While you were sleeping: European equities slide, Reckitt Benckiser slumps
By Margreet Dietz
Feb. 20 (BusinessDesk) - Equities in Europe moved lower amid disappointing corporate earnings outlooks including from
the UK’s Reckitt Benckiser Group.
US financial markets are closed for the President’s Day holiday on Monday, while China’s markets were also shut for the
Lunar New Year.
Europe’s Stoxx 600 Index finished the day with a 0.6 percent drop from the previous close. Germany’s DAX Index retreated
0.5 percent, as did France’s CAC40 Index.
The UK’s FTSE 100 index shed 0.6 percent, led by a 7.5 percent plunge in shares of Reckitt Benckiser Group after the
consumer goods company’s 2018 outlook fell short of expectations.
Reckitt Benckiser is one of two remaining bidders vying to acquire Pfizer’s consumer-health business, which includes
brands such as Advil and ChapStick lip balm, Bloomberg reported, citing people familiar with the matter. GlaxoSmithKline
is the other.
On a call Monday, Reckitt Benckiser Chief Executive Officer Rakesh Kapoor declined to comment on a possible bid,
according to Bloomberg.
Meanwhile, BlackRock, the world’s biggest asset manager, upgraded its view on US equities to “overweight”, citing very
strong earnings momentum, while cutting European stocks to neutral, Reuters reported.
In a note on Monday, BlackRock’s global chief investment strategist Richard Turnhill pointed to tax cuts in the United
States and government spending plans as driving earnings growth and said the ratio of earnings upgrades to downgrades
for US large caps was at its highest since records began in 1988, according to Reuters.
“We believe the coming positive effects of new US tax and spending plans are still underappreciated by markets,”
BlackRock’s Turnill said in the note.
This week, minutes from the latest Federal Open Market Committee meeting, scheduled for release on Wednesday, and a slew
of speeches by US central bank policy makers will form a key focus as investors try to assess the outlook for inflation
and interest rate increases.
In other central bank news, Spain’s Luis de Guindos, the nation’s economy minister who’s held prominent positions in
banking and government, won the support of eurozone finance ministers to succeed Vitor Constancio as Vice President of
the European Central Bank, the Eurogroup said in a statement.
Ireland withdrew the only other candidate, central-bank governor Philip Lane, according to media reports.
“Guindos is perceived to be a tick more on the hawkish side because of the austerity measures he implemented,” Carsten
Brzeski, chief economist at ING-Diba in Frankfurt, told Bloomberg. Coming directly from a ministry position, initially
“he’ll probably hold back from monetary-policy discussions in order to not give the impression that he’s damaging the
Investors will also eye three debt auctions by the US Treasury on Tuesday. It plans to sell US$151 billion of debt in
the heaviest day of T-bill supply on record, according to Bloomberg data going back to 1994.