By Namitha Jagadeesh Apr 11, 2014 3:09 PM GMT+0800

European stocks fell for a second day, with the benchmark index heading for its biggest weekly drop in four weeks, as investors speculated that equity gains have overshot the earnings outlook. U.S. index futures were little changed, while Asian shares slid.

Thales SA lost 3 percent after JPMorgan Chase & Co. lowered its rating for the shares. Givaudan SA dropped after comparable sales at its flavor division missed analysts&rsquo estimates. Salzgitter AG rose 2.7 percent after Citigroup Inc. recommended that investors buy the stock. Mediaset Espana Comunicacion SA may move in delayed opening after its second-biggest shareholder offered to sell a part of its stake.

The Stoxx Europe 600 Index declined 1 percent to 330.14 at 8:06 a.m. in London, heading for a weekly retreat of 2.7 percent. Standard & Poor&rsquo s 500 Index futures added less than 0.1 percent, following a slump in U.S. technology shares yesterday. The MSCI Asia Pacific Index tumbled 1.1 percent today.

&ldquo It appears that markets are looking past the froth of unrealistic valuations and starting to adopt a &lsquo show-me-the-money&rsquo approach,&rdquo Michael Hewson, chief market analyst at CMC Markets Plc in London, wrote about the biggest drop since 2011 for the Nasdaq Composite Index. &ldquo This is likely to be reflected in a sharply lower open this morning in Europe.&rdquo

The Stoxx 600 has more than doubled from a low in March 2009, with its valuation rising to 14.5 times estimated earnings compared with a five-year average of 12.3 times.

American Consumers

In the U.S., a preliminary report at 9:55 a.m. New York time may show the University of Michigan&rsquo s consumer confidence index rose to 81 in April from 80 a month earlier, according to the median forecast of economists surveyed by Bloomberg.

Thales fell 3 percent to 46.42 euros. JPMorgan Chase downgraded the French defense-electronics maker to neutral from overweight, meaning investors may no longer buy the stock. The company&rsquo s forecasts for sales and cost reduction through 2017-18 are weaker than estimated, the brokerage said.

Givaudan declined 0.9 percent to 1,393 Swiss francs. Comparable sales at its flavor division rose 5.8 percent in the first quarter, the world&rsquo s biggest maker of flavoring products said. That missed the 6.5 percent increase estimated by analysts in a Bloomberg survey. Overall comparable sales increased 5.7 percent for the quarter, exceeding the 5.6 percent average analyst forecast.

Bauer AG lost 1.1 percent to 19.45 euros after posting a 2013 net loss of 19.4 million euros, compared with a profit of 25.8 million euros a year earlier. The company said it is negotiating a syndicated loan with bankers as it could not meet some debt covenants. Bauer said it won&rsquo t propose a dividend.

Salzgitter AG advanced 2.7 percent to 31.26 euros after Citigroup upgraded the shares to buy from neutral, saying the German steelmaker will benefit from any increase in construction-related demand in Europe.

Mediaset Espana was suspended for the first hour of trading. Credit Suisse Group AG said it is selling a 3.7 percent stake in the company on behalf of Promotora de Informaciones SA. Prisa held 17.34 percent of the Spanish media company, according to data compiled by Bloomberg.

 

 

 

The Federal Reserve played down predictions by some of its own policymakers that interest rates might rise faster than they had forecast earlier.

" Several participants noted that the increase in the median projection overstated the shift in the projections," according to minutes of the March 18-19 meeting of the Federal Open Market Committee (FOMC) released on Wednesday. Some expressed concern the rate forecasts " could be misconstrued as indicating a move by the committee to a less accommodative reaction function."

US stocks rallied the most in a month while Treasuries pared declines after the minutes eased concern about the timing of future interest-rate increases. Even after rates rise, officials said last month, they might have to be kept at levels considered below normal for longer

By Adam Haigh Apr 11, 2014 8:26 AM GMT+0800

Asia&rsquo s benchmark stock index fell from an almost three-month high as a stronger yen dragged Japanese shares toward their worst week since the 2011 earthquake. Health-care to financial companies dropped.

Fast Retailing Co. (9983), which comprises 10 percent of Japan&rsquo s Nikkei 225 Stock Average, tumbled 5.1 percent in Tokyo after Asia&rsquo s biggest clothing retailer cut its forecast for annual profit. Coca-Cola Amatil Ltd. (CCL) slumped 12 percent in Sydney as Australia&rsquo s largest listed beverage company said first-half earnings will decline amid weak consumer spending and a shift to more price-sensitive shoppers.

