Market Updates

Siemens, KPN Net Drops; Spain Sold

Arthi Gupta
24 Jan, 2012
New York City

    European markets edged lower after weaker than anticipated corporate earnings. Spain sold

[R]1:30 PM Frankfurt – European markets edged lower after weaker than anticipated corporate earnings. Spain sold €2.51 billion of short-term debt today at lower yields and Greek talks stalled. Switzerland based Petroplus planned to file for insolvency.[/R]

European markets traded lower after Siemens, Software AG and KPN reported weaker-than-estimated earnings. Traders focus on talks between Greece and its private creditors. However, the impasse continues as both the parties remain apart on the Greek proposal of 70% reduction in bond repayment.

Eurogroup president Jean-Claude Juncker urged Greece to accelerate its fiscal reforms in order to receive the proposed second bailout package worth €130 billion. However, he supported the Greek government''s stance of not willing to pay a coupon of more than 3.5% on Greek bonds offered as an exchange in debt restructuring with maturities up to 2020.

The Greek government needs to restructure its debt to reduce it to 120% of GDP by 2020 from the current 160% level.

Banks were in focus today after Societe Generale and Credit Agricole had their credit opinion downgraded to A from A+, with a stable outlook by Standard & Poor''s Ratings Services.

German lender Deutsche Bank slumped 4% and CommerzBank plunged 4.5%.

In Paris trading, the CAC-40 Index declined 38.18 or 1.1% to 3,300.18 and in Frankfurt the DAX Index edged lower 79.72 or 1.2% to 6,356.89.

Spanish Auction Drew Heavy Demand

Spain sold €2.51 billion short-term debt today amid lower yield and higher demand, reports said. The Spanish Treasury had set a target range of €1.5 billion and €2.5 billion for the combined sale of 3-month and 6-month Treasury bills.

The Spanish Treasury issued €1.4 billion of three-month bills at an average yield of 1.285% compared to 1.735% in a December 20 auction. The bid-to-cover ratio was 4.3 compared to 2.9 in the last auction.

The Treasury also sold €1.11 billon of six-month bills at an average yield of 1.847% compared to 2.435% in the last auction. The bid-to-cover ratio rose to 6.9 compared to 4.1 in the prior

The yield on Spain’s benchmark 10-year bond rose to 5.472%.

Separately, France sold €8.202 billion of treasury bills yesterday.

Euro-zone Private Sector Activity Improves

Euro-zone private sector expanded in January, the flash survey results from Markit Economics showed today.

The composite output index, that measures activity in both manufacturing and service sector, rose to 50.4 in January from 48.3 in December.

Gainers & Losers

Nordea Bank AB dipped 0.7% to SEK56.55 after the Sweden-based bank reported fourth quarter net profit rose 2.1% to €786 million, from €770 million reported a year ago. Earnings per share stood flat at 19 cents. Net interest income for the quarter rose 4.4% to €1.43 billion from €1.37 billion in the prior year.

Petroplus Holdings AG plunged 85% to Sfr0.22 after the refiner and wholesaler of petroleum products said the company resolved to file for insolvency.

Royal KPN NV slumped 6.7% to €7.97 after the Dutch telecoms firm stated fourth quarter revenues and other income declined 0.4% to €3.375 billion compared with €3.39 billion in the year-ago quarter. Net profit in the quarter slumped 63% to €176 million or 13 cents a share compared to net profit of €475 million or 31 cents a share last year.

Siemens AG fell 3.9% to €75.35 after the German industrial conglomerate said first quarter revenue rose 2% to €17.90 billion, from €17.6 billion in the previous year. Net income in the quarter fell 17% to €1.46 billion or €1.6 earnings per share compared with €1.75 billion or €1.97 earnings per share in the prior-year period.

Software AG plummeted 6% to €24.16 after the provider of business infrastructure software reported fourth quarter revenues declined 10% to €294 million from €326.7 million in the prior year. Net income in the quarter fell 20% to €51.7 million or 59 cents a share from €64.6 million or 76 cents a share a year earlier.

STMicroelectronics NV declined 5.9% to €5.31 after the chipmaker reported fourth quarter revenues declined 22.6% to $2.191 billion from $2.833 billion a year ago. Net loss in the quarter was $11 million or $0.01 per share compared to net income of $219 million or $0.24 per share last year.

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