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EUROPEAN shares ended slightly lower on Friday (Feb 9) as advances in Ubisoft and Hermes were undercut by sliding L’Oreal shares, while rising government bond yields also exerted some pressure.
The pan-European Stoxx 600 index closed 0.1 per cent lower, though logging a 0.2 per cent advance for the week.
L’Oreal dropped 7.6 per cent after the French cosmetics company reported underwhelming fourth-quarter sales growth.
Banks lost 0.3 per cent as BNP Paribas eased 2 per cent after UBS downgraded the French lender to “neutral” from “buy”.
On the bright side, healthcare stocks were amongst top gainers, helped by a 9.7 per cent rise in Coloplast after the Danish medical equipment maker reported better-than-expected first-quarter results.
Hermes shares rose 4.8 per cent, notching a record high after the Birkin bag maker said it will further raise prices as its sales outpaced luxury competitors at the end of 2023.
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Ubisoft jumped 13.8 per cent after the video games group reported third-quarter net bookings slightly above its forecast.
Europe’s technology sector continued its stellar run, advancing 1.2 per cent on the day and taking its tally of consecutive daily gains to seven.
Fourth-quarter earnings are estimated to decrease 7.6 per cent year-on-year for Stoxx 600 firms, according to LSEG data, with just about 55 per cent of the 85 companies that have reported so far beating profit expectations.
“Companies have been in a high input cost environment for a long time (and) we’re seeing a slow down in demand. So the way they are trying to manage is by giving out on margins,” said Anthi Tsouvali, multi-asset strategist at State Street Global Markets.
While some strong quarterly earnings updates have propelled the benchmark index to eke out modest weekly gains, investor concerns over elevated interest rates for long have kept further gains in check.
Hurting equities on the day, the yield on the German 10-year government bond rose for a third-straight session, last at 2.38 per cent, as bets of an early interest-rate cut by the European Central Bank eased after several rate-setters warned against such a move.
Utilities, often noted as a bond proxy, fell 1.0 per cent.
Money markets now see a near 48 per cent chance of a rate cut in April, having fully priced in such a move at the end of January.
Among other earnings, Saab jumped 4.2 per cent after the defence equipment maker lifted mid-term sales growth targets.
Sweco shed 13.7 per cent to the bottom of Stoxx 600 after the Swedish engineering and architecture consultancy company posted fourth-quarter Ebita below expectations.
Meanwhile, Deutsche Pfandbriefbank shares extended their declines, down 3.0 per cent over concerns over its exposure to the US commercial real estate market. REUTERS
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