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European stocks struggled Wednesday, amid sharp losses for heavyweight Ericsson AB, which sank on news of a probe into Iraq dealings, as investors kept an eye as well on geopolitical tensions between Russia and the West over Ukraine.
The Stoxx Europe 600 index
SXXP,
was modestly lower at 467.16, giving up earlier gains driven by technology stocks, on the heels of a positive day on Wall Street. The German DAX
DAX,
and the French CAC 40
PX1,
each slipped 0.1% and the FTSE 100 index
UKX,
fell 0.3%.
Bond yields remained elevated in Europe, following a surge in U.S. bond yields on Tuesday, with that of the 10-year German bund
TMBMKDE-10Y,
hovering at the highest since 2018 at 0.299%. The yield on the 10-year gilt
TMBMKGB-10Y,
was down 2 basis points at 1.56%, but was also hovering at levels not seen since 2018.
Data from the U.K. showed annual inflation at 5.5%, holding at a three-decade high and at a level not seen since March 1992, chiefly driven by higher energy prices. Oil futures
CL00,
rose on Wednesday amid ongoing uncertainty over whether Russia will invade Ukraine, following a buildup of troops on that country’s borders.
NATO Secretary-General Jens Stoltenberg on Wednesday dampened hopes that Russia had been pulling back some troops, reports of which helped global stocks rally on Tuesday. “At the moment, we have not seen any withdrawal of Russian forces,” he said, adding that they instead observed buildup of those troops.
Thanks to crude oil gains, energy companies were among the best performers, with Shell
SHEL,
SHEL,
up 2.4% and BP
BP,
BP,
rising 1%.
Banks such as HSBC
HSBC,
down 0.9%, weighed on the downside, but the worst performer and biggest drag was Ericsson
ERIC,
ERIC.B,
whose shares slumped 9% after the Swedish telecommunications company disclosed serious compliance breeches within its Iraq dealings, including payments that could have ended up in the hands of terrorist group Islamic State.
In December 2019, Ericsson shelled out $1 billion to settle U.S. probes into allegations of bribery in five countries, including Vietnam and China.
Elsewhere, Royal Ahold Delhaize
AD,
shares slid 6% after the Dutch grocer swung to a net profit for the fourth-quarter of 2021, beating market forecasts, but said it expects adjusted earnings per share to fall this year as margins return to historical levels.
Shares of Air Liquide
AI,
surged 3% after the French supplier of industrial gases reported higher 2021 net profit even as it said it faces sustained and higher energy prices. It reported a 14% rise in revenue with activities improving across all areas of the company. The company also proposed a dividend.
Also in the spotlight, shares of Heineken Holding
HEIA,
rose 1% after the beer maker swung to a net profit for 2021, above market expectations. But the Dutch brewer warned that it expects to be significantly hit by inflationary pressures.
“We will offset these input cost increases through pricing in absolute terms, which may lead to softer beer consumption,” the company said.
