European Matkets Lose Steam, BP and Orange in Focus

Lucy Stoeva
26 Apr, 2016
New York City

After a strong start, most European markets changed direction and closed slightly lower. Pulp & paper producer UPM said quarterly profit jumped 35% and announced the sale of its Schwedt mill site. BP reported a pre-tax loss of $865 million. Orange said revenues rose 3.5%.

[R]4:00 PM Frankfurt, Germany - After a strong start, most European markets changed direction and closed slightly lower. Pulp & paper producer UPM said quarterly profit jumped 35% and announced the sale of its Schwedt mill site. BP reported a pre-tax loss of $865 million. Orange’s revenues grew 3.5% on the back of strong corporate sales.[/R]

After a strong start, most European markets changed direction and closed slightly lower, as concerns over interest rates offset the positive company results and higher oil prices.

Investors are looking ahead at the next policy meeting of the U.S. Federal Reserve this week, but do not expect a rate hike before the next meeting in June.

The dollar retreated against most major currencies ahead of the rate decision of the Federal Reserve.

The euro rose 0.19% against the dollar to $1.1293.

The pound surged 0.7% against the dollar to $1.46 after comments from the U.S. President Barack Obama suggested that the U.K. exit from the European Union seem less likely.

The weaker dollar fueled oil price growth. Brent crude oil futures surged 2.7% to $45.68 per barrel and WTI crude oil futures climbed 2.7% to $43.79 per barrel.

Among the largest gainers, pulp and paper producer UPM surged 11.7% after quarterly profit jumped 35% and the company agreed to divest its Schwedt newsprint mill site.

BP soared 4.3% on better than expected results and despite reporting a pre-tax loss of $865 million.

Among financial companies, Standard Chartered rose 9.8% after it posted stronger-than-expected first-quarter results and reassured investors that restructuring costs remained in check.

The pound surged 0.7% against the dollar to $1.46 after comments from U.S. President Barack Obama made the British exit from the EU seem less likely.

In London, the FTSE 100 index gained 23.60, or 0.38%, to 6,284.52, while in Frankfurt, the DAX index fell 34.76, or 0.34 %, to 10,259.59.

In Paris, the CAC 40 index dropped 12.94, or 0.28%, to 4,533.18.

BP Plc soared 4.3% to 375.9 pence, despite reporting a pre-tax loss of $865 million in the first-quarter due to low oil prices.

First-quarter replacement cost loss, a key indicator in the oil industry, was $485 million, compared with a profit of $2.1 billion a year ago, but the results showed an improvement over the fourth-quarter and surpassed expectations.

CEO Bob Dudley said that despite the environment, the company was driving towards its near-term goal of rebalancing cash flows. “Development of our next wave of material upstream projects is well on track,"" said Dudley

Cobham Plc tumbled 17.5% to 177.6 pence after the U.K. engineering company issued a profit warning for 2016 and proposed a £500 million rights issue.

Orange gained 1.3% to €14.98 after the French telecom said revenue grew 3.5% on the back of strong corporate sales and revenue growth in Spain.

UPM-Kymmene Oyj surged 11.7% to 16.75 after the Helsinki-based pulp and paper producer said quarterly core operating profit jumped 34% from a year ago to €281 million due to cost cutting and investments.

UPM signed an agreement to sell its Schwedt newsprint mill in Germany and to LEIPA Georg Leinfelder GmbH for €70 million. The mill will be converted to containerboard production, while newsprint operations will continue under a manufacturing agreement between UPM and LEIPA until the end of 2017.