Resource Stocks Rally in Europe; Credit Suisse, ING and Lafarge in Focus

Lucy Stoeva
04 Feb, 2016
New York City

European markets rebounded after a rally in resource sector on the weakening dollar. Credit Suisse plummeted after reporting its first full-year loss since 2008. LafargeHolcim proposed selling its entire operation in India.

[R]4:00 PM Frankfurt, Germany - European markets rebounded after a rally in resource sector on the weakening dollar. Credit Suisse plummeted after reporting its first full-year loss since 2008. LafargeHolcim proposed selling its entire operation in India.[/R]

Stock markets in Europe rebounded on Thursday as a falling U.S. dollar fueled a resource sector rally and ahead of the Bank of England rate decision later today.

The dollar continued to slide after hopes for further interest-rate hikes by the Federal Reserve faded on Wednesday.

Oil and metals, priced in the U.S. dollar in international markets, increased following the weakness in the currency.

Anglo American soared 11.1%, Glencore jumped 7% and BHP Billiton gained 8.3%.

In the energy sector, Royal Dutch Shell rose 6.1% and Norway controlled Statoil gained 7.8%, despite reporting a widening loss for the latest quarter.

The Bank of England is expected to release its quarterly inflation report later today and the central bank is expected to leave benchmark rate of 0.5% unchanged.

In London, FTSE 100 index gained 87, or 1.49%, to 5,924.14 and in Frankfurt, the DAX index added 65.15, or 0.69%, to 9,499.97.

In Paris, the CAC 40 index rose 22.95, or 0.54%, to 4,249.91.

Credit Suisse Group AG plummeted 11.3% to €13.18 after posting its first full-year loss since 2008 due to impairment charges for its investment banking operations.

The bank reported a pre-tax 2015 loss of 2.4 billion Swiss francs after it wrote off 3.8 billion francs in goodwill related to its investment banking division.

Credit Suisse said it is accelerating its cost-cutting program and announced 4,000 job cuts.

The bank plans to save 3.5 billion Swiss francs in 2016.

GEA Group AG rose 6.6% to €40.17 after the German food processing equipment maker reported improving annual results due to an extensive restructuring program.

More than half of the staff reduction targeted until 2017 was accomplished by the end of 2015.

And equipment maker said new orders increased 1.6% to €4.6 billion from the same period a year ago.

Operating earnings or EBITDA rose 5.1% to €621 million from the year-ago period and the operating margin stood at 13.5%.

The company completed four bolt-on acquisitions with aggregate annual revenue of more than €120 million, said CEO Jürg Oleas.

For 2016, GEA projects moderate revenue growth and EBITDA between €645 million and €715 million.

ING Groep NV surged 10.5% to €10.69 after the Dutch bank posted better-than-expected fourth-quarter results due to strong performance of its retail and wholesale divisions.

Underlying pre-tax profit, excluding divestments and extraordinary items, soared 54% to €1.2 billion in the fourth quarter from the same period in the previous year.

Net profit fell 30% to €819 million from a year ago because in 2014 the results included profit from the bank’s insurance division.

ING announced an annual dividend of €2.5 billion, or €0.65 a share.

LafargeHolcim Ltd tumbled 4.6% to €34 after the cement giant proposed selling its business in India due to issues with Indian competition regulations.

Initially, LafargeHolcim was planning to sell two cement plants in eastern India to Birla Corporation to meet the requirements of the competition regulator.

However, since the regulatory issues included the transfer of key mining rights, the cement company decided to sell its entire operation in India.

Münchener Rückversicherungs AG also known as Munich Re, gained 4.6% to €176.5 after the reinsurer reported better-than-expected full-year 2015 results and raised its dividend.

Fourth-quarter net profit was €700 million, unchanged from the same quarter a year earlier.

Full-year net profit was €3.1 billion, slightly ahead of the target of €3 billion.

Munich Re announced a dividend of €8.25 a share, up 6.5% from the dividend paid for 2014.

Payouts for damage by natural disasters were significantly lower than anticipated and compensated for lower investment returns.

Statoil surged 7.9% to 117.7 Norwegian kroner despite reporting a widening loss in the fourth-quarter of 2015 due to falling oil prices.

Norway’s largest oil company increased its cost-cutting program to $2.5 billion from $1.7 billion and announced plans to reduce capital expenditure by 12% in 2016.

After the cost reduction, Statoil plans to breaks even at oil price of $41 a barrel from the average $70 a barrel in 2013.

Revenues declined 7.3% to 109.2 billion kroner from the same period a year earlier.

Fourth-quarter loss amounted to 9.2 billion Norwegian kroner, compared to a loss of 8.9 billion kroner for the same period a year ago.

Adjusted earnings fell to 15.2 billion kroner from 26.9 billion kroner in the same quarter the previous year.

Statoil said it would maintain its current rate of dividend.