By Shiyin Chen and Saeromi Shin - Oct 12, 2011 2:27 PM GMT+0700
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Alcoa was the first Dow Jones Industrial Average company to report results for a quarter that’s forecast to show the slowest profit growth in the U.S. since the end of 2009. Photographer: Carla Gottgens/Bloomberg
Oct. 12 (Bloomberg) -- Bob Doll, chief equity strategist at New York-based BlackRock Inc., talks about the outlook for the U.S. economy, financial markets and Greece's debt problems. Doll speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
The Nikkei 225 Stock Average slipped 0.6 percent and Australia’s S&P/ASX 200 Index decreased 1.1 percent. Photographer: Luis Enrique Ascui/Bloomberg
European stocks declined and German 10-year bonds snapped a five-day drop as political wrangling in Slovakia delayed the approval of the region’s overhauled bailout fund. Asian shares and metals rose on speculation China will boost support for its domestic market.
The Stoxx Europe 600 Index sank 0.8 percent as of 8:25 a.m. in London. Standard & Poor’s 500 Index futures lost 0.3 percent, while the Shanghai Composite Index jumped 3 percent, the biggest gain in a year. The 10-year bund yield decreased three basis points to 2.06 percent. Copper added 1.2 percent, gold advanced 0.7 percent, while corn jumped a third day.
Slovakia, the only country that hasn’t ratified a revised European bailout fund, headed for a second vote after failing to approve the package yesterday. Alcoa Inc., the first Dow Jones Industrial Average company to report results, posted profits that missed analyst estimates and said European customers “dramatically” cut orders on economic uncertainty.
“The development in Slovakia was just another reminder that the process to resolve Europe’s debt trouble isn’t easy,” said Han Sang Soo, a fund manager at Samsung Asset Management Co. in Seoul, which oversees about $28 billion in assets. “We’re watching corporate earnings reports to gauge the impact of the global economic slowdown on profitability.”
More than six shares declined for every one that gained on the Stoxx 600. Germany’s DAX Index slipped 0.8 percent, France’s CAC 40 lost 0.8 percent and the U.K.’s FTSE 100 Index retreated 0.7 percent. Slovakia’s opposition leader said lawmakers must find a way to approve Europe’s enhanced bailout fund, which was rejected yesterday amid a dispute over the future of Prime Minister Iveta Radicova.
Alcoa, U.S. Earnings
Alcoa fell in New York after the company said profit excluding some costs was 14 cents a share last quarter. That trailed the 22 cents forecast by analysts surveyed by Bloomberg. Earnings per share for the S&P 500, excluding financial companies, are forecast to have gained 14 percent last quarter, the smallest gain since the end of 2009, analysts’ estimates compiled by Bloomberg show.
PepsiCo Inc., the world’s largest snack-foods maker, is scheduled to release earnings later today and JPMorgan Chase & Co. and Google Inc. will report tomorrow, according to data compiled by Bloomberg.
Companies will be guiding “for a lot of uncertainty and markets have had plenty of that and we’ll probably get another dose of it,” Bob Doll, chief equity strategist at Blackrock Inc., which manages $3.6 trillion, said in a Bloomberg Television interview from Princeton, New Jersey. The European crisis “is still out there” and “until we have some understanding that we can hold it all together, we’re not out of the woods,” he said.
Chinese Banks
The MSCI Asia Pacific Index rose 0.2 percent, extending a four-day, 7.8 percent rally. Industrial & Commercial Bank of China (601398) Ltd., the world’s largest lender by market value, added 1.7 percent in Shanghai and China Construction Bank Corp. advanced 1.6 percent. The stocks surged yesterday after Central Huijin Investment Ltd., a Chinese state investment fund, said it bought shares in the nation’s four largest lenders.
CSR Corp. and China CNR Corp., the country’s two biggest train makers, advanced more than 5 percent in Shanghai after the 21st Century Business Herald reported their parent companies may each receive a 2 billion yuan ($314 million) cash injection from the government.
The government is “obviously ready to support growth,” Steven Sun, head of China equity strategy at HSBC Holdings Plc, said in a Bloomberg Television interview in Hong Kong.
Copper for three-month delivery on the London Metal Exchange erased declines of as much as 1.7 percent and climbed 1.2 percent to $7,379. The metal slipped 2.7 percent yesterday on concern slowing economic growth in China and the deepening European debt crisis will curb metals demand.
Crude, Corn
Crude slipped 0.3 percent to $85.53 on the New York Mercantile Exchange, halting a five-day rally that was the longest run of gains this year. The Organization of Petroleum Exporting Countries cut its global oil demand growth estimate for this year and 2012 yesterday, citing a weak economic outlook in industrialized nations. Prices also fell after the U.S. Senate blocked President Barack Obama’s $447 billion jobs plan.
December delivery corn climbed as much as 1.6 percent to $6.55 a bushel before trading at $6.5256. The price jumped 6.6 percent yesterday, the most since June 2010. Wheat and soybeans declined after increasing 8.1 percent and 4.9 percent respectively yesterday, on signs of increased demand from the U.S., the biggest shipper. Mexico, the largest corn importer after Japan, bought 261,200 metric tons from U.S. exporters, the government said.
To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net.
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
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