By Geoffrey Smith
Investing.com -- Europe’s stock markets are all markedly lower after early trading on Thursday, reacting negatively to the Federal Reserve’s refusal to be any more accommodative with its monetary policy despite a sustained period of relatively weak global growth.
Most of Europe’s markets are reopening after a holiday on Wednesday, against a backdrop of purchasing manager indexes still near six year lows, confirming that Eurozone manufacturing contracted again in April.
Meanwhile, the barrage of first-quarter earnings from across the continent has had as many disappointments as positive surprises.
At 04:00 AM ET (0800 GMT), the benchmark Euro Stoxx 600 was down 0.4% at 389.66. It’s risen over 16% from its trough at the end of last year, with only two modest pull-backs on the way, and is now above fund managers’ average forecast for the end of 2019. That makes for a tough environment for bulls in the near term.
The U.K. FTSE 100 was down 0.2%, due in part to the pound finding a bid in the foreign exchange markets again. Germany’s DAX was the best-performer of the bunch, holding the line from Tuesday's close.
The morning’s stand-out winners include two big heavyweights whose quarterly reports weren’t as bad as expected. Volkswagen (DE:VOWG_p) rose over 3% as a strong performance at its core VW brand took the sting out of an 8% drop in operating profit. The group also booked another 1 billion euros in reserves to cover the costs of the 2015 diesel scandal.
Royal Dutch Shell (LON:RDSa), meanwhile, rose 2.5% despite following BP (LON:BP) in reporting lower profit for the quarter, thanks to lower crude prices and tighter margins in its refining and marketing businesses. Earnings on a current cost of supply basis slipped by some 2% from last year, but were still some 15% above forecasts.
Other winners, in more than one sense, included soccer club AFC Ajax (AS:AJAX), up 4.6% after an away win at Tottenham left it with one foot in the final of the UEFA Champions League. The shares have now doubled in the past 16 months.
And Swiss hygiene group Geberit (SIX:GEBN), famous for its toiletware, leapt nearly 7.5% after a 3.6% rise in currency-adjusted sales in the first quarter.