EUROPEAN STOCKS ROUT
European stocks deepened a monthly rout as disappointing earnings reports reignited investor concern about global growth prospects and oil prices resumed their downward trend.
BASF SE lost 3.2 percent after the world's largest chemical maker said it will book a 600-million euro ($652 million) charge in the fourth quarter because of lower oil and gas prices. Novartis AG dropped 3.5 percent after the Swiss drugmaker posted earnings and sales that missed projections. Ericsson AB slid 5.1 percent as its fourth quarter was less profitable than analysts predicted.
The Stoxx Europe 600 Index slipped 0.7 percent to 336.9 at 10:31 a.m. in London. The index is heading for a monthly decline of 7.9 percent, its biggest since August. A measure of volatility in the market has risen 30percent in January and reached its highest level since September last week.
"Nobody is really sure where we go from here, and nobody is brave enough to make the call," said Peter Dixon, Commerzbank AG's global equities economist in London. "Corporate-earnings season won't provide much of a support -- markets may find a floor if the Fed is extremely dovish tonight. At least investors will have time to think and reassess valuations."
The Federal Reserve releases a monetary-policy statement after the close of European trading. Investors will be looking for indications of the U.S. central bank's intentions regarding interest rates after January's market turmoil. Traders are pricing in zero percent chance of a rate hike this month and 24 percent odds of an increase in March.
Tumbling oil prices have hamstrung global stocks as the two asset classes have become the most correlated since 2013. An increase in oil prices on Tuesday fueled a rebound in European commodity and energy producers, while better-than-expected corporate updates also boosted sentiment. Oil resumed declines today after U.S. industry data showed crude stockpiles increased, adding to a global glut.
A measure of energy companies was the worst performer on the Stoxx 600. Tullow Oil Plc led the drop with a 6.9 percent slide. Commodity producers retreated the second-most, led by Anglo American Plc and BHP Billiton Ltd.
Among other stocks moving on corporate news, Royal Bank of Scotland Group Plc slipped 3.2 percent after saying it will take a 3.6 billion-pound ($5.2 billion) hit to the value of its assets and set aside more money for past misconduct, pushing it to an eighth consecutive annual loss.
ARM Holdings Plc, the semiconductor designer whose technology is used in most smartphones, slid 2 percent after Apple Inc. forecast its first drop in sales since 2003. Dialog Semiconductor Plc retreated 2.4 percent and AMS AG dropped 1.6 percent.
Assicurazioni Generali SpA declined 2.2 percent after the Italian insurer said its chief executive officer won't serve another term. Mario Greco will join rival Zurich Insurance Group AG from May, according to a separate statement from the Swiss company.
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.