Fresh Greek Elections in June, EADS Swings to Profit

Arthi Gupta
16 May, 2012
New York City

The European indexes edged lower. Fresh elections will be held in Greece in June. Euro area annual inflation eased and jobless claims in the UK fell unexpectedly in April. EADS lifted full year earnings outlook.

[R]1:00 PM Frankfurt – The European indexes edged lower. Fresh elections will be held in Greece in June. Euro area annual inflation eased and jobless claims in the UK fell unexpectedly in April. EADS lifted full year earnings outlook.[/R]

The European indexes edged lower after Greece is expected to set fresh parliamentary election as political parties failed to form a unity government.

Greek President Karolos Papoulias is expected to announce another election either on June 10 or June 17. The election on May 6 failed to give a clear mandate to either of the two leading parties.

Greece is expected to run out of cash as early as August and international lenders have resisted releasing the next tranche of funding until a government is formed and Greece cuts additional spending.

Since the elections May 6 citizens have withdrawn as much as €700 million, according to the central bank of Greece.

German Chancellor Angela Merkel and new French President Francois Hollande said in their first joint statement that they are willing to help Greece come out of its current economic rut as long as it sticks to the austerity measures.

European Union finance ministers reached an agreement over stricter new banking rules in a bid to avoid future crises and relieve taxpayers from the need to bailout banks.

The EU Presidency will negotiate the proposals with the European Parliament and will aim for adoption of the agreement by around June 2012.

In corporate earnings news, A.P. Moeller-Maersk pre-tax profit plunged 44% in the quarter and German automaker reaffirmed its multi-year targets.

In Paris trading, the CAC-40 Index declined 1.23 or 0.04% to 3,038.76 and in Frankfurt the DAX Index edged lower 64.64 or 1% to 6,335.91.

The yield on benchmark 10-year bonds for Spain climbed 11 basis points to 6.45% and on the Italian bonds rose seven basis points to 5.94%.

Euro-zone Inflation Eases

Euro-zone annual inflation for April was confirmed at 2.6%, down from 2.7% in March, final data from Eurostat showed today.

Inflation continues to stay above the European Central Bank''s target of near 2%. Monthly inflation was 0.5% in April.

EU annual inflation eased in April to 2.7% from 2.9% in March.

UK Jobless Claims Fall

Jobless claims in the UK fell unexpectedly in April, the latest data from the Office for National Statistics showed today. The total claims in April were 1.59 million, down 13,700 from the previous month.

The job claims rate was unchanged at 4.9%.

The unemployment rate during the three months through March fell 0.2 percentage points from the previous three months to 8.2%.

The number of unemployed persons totaled 2.63 million in the March quarter, down 45,000 from previous three months.

Rexel to Acquire Platt Electric Supply

Rexel agreed to acquire Platt Electric Supply, a premier independent distributor of electrical products & services in the Western U.S. for an enterprise value of about €300 million.

Following this acquisition, Rexel’s market share in this region, which is expected to grow at a faster rate than the overall U.S. market, will exceed 10%.

Gainers & Losers

A.P. Moeller-Maersk A/S plunged 5.5% to DKK 38,100 after the Denmark-based conglomerate reported first quarter revenue rose 3% to DKK 81.25 billion from DKK 79.11 billion a year before. Pre-tax profit for the quarter plunged 44% to DKK 8.48 billion from DKK 15.03 billion last year.

Compagnie Financiere Richemont AG soared 6.8% to Sfr56.95 after the Swiss luxury goods group reported fiscal year 2012 sales grew 29% to €8.87 billion from €6.89 billion in the preceding year. Annual profit attributable to owners of the parent company increased 41.3% to €1.54 billion from €1.09 billion in the previous year.

Compass Group Plc dipped 0.2% to 623.50 pence after the catering service provider to airlines said first-half revenues increased 9% to £8.6 billion from £7.9 billion last year. Profit attributable to stock holders advanced 11% to £427 million from £384 million a year ago.

CRH plc fell 1% to $17.70 after the Irish building material group said it has transferred its 49% shareholding in Secil, the Portuguese cement producer, to Semapa, its former joint venture partner.

European Aeronautic, Defence and Space Co. climbed 1.9% to €29.57 after the parent of Airbus reported first quarter revenue increased 16% to €11.4 billion from €9.9 billion a year-ago quarter. Net profit in the quarter swung to €133 million compared to a net loss of €12 million last year.