By Sarah Jones
Jan. 13 (Bloomberg) -- Stocks in Europe and Asia declined, sending the MSCI World Index lower for a fifth day, as slumping metals and oil prices dragged down commodity producers and Alcoa Inc. said demand for aluminum may weaken. U.S. futures fell.
BHP Billiton Ltd. and Total SA retreated more than 1 percent as copper futures tumbled in Shanghai and crude sank for a sixth day in New York. Alcoa, the largest U.S. aluminum producer, slipped 1.1 percent in Germany after reporting its first quarterly net loss in six years. Sony Corp. slumped 8.9 percent after the Nikkei newspaper said the company will record an annual operating loss.
The MSCI World Index fell 1.5 percent to 889.27 at 9:13 a.m. in London. The gauge of 23 developed nations has lost 6.4 percent in the past five days as companies from Intel Corp. to Wal-Mart Stores Inc. and Alcoa spurred concern the profit outlook is worsening, while unemployment in the U.S. climbed to the highest in almost 16 years.
“Underlying data has deteriorated and there is still big uncertainty of the magnitude of the recession we are in,” said Sonja Schemmann, who oversees about $700 million at Schroders Plc in London.
Europe’s Dow Jones Stoxx 600 Index fell 2.1 percent, the biggest decrease in a month, as France Telecom SA and Ericsson AB retreated. The MSCI Asia Pacific Index slid 3.1 percent as all 10 industry groups dropped. Standard & Poor’s 500 Index futures slipped 0.6 percent.
The MSCI World Index has tumbled 44 percent since the start of last year as about $1 trillion in losses at financial companies eroded profits and the U.S., Europe and Japan fell into simultaneous recessions.
Two Decades
Reports by lobby groups including the British Chambers of Commerce showed the U.K. economy slumped the most in at least two decades during the fourth quarter and home sales dropped to the lowest since the measure began in 1978 as the recession deepened.
BHP Billiton, the world’s largest mining company, fell 4.4 percent to 1,188 pence. Rio Tinto Group, the third-biggest, retreated 8 percent to 1,479 pence.
Copper futures tumbled the exchange-imposed 5 percent daily limit in Shanghai, tracking overnight losses in London, as the slowing global economy curbed demand for raw materials.
Energy Companies
Total declined 1.1 percent to 39.05 euros after crude oil extended yesterday’s 7.9 percent slump on speculation oil inventories increased last week as demand declined.
The contract for February delivery fell as much as 2.9 percent to $36.50 a barrel today in New York.
Alcoa, the largest U.S. aluminum producer, reported a fourth-quarter net loss of $1.19 billion because of “historic” price declines and said demand for the metal may continue to weaken in 2009. The shares slipped 1.1 percent to $9.95.
Alcoa unofficially kicked off the earnings reporting season in the U.S. as the first Dow Jones Industrial Average company to post results.
Profits for companies in the S&P 500 probably fell 20 percent in the fourth quarter of 2008, according to analysts’ estimates compiled by Bloomberg. That would mark the sixth straight period of declining earnings, the longest stretch on record. Income probably dropped 65 percent at raw-materials producers and 53 percent at financials firms.
The European companies tracked by Bloomberg that announced earnings since the MSCI World began to rebound from its 2008 low in November posted a 73 percent decline in average profit, missing analysts’ estimates by 77 percent. American companies have posted a 54 percent drop in earnings, trailing forecasts by 44 percent.
Sony, France Telecom
Sony sank 8.9 percent to 2,000 yen. The world’s second- biggest maker of consumer electronics will likely post an operating loss of about 100 billion yen ($1.12 billion) this year, its first in 14 years, due to the stronger yen and slumping demand for electronics such as televisions, the Nikkei newspaper reported. Analysts surveyed by Bloomberg forecast a 35 billion yen operating profit.
France Telecom fell 2.2 percent to 19.22 euros. Europe’s third-largest telephone company was cut to “sell” from “neutral” at UBS AG, citing increased foreign exchange “risks.”
Ericsson declined 3.3 percent to 58.50 kronor. The world’s biggest maker of wireless networks had its recommendation lowered to “sell” from “neutral” at UBS, which cited a more “bearish” outlook for the Swedish company in 2009.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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