By Barbara Kollmeyer
European stocks traded mixed and U.S. equity futures slipped ahead of a Federal Reserve policy decision and as bond yields crept higher. Deutsche Bank shares surged after the bank reported its best quarter in years.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.84% dipped 0.1% to 439.28, while the German DAX /zigman2/quotes/210597999/delayed DX:DAX +0.74% and French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.46% indexes rose 0.2% each, and the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.06% climbed 0.2%. Dollar strength was weighing on both the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.3024% and the euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.0663% .
U.S. stock futures /zigman2/quotes/209948968/delayed ES00 -0.13% /zigman2/quotes/210407078/delayed YM00 -0.27% /zigman2/quotes/210219788/delayed NQ00 +0.11% were mostly lower ahead of a policy decision from the Federal Open Market Committee (FOMC) later, and following a flat to slightly lower close for equities on Tuesday.
On the heels of the biggest jump in four weeks , the U.S. 10-year Treasury yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +2.11% was up another 3 basis points to 1.6503% on Wednesday. Investors appeared to be positioning ahead of the Fed’s decision, even though most analysts don’t anticipate a change in tone or any major policy decision.
“Though the broad consensus is that Jerome Powell and the rest of the FOMC will keep things unchanged this evening, there have been some reports suggesting that the topic of tapering bond purchases could be broached. If that is the case, then the markets could be about to end April on a bum note,” said Connor Campbell, financial analyst at Spreadex, in a note to clients.
That move was pressuring European bond yields, with those for the 10-year German bund /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y +6.28% and 10-year U.K. gilt /zigman2/quotes/211347177/realtime BX:TMBMKGB-10Y +2.87% both creeping higher.
On the data front, market-research group GfK said German consumer sentiment is set to fall in May, amid rising COVID-19 infections and the tightening of lockdown restrictions.
Elsewhere, prices at U.K. retail stores continue to fall but at a slower pace, an indication that prices could start rising as the economy starts to normalize after reopening, according to the latest report by Nielsen and the British Retail Consortium.
Deutsche Bank /zigman2/quotes/203042512/composite DB +0.90% /zigman2/quotes/207242873/delayed XE:DBK +1.18% reported higher-than-expected profit and revenue , helped by a strong performance by its investment bank. The German lender boosted its full-year outlook for revenue, as well as for its investment-bank unit. Shares climbed nearly 7%, with analysts at Citigroup noting it was the best quarter for Deutsche Bank in eight years.
“The beat is broad-based across all divisions and has enabled the company to provide a more optimistic outlook on FY21 for revenues & provisions. A very good set of results,” said a team of Citi analysts led by Andrew Coombs, in a note to clients.
Shares of Lloyds Banking Group /zigman2/quotes/200709414/composite LYG +1.57% /zigman2/quotes/202285510/delayed UK:LLOY +1.18% rose 3.1%, after reporting a sharp rise in first-quarter pretax profit, which beat expectations thanks to an impairment credit. The U.K. bank improved its outlook for the year.
Shares of Delivery Hero /zigman2/quotes/208380525/delayed XE:DHER -2.34% were also up close to 5.9%, after the Berlin-based food-delivery company reported soaring revenue and orders for the first quarter amid the “exceptional growth of quick commerce.” The company also issued guidance for the year.
WPP /zigman2/quotes/202300097/delayed UK:WPP +0.74% /zigman2/quotes/203813176/composite WPP +1.18% shares surged 3%, after becoming the latest advertising group to post forecast-beating results as the industry rebounds from the COVID-19 pandemic. The company reported a surprise return to comparable net sales growth in the first quarter.
Shares of Sanofi /zigman2/quotes/201967021/composite SNY -0.68% /zigman2/quotes/206928357/delayed FR:SAN -0.30% rose 1.5%, after the French drug company reported lower net profit and sales for the first quarter, but backed its 2021 outlook. Sanofi expects business earnings per share to grow by a high-single digit at constant exchange rates, barring unforeseen events.
Puma /zigman2/quotes/203655455/delayed XE:PUM +2.16% reported a first-quarter jump in earnings and sales despite coronavirus-related restrictions and supply-chain issues. Shares of the German sporting-goods company fell nearly 2%.
Carlsberg /zigman2/quotes/206906043/delayed DK:CARL.A -0.42% lifted the lower end of its guidance range and launched a new, larger buyback program of up to DKK1 billion after posting forecast-beating first-quarter revenue and volumes. Shares edged up 1%.
Shares of J Sainsbury /zigman2/quotes/206038250/delayed UK:SBRY +0.98% slid nearly 3%, after the British grocer swung to a pretax loss for fiscal 2021, as the pandemic increased costs and offset growing revenue.