You are using an older browser version. Please use a supported version for the best MSN experience.

Gloomy start to results season hits shares

Reuters Reuters 12/04/2016 By Patrick Graham

A man walks through the lobby of the London Stock Exchange in London© REUTERS/Suzanne Plunkett A man walks through the lobby of the London Stock Exchange in London A downbeat first batch of corporate results prodded European stock markets lower on Tuesday while oil prices held above $40 ahead of a meeting of major producers to discuss freezing output.

The mood among investors in Europe and the United States has been subdued in the run-up to the second quarter earnings season, and sales numbers from France-based luxury goods producer LVMH were poor, helping push European markets 0.3 percent lower in early trade.

While analysts greeted Italy's plans for a $5 billion resolution fund to deal with billowing bad debts, that was also not enough to generate much optimism about European banks as they launch another round of restructuring.

Metals company Alcoa (AA.N) reported lower profits.

"LVMH's numbers were not that good, and the problem with the Italian bank fund is that it is not big enough and it risks compromising the banks that are already in a much better shape," said Francois Savary, chief investment officer at Geneva-based investment and consultancy firm Prime Partners.

Asian markets had done better. Japan's Nikkei (.N225) rose more than 1 percent after a rally in the yen against the dollar stalled on Monday following three weeks of consistent gains.

The more robust performance of oil helped commodities-linked currencies like the Australian and New Zealand dollars, both up around half a percent against their U.S. equivalent.

The U.S. dollar index, which measures its strength against a basket of currencies, fell 0.2 percent to 93.754. The euro was trading back above $1.14, touching a six-month high on a batch of sales of the dollar in early trade in London.

The yen dipped 0.2 percent to 108.16 per dollar. (JPY=)

"Oil prices holding above $40 a barrel overnight has got the dollar on the back foot, more than anything else, so we have the yen and the dollar at the bottom, and everything else at the top," said Societe Generale macro strategist Kit Juckes, in London.

"I think dollar/yen will get back to 120 at some point. We might want to sell it again there, but I think this move is way overdone."

While concerns over tepid global growth and the inability of policymakers in Europe and Japan to kick-start their economies have dominated financial markets this year, some of the big risks have eased along with a fall in the dollar over the past month.

A man walks past an electronic board displaying the Nikkei average outside a brokerage in Tokyo, Japan© REUTERS/Thomas Peter A man walks past an electronic board displaying the Nikkei average outside a brokerage in Tokyo, Japan While relieving pressure on developing economies that have borrowed heavily in dollars, that fall has also helped global commodities prices to stabilise. 

Expectations that oil producers will agree in Doha on Sunday to curb output kept U.S. crude prices (CLc1) above $40 a barrel. Brent (LCoc1) popped above $43 to a four-month peak overnight.

(editing by John Stonestreet)

More From Reuters

image beaconimage beaconimage beacon