European markets reversed losses on Thursday, as the oil price continued its march higher, despite some disappointing earnings from major corporates.
The pan-European STOXX 600 was up 0.48 percent after trading sharply lower earlier in the day. European markets bucked the trend set by markets in Asia and the U.S. on Wednesday. U.S. stocks closed lower Wednesday with the Dow Jones industrial average clocking in its worst day since February 11. The S&P 500 also closed 0.96 percent lower.
The oil price was supported by the weekly inventory report from the Energy Information Administration’s (EIA) which showed a decline of 3.4 million barrels, versus expectations of a slight build. A separate report from the International Energy Agency also suggested on Thursday that a rebalancing of supply and demand in the oil market was starting to become evident.
The news sent stocks in the oil and gas sector higher.
The banking sector was once again in focus for investors. France’s Credit Agricole reported a 71 percent slump in net income for the first-quarter, sending the stock over 4.7 percent lower.
Meanwhile, UBS shares tanked over 5 percent while Credit Suisse was also sharply lower. The moves come after the Swiss government agreed on final versions of new banking rules, aimed to protect the country’s economy from a major lender collapsing. Under the rules, UBS and Credit Suisse would be required to have 5 percent leverage ratio of core capital to total assets.
“Switzerland will be one of the countries with the highest capital requirements in the world for global systemically important banks and will meet the capital standard for such banks as approved by the G20 countries,” the government said in a release on Wednesday.
UBS shares were also trading ex-dividend on Thursday. Raiffeisen Bank International was also in the red after HSBC cut its price target for the stock.
A number of insurance players were reporting on Thursday. Zurich Insurance said first-quarter net profit came in at $875 million, beating market expectations and sending shares 6 percent higher.
But Italian insurer Generali was trading lower after its operating profit in the first quarter fell 12.3 percent.
And Dutch insurer Aegon saw shares slump over 10 percent after its underlying pretax profit came in below expectations.
Meanwhile German utility RWE said first-quarter operating profit rose 7 percent to 1.7 billion euros, beating market expectations and sending shares surging.
German online retailer Zalando missed sales and pre-tax earnings expectations but reiterated its full-year guidance for revenue growth. It also said it had acquired e-commerce player Tradebyte, but shares traded lower as a result.
Lafargeholcim’s shares were in negative territory after it said first-quarter adjusted operating earnings before interest, taxes, depreciation and amortisation (EBITDA), fell 21.5 percent to 824 million Swiss francs ($848.61 million). Still, the company promised “a high single digit like-for-like increase in adjusted operating EBITDA for the year”.
In other news, Brazil’s Senate is voting on whether to impeach President Dilma Rousseff. A debate on whether to impeach Rousseff, who has been accused of breaking fiscal laws, dragged on late into the night on Wednesday delaying a vote on the matter although the majority of Senators have appeared to be leaning towards a decision to put her on trial.
The Bank of England also publishes its latest rate decision, minutes and inflation report at 12 midday London time. The bank’s nine-member monetary policy committee is expected to keep its main interest rate on hold at a record low of 0.5 percent. Analysts are not expecting any surprises when it comes to changing the interest rate, but the minutes could give clues about the health of the U.K. economy.
“As far as rates are concerned there shouldn’t be any surprises with unanimous votes expected to keep policy unchanged for the eighty-sixth month in a row,” Michael Hewson, chief market analyst at CMC Markets, wrote in a note on Thursday.
“What will be pored over is the banks outlook for growth and inflation and it is here we could well see some changes with downgrades to the growth forecasts while the inflation forecast is likely to be nudged upwards.”