European Indexes Trim First Quarter Losses; TUI, Carnival Advance

Lucy Stoeva
31 Mar, 2016
New York City

European markets extended March gains and trimmed first-quarter losses as financial services sector dragged broader market sentiment. Italian banks struggled after rights offering from Banca Popolare di Vicenza may have to be postponed. Bouygues and Orange extended merger deadlines.

[R]4:00 PM Frankfurt, Germany – European markets extended March gains and trimmed first-quarter losses as financial services sector dragged broader market sentiment. Italian banks struggled after rights offering from Banca Popolare di Vicenza may have to be postponed. Bouygues and Orange extended merger deadlines.[/R]

European stocks ended the month on a negative note, dragged down by banks and export-oriented companies.

The U.S. dollar continued to lose ground after earlier in the week Fed’s Chair Janet Yellen signaled a cautious outlook on interest rate policy.

The euro rose 0.77% against the dollar to $1.1382 and dampened the outlook for exporters, whose goods and services become less competitive on foreign markets with a strong euro.

In Germany, Daimler fell 0.8% and BMW dropped 1.7%.

Italian banks led decliners after investors showed lukewarm interest in rights issue of Banca Popolare di Vicenza and UniCredit’s guarantee of that sale.

UniCredit was reportedly considering a delay in Banca Popolare di Vicenza''s €1.76 billion rights issue, pending in April, due to poor market conditions.

Shares of UniCredit fell 3.1%, Banco Popolare Società Cooperativa tumbled 6.4% and Banca Monte dei Paschi declined 4.2%.

In Paris, the telecom sector dragged the market down after Bouygues and Orange delayed the finalization of their merger negotiations. Bouygues erased 3.6% and Orange shed 1.3%.

In London, mining heavyweights Anglo American and Glencore advanced more than 3% each, although rival BHP Billiton declined 1.4%.

The FTSE 100 index fell 28.27, or 0.46%, to 6,174.90. The index gained 1.74% in March, but is still down 0.63% in the year so far.

In Frankfurt, DAX index dropped 81.10, or 0.81%, to 9,965.51. The index advanced 5.95% in March, but lost 4.19% in the first-quarter.

In Paris, CAC 40 index shed 59.36, or 1.34%, to 4,385.06. The index added 1.74% in March, but is down 3% in the first-quarter of the year.

In Milan, FTSE MIB index dropped 1.4% to 18,116.88. Although the index gained 2% in March, it is down more than 10% in the first-quarter of 2016.

TUI AG soared 5% to €13.72 after the travel operator announced higher growth in bookings and summer 2016 revenue from the same period a year ago.

The company has already sold 47% of its summer holidays for this year. Compared with 2015, bookings were up 2% and revenues rose 3%.

The growth was driven by the UK customers and bookings increased 9% from the same period a year ago.

There was greater demand for Spanish and long-distance destinations, while demand for Turkey remained subdued as the war in neighboring Syria continues. Last month, TUI reported a 40% decline in summer holiday bookings to Turkey.

Carnival Plc rose 1.6% to 60 pence after the cruise operator announced better-than-expected quarterly earnings due to lower fuel costs.

First-quarter net income was $142 million for the three months ended Feb. 29, compared with $49 million in the same quarter a year ago.

Revenues grew 3.4% to $3.65 billion from the same period a year ago.

Expenses for fuel dropped 41% to $187 million in the quarter, while passenger count increased 4%.

Bookings for the rest of 2016 are running ahead of 2015 and are at higher average prices.

Carnival revised earnings per share outlook in 2016 to $3.20 and $3.40, up from the previous forecast between $3.10 and $3.40.