European Markets Turn Lower on Weaker Oil and UBS Asset Outflow

Lucy Stoeva
02 Feb, 2016
New York City

European equities extended losses as oil prices continued to slide. UBS Group reported an unexpected outflow of 3.4 billion Swiss francs from its wealth management business. BP Plc posted its worst results in more than 20 years and announced 3,000 job cuts.

[R]4:00 PM European equities extended losses as oil prices continued to slide. UBS Group reported an unexpected outflow of 3.4 billion Swiss francs from its wealth management business. BP Plc posted its worst results in more than 20 years and announced 3,000 job cuts.[/R]

European equities extended losses as oil prices continued to slide and BP Plc and UBS Group disappointed investors.

Oil prices extended losses again after the production curb deal between OPEC and other oil producing nations appeared less likely.

Brent crude oil futures plunged 3.4% to $33.08, while West Texas Intermediate crude oil tumbled 4.30% to $30.26.

The impact on energy stocks was heavy, especially after BP reported disappointing results. BP tumbled 8.7%, Tullow Oil erased 7.5%, Royal Dutch Shell lost 4.7%, Repsol in Spain declined 5.8%, and Total in France lost 4.5%.

In Germany, the unemployment rate dropped to 6.2% in January, the lowest level since the reunification of the country.

In London, FTSE 100 index fell 138.09, or 2.28%, to 5,922.01 and in Germany, the DAX index declined 176.84, or 1.81%, to 9,581.04.

In Paris, the CAC 40 index shed 108.34, or 2.47%, to 4,282.99.

BP Plc plummeted 8.7% to 335 pence after the British oil giant reported its worst annual result in more than 20 years and announced 3,000 job cuts due to impact of low oil prices.

The company reported a $2.2 billion loss in the fourth quarter and a replacement cost loss of $5.2 billion, compared with a profit of $8.1 billion in 2014.

BP maintained its quarterly dividend at least for now, but investors are increasingly skeptical that the company will be able to maintain the current rate payout.

Danske Bank A/S jumped 4.1% to 188 Danish crowns after the bank announced a dividend, a share buyback program, and higher than expected pre-tax profit due to larger trading income.

The largest Danish bank announced a dividend of 8 Danish crowns per share and plans to buy back shares worth 9 billion crowns.

Pre-tax profit was 866 million crowns in the fourth quarter ahead of 615 million crowns.

Infineon Technologies AG plunged 5.8% to €11.73 after the German semiconductor maker provided disappointing guidance on margins.

Revenue grew 38% to €1.56 billion in the first quarter, compared with the same period a year ago.

Net profit increased 12% to €152 million from the same period a year earlier.

The growth followed the acquisition of International Rectifier and strength in the auto parts business.

For the next quarter, the company expects revenue growth between 1% and 5% and a margin of 13%. For the fiscal year ending in September, Infineon expects 11% to 15% revenue growth and 16% segment margin.

J Sainsbury Plc added 2.5% to 251 pence after the company agreed to buy Home Retail for £1.3 billion to expand its online business.

NWF Group Plc shed 3.5% to 166 pence after the agricultural and distribution group’s revenues sharply declined in the first-half of the fiscal year due to low fuel and commodity prices.

Revenues dropped 9.1% to £224.6 million in the six months to 30 November 2015 from £247.1 million a year ago.

Operating profit was flat at £2.8 million, while profit before tax rose 4% to £2.6 million.

The company will keep its interim dividend unchanged at 1 pence per share.

NWF reduced its net debt by 16.1%, to £10.4 million, despite completing two acquisitions in the six-month period.

St Modwen Properties Plc declined 1.83% to 387 pence despite posting an increase of 91% in pre-tax profit for the last fiscal year.

The Birmingham-based regeneration specialist reported a record profit £258.4 million, compared with £135.4 million a year earlier.

The company also said CEO Bill Oliver is retiring at the end of the current financial year after 13 years in the post.

Total dividend for the year increased 25% to 5.75 pence per share.

UBS Group AG tumbled 6.8% to 15.54 Swiss francs after the bank reported an unexpected outflow of 3.4 billion Swiss francs from its flagship wealth management business.

Adjusted pre-tax operating profit grew 46.7% to 754 million Swiss francs year over year.

The bank reported fourth-quarter net profit of 949 million Swiss francs, up 10.6% from the previous year.