Europe stocks fall from seven-year high; Greek bonds drop
European stocks fell from a seven-year high as results from Siemens AG and Royal Philips NV disappointed investors. Greek bonds slid for a second day while US natural gas jumped as cold weather struck the country’s Northeast.
The Stoxx Europe 600 Index lost 0.4 percent at 10:35 a.m. in London. Standard & Poor’s 500 Index futures slipped 0.3 percent. The Swiss franc erased declines versus the euro. Europe’s shared currency climbed 0.5 percent to $1.1284. The yield on 10-year Greek debt jumped 45 basis points to 9.55 percent. Russian bonds declined after S&P cut the country’s rating to junk. US natural gas advanced 3.5 percent.
European finance ministers signaled willingness to work with Greek Prime Minister-elect Alexis Tsipras as long as he drops demands for a debt writedown. Caterpillar Inc. and Apple Inc. are among companies set to report earnings, while reports on durable-goods orders and home sales will provide evidence on the strength of the US economy.
“With Siemens, it’s worrying in the sense that Germany’s an industrial power and a good part of their business is exports,” Jasper Lawler, a market analyst at CMC Markets Plc in London, said by telephone. “There’s going to be a lot of focus on the negotiations between Greece and the Troika. Whenever we hear parties involved making commentary, there’s going to be volatility. It’s adding to the distrust of how the eurozone functions.”
Profit drop
The Stoxx 600 halted an eight-day winning streak, its longest since April. Greek stocks dropped for a second day. The Swiss Market Index rose 1.3 percent for a third day.
Siemens retreated 3.5 percent after Europe’s largest engineering company reported a decline in first-quarter profit. Philips fell 4.4 percent after saying it is behind on its 2016 financial targets.
EasyJet Plc climbed 3.8 percent after posting an increase in first-quarter revenue, and Novartis AG (NOVN) rose 1.6 percent after posting fourth-quarter profit that beat analysts’ estimates. The world’s biggest drugmaker by sales also said revenue growth will resume this year, with earnings gains exceeding sales increases.
Microsoft Corp. (MSFT) lost 4.3 percent in early New York trading after the world’s largest software maker reported that software-license sales to businesses fell short short of analysts’ estimates.
S&P 500 futures expiring in March fell after the index advanced for a fifth day in six. About 76 percent of the 101 companies in the S&P 500 that have posted earnings this season have beaten analyst estimates, while 53 percent have topped sales projections, data compiled by Bloomberg show.
Russia downgrade
Russian bonds declined, driving the yield on five-year government debt 30 basis points higher to 15.55 percent. The dollar-denominated RTS slipped 0.8 percent. The ruble advanced 1.6 percent against the dollar after losing 6.6 percent yesterday.
S&P, which last downgraded Russia in April, cut the sovereign one step to BB+, the same level as countries including Bulgaria and Indonesia. The ratings firm said the outlook is “negative.”
The European Union will probably toughen sanctions linked to the conflict in Ukraine, adding more individuals to a list of those facing visa bans and asset freezes rather than impose economic sanctions, Latvian President Andris Berzins, whose country holds the EU’s rotating presidency, said Monday in a Bloomberg interview. The step may take place at a foreign ministers meeting set for Jan. 29 in Brussels, he said.
China Economy
Chinese stocks fell for this first time in six days in Shanghai after industrial profits declined the most in at least three years last month. The Shanghai Composite Index lost 0.9 percent after closing at a more than five-year high on Monday. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong dropped 1.6 percent.
Industrial profits declined 8 percent from a year earlier, the National Bureau of Statistics said. That’s the biggest drop since at least October 2011, according to data compiled by Bloomberg.
India’s S&P BSE Sensex advanced 0.4 percent to a record high as Prime Minister Narendra Modi and President Barack Obama reached an agreement that could spur nuclear energy projects.
US natural gas futures climbed to $2.982 per million British thermal units as a blizzard of historic proportions brought a blanket of snow and hurricane-force winds to parts of New York, New Jersey and Connecticut.
Copper slid 0.4 percent and nickel also lost 0.4 percent. Gold traded near the lowest level in a week before Federal Reserve policy makers begin a two-day meeting.
[Bloomberg]
