French lender Société Générale SA and Danish brewer Carlsberg
A/S both cited tensions in Russia and Ukraine for forecast-missing
earnings Wednesday, in a reminder of how ripples from the Ukraine
crisis can head west.
The Paris-based lender, France's third-largest listed bank by
assets, said a EUR525 million ($731.2 million) write-down on its
Russian business pushed first-quarter net profit down 13% to EUR315
million from a year earlier.
The brewer, meanwhile, trimmed full-year profit guidance and
said it now expects adjusted net profit, as well as operating
profit in Danish kroner, to grow by low single-digit percentages,
compared with its earlier estimate of mid-single-digit percentages,
citing a weak ruble.
In a bid to offset slowing growth in the West, Carlsberg made a
big bet on Eastern Europe in 2008 when it bought the 50% it didn't
already own in Baltika Breweries, the market leader in Russia.
Tensions in Ukraine flared up anew overnight, leading the Stoxx
Europe 600 to an early 0.4% loss. The U.K's FTSE 100 was trading
0.3% lower, with France's CAC-40 and Germany's DAX both down
0.5%.
Fiat SpA slipped to the bottom of the Stoxx Europe 600 after
Fiat Chrysler overnight announced an ambitious five-year plan to
boost the company's global vehicle sales nearly 60% to 7 million by
2018, even as it disclosed a net loss for the latest quarter.
Anheuser-Busch InBev reported strong revenue growth during the
first quarter, though higher financing costs and exchange-rate
swings pushed down the brewer's profit, and Siemens reported a rise
in fiscal second-quarter profit but said new orders fell.
The German engineering group also delivered the latest sign of a
resurgence in merger-and-acquisition activity, announcing that it
will buy most of Rolls-Royce Holdings PLC's civil energy
operations.
In the currency markets, the dollar remained largely
unloved.
Sterling remained close to $1.70 Wednesday, while the euro
continued to hover around $1.39 following strong purchasing
managers indexes from the euro zone Tuesday. The euro last hit that
level at the end of February. Strategists struggled to explain the
weakness in the dollar, however.
"Everybody seems to be searching for the missing link," said
Jens Nordvig, currency strategist at Nomura. "The moves cannot be
explained by rates. The moves cannot be explained by a reversal of
safe-haven flows."
Strategists at Bank of Tokyo Mitsubishi UFJ said that "the
ongoing decline in U.S. yields despite building evidence that a
strong economic rebound is under way in the U.S. is serving to
undermine confidence in the U.S. dollar."
Later in the day, the market will be scrutinizing quarterly
preliminary nonfarm productivity data out of the U.S., as well as
consumer credit figures for March. HSBC economists said that they
expect productivity to have fallen 1.1% at an annual rate in the
first quarter, and that unit labor costs rose 2.8% at an annual
rate. They said in a note that they expect to see a $12 billion
increase in consumer credit for March.
Monthly interest-rate decisions for both the European Central
Bank and the Bank of England are scheduled for Thursday. Several
economists have said that the BOE meeting will be watched
particularly closely in the light of unemployment breaching the 7%
threshold by falling to 6.9% in February, potentially putting the
discussion of rate rises on the agenda.
The ECB, meanwhile, is broadly expected to keep rates
unchanged.
In commodities markets, gold rose 0.15% to $1,310.60 an ounce
while Brent crude oil added 0.24% to trade at $107.32 a barrel.
Write to Josie Cox at josie.cox@wsj.com
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