European stocks finished lower Monday, with election-related worries prompting investors to step away from equities, while downbeat developments left shares of Volkswagen AG and Ryanair Holdings PLC in the red.
Stocks found no relief Monday after European Central Bank President Mario Draghi reiterated his stance that monetary stimulus will be available if warranted for the eurozone economy. He said the combination of a recent fall in oil prices and monetary policy have helped the region recover, but it isn’t yet time to withdraw quantitative easing. A pickup in inflation has spurred calls from German officials for the ECB to begin winding down its measures.
was buying $1.0733 on Monday, compared with $1.0779 late Friday.
Election watch: French stocks dropped and bond yields rose as investors kept tabs on the French political scene. Far-right National Front party leader Marie Le Pen over the weekend launch her bid to become France’s next president. Meanwhile, French conservative presidential candidate François Fillon said Monday he’s staying in the race despite an investigation into his wife Penelope’s state pay.
In Germany, German Chancellor Angela Merkel’s Christian Democratic Union party has slipped to second place against the center-left Social Democratic Party in a poll published by Bild newspaper before the country’s federal elections in September.
“Investors are just starting to grapple with the political implications of a Germany without Merkel for the first time since 2005,” said Jasper Lawler, London Capital Group’s senior market analyst, in a note.
“Germany is ultimately the most exposed to the rise in populism and the increased odds of a Eurozone breakup. Still, Germany’s far right parties like the AfD are very unlikely to lead the country, unlike in France where a Marine Le Pen victory could portent a Front National government,” he said. Lawler backed staying overweight German stocks until Germany holds its federal elections.
Movers: In Frankfurt, Volkswagen shares
closed down 2.1% following news that the auto maker is facing its first lawsuit from a large German customer stemming from Volkswagen’s emissions-rigging scandal. German newspaper Bild am Sonntag said fish distributor Deutsche See is seeking €11.9 million in damages. The company leases 500 vehicles from Volkswagen, according to the report.
Meanwhile, investors pushed shares of Ryanair Holdings PLC
lower by 3.8%. The airline said third-quarter net profit fell nearly 8% to €94.7 million as a glut of seats for sale in the European airline industry continued to hurt ticket prices.
In Milan, UniCredit SpA
shares fell 6.9% as the Italian lender’s €13 billion share sale got under way. Shares in the rights issue were priced at a 38% discount on a theoretical ex-rights price. The move is aimed at bolstering capital at UniCredit, which has had to write down bad loans.
But advancers included Randgold Resources
Its shares jumped 4.2% as the gold producer posted a 76% leap in fourth-quarter net profit to $78.5 million, and raised its final dividend by 52% to $1 a share.
Industrial orders in Germany, Europe’s largest economy, climbed 5.2% on a seasonally adjusted basis in December, the highest rate since July 2014. The reading from Destatis outstripped expectations of a 0.75% rise in a FactSet survey of analysts. Domestic orders climbed by 6.7% during the month.
“It is difficult to read much into the factory orders series due to its volatility. The slowdown in nominal wage growth could be a sign of second-round effects of low headline inflation, which would be a worry for the ECB,” said economists at Citi in a note. “With inflation potentially around 2% year-over-year in 2017, real income growth and thus possibly consumer spending, will be under pressure.”