Positive Earnings Lift European Indexes, Credit Suisse Net Drops 96%

Arthi Gupta
25 Apr, 2012
New York City

The European indexes gained on strong corporate earnings. The euro area loan demand fell and the UK economy slid into a recession in the first quarter. Siemens cut fiscal year outlook after quarterly earnings plunged.

[R]1:50 PM Frankfurt – The European indexes gained on strong corporate earnings. The euro area loan demand fell and the UK economy slid into a recession in the first quarter. Siemens cut fiscal year outlook after quarterly earnings plunged.[/R]

The European indexes soared after more companies reported better-than-estimated earnings.

ABB Ltd, ACE Limited and Air Liquid SA reported better than expected earnings but Credit Suisse quarterly net plunged 96% and Siemens said quarterly sales rose 9% but new orders declined 19%.

The UK economy unexpectedly contracted in the first quarter, entering a double-dip recession.

Investors also look ahead to the Federal Reserve''s announcement later today and will be looking for clues if the central bank is prepared to offer additional monetary stimulus. The Fed is expected to hold rates near zero and has indicated in the past that it is prepared to expand asset purchase program if economic conditions warrant it.

The political turmoil in The Netherlands continues after the Dutch opposition parties rejected Prime Minister Mark Rutte’s austerity cuts.

The Dutch premier earlier had formulated budget cuts of €14 billion to €16 billion to meet the EU budget targets of 3% of GDP by next year.

Euro area banks reported a fall in net demand for loans in the first quarter, according to the bank lending survey data published by the European Central Bank today.

In Paris trading, the CAC-40 Index gained 58.11 or 1.8% to 3,227.79 and in Frankfurt the DAX Index edged higher 92.60 or 1.4% to 6,683.17.

The yield on Spain’s benchmark 10 year bonds declined 11 basis points to 5.76% and the Italian bond yields fell 5.5 basis points at 5.63%.

Gainers & Losers

ABB Ltd. fell 2.8% to 17.86 francs after the power and automation technologies company reported first quarter revenues rose 6% to $8.9 billion compared to $8.4 billion the prior year. Net income in the quarter increased 5% to $685 million from $655 million in the same period last year. Basic net income per share was 30 cents compared to 29 cents in the previous year period.

ACE Limited rose 1% to $75.24 after the Swiss-based insurer reported first quarter net income soared 289% to $973 million or $2.84 per share compared to $250 million or 73 cents per share last year. Net premiums written for the quarter climbed 3.5% to $3.57 billion compared to $3.45 billion last year.

Air Liquide SA climbed 1.1% to $25.11 after the French industrial gas maker said first quarter group revenue rose 6.7% to €3.78 billion, from €3.54 billion last year. On a comparable basis, revenue grew 4.5%.

Credit Suisse Group AG increased 0.4% to 23.65 francs after the Swiss financial services company reported first quarter core net revenues declined 25% to 5.88 billion francs from 7.81 billion francs last year. Net income in the quarter slumped 96% to 44 million Swiss francs from 1.14 billion francs in the prior year.

PSA Peugeot Citroën SA edged higher 2.9% to €9.18 after the French car manufacturer reported first quarter revenues declined 7% to €14.29 billion from €15.41 billion last year.

SAP AG declined 0.8% to €48.88 after the maker of business software said first quarter total revenue rose 11% to €3.35 billion from €3.02 billion in the previous year. Net profit for the quarter increased 10% to €444 million or 37 cents per share from €403 million or 34 cents per share in the year-ago quarter.

Siemens AG gained 1.4% to €70.78 after the German industrial conglomerate reported second quarter revenue rose 9% year-over-year to €19.3 billion from €17.7 billion a year ago. Net income in the quarter plunged 67% to €1.05 billion from €3.17 billion last year. Corresponding basic EPS declined to €1.16 compared to €3.58 a year earlier.

New orders fell 13% to €17.880 billion from the prior-year period.

Telefonaktiebolaget LM Ericsson soared 4.4% to 66.40 kronor after the Sweden-based communications technology company reported first quarter net sales fell 4% to 50.97 billion kronor from 52.97 billion kronor in the comparable period last year. Sales for comparable units, adjusted for foreign exchange and hedging, decreased 6% year over year.

Net income in the quarter surged 116% to 8.8 billion kronor or 2.76 kronor per share from 4.1 billion kronor or 1.27 kronor per share in the prior year.