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Europe: benchmarks retreat under barrage of negativity

Anna Kalmykova, Analyst, Global Markets (Finam)

On Wednesday, March 4, European equity benchmarks sustained hefty losses as markets carried on with a wave of sell-offs in US and Asian markets, caused by the unfavorable outcome of the Fed meeting for market players. After hearing about the Fed minutes, investors failed to see any signs of QE3 going forward any time soon.

The unsuccessful auction for Spanish bonds added to pessimism that set in on stock exchanges. The government managed to place EUR 2.6 bn (USD 3.4 bn) in debt, against the targeted range of EUR 2.5 bn to EUR 3.5 bn.

The situation was further exacerbated by the release of regional macro data, showing that Eurozone retail sales slid 0.1% in February, against the forecast flat sales after growth of 1.1% in the previous month. Manufacturing orders in Germany rose by a paltry 0.3%, while analysts had generally expected a 1.2% upturn.

Additional negativity came from the reading of the US ISM non-manufacturing index, showing a higher-than-expected decline in March.

Negativity was partly offset by data on business activity in the EU services sector in March. German’s services business activity index advanced to 52.1 in March, while the unchanged index at 51.8 had been expected. The respective metric for the Eurozone rose to 49.2, while analysts had expected the flat index at the previous month’s level of 48.7. Britain’s indicator climbed to 55.3, against the estimated decline to 53.4 from 53.8 in February.

In the upshot, regional indicator STXE 600 eased 2.09% to end at 258.76. Britain’s FTSE 100 sank 2.3%, German’s main stock market gauge DAX gave up 2.64% and the French CAC 40 index lost 2.74%. Auto manufacturers were laggards among the companies posted on the regional indicator Stoxx 600, being dragged down by US auto sales figures for March, which missed analyst estimates. The shares of the auto concerns Peugeot, Renault and Porsche lost 5.8%, 4.5% and 2.4%, respectively.

Swedish truck maker Volvo retreated 4.8% on news that March orders for Class 8 trucks on the US market totaled 20,000, falling short of expectations, as preliminary estimates by ACT Research analysts show.

French water utility Veolia saw 5.2% shaved off its market cap on media reports that the company was about to finalize a decision to take over ferry operator Societe Nationale Maritime Corse Mediterranee.

The British biotech company BTG added 2.6% to its market value after reporting the targeted sales of GBP 190-195 mn (USD 309 mn) in the year ended March 31, which exceeded the previous sales guidance of GBP 160-165 mn.

By 7:35 am GMT, futures for European equity benchmarks were trading slightly higher, trimming losses after yesterday’s fall.

British FTSE 100 index futures for March settlement were trading 0.64% higher, German DAX index futures for March settlement were up 0.57% and French CAC 40 index futures for February settlement were 0.56% higher.

Country Value Change Change, % YTD, %
Austria 2,092.09 -55.04 -2.56 10.59%
Belgium 2,262.45 -72.31 -3.1 8.59%
United Kingdom 5,703.77 -134.57 -2.3 2.36%
Germany 6,784.06 -198.22 -2.84 15.02%
Spain 7,660.70 -163.8 -2.09 -10.57%
Italy 15,245.90 -378.31 -2.42 1.03%
Netherlands 313.87 -8.16 -2.53 0.45%
Scandinavia 988.18 -34.99 -3,42 9.83%
France 3,313.47 -93.31 -2.74 4.86%
Switzerland 6,166.79 -91.87 -1.47 3.88%