{"id":107403,"date":"2021-02-18T18:15:37","date_gmt":"2021-02-18T18:15:37","guid":{"rendered":"https:\/\/fin2me.com\/?p=107403"},"modified":"2021-02-18T18:15:37","modified_gmt":"2021-02-18T18:15:37","slug":"european-shares-end-lower-on-weak-earnings-rising-inflation-concerns","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/european-shares-end-lower-on-weak-earnings-rising-inflation-concerns\/","title":{"rendered":"European shares end lower on weak earnings, rising inflation concerns"},"content":{"rendered":"

(Reuters) – European shares marked a third straight day of losses on Thursday as a clutch of disappointing earnings reports added to concerns over a quicker-than-expected spike in inflation due to higher commodity prices and a strong euro.<\/p>

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, February 16, 2021. REUTERS\/Staff\/File Photo<\/figcaption>

The pan-European STOXX 600 dropped 0.8%, with oil and gas stocks leading losses despite higher crude prices.<\/p>\n

Norway\u2019s Nel ASA was the worst performer in the sector after it posted a wider fourth quarter loss, while UK\u2019s Royal Dutch Shell sank more than 3% after it announced plans to sell its Kaybob Duvernay assets in Alberta.<\/p>\n

Oil prices – which recently raced to near pre-pandemic levels due to a production freeze in Texas – have driven up expectations that inflation may rise more than expected in the near term.<\/p>\n

High inflation brings the two-fold risk of weighing on spending, as well as the earlier-than-anticipated scaling back of monetary policy support by central banks.<\/p>\n

\u201cAn increase in headline inflation on the back of technical factors is the worst scenario for the European Central Bank,\u201d said Carsten Brzeski, global head of macro at ING.<\/p>\n

\u201cOn the one hand, it could lead to financial markets pricing in higher inflation expectations and possibly even a policy reaction, while on the other hand this inflation reduces purchasing power and will be undermining if not denting the economic recovery.\u201d<\/p>\n

Minutes from the ECB\u2019s recent meeting showed that policymakers were concerned over the euro\u2019s strength, which could hit the bloc\u2019s major export centres.<\/p>\n

The benchmark STOXX 600 had jumped to a one-year high this week on optimism around a global economic recovery, but concerns over inflation and a sluggish vaccine programme swiftly pulled it off the peak.<\/p>\n

A slate of underwhelming European corporate earnings reports on Thursday also underscored the deep impact on corporate earnings from the pandemic.<\/p>\n

Planemaker Airbus fell 2.8% as it posted an annual loss and withheld a dividend due to the COVID-19 pandemic, while Orange, France\u2019s biggest telecoms group, lost 2.6% after reporting a drop in core operating profit in the fourth quarter.<\/p>\n

Barclays shed 4.4% even as it resumed modest shareholder payouts after a year-long hiatus.<\/p>\n

In a bright spot, Swiss banking software system developer Temenos topped the STOXX 600 as it launched a share buyback programme of up to $200 million.<\/p>\n

Overall, analysts expect earnings at STOXX 600 companies to decline by about 20% in the fourth quarter before rebounding nearly 43% year-on-year in the current quarter, according to Refinitiv data.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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