European Markets Drop 2%; Solar Stocks Fall

Mayank Mehta
15 Jan, 2010
New York City

European markets fell sharply and German bond yield gained. The euro declined. Banks and brokerages declined after JPMorgan increased consumer loan loss provisions. Solar energy related companies declined as Germany may lower subsidies to the industry.

[R]7:00PM Frankfurt, Paris; 1:00 PM New York – European markets fell sharply and German bond yield gained. The euro declined. Banks and brokerages declined after JPMorgan increased consumer loan loss provisions. Solar energy related companies declined as Germany may lower subsidies to the industry.[/R]

European markets traded mixed ahead of earnings season and growing concern about Greece and other smaller nations in the union.

The Euro decline 1% in in Frankfurt and credit default swaps linked to Greek bonds surged 340 basis points and hovered near record according to the data available from CMA DataVision.

Though ECB President Trichet publicly said no nation “will receive special treatment” market still worries that the central bank and Germany will have to bailout smaller nations that are running budget deficit for years.

Preliminary estimate of EA16 trade balance in November with rest of the world was 4.8 billion euro surplus, compared with a deficit of 7.0 billion a year ago month. Seasonally adjusted exports fell 0.4% in November from October.

Annual inflation of Euro area rose to 0.9% in December compared to rise of 0.5% of November. Monthly inflation was 0.3% in December 2009. Compared to year ago annual inflation of Euro area fell 1.4%.

The dollar advanced against the euro on the worries that Greece budget deficit may force the ECB and Germany to bailout the nation and Spain, Portugal and Italy may need additional assistance.

One euro traded at $1.436 and one dollar fetched 90.94 yen.

Banks and brokerages traded lower after JPMorgan Chase reported a loss in its retail banking unit and also increase credit provision losses. Solar energy companies declined on the worries that the German government is looking to lower subsidies it provides to solar makers and power generators.

In London FTSE 100 Index closed lower 42.83 or 0.78% to 5,455.37, in Paris CAC 40 Index decreased 61.39 or 1.53% to close at 3,954.38, in Frankfurt DAX index lower 112.91 or 1.89% to close at 5,875.97. In Zurich trading SMI decreased 51.40 or 0.78% to close at 6,576.02.

Deutsche Bank dropped 3.7% to €48.50 and Societe Generale declined 2.7% to €49.03 and Credit Suisse Group AG fell 4.2% to Sfr52.

Q-Cells dropped 8.8% to €11.28 and Soalrworld fell 5.5% to €14.81.

Gainers & Losers

Affine SA the property rental company added 1.1% to €16.40.

Alstom SA climbed 1.8% to €54.61 after the maker of high-speed trains was upgraded to “outperform” from “neutral” at Exane BNP Paribas.

Areva SA rose 0.08% to €359 and the nuclear power-plant builder announced three contracts totaling €260 million in the bio-energy sector in Brazil and Thailand.

Beiersdorf AG rose 0.4% to €43.97 after the consumer products maker net profits dropped 33% to €379 million.

Carrefour SA increased 2.4% to €35.45 and the retailer reported quarterly sales increased of 1% to €26 billion. Rising demand in Latin America contributed to sales gains.

Fraport AG rose 1.0% to €37.79 after the operator of the Frankfurt airport was upgraded to “overweight” from “equal-weight” at Barclays Plc.

HeidelbergCement AG fell 2.5% to €50.10 after the cement maker was downgraded to “hold” from “buy” at ING Groep NV.

Inficon Holding AG the manufacturer and supplier of measurement instrumentation said fourth quarter sales expected in the range of $55 million to $59 million and income from operations between $6 million and $8 million.

Jacquet Metals SA added 1.0% to €47.00 after the stainless steel distributor said fourth quarter sales fell 37% to €31.4 million from €49.9 million a year ago. The total volume distributed by the group fell 17% in 2009 compared to a year ago.

JCDecaux SA rose 0.1% to €18.73 after the seller of outdoor advertising announced that its subsidiary, JCDecaux Airport, has been awarded the advertising contract at Bordeaux Airport for an eight year period. The contract covers installation of digital advertising networks as well as installation of panels at the airport.

K+S AG the potash producer rose 0.3% to €44.51.

Manutan International SA the seller of equipment to industrial customers increased 5.6% to €41.55 after first quarter sales increased 20% to €150.5 million.

Pernod Ricard SA rose 0.2% to €60.15 after the producer and distributor of spirits and wines said first-half sales have been in line with expectation and sales fell 3%.

Salzgitter AG fell 0.8% to €69.55 after the steelmaker was downgraded to “sell” from “hold” at NordLB.

SAP AG fell 1.9% to €34.65 after the maker of business-management software was downgraded to “equal-weight” from “overweight” at Morgan Stanley.

Total SA closed unchanged at €44.92 after the oil refiner was downgraded to “hold” from “buy” at ING Groep NV.

Volkswagen AG the carmaker fell 0.8% to €72.86.

DAX Index Movers

Deutsche Bank AG led the decliners in the DAX index of 4.17%, followed by losses in Infineon Technologies AG of 3.89%, in Bayer AG of 3.21%, in Volkswagen AG of 3.07%, and in Salzgitter AG of 2.95%.

Merck KGaA led gainers in the DAX index with a rise of 1.25% followed by increase in Deutsche Lufthansa AG of 1.19%, in Fresenius SE of 0.71%, in Metro AG of 0.32%, and in Adidas AG of 0.15%.

CAC-40 Index Movers

BNP Paribas SA led the decliners in the CAC-40 index of 3.67%, followed by losses in PSA Peugeot Citroen S.A. of 3.62%, in Cap Gemini SA of 3.57%, in Societe Generale SA of 2.73%, and in Dexia SA of 2.67%.

Carrefour SA gainers in the CAC-40 index with a rise of 3.57% followed by gainers in Eads NV of 1.41%, in Alcatel Lucent of 1.40%, in Technip of 0.48%, and in Credit Agricole SA of 0.12%.