BLBG: Stocks Decline in Europe, Asia; U.S. Index Futures Decrease
By Sarah Jones
Nov. 11 (Bloomberg) -- Stocks fell in Europe and Asia as investors speculated the profit slump will worsen and declining oil and metals prices pushed commodity producers lower. U.S. index futures retreated.
Taylor Wimpey Plc tumbled 5.7 percent in London after the homebuilder said orders have fallen 40 percent, while Citizen Holdings Co. dropped 9.5 percent in Tokyo as the world's largest watchmaker cut its profit forecast. Starbucks Corp., the world's biggest chain of coffee shops, sank 3.5 percent in Germany after earnings missed analysts' estimates.
The MSCI World Index lost 1.4 percent to 927.63 at 10:50 a.m. in London, falling for the first time in three days. More than $28 trillion has been erased from the value of global equity markets as credit losses and writedowns topped $920 billion in the worst financial crisis since the Great Depression.
``Markets are shifting their concern from the financial sector to the wider economy and very clear signs of recession,'' said Andrew Popper, chief investment officer at SG Hambros in London where he helps manage about $13.7 billion. ``There is a lot of negative news out there and a lot of negative news about the economy which continues to weigh on the market and how that will impact on earnings and so on.''
Futures on the Standard & Poor's 500 Index slid 0.9 percent. Europe's Dow Jones Stoxx 600 Index declined 2.2 percent. The Royal Institution of Chartered Surveyors said U.K. home sales tumbled to the lowest in at least three decades. The MSCI Asia Pacific Index dropped 3.5 percent as Australian business confidence fell to a record low.
Cutting Forecasts
Earnings for the 1,246 companies in western Europe that reported results since Oct. 7 declined 11 percent on average, trailing expectations by 4.5 percent, Bloomberg data show. Profits for the 428 companies in the S&P 500 that have reported, including Boeing Co. and AT&T Inc., have shrunk 17 percent, while missing predictions by 4.7 percent, the data show.
The euro-area economy will probably contract 0.7 percent next year, Morgan Stanley wrote in a report, citing the financial market turmoil and slowdown abroad. That's down from 0.2 percent growth forecast earlier, the brokerage said.
``This puts the current recession on par with the early 1990s,'' Elga Bartsch, chief European economist at Morgan Stanley in London, wrote.
Growth in the U.S. economy will slow to 1.1 percent next year, down from 1.6 percent predicted for 2008, according to economists' estimates compiled by Bloomberg News.
Taylor Wimpey, battling to survive the biggest homebuilding slump in 25 years, sank 5.7 percent to 12.50 pence after orders fell 40 percent as it continues to negotiate new loan conditions with lenders.
The U.K.'s largest homebuilder has an order book of 6,607 homes, compared with 11,074 units this time last year.
Home Sales
RICS today said British home sales fell in October as the lending freeze pushed down prices for a 15th month. Real-estate agents and surveyors sold an average of 10.9 homes in the quarter through October, the least since the series began in 1978, the report showed. The percentage of agents saying prices fell last month exceeded those reporting gains by 82 points, an indicator that has been negative since August 2007.
Julius Baer Holding AG retreated 5.7 percent to 41.5 francs after Switzerland's biggest independent wealth manager said assets under management fell in the year to date as markets eroded the value of portfolios and its hedge funds businesses recorded net outflows.
Citizen lost 9.5 percent to 504 yen in Tokyo. The company slashed its net income forecast for the year ending in March due to a worsening overseas sales outlook for wristwatches and mobile phone components.
Starbucks
Starbucks fell 3.5 percent to $9.84 in German trading after saying 2009 earnings per share may be as low as 71 cents or as high as 90 cents, depending on how steeply sales deteriorate. In July it forecast earnings per share of 90 cents to $1. Analysts had estimated 87 cents.
BHP, the world's largest mining company, retreated 4.2 percent to 1,076 pence as copper declined in Asia on slowing demand concerns. Rio Tinto Group, the third-largest mining company, lost 3.9 percent to 2,734 pence.
Total, Europe's third-largest oil company, fell 1.8 percent to 41.77 euros as crude oil slumped as much as 3.4 percent to $60.29 in New York. Royal Dutch Shell Plc, the region's biggest oil company, lost 1.3 percent to 1,676 pence.
The International Energy Agency may cut its 2009 oil demand forecast for a third month as the threat of the worst recession since World War II saps fuel consumption, former IEA analysts said.
InterContinental Hotels Group Plc fell 4.4 percent to 516 pence. The owner of the Holiday Inn brand reported a 28 percent drop in third-quarter profit after selling properties and said October sales slowed on a ``sharp deterioration'' in the lodging market.
Vodafone Group Plc rose 6.8 percent to 115.65 pence after the world's largest mobile-phone company reiterated its full- year forecast for adjusted operating profit of 11 billion pounds to 11.5 billion pounds and raised its predictions for free cash flow in the full year.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.