The MSCI Asia Pacific Index declined 1.2 percent to 137.61 as of 9:15 a.m. in Tokyo, with all 10 industry groups retreating, before markets open in Hong Kong and China. Futures on Hong Kong&rsquo s Hang Seng Index climbed 0.3 percent in the most recent trading session, after the gauge surged 1.5 percent yesterday following an agreement to link Shanghai and Hong Kong markets.

&ldquo Heightened risk aversion has resurfaced,&rdquo Matthew Sherwood, Sydney-based head of investment markets research at Perpetual Ltd., which manages about $25 billion, said in an e-mail. &ldquo There was no clear catalyst to spark such an aggressive sell-down. The key for investors is determining which stocks are overtly overvalued.&rdquo

Japan Rout

Japan&rsquo s Topix index slid 2 percent as the yen traded at 101.42 per dollar, reaching its highest level in three weeks. The stock gauge has lost 7.3 percent this week and the yen strengthened as weaker-than-forecast Chinese exports revived demand for safer assets. Japanese equities are on course for the largest weekly decline among 24 developed markets tracked by Bloomberg. The Nikkei 225 declined 2.6 percent today, extending this week&rsquo s loss to 7.5 percent.

South Korea&rsquo s Kospi index retreated 1 percent and Australia&rsquo s S& P/ASX 200 Index fell 0.9 percent. New Zealand&rsquo s NZX 50 Index lost 0.8 percent. Xero Ltd., a Wellington-based online accounting software developer, slipped 8 percent today, bringing its decline this week to 19 percent, the most on record.

China&rsquo s plans to connect the stock exchanges of Hong Kong and Shanghai bolstered speculation the country will lure more investors. Stocks rallied on both venues yesterday after China said it would allow a combined 23.5 billion yuan ($3.8 billion) of daily cross-border trading.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York fell 0.9 percent yesterday, fueled by declines of more than 4 percent in technology stocks including E-Commerce China Dangdang Inc., Vipshop Holdings Inc., Qihoo 360 Technology Co. and Sina Corp. American depositary receipts of Baidu Inc., owner of China&rsquo s most-used Internet search engine, fell 4.3 percent in New York.

China Inflation

A report today will show Chinese consumer prices rose 2.4 percent in March from a year earlier, after gaining 2 percent in February, according to the median of 55 economists&rsquo estimates compiled by Bloomberg. The nation&rsquo s producer-price index retreated 2.2 percent following the previous month&rsquo s 2 percent drop, economists forecast.

Futures on the Standard & Poor&rsquo s 500 Index were little changed today. The measure yesterday lost 2.1 percent, the most since Feb. 3., as a technology selloff resumed amid concern valuations may be too high at the start of earnings season. The Dow Jones Internet Composite Index sank 4.2 percent in the U.S. session and the Nasdaq Biotechnology Index plunged 5.6 percent, the most since 2011.

The MSCI Asia Pacific Index traded at 12.5 times estimated earnings yesterday, compared with 15.6 for the S& P 500 and 14.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

 

 

[WASHINGTON] The Chinese government and central bank should be " very cautious" in implementing any stimulus programs because they tend to be less efficient than natural market forces in boosting growth, a People' s Bank of China official said on Thursday.

By Callie Bost and Jeremy Herron Apr 11, 2014 4:46 AM GMT+0800

U.S. stocks fell, with the Nasdaq Composite Index (CCMP) sinking the most since 2011, as technology shares resumed a selloff on concern valuations are too high as earnings season begins. Treasury rates sank to a three-week low on speculation interest-rate increases won&rsquo t be accelerated.

The Nasdaq Composite Index sank 3.1 percent at 4 p.m. in New York to a two-month low that erased its gain this year. The Standard & Poor&rsquo s 500 Index lost 2.1 percent to the lowest since Feb. 19. The 10-year Treasury note fell five basis points to 2.64 percent. The Bloomberg Dollar Spot Index declined to a five-month low and the yen strengthened on a surprise drop in China&rsquo s trade figures. Gold jumped 1 percent to $1,318.30.

Investors returned today to selling the biggest winners in the five-year U.S. bull market, with Internet and biotechnology shares plunging. Bed Bath & Beyond Inc. (BBBY) tumbled the most in three months after warning first-quarter profit will fall short of analysts&rsquo estimates. China&rsquo s exports slid 6.6 percent and imports declined in March, adding to concern that expansion in the world&rsquo s second-largest economy will deteriorate further.

Related:

• Stock-Market Tango of Price, Earnings Has Two Left Feet
• Opinion: What You' re Hearing Is Market Noise
• Technology IPOs Face Skittishness as Market Momