European Markets Turn Higher on China Economic Growth Data

Lucy Stoeva
19 Jan, 2016
New York City

Resource stocks lead European markets higher after China reported better-than-expected growth in the final quarter of 2015. In Milan, Banca Monte dei Paschi di Siena plummeted 13.3% and other banks were halted as ECB reviews non-performing loans. Unilever said 2015 revenues increased 10%.

[R]4:00 PM Frankfurt – Resource stocks lead European markets higher after China reported better-than-expected growth in the final quarter of 2015. In Milan, Banca Monte dei Paschi di Siena plummeted 13.3% and other banks were halted as ECB reviews non-performing loans. Unilever said 2015 revenues increased 10%.[/R]

European equities rebounded on Tuesday and resource stocks advanced after China reported better-than-expected gross domestic product data.

In the fourth quarter of 2015, China’s GDP grew at 6.8% rate from the previous year period, but declined from 6.9% growth rate in the third quarter.

For the full-year, Chinese economy expanded 6.9%, which would be a significant achievement for any other country, but for China, it represents the slowest rate of expansion in 25 years.

Investors hope to see additional stimulus that would prevent the further slowdown of the economy.

The Shanghai Composite Index closed 3.2% higher.

Heavily dependent on Chinese demand, mining and energy companies performed strongly on Tuesday.

Anglo American gained 3.4%, BHP Billiton added 3.1%, and BP edged up 1%.

In Milan, banks extended losses as ECB reviews non-performing loans and the consolidation in the Italian banking sector is under question.

Banca Monte dei Paschi di Siena SpA plummeted 13.3%, while trading in some banks was halted due to the sharp decline.

In London, FTSE 100 index gained 91.97, or 1.59%, to 5,871.89 and in Germany, the DAX index added 129.53, or 1.36%, to 9.651.38.

In Paris, the CAC 40 index jumped 82.12, or 1.96%, to 4,271.69.

British Land Company Plc gained 1.69% to 724 pence after the property giant, which rents out 312,000 sq. ft. in both office and retail, said its properties were let at 8.5% above market value.

The company reported an increase of 0.9% in retail same store sales and a full office portfolio.

Recently, British Land won an approval to redevelop Victorian warehouses on Norton Folgate in central London.

Credit Agricole S.A surged 2.7% to €9.29 after the French bank confirmed that it was considering selling its stake in a network of 39 regional banks to boost its capital and to finance dividends.

IG Group Holdings Plc added 1.1% to 752 pence after the UK online brokerage and trading platform said revenues increased 8.8% to £214.8 million in 2015 due to higher than average market volatility and an increase in the number of trades.

Some of the worst events on the market, including the Black Friday in China in the summer, the Greek crisis, the declining commodity prices, and the uncertainty around interest rates, were key drivers for the company’s growth.

While European revenues added 12.6%, the company’s growth outside the U.K. was 32.8%.

Pre-tax profits fell 2.8% to £98.6 million due to large investments in infrastructure and an increase in personnel and marketing expenses related to the investments.

IG Group announced dividend of 8.45 pence per share

Novozymes A/S shares tanked 8.5% to 269 Danish krone after the enzyme maker decreased its long-term sales forecast.

The biotech company lowered its annual organic sales growth estimate to between 6% and 7% through 2020, compared to the previous forecast between 8% and 10%.

Fourth-quarter results were on target with revenues of 3.45 billion Danish krone and operating profit of 962 million Danish krone.

Ocado Group Plc, the U.K.-based online grocer, gained 5.2% to 255 pence on market rumors that Amazon.com is interested in buying the company.

Prudential Plc added 3.8% to 1399 pence after the British insurer posted a better-than-expected capital ratio under the new European Solvency II rules, effective from January.

Prudential''s solvency capital ratio was 190% at the end June. A ratio higher than 100% is considered sufficient to cover underwriting, investment and operational risks.

The company also announced that John Foley, previously interim chief executive of Prudential UK & Europe, is appointed as an executive director.

Unilever NV added 2.4% to €38.46 after the consumer products maker reported core earnings growth of 14% in 2015, driven by cost cuts, currency rates and price increases.

Revenue increased 10% to €53.3 billion from the previous year. Emerging markets rose 7.1%, while developed markets remained flat as price cuts offset volume increases.

The Anglo-Dutch company warned of more difficult conditions and high volatility in 2016, which would require agility and cost discipline.

Zalando SE soared 6.4% to €31.52 after the Berlin-based online fashion retailer said revenues increased at least 30% to €865 million in 2015, despite the unusually warm weather and thanks to flexible supplier deals.

With adjusted EBIT in the range of €61 to €78 million euros, the company returned to profitability after reporting an operating loss in the third quarter.

The company expects full-year revenue to increase 34%.