Mixed Closings in Europe, ARM, ABB in Focus

Lucy Stoeva
20 Apr, 2016
New York City

European markets were little changed as positive earning updates offset a decline in oil prices and sharp losses in China. ABB, the power grid automation maker said net profit fell 11%, less than expected. ARM Holdings reported revenue growth of 22% and profit growth of 7.6% in the first-quarter.

[R]4:00 PM Frankfurt, Germany - European stock markets were little changed as positive earning updates offset a decline in oil prices and sharp losses in China. ABB, the power grid automation maker said net profit fell 11%, less than expected. ARM Holdings reported revenue growth of 22% and profit growth of 7.6% in the first-quarter.[/R]

European market indexes closed little changed on Wednesday as positive corporate earning updates offset a decline in oil prices and sharp losses in China.

Oil workers in Kuwait ended three-day strike and the country restored production. Brent crude oil futures dropped 1.9% to $43.21 per barrel and WTI crude oil futures tumbled 2.2% to $40.16 per barrel.

Among oil-related shares, Subsea 7 and Statoil climbed 0.6% to 0.7% in Oslo. Tullow Oil and Seadrill advanced 3.5% and 3.3%, respectively, and BP fell 0.6%.

A sharp drop in Chinese markets negatively affected investors’ sentiment. The Shanghai Composite Index fell 4.5% earlier in the day before closing down 2.3% at 2,972.58.

On the positive side, Volkswagen jumped 4.2% on optimism it can resolve the issue with its fake emissions tests without going to trial. The company has to present the U.S. court with a plan to fix the cars sold in the U.S. by Thursday.

In the U.K., mining shares were among the largest gainers, with Anglo American up 5.4% and BHP Billiton gaining 4.3%.

U.K. unemployment rate between December and February was 5.1%, an increase of 0.1 percentage point from the previous three-month period ended in November 2015, the Office for National Statistics said.

The number of jobless claims climbed 21,000 to 1.7 million in the period.

Total wage growth slowed down to 1.8% from 2.1% due to a decline in bonuses in the financial sector. Average annual wage growth, excluding the effect of bonuses, was flat at 2.2%.

In London, the FTSE 100 index eased down 19.76, or 0.31%, to 6,385.59, while in Frankfurt, the DAX index added 21.57, or 0.21%, to 10,371.16.

In Paris, the CAC 40 index rose 3.69, or 0.08%, to 4,570.17.

ABB gained 3.8% to 20.28 Swiss francs after the power grid maker said its first-quarter net profit declined less than expected.

Net profit fell 11% to $500 million in the quarter from the same period a year earlier.

Revenue dropped 8% to $7.9 billion due to a stronger U.S. dollar, a decline in energy prices, and the slowdown of economic growth in China.

Forward looking, the company expects a mixed picture with continued uncertainty.

ARM Holdings Plc dropped 0.5% to 959 pence after the UK chip maker reported strong growth in revenues and profit in the first-quarter, but the company warned that industry may face a slowdown.

Revenue increased 21.5% from a year ago period to £276.4 million in the first quarter.
Profit increased to £91.5 million in the quarter, up 7.6% from the same period in 2015.

ARM increased its employees by 20% to 4,000 over the past year. Operating expenses grew 36% to £157 million from the same period a year ago.

ASML Holding NV dropped 4.1% to €84.66 in Amsterdam after the Dutch chip-equipment maker reported first-quarter revenue of €1.33 billion and profit of €198 million, ahead of expectations.

For the second-quarter, the company forecasted revenue of €1.7 billion and a gross margin of around 42% and research and development costs of €270 million in the second-quarter.