BLBG: Stocks in Europe, Asia Decline; U.S. Futures Are Little Changed
Stocks in Europe and Asia retreated, sending the MSCI World Index to its fifth straight decline, on concern that deepening recessions in the U.S., U.K. and Japan will snuff out earnings growth. U.S. index futures were little changed.
BP Plc and Royal Dutch Shell Plc, Europe’s largest oil producers, lost more than 1 percent as crude fell below $39 a barrel. Bridgestone Corp., the world’s biggest tiremaker by sales, slid 4.7 percent as the company cut earnings estimates and confidence among Japanese manufacturers slumped. U.S. reports on consumer spending, durable-goods orders and jobless claims are expected to show the world’s largest economy also deteriorated.
“In terms of the economy, 2009 and maybe even 2010 will be quite difficult,” said Philippe Gijsels, a Brussels-based senior equity strategist at Fortis Global Markets, which has $62 billion under management. “Profits could get worse,” he told Bloomberg Television.
The MSCI World Index fell 0.2 percent to 886.90 at 12:01 p.m. in London, extending its 2008 drop to 44 percent. Futures on the Standard & Poor’s 500 Index expiring in March added 0.1 percent.
Trading may be slower than average today with markets in Germany, Switzerland, Italy and Spain closed for the Christmas holiday, while exchanges in the U.K., France, Belgium, the Netherlands and Portugal will shut early. Trading on the New York Stock Exchange will end at 1 p.m. local time.
Trading of stocks in the MSCI Europe Index yesterday was the slowest of the year, with some 1.59 billion shares changing hands according to data compiled by Bloomberg.
AstraZeneca
The MSCI Europe Index slid 0.3 percent today, while the U.K.’s FTSE 100 Index lost 0.4 percent as AstraZeneca Plc fell. The MSCI Asia Pacific Index declined for a fourth straight day, dropping 1 percent as China Shipping Development Co. led a retreat among the region’s shipping-related companies.
The MSCI World gauge of 23 developed countries is headed for its worst annual performance on record as credit-related losses and writedowns at financial firms that topped $1 trillion pushed the U.S., Europe and Japan into the first simultaneous recessions since World War II.
The Royal Institution of Chartered Surveyors gave the latest indication the U.K. housing slump is deepening today. House prices in Britain may fall about 10 percent next year, RICS said in a report.
In Japan, sentiment among large manufacturers fell to minus 44.5 points from minus 10 points three months earlier, a survey by the Cabinet Office and Finance Ministry showed. A negative number means pessimists outnumber optimists.
Bridgestone slumped 4.7 percent to 1,225 yen. The tire maker slashed its net income prediction for the year by 82 percent.
Profit Slump
Companies in the MSCI World Index have posted an average profit decline of 17 percent in the last three months, data compiled by Bloomberg show. European analysts have slashed their earnings forecasts, predicting a 16 percent drop in full-year profits at Stoxx 600 companies, compared with 11 percent growth estimated at the start of the year. Earnings in 2009 are expected to rise 0.1 percent, according to data compiled by Bloomberg.
In the U.S, earnings for S&P 500 companies will drop 14 percent this year and rise 5.2 percent in 2009, the data show.
BP, Europe’s second-largest oil producer, declined 2.1 percent to 494.25 pence. Shell, the region’s biggest, slid 1.4 percent to 1,732 pence.
Crude oil for February delivery lost 1.2 percent to $38.50 a barrel in New York before a report forecast to show that U.S. inventories accumulated for a third week as demand ebbs. The collapse in U.S. house prices has raised concern that the global recession will deepen, limiting demand for fuels.
U.S. Economic Reports
Consumer spending in the U.S., the largest part of the economy, may have fallen in November for a record fifth straight month as unemployment rises. Economists surveyed by Bloomberg estimate purchases decreased 0.7 percent after a 1 percent drop in October that was the biggest in seven years. The Commerce Department’s spending figures are due at 8:30 a.m. in Washington.
Separately, the Commerce Department may report that orders for durable goods, those meant to last several years, fell 3 percent in November.
A report from the Labor Department at the same time may show that for a seventh week in a row more than 500,000 Americans filed initial claims for jobless benefits, the longest stretch in 26 years, according to a Bloomberg survey.
AstraZeneca declined 2.7 percent to 2,639 pence. The U.K. drugmaker got a complete response letter from the U.S. Food and Drug Administration seeking additional information on its application for Seroquel XR for the treatment of major depressive disorder in adults.
Baltic Dry Index
China Shipping Development fell 4 percent to HK$6.91 after the cost of transporting raw materials fell for a fourth day. Mitsui O.S.K. Lines Ltd., Japan’s largest operator of iron-ore ships, slumped 5.3 percent to 519 yen.
The Baltic Dry Index, a measure of shipping costs for commodities, lost 2.1 percent yesterday, extending its four-day decline to 6.2 percent. The index has tumbled 91 percent in the past 12 months as slowing global trade lowered cargo rates.
Fortis declined 9.5 percent to 92 cents. The financial- services firm that’s being broken up after running out of funding lost 295 million euros ($412 million) in currency trades after a Belgian court halted the sale of units to BNP Paribas SA.
On Dec. 8, Fortis bought dollars and pounds in preparation for the sale to BNP Paribas, currency that it was forced to sell at a loss after the transaction was delayed by a Brussels court on Dec. 12, Fortis said in a statement.
