Lower Oil and Copper Weigh on European Markets

Lucy Stoeva
24 Feb, 2016
New York City

Market indexes in Europe declined after resource sector led the downturn and copper and oil prices edged lower. IPF warned of lower 2016 profits amid tighter credit regulations. Barratt Developments posted a 40% pre-tax profit growth.

[R]4:00 PM Frankfurt, Germany – Market indexes in Europe declined after resource sector led the downturn and copper and oil prices edged lower. IPF warned of lower 2016 profits amid tighter credit regulations. Barratt Developments posted a 40% pre-tax profit growth.[/R]

European stock markets declined, led by resource and energy sectors as profit taking dragged down copper prices, while oversupply issues continued to depress oil prices.

Brent crude oil futures slipped 2.3% to $32.50 after major producers Saudi Arabia and Iran indicated they wouldn’t cut back output, while crude stockpiles increased in the U.S.

Oil and energy companies extended yesterday losses, with Statoil down 4.9%, while BP and Royal Dutch Shell lost nearly 3% each.

Copper prices fell as investors preferred to cash out the recent gains in the gloomy environment of falling oil prices and a slowdown in China.

Other base metals Zinc, nickel, and lead also traded lower.

In London trading, the three-month copper contract was down 1.3%, while aluminum was little changed from its Tuesday four-month high, due to industry data that showed a decline in the output.

Mining companies led the decliners with Glencore plummeting 11%, Anglo American losing 10.4%, and BHP Billiton erasing 8.3%.

In the financial sector, International Personal Finance tumbled 16.2% after the consumer credit company warned of lower 2016 profits amid tighter credit regulations.

Standard Chartered extended its losses, down 5.2% for the day, after posting its first loss in more than 25 years on Tuesday.

The pound continued to decline against the dollar, down 0.6% to 1.3944, on concerns that the U.K. could leave the European Union after the referendum in July.

In London, FTSE 100 index was down 105.23, or 1.77%, to 5,857.08, while in Frankfurt, the DAX index fell 278.48, or 2.96%, to 9,138.29.

In Paris, the CAC 40 index dropped 117.16, or 2.76%, to 4,121.26.

Barratt Developments Plc climbed 1.8% to 572 pence after the homebuilder reported an increase of 40% in pre-tax profit for the first six months of the fiscal year.

For the six months to December, revenues rose to £1.87 billion from £ 1.57 billion a year ago, while pre-tax profit increased to £295 million from £210.2 million in the same period a year earlier.

The company announced an interim dividend of 6 pence, up 25% from the previous year.

International Personal Finance Plc tumbled 16.2% to 222.30 pence after the consumer credit company said the tighter regulatory environment in Poland and Romania, as well as the closure of its Slovak business, would weigh on 2016 profits.

In 2015, the company posted a pre-tax profit of £100.2 million, unchanged from 2014.

IPF expects 2016 pre-tax profit between £95 million and £100 million.

In Amsterdam, Wolters Kluwer jumped 5.7% to €33.08 after the Dutch business information and publishing company positively surprised investors due to growth in North America and Asia.

Revenues soared 15% to €4.21 billion from a year ago, while adjusted operating profit advanced 17% to €902 million.

At constant currency prices, however, both revenues and profit increased by 3%.

Net profit declined 11% to €423 million.