European equities fell yesterday after seven straight sessions of gains, with weaker metal prices weighing on miners and a poor update battering shares in engineering group Cobham.
Companies like NN Group and Drax also dragged the market lower after their disappointing updates.
The Pan-European STOXX 600 fell 0.3% by 0957 GMT after recent gains to a two-month high on Wednesday. Britain’s commodity-heavy FTSE 100 index was down 0.4%, while Germany’s DAX dropped 0.2%.
Cobham led the STOXX 600 lower after slumping nearly 20% to its lowest level in about 13 years and heading for its biggest-ever daily fall.
The sharp sell-off came after the company missed a profit target that had already been repeatedly lowered and took a charge on a troubled contract with Boeing, capping “an incredibly turbulent and disappointing year” for the defence and aerospace group.
The company said 2017 could be even worse as it struggles to fix operational problems in difficult markets. Its shares have already more than halved in the last 12 months.
“Investors are ditching the stock as it looks like the problems at Cobham go further than anyone realised when all this started. There is every reason to think that management’s review of the business may throw up further concerns and more write-downs,” said Neil Wilson, an analyst at ETX Capital.
Miners put pressure on the broader market. The STOXX Europe 600 Basic Resources index fell 0.9%, the biggest sectoral decliner, as copper prices fell after China’s overseas investment weakened and sentiment waned over demand in the world’s top copper user.
Shares in Anglo American, Antofagasta and Rio Tinto fell 0.5% to 2.4%.
Elsewhere, Dutch insurance company NN Group dropped 8% after its fourth quarter core profit missed expectations, while power producer Drax fell 7% after saying it was reviewing its dividend policy.
However, broader market losses were partly offset by stronger airlines. Air France-KLM jumped 6% after reporting better-than-expected operating profit for 2016 and said it had made a “resilient” start to 2017.
Shares in International Consolidates Airlines Group and Lufthansa rose 1.9% and 2.8% respectively.
Mobile telecom equipment maker Ericsson advanced 3.4%, the biggest gainer in the STOXX 600, on a media report saying that Cisco was open to larger acquisitions, while IT services group Capgemini was up 2.7% after saying that it was targeting higher 2017 earnings.
Shares in Cobham slumped nearly 20% yesterday to its lowest level in about 13 years.
