By Stephen Kirkland and Shiyin Chen - Jan 25, 2012 8:05 PM GMT+0700
Jan. 25 (Bloomberg) -- Rajiv Jain, a money manager at Vontobel Asset Management Inc. in New York, talks about U.S. stocks, Europe's debt crisis and the technology industry. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Jan. 25 (Bloomberg) -- Thomas Murphy, managing partner at Family Office Research & Management Ltd. in Sydney, a private wealth-management firm, talks about global stocks and his investment strategy. Murphy also discusses President Barack Obama's State of the Union address. He speaks with Susan Li on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
European stocks dropped for a second day as Ericsson AB’s earnings missed estimates, Novartis AG said sales may stagnate and a report showed the U.K. economy contracted more than estimated. Nasdaq-100 Index futures rose after Apple (AAPL) Inc.’s profit more than doubled.
The Stoxx Europe 600 Index slipped 0.7 percent at 8 a.m. in New York and Standard & Poor’s 500 Index futures fell 0.3 percent. Nasdaq-100 futures jumped 0.6 percent as Apple shares climbed 7.4 percent in pre-market trading. The yen weakened 0.5 percent against the dollar after the country posted its first annual trade deficit in 31 years. The German 30-year bond yield lost three basis points as bids at an auction exceeded the government’s sales target. Oil declined 0.9 percent.
Ericsson, the world’s largest maker of wireless networks, reported profit fell amid slower spending from North American customers, and Novartis said sales probably won’t grow this year and profitability may decline. The U.K. economy shrank 0.2 percent in the fourth quarter, according to the Office for National Statistics. The Federal Reserve is set to release rate forecasts for the first time a day after President Barack Obama delivered his third State of the Union address.
“Earnings estimates still look extremely optimistic,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels. “We would be cautious on risky assets at the moment. Let’s not forget the overall economy is weak.”
Ericsson tumbled 14 percent and Novartis, Europe’s biggest drugmaker by sales, sank 3.4 percent. ARM Holdings Plc, the U.K. owner of chip technology used in Apple’s iPhone and iPad, rose 4.4 percent.
Apple Earnings
Apple said first-quarter profit surged to $13.1 billion, or $13.87 a share. Analysts surveyed by Bloomberg on average estimated profit of $10.14 a share. Apple is among the 54 of 86 S&P 500 companies that have beaten analyst estimates for quarterly profit since earnings season began on Jan. 9.
Advanced Micro Devices Inc., the second-largest maker of processors for personal computers, fell 6.3 percent after projecting lower sales than some analysts estimated. Nvidia Corp. sank 5.5 percent after the maker of graphics processors cut its fourth-quarter revenue outlook.
Boeing Co. slipped 1.1 percent after forecasting earnings per share that were less than analysts predicted. Xerox Corp. reported fourth-quarter profit more than doubled. The shares were little changed.
Illumina Inc. surged 43 percent in pre-market New York trading after Roche Holding AG offered about $5.7 billion in cash for the provider of genetic-analysis tools, the third time the Swiss drugmaker has made a hostile bid for a U.S. company since 2007.
Home Sales
A report today may show the number of Americans signing contracts to buy previously owned homes fell 1 percent in December after a 7.3 percent gain the previous month, according to the median estimate in a Bloomberg News survey of economists.
Australia’s dollar strengthened against most of its 16 counterparts on speculation the nation’s central bank may have less scope to cut borrowing costs after core inflation accelerated.
The pound lost 0.5 percent to $1.5556. The euro slipped 0.7 percent to $1.2949 as the European Central Bank was said to oppose restructuring its Greek bond holdings.
Billionaire George Soros said “the euro must survive because the alternative, a breakup, would cause a meltdown that Europe, the world, can’t afford,” Newsweek Magazine reported, citing an interview in New York before his participation at the World Economic Forum in Davos.
German Auction
The Portuguese five-year note yield climbed to a record 18.78 percent, while the yield on the Italian 10-year bond jumped 10 basis points.
The German 10-year bund yield slipped four basis points, falling for the first time in five days. Germany got bids for 5.042 billion euros ($6.6 billion) of 30-year bonds, more than the maximum sales target of 3 billion euros, the Bundesbank said in a statement today. The debt agency accepted bids for 2.458 billion euros at average yield of 2.62 percent.
The yield on the U.S. five-year Treasury note fell two basis points to 0.88 percent before the government sells $35 billion of similar-maturity securities.
Obama called on Congress to require the highest U.S. earners to pay at least 30 percent of their income in taxes, building on his election-year push for what he terms economic fairness. He also vowed to get tough on unfair trade practices by nations such as China, and said the U.S. should provide aid to help domestic companies compete.
Oil in New York dropped for a second day to $98.07 a barrel and copper declined from a four-month high. The S&P GSCI index of 24 commodities slipped 0.3 percent. Natural gas climbed 2.9 percent, the fourth consecutive gain.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
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