Euro Markets Ease on Earnings Worries, German Retail Sales Fall 1.7%

Barry Randall
31 Jan, 2013
New York City

Markets in the euro zone declined after weaker than expected earnings and German retail sales fell in December. AstraZeneca estimated sales decline on higher competition from generics. Banco Santander set aside more capital cover losses in Spanish loans. Deutsche Bank reported a loss.

[R]4:30 PM Frankfurt – Markets in the euro zone declined after weaker than expected earnings and German retail sales fell in December. AstraZeneca estimated sales decline on higher competition from generics. Banco Santander set aside more capital cover losses in Spanish loans. Deutsche Bank reported a loss but met Tier 1 capital target.[/R]

Across the euro zone, market indexes in fourteen countries fell after German retail sales fell 1.7% in December from November.

Separately, the number of people without jobs declined 16,000 to 2.92 million after seasonally adjusted, according to the Federal Labor Agency in Nuremberg.

German 10-year yields declined three basis points to 1.68%. Spanish benchmark 10-year yield declined 4 basis points to 5.18% and Portugal’s similar bond yield increased 5 basis points to 6.13%.

In London trading, FTSE 100 index declined 46.2 or 0.7% to 6,277 and in Frankfurt DAX index fell 0.5% or 35.3 to 7,776. In Paris, CAC 40 index dropped 0.9% or 32.9 to 3,733.

For January, CAC 40 index increased 2.9%, DAX index added 2.2% and FTSE 100 index soared 6.9%.

In addition, Spain reported consumer price index on annual basis increased 2.8% in January, the slowest pace decline since August.

Russian economic growth slowed to the lowest level since 2009 after foreign investment waned. Gross domestic product expanded 3.4% in 2012 from 4.3% in 2011, according to the Federal Statistics Service in Moscow.

Russian market index increased 0.2% and for the year 2012 rose 9.6%.

The economic growth in 2012 was the slowest since the 7.8% plunge in 2009.

Stocks in Review

AstraZeneca declined 3.4% to 3,045 pence after the company said profit declined in the fourth quarter. The drug maker cited competition from generic makers and said sales are likely to decline in “mid-to high-single digit” percentage.

Banco Santander declined 2.6% to 6.24 euro after the Spain’s largest bank reported fourth quarter profit declined to 401 million euro and set aside higher amount to cover loan losses in domestic market.

Deutsche Bank increased 2.8% core Tier 1 capital ratio increased to 8% in the quarter ending in December. The company estimated a loss of 2.17 billion euro and set aside 1 billion euro for legal costs.

Non-interest expenses increased to 10 billion euro from 6.7 billion euro in the quarter a year ago and took 1.9 billion euro impairment in goodwill.

Ericsson AB soared 8% to SK74.61 after the wireless telecom network operator reported a 5% increase in revenues in the December quarter to SK66.9 billion and reported a net loss of SK6.46 billion.

STMicroelectronics increased 5% to 6.44 euros after the company and Ericsson finalized the plans to dissolve the joint venture and Ericsson has said earlier that it may close the operations of the joint venture.

STMicroelectronics also estimated semiconductor industry to grow 9% in 2013.

Infineon Technologies AG rose 4.5% to 6.7 euros after the second largest chipmaker in Europe estimated higher operating earnings and sales in the current quarter.

Fiscal first quarter profit plunged 69% to 44 million euros excluding special items.

Infineon estimated revenues in the fiscal second quarter ending in March to increase 5% to 894 million euros. The company is also embarking on 100 million euros of cost cutting. Infineon estimated full year 2013 revenues to drop between 5% and 9% and core operating margin to fall between 5% and 9% from 13.5% in for the year ending in September 2012.

Lonmin Plc soared 15% after the mining company said it has restarted production and platinum sales in the first quarter jumped 17%.

Shell fell 2.5% to 2,248 pence after oil explorer reported fourth quarter earnings excluding certain items of $5.6 billion.

TeliaSonera AB fell 1.8% to SK45.85 after the largest Swedish telecom company said fourth quarter operating earnings decreased 3.2% to SK8.97 billion.