European Shares Decline from 15-Month High Amid Concerns Over Earnings and Rate Hikes

Strategic Insights -

European shares retreated from a 15-month high as investors grew increasingly cautious about the prospects for corporate earnings and potential interest rate hikes in the United States. The Dow Jones Stoxx 600 Index slipped 0.1 percent to 258.81, reversing an earlier gain of 0.9 percent, after a strong start to the day. The decline was led by shares in Telefonica SA, which posted the biggest drop in a year, and Thales SA, which slid the most in two months following a downgrade by Natixis SA.

Key Takeaways:

  • European shares declined from a 15-month high, with the Dow Jones Stoxx 600 Index slipping 0.1 percent to 258.81.
  • The decline was led by shares in Telefonica SA, which posted the biggest drop in a year, and Thales SA, which slid the most in two months following a downgrade by Natixis SA.
  • The Stoxx 600 has rallied 64 percent since March 9, driven by record-low interest rates in the U.S. and Europe and about $12 trillion in commitments from governments worldwide.
  • The gauge is trading at around 59 times its companies' reported earnings, near the highest valuation since June 2003.
  • Alcoa Inc. is set to become the first Dow Jones Industrial Average company to post results for the three months through December later today, with combined profit for S&P 500 companies forecast to increase in the fourth quarter.

Statistics:

  • The Dow Jones Stoxx 600 Index slipped 0.1 percent to 258.81.
  • The gauge is trading at around 59 times its companies' reported earnings, near the highest valuation since June 2003.
  • The Stoxx 600 has rallied 64 percent since March 9.

Sources:

  • Bloomberg weekly data compiled as of June 2003.
  • Euclid Infotech Pvt. Ltd.
  • Syndigate.info an Albawaba.com company.