BLBG: U.S. Equity Futures Fall With Europe as Dollar Advances
U.S. equity futures fell with European stocks as companies from LVMH Moet Hennessy Louis Vuitton SA (MC) to Amazon.com Inc. (AMZN) missed earnings estimates. Russian shares retreated for a second week, while the dollar strengthened.
Nasdaq 100 Index futures fell 0.3 percent at 8:33 a.m. in New York, as Amazon sank 11 percent. Contracts (SPX) on the Standard & Poor’s 500 Index dropped 0.2 percent after closing at a record for the second straight day. The Stoxx Europe 600 Index slipped 0.2 percent, dropping from a two-week high. Russia’s Micex (INDEXCF) Index declined 1.4 percent. The Bloomberg Dollar Spot Index advanced to the strongest level in more than a month.
While LVMH missed analysts’ projections, better-than-estimated results from Facebook Inc. (FB) to Royal Bank of Scotland Group Plc (RBS) helped global equities climb for a second week. In Russia, the central bank unexpectedly raised borrowing costs for a third time this year, and the U.S. and Canada said they will oppose World Bank projects related to Russia to intensify pressure on the country over its actions in Ukraine. A Commerce Department report showed orders for U.S. business equipment rose in June following a revised drop the prior month.
“I was quite surprised by LVMH and didn’t see that profit miss coming,” said Michael Woischneck, who helps oversee about 1 billion euros ($1.3 billion) at Lampe Asset Management in Dusseldorf. “We’re still not that far into the earnings season and this week has been fine, with quite a few companies reporting very good numbers. As long as we don’t see really harsh sanctions against Russia, I don’t think this can derail the overall positive trend in the economic recovery and the markets for 2014.”
Amazon Sinks
Amazon plunged 11 percent after the world’s largest online retailer posted a second-quarter loss of $126 million, wider than analysts had estimated. Pandora Media Inc. sank 9.1 percent after the biggest Internet radio service reported listener growth that missed some analysts’ projections. Visa Inc. (V) declined 2.9 percent after the world’s largest payments network lowered its revenue forecast for the rest of the year.
Eleven companies in the S&P 500 report earnings today. About 78 percent of those that have posted results this season have beaten analysts’ estimates for profit, while 66 percent exceeded sales projections, according to data compiled by Bloomberg. Profits probably rose 6.2 percent in the second quarter, while sales gained 3.3 percent, according to analyst estimates compiled by Bloomberg.
The S&P 500 is heading for a second weekly gain as corporate earnings reports have boosted confidence in the economy and inflation data signaled the Federal Reserve won’t be compelled to raise interest rates in the near future.
Durable Goods
Bookings for non-military capital goods excluding aircraft climbed 1.4 percent after a 1.2 percent decrease in May that was previously reported as a 0.7 percent gain, data from the Commerce Department showed today in Washington. Demand for all durable goods -- items meant to last at least three years -- increased 0.7 percent.
The Stoxx 600 slid today after three daily gains that sent it to its highest level since July 7. The gauge is less than 2 percent away from its six-year high reached June 10 and has increased 1.2 percent this week for a second weekly advance.
LVMH lost 6.2 percent after the world’s largest luxury-goods company posted worse-than-expected financial results and said demand weakened in Asia.
British Sky Broadcasting Group Plc fell 5.4 percent after offering to buy 21st Century Fox Inc.’s Sky Italia unit and 57 percent stake in Sky Deutschland AG to expand in Europe. Sky Deutschland rose 1.7 percent.
European Shares
RBS jumped 13 percent after saying pretax profit almost doubled in the first half of the year and forecasting that it will meet a target to cut costs by 1 billion pounds ($1.7 billion) in 2014. That helped send a gauge of Stoxx 600 lenders to the biggest rally among 19 industry groups.
Air France-KLM Group rose 4.1 percent after Europe’s largest airline group posted second-quarter profit that exceeded estimates.
Germany’s DAX Index (DAX) lost 0.5 percent. Business confidence in the nation slipped in July more than economists had forecast, according to a report from the Ifo institute. Separate data showed that consumer confidence in Europe’s largest economy will increase in August to its highest level since December 2006, forecasts from GfK SE, a Nuremberg-based market research company, showed.
The MSCI All-Country World Index slipped less than 0.1 percent today, heading for a 0.7 percent weekly gain, a second weekly increase. The MSCI AC Asia Pacific Index rose 0.2 today, climbing to its highest level since June 2008 and sending its weekly advance to 1.3 percent.
Russian Surprise
Russia’s Micex extended its drop this week to 2.4 percent, and the ruble weakened 0.1 percent against the dollar. The U.S. said Russia is firing artillery over its border into Ukraine, the first time American officials have publicly alleged direct participation in fighting on behalf of separatists.
Russia’s central bank increased its one-week auction rate to 8 percent from 7.5 percent. None of the economists surveyed by Bloomberg predicted an increase, with 22 of 23 forecasting no change and one projecting a quarter-point cut.
The European Union is preparing to sanction Russia’s most senior spies and security officials, according to a draft document obtained by Bloomberg News.
Chinese Stocks
Chinese shares may climb another 20 percent, following a 19 percent surge in the Hang Seng China Enterprises Index (HSCEI) since March 20, according to Mark Mobius, executive chairman of Templeton Emerging Markets Group. He favors state-owned banks and energy companies because of their cheap valuations and the government’s plans to open up state-dominated industries.
The Shanghai Composite Index gained 1 percent to a three-month high. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 0.5 percent today.
The MSCI Emerging Markets Index fell 0.2 percent, trimming this week’s advance to 1.5 percent.
U.K. natural gas jumped 4.9 percent, a third consecutive advance, according to broker data on Bloomberg. Platinum rose 0.6 percent to $1,476.88 an ounce, the first increase in four days.
Dollar Strengthens
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, rose 0.1 percent to 1,013.54, the highest level since June 18. The gauge has increased 0.4 percent this week.
The pound was little changed after data showed the U.K. economy expanded 0.8 percent in the second quarter. The increase followed a 0.8 percent gain in the first three months of the year and matched the median estimate in a Bloomberg News survey of 36 economists. Sterling traded at $1.6982 for an eighth daily decline.
Treasuries headed for a weekly drop, with the 10-year note yield at 2.51 percent.
To contact the reporters on this story: Cecile Vannucci in London at cvannucci1@bloomberg.net; Nick Gentle in Hong Kong at ngentle2@bloomberg.net
To contact the editors responsible for this story: Nick Gentle at ngentle2@bloomberg.net Lynn Thomasson, Jeff Sutherland
