Volatile European Markets Turn Lower on Weaker Commodities

Lucy Stoeva
15 Mar, 2016
New York City

European markets fell on lower commodity prices and on weakness in Asian markets. Antofagasta canceled its final dividend. Galenica confirmed the corporate split-off plan. Numericable-SFR said adjusted operating earnings rose 20% in 2015.

[R]4:00 PM Frankfurt, Germany – European markets fell on lower commodity prices and on weakness in Asian markets. Antofagasta canceled its final dividend. Galenica confirmed the corporate split-off plan. Numericable-SFR said adjusted operating earnings rose 20% in 2015.[/R]

European shares retreated Tuesday on lower commodity prices and weakness in Asian markets after the Bank of Japan left its policy unchanged.

The Bank of Japan indicated that the central bank could lower rates deeper in the negative zone if the economic outlook doesn’t improve.

Rates in Japan are already in the negative zone and the Bank of Japan is encouraging banks to lend and not park money with the central bank.

Metals mining stocks, heavily weighted in the UK FTSE 100 index, tumbled on the decline of copper prices and the base metal extended losses of 25% in 2015.

Antofagasta, the Chile-based copper producer, lost 4.5% after canceling its final dividend.

Shares in BHP Billiton tumbled 6.5%, Glencore retreated 4.8%, and Rio Tinto was down 4%.

Oil prices also continued to decline. Brent crude oil futures fell 2.4% to $38.58, while WTI crude oil eased 2.9% to $36.12.

This week investors expect the U.S. Federal Reserve to stay on the course at the end of meeting on Wednesday.

The Bank of England and the Swiss National Bank are scheduled to announce monetary policy decisions on Thursday.

In the UK, a poll conducted by Telegraph newspaper, showed that 79% of the respondents in favor of the Brexit, or the U.K. exit of the European Union, will vote in the referendum in June, compared with 72% of those against the Brexit.

In London, the FTSE 100 index fell 29.7, or 0.48%, to 6,144.86, while in Berlin, the DAX index lost 46.97, or 0.47%, to 9,943.29.

In Paris, the CAC 40 index declined 33.15, or 0.74%, to 4,473.44.

Galenica Group shares plummeted 13.8% to 1,334 Swiss francs after the healthcare company confirmed the split of the group in two independent companies.

Net profit before deduction of minority interests soared 18.6% to 370 million Swiss francs and by 5.8% to 301 million francs after deduction of minority interests.

EBIT jumped to 450.8 million Swiss francs in 2015, compared with 370.2 million francs in 2014.

Galenica Group said its division into two independent listed companies is planned for the fourth quarter of this year.

The two companies will be based on the group’s two business units - Vifor Pharma and Galenica Santé.

The company proposed a dividend of 18 Swiss francs per share, compared with 15 francs a year earlier.

Legal & General Group Plc dropped 6.3% to 228.2 pence despite the solid growth in operating profit of the British insurance and investment services provider.

Operating profit grew 14% to £1.46 billion in 2015 from the previous year.

The company raised total dividend to 13.4 pence a share.

However, L&G posted a solvency capital ratio of 169% under the new European Solvency II capital rules, sufficiently higher than the 100% required, but lower than the ratio of major competitors.

Numericable-SFR gained 1.6% to €38 after the French cable and telecom services provider said adjusted EBITDA increased 20% in 2015.

Revenues declined 3.5% to €11.04 billion from the previous year.

The cable operator said it cut expenses by €755 million in 2015 and is on track to meet its synergy targets from the acquisition of SFR.

Capex declined by 2% to €1.86 billion, while adjusted EBITDA improved 20% to €3.86 billion in 2015.

Numericable-SFR reported net profit of €682 million compared to a net loss of €188 million in 2014.

Ocado Plc climbed 1.6% to 265.8 pence after the U.K.-based online grocer reported double-digit sales growth in the first quarter.

Group sales increased 15.3% to £312.4 million in the quarter ended February 21 from the same period a year ago.

The average number of orders per week rose to 214,000, but the average order size declined 2.9%.

Ocado is still looking for an international partner that would enable it to use its technology outside the UK.

The company is currently in talks about expanding its agreement with supermarket Morrisons to deliver online groceries from its new distribution center in London.