By Carla Mozee, MarketWatch
Moody's cautions on 'Grexit'
European stocks fell Thursday and moved toward a monthly loss,
as investors weighed a rise in the euro and concerns about slowing
global growth.
The Stoxx Europe 600 gave up 0.3% to 396.13, led by declines in
technology, mining and utilities shares. The pullback was the
benchmark's third in a row, with Wednesday's 2.2% selloff
(http://www.marketwatch.com/story/european-stocks-gain-as-corporate-results-roll-in-fed-in-focus-2015-04-29)
underpinned by U.S. data that showed meager growth in the world's
largest economy in the first quarter.
"Confidence certainly seems to have been shaken up, with a few
unknowns impacting investors," said IG Market Strategist Stan Shamu
in a note Thursday. There was "an unprecedented QE program by the
U.S. and, judging by the way data is going, the economy isn't quite
able to stand on its own two feet yet."
The Stoxx 600 was on track for a 0.3% decline in April, which
would be the first monthly loss since December.
Data: Eurozone inflation rose to 0% in April
(http://www.marketwatch.com/story/eurozone-consumer-prices-steady-after-declines-2015-04-30)
from negative 0.1% in March. Inflation expectations are watched by
the European Central Bank in setting its monetary policy,
especially in connection with its quantitative-easing program.
German jobless claims in April were down 8,000
(http://www.marketwatch.com/story/german-jobless-claims-fall-by-less-than-expected-2015-04-30)
from March, less than the decline of 13,000 forecast in a Wall
Street Journal poll of economists.
Euro: The shared currency (EURUSD) was off intraday highs but
remained above $1.12, recently trading at $1.1206. The euro held to
gains against the U.S. dollar, as investors appeared to shrug off
the Federal Reserve's statement late Wednesday that suggested it's
keeping its options open on interest rates
(http://www.marketwatch.com/story/dollar-hits-3-week-low-against-euro-ahead-of-gdp-fed-statement-2015-04-29).
Many analysts, however, think the Fed will hold off on an
interest-rate hike at least until September.
The euro on Wednesday posted its best day against the dollar in
six weeks, a move that contributed to a 3.2% slide in Germany's DAX
30 . On Thursday, the DAX rose 0.4% to 11,477.44.
Corporates: Among stock movers, French steel-pipe maker
Vallourec SA was the worst performer on the Stoxx 600, with shares
tumbling 15%. The sharpest decline in nearly three years came after
the company late Wednesday swung to a first-quarter loss of EUR76
million
(http://www.wsj.com/articles/vallourec-swings-to-loss-cuts-jobs-1430333521)($84.4
million), and revenue fell more than 17%, under pressure as demand
from energy companies softens. Standard & Poor's downgraded
Vallourec's credit rating late Wednesday.
Shares in Alcatel-Lucent fell 6% after a major shareholder in
the French telecoms company criticized the terms of its proposed
buyout by Nokia (NOK). Odey Asset Management, which holds more than
5% of Alcatel-Lucent, described the sale to Nokia as
"unacceptable," the Financial Times reported. Shares in Nokia were
down 7.8% after the report.
Meanwhile, Nokia on Thursday said its network business
(http://www.marketwatch.com/story/nokia-profit-falls-but-beats-expectations-2015-04-30)
in the first quarter saw underlying operating profit fall to EUR85
million from EUR216 million, on higher revenue.
Greece: The Athex Composite slipped 0.3% to 795.71. Meanwhile,
bond prices were higher, pushing the yield on 2-year debt down 58
basis points to 20.8%. The yield on 10-year debt fell 14 basis
points to 10.9%.
Greece and its creditors have been working on a deal aimed at
addressing the country's debt and cash-flow troubles. But if Greece
were to default and have to leave the eurozone, its exit could
"cause a confidence shock and disrupt government debt markets,"
said Alastair Wilson, managing director of global sovereign risk at
Moody's, in a Thursday report
(http://www.marketwatch.com/story/moodys-impact-of-grexit-on-euro-area-shouldnt-be-underestimated-2015-04-30).
Moody's late Wednesday cut its rating on Greece's debt deeper into
junk territory, to 'Caa2'.
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