Europe Stocks Rise as SocGen, Commerzbank Results Beat
By Sarah Jones - May 7, 2013
European stocks climbed to a near five-year high as companies from Societe Generale SA (GLE) to HSBC Holdings Plc (HSBA) reported results that topped analysts’ estimates. U.S. index futures were little changed, while Asian shares rose.
Societe Generale, France’s second-largest bank, and HSBC, Europe’s biggest lender, rose more than 2 percent. Carlsberg A/S (CARLB) added 1.8 percent in Copenhagen after posting better-than- expected earnings. Alstom SA (ALO) sank 8.6 percent after the power- equipment maker cut its profit forecast.
The Stoxx Europe 600 Index (SXXP) rose 0.3 percent to 301.87 at 10:22 a.m. in London, as trading resumed in the U.K., Ireland and Greece after yesterday’s public holiday. The gauge has climbed 7.9 percent this year to its highest level since June 2008 as central banks maintained stimulus measures.
“It’s been a mixed bag on the earnings front but surprises are coming through on financials,” said Kevin Lilley, a fund manager at Old Mutual Asset Managers U.K. in London, which oversees about $6.1 billion. “I am overweight financials. There are one or two weak results out there which isn’t surprising as Q1 was expected to see the economy trough in the euro zone.”
Futures on the Standard & Poor’s 500 Index gained 0.1 percent today, while the MSCI Asia Pacific Index rallied 1.3 percent as the Reserve Bank of Australia cut its benchmark interest rate to a record low.
The RBA unexpectedly reduced the overnight cash-rate target by a quarter percentage point to 2.75 percent. Eight of 29 economists predicted the seventh cut in the past 19 months, while money markets had seen about a 50-50 chance.
Five-Year High
Europe’s Stoxx 600 (SXXP) closed little changed near a five-year high yesterday as services and manufacturing output shrank for a 15th month, while European Central Bank President Mario Draghi said policy makers are ready to cut interest rates if needed.
The Bank of England will probably leave its stimulus program on hold this week amid signs the economy has found a firmer footing. A Bloomberg News survey of economists shows policy makers will refrain from expanding quantitative easing beyond 375 billion pounds ($585 billion) on May 9.
Societe Generale (GLE) increased 5.1 percent to 29.98 euros after it said first-quarter profit fell 50 percent to 364 million euros ($476 million), hurt by accounting charges related to its debt. That still beat the 317 million-euro average estimate of 10 analysts surveyed by Bloomberg.
HSBC (HSBA) rose 2.7 percent to 733.3 pence after saying first- quarter pretax profit almost doubled to $8.43 billion, as bad debts declined and it cut costs. That beat the $8.04 billion average estimate of nine analysts surveyed by Bloomberg.
Carlsberg Beats
Carlsberg (CARLB) climbed 1.8 percent to 557.50 Danish kroner. The brewer of Tuborg beer reported a 15 percent rise in earnings before interest and taxes, excluding some one-time items, to 661 million Danish kroner ($116 million) as sales in Asia climbed and profitability improved in eastern Europe. Analysts had expected 624 million kroner, according to the average of 13 estimates compiled by Bloomberg.
Commerzbank AG (CBK) added 1.5 percent to 10.97 euros. Germany’s second-largest lender reported a first-quarter loss of 94 million euros after booking costs associated with firing staff, compared with a profit of 355 million euros a year earlier. That still beat the average loss estimate of 153.7 million euros of seven analysts surveyed by Bloomberg.
Allianz SE (ALV) gained 2.4 percent to 119.30 euros after Europe’s biggest insurer reported a 24 percent increase in first-quarter profit to about 1.7 billion euros after results improved at all of its businesses. Operating profit of 2.8 billion euros also topped analyst estimates.
Hochtief Airports
Hochtief AG (HOT) advanced 4.9 percent to 56 euros. Germany’s largest construction company agreed to sell its airports division to Public Sector Pension Investment Board of Canada for about 1.5 billion euros as it streamlines its business to focus on more profitable units.
Hochtief also today forecast full-year pretax profit of between 600 million and 680 million euros after reporting first- quarter pretax profit of 123 million euros. That beat the average estimate of three analysts in a Bloomberg news survey.
ACS Actividades de Construccion & Servicios SA, which owns a majority stake in the German company, climbed 6.3 percent to 21.13 euros in Madrid.
Alstom (ALO) tumbled 8.6 percent to 29.42 euros. The world’s third-largest power-equipment maker cut its profit forecast after full-year earnings missed analyst estimates amid reduced spending by clients. It predicted its operating margin will stay stable in 2013 and 2014 and then gradually increase over the next two to three years to around 8 percent. The company had initially said the margin would rise to about 8 percent by 2015.
G4S Plc sank 12 percent to 267.8 pence. The security company reported a lower operating margin for the first quarter, citing challenging economic and trading conditions in continental Europe. It expects the margin trend to continue for the full year.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net
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