ASIA
Asian stocks outside of Japan rose for a third week as
Chinese equities advanced amid government pledges to do more to support
transition in the world’s No. 2 economy. Japanese shares retreated as
the yen strengthened. Japan’s Topix index dropped 3.7% last week and the
Nikkei 225 Stock Average sank 3.2%. Both gauges retreated for the first
time in six weeks as the Japanese yen strengthened.
The Shanghai Composite Index climbed 0.9% last week. The
benchmark Hang Seng Index gained 2.8%. Chinese shares rallied as Premier
Li’s commitment to support growth overshadowed a weaker manufacturing
report. China’s “bottom line” for gross domestic product growth is 7%
and the nation can’t let growth go below that, Beijing News reported on
July 23, Li’s comments at a recent meeting with economists and business
people.
Chinese lenders and developers rose. ICBC, as China’s
biggest bank is known, climbed 3.9%, China Construction Bank Corp.
advanced 5.3% and CSR Corp., the nation’s biggest trainmaker, surged 9%.
ZTE jumped 19% last week after saying first-half net income rose 23% to
302.3 million yuan ($49 million). Daihatsu Motor Co., the minicar maker
52% owned by Toyota Motor Corp., advanced 5.7% in Tokyo after
first-quarter profit beat analysts’ estimates.
Among stocks that fell, Canon slumped 6.5% for the week
after cutting its profit forecast by 10%. Toyota fell 5% as General
Motors Co. outsold Japan’s biggest carmaker for the first time in six
quarters. Japanese exporters also declined as the yen advanced last
week. A stronger yen reduces the value of overseas income at carmakers
and electronics manufacturers when repatriated. Honda Motor Co. lost
2.2% and Sony Corp. lost 2.5%.
EUROPE
European stocks declined for the first week in five as
worse-than-estimated earnings from BASF SE and ABB Ltd. raised concern
the economic recovery is faltering. The Stoxx Europe 600 Index slid 0.3%
to 298.91 this past week. The benchmark gauge has rallied 4.9% so far
in July, after its decline in June that was the first in 13 months.
National benchmark indexes closed mixed last week: the U.K.’s FTSE 100
slipped 1.1%, France’s CAC 40 gained 1.1% and Germany’s DAX Index
dropped 1%.
Strong industry report, that showed German business
confidence jumped for a third month, was mostly ignored by markets. But
Greece was in focus on Friday. The European Commission has announced
that the next bailout payment for Greece, worth 2.5 billion euros and
blocked on Wednesday, would be released on Monday. The entire bailout
tranche amounts to 5.8 billion euros. Apart from the 2.5 billion euro
payment from the EFSF, Greece will receive 1.8 billion euros from the
International Monetary Fund, while 1.5 billion comes from the profits
from Greek bonds bought by the ECB.
BASF retreated 5.9%. The world’s biggest chemical company
said second-quarter earnings before interest, taxes and one-time items
fell 5.4% to 1.83 billion euros ($2.41 billion). The average estimate of
analysts had called for 1.99 billion euros. ABB slid 4.7%. The largest
maker of power transformers posted second-quarter net income of $763
million, missing the $779-million average estimate of analysts.
Siemens dropped 4.5%. The company, which makes products
from power turbines to high-speed trains, said July 25 it no longer
predicts an operating profit margin of at least 12% of sales in the 12
months through September 2014, citing “lower market expectations.”
Siemens’s board prepared to meet next week to consider the future of
Chief Executive Officer Peter Loescher after the company cut its profit
forecast for the fifth time in his six-year tenure.
Metso Oyj declined 8.1%. The Finnish maker of mining
equipment on July 25 reported second-quarter net income that missed
analysts’ estimates and cut its forecast for full-year sales and pretax
earnings, saying uncertainty in the global economy hurt orders.
ProSiebenSat.1 Media AG tumbled 16%. Liberum Capital Ltd. cut its
rating on the stock to hold from buy, saying Germany’s advertising
market may weaken before the federal Parliamentary election on Sept. 22.
No changes are expected from the next week’s ECB meeting’s
outcome at 11:45 GMT, Thursday. ECB Monetary policy statement and press
conference will be the main focus.
USA
The Wall Street closed last week mostly higher with the
Standard & Poor’s 500 Index snapped a four-week advance as investors
weighed corporate earnings amid speculation that the Federal Reserve
may reduce its asset purchases this year. The S&P 500 dropped 0.03%
to 1,691.65, its first weekly decline since June 21. The benchmark index
reached a record on July 22 and climbed within 3 points of 1,700 for
three straight days before retreating. The Dow Jones Industrial Average
added 0.71% to 15,558.83.
Exxon Mobil Corp. and Procter & Gamble Co. will be
among 134 S&P 500 companies releasing results in the coming week. Of
the 260 companies in the benchmark equity index that have posted
quarterly results so far, 73% have exceeded analysts’ estimates for
profit and 57% have topped sales projections.
Industrials lost 1% as a group for the week, followed by a
0.8% drop among energy producers. Caterpillar (CAT) slid 4.2% for the
steepest loss in the Dow. Earnings for the world’s largest maker of
mining and construction machinery trailed analysts’ estimates for a
third straight quarter and cut its forecast as mining-equipment sales
declined on slower commodity demand from emerging markets.
McDonald’s fell 2.2% after the world’s largest restaurant
chain posted second-quarter profit and revenue that fell short of
analysts’ forecasts and said sales for the rest of 2013 would be hurt by
economic weakness. Expedia Inc. (EXPE) sank 27% for the biggest retreat
in the S&P 500 as the online travel agency missed sales and profit
estimates amid increased competition. Netflix Inc. slumped 6.9% on
slower-than-estimated subscriber gains.
An index of homebuilders fell 8.8% as PulteGroup and D.R.
Horton reported lower-than-forecast orders, adding to concerns that
higher mortgage rates will hamper the nation’s housing recovery.
PulteGroup plunged 16% for its biggest weekly decline in almost two
years. D.R. Horton sank 12%.
Meanwhile, technology companies added at least 0.8% for the
biggest gains of the week. Facebook jumped 31%, its biggest weekly
advance. The operator of the world’s most popular social-networking
service reported sales and profit that beat estimates. Apple Inc. (AAPL)
rose 3.8% . The world’s most valuable technology company managed to
exceed analysts’ earnings projections, even as profit declined from a
year earlier and sales were largely flat. Boston Scientific Corp. (BSX)
soared 13% as the second-biggest maker of heart-rhythm devices reported
profit that beat analysts’ estimates and raised its forecast.
The coming week will offer more clues to the state of the
economy. In addition to earnings reports will be data on U.S. gross
domestic product and the monthly labor report, as well as monetary
policy announcements by the Fed.
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