BLBG: European, U.S. Stock-Index Futures Retreat; Asian Shares Drop
European and U.S. stock futures fell and Asian shares slid after Intel Corp. said it faces a “fragile” economy, ASML Holding NV posted a loss and the stronger yen dimmed the earnings outlook for Japanese exporters.
Intel may drop after Chief Executive Officer Paul Otellini said the world’s largest chipmaker isn’t ready to predict growth this quarter. ASML may be active as Europe’s biggest maker of semiconductor equipment reported an 80 percent plunge in sales. UBS AG may decline after announcing a quarterly loss and plans to cut an additional 7,500 jobs.
Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, lost 1.3 percent to 2,169 at 7:21 a.m. in London. The U.K.’s FTSE 100 Index is set to open 41 points lower, according to BGC Partners. The MSCI Asia Pacific Index fell for the first time in five days, losing 1 percent.
Standard & Poor’s 500 Index futures slid 0.7 percent. Companies from Citigroup Inc. to General Electric Co. will follow Intel with earnings reports this week. Analysts estimate that profits at S&P 500 companies decreased for the seventh straight quarter in the January to March period, the longest stretch of declines since at least the Great Depression.
The MSCI World Index of 23 developed countries has rebounded 25 percent since March 9 as lenders from Citigroup to Bank of America Corp. said they made money at the beginning of 2009. Investors also speculated that Treasury Secretary Timothy Geithner’s plan to finance as much as $1 trillion in purchases of illiquid real-estate assets from banks will pull the global economy out of its first recession since World War II.
‘Fragile’ Economy
Intel still faces a “fragile global economic environment,” Otellini said. The company’s shares fell as much as 96 cents to $15.05 in extended trading yesterday after announcing that first-quarter net income plunged 55 percent to $647 million.
ASML may be active after the company reported a first- quarter net loss of 117 million euros ($155 million), compared with a profit of 145 million euros a year earlier. Analysts predicted a loss of 112 million euros.
UBS, Switzerland’s biggest bank, may drop after saying it will reduce the number of employees globally to 67,500 in 2010 from the previous target of 75,000. UBS had a loss of almost 2 billion Swiss francs ($1.75 billion) in the first quarter.
Financial institutions worldwide have announced almost 300,000 job cuts since the beginning of the credit crisis as writedowns and losses swelled to almost $1.3 trillion.
Yen, Canon
Japan’s exporters fell as the stronger yen eroded the value of sales generated overseas. The yen climbed to as high as 98.41 against the dollar from 99.79 at the close of trading in Tokyo yesterday.
Canon Inc., which generates more than half of its sales from the U.S. and Europe, slid 2.6 percent to 3,030 yen in Tokyo. Toyota Motor Corp., the world’s largest automaker, fell 2.4 percent to 3,710 yen.
Rio Tinto Group, the world’s third-largest mining company, will probably move after reporting a 15 percent fall in first- quarter iron-ore output as floods cut deliveries from its Australian mines and demand from steelmakers slumped.
Syngenta AG may be active after the world’s biggest maker of agricultural chemicals reported a surprise decline in first quarter sales after drought hit parts of Brazil and Argentina and a stronger dollar clipped overseas sales.
‘Volatility Bubble’
Industrial output in the U.S. probably fell 0.9 percent in March and inflation cooled, economists forecast. The Federal Reserve’s report on industrial production is due at 9:15 a.m. in Washington. At 8:30 a.m., figures from the Labor Department are projected to show the cost of living climbed 0.1 percent in March after a 0.4 percent gain the previous month.
A third report, from the New York Fed, may show manufacturing in the state is shrinking again this month.
U.S. equities were lowered to “underweight” at HSBC Holdings Plc, as the bank recommended investors buy into stocks in Asia, emerging markets and Europe to take advantage of falling volatility.
“What we’ve labelled the ‘volatility bubble’ may be about to deflate at last,” Kevin Gardiner, HSBC’s London-based chief equity strategist, wrote in a report. “The non-US markets may do better if risk appetite revives.”
