Monday, the lowest since April 30. Yields on US 10-year Treasuries slipped two basis points to 1.93 per cent and the yield on similar-maturity UK gilts dropped three basis points to 1.59 per cent.
Bloomberg
