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European Stocks Lower; BNP Paribas Slips Despite Profit Jump

Stock Markets Jul 30, 2021 03:36AM ET
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By Peter Nurse - European stock markets weakened Friday, with investors focused on a fresh reversal of market sentiment in China, a deluge in earnings from some of the region’s big names as well as important growth data.

At 3:40 AM ET (0840 GMT), the DAX in Germany traded 1.1% lower, the CAC 40 in France fell 0.5% and the U.K.’s FTSE 100 dropped 1%.

Corporate earnings continue to take center stage in Europe, with BNP Paribas (OTC:BNPQY) reporting a 26% rise in net income in the second quarter allowing the French bank to pay an additional dividend. U.K. bank NatWest Group (LON:NWG) also used its newly-regained freedom to pay a dividend, and announced a 750 million-pound buyback program. However, this wasn’t enough to interest investors Friday, with both stocks trading lower. 

Two banks that stood out were in Italy, where UniCredit (MI:CRDI) said it had agreed the outline of a deal to buy parts of the country's long-running problem bank, Banca Monte dei Paschi di Siena (MI:BMPS). Unicredit stock rose over 5% after saying it had agreed with BMPS's current owner, the Italian government, that any deal should be capital-neutral for Unicredit and not expose it to legacy risks at the scandal-plagued bank.

Elsewhere, Renault (PA:RENA) stock rose 3.2% after the French carmaker posted a half-year net profit, a sharp improvement from this time last year, and said it expected to post a full-year 2021 profit despite a worsening semiconductor chip shortage and rising raw materials costs.

EssilorLuxottica (PA:ESLX) stock rose 1.5% after the luxury glasses maker raised its full-year guidance on Friday after revenue doubled in the second quarter, and Hermes (PA:HRMS) stock rose 0.3% after its sales at the Birkin bag maker more than doubled from a year earlier.

Air France KLM (OTC:AFLYY) stock rose 1.4% after reporting a hefty jump in second-quarter revenue with its net loss narrowing, outperforming British Airways-owner IAG (LON:ICAG), whose stock fell 2.7% after it predicted a cautious summer recovery, saying capacity would rise to 45% of pre-pandemic levels from 22% in the previous quarter. 

Also in France, Iliad (PA:ILD) shares rose 61% after founder Xavier Niel made a formal offer to take the telecoms company private.

Weighing on sentiment Friday was a disappointing earnings report from Amazon (NASDAQ:AMZN) after the close on Wall Street Thursday. The e-commerce giant missed quarterly revenue expectations for the first time in three years while providing weak guidance for the current quarter.

In economic news, French gross domestic product rose 0.9% in the three months ending in June, an improvement from the drop of 0.1% the previous quarter, while Spanish GDP soared 2.8% on the quarter, up from -0.4% last quarter. 

This sets the scene for the equivalent data from Germany and the Eurozone as a whole later in the session, with growth expected to rebound as the region’s economies reopened after the pandemic.

Elsewhere, oil prices edged lower Friday, but are set to end the second consecutive week higher as investors remained confident about the global demand recovery.

At 3:40 AM ET, U.S. crude futures traded 0.6% lower at $73.20 a barrel, while the Brent contract fell 0.6% to $74.67, but both contracts are set for gains of around 2% for the week.

Additionally, gold futures fell 0.1% to $1,830.50/oz, while EUR/USD traded 0.1% higher at 1.1894.


European Stocks Lower; BNP Paribas Slips Despite Profit Jump

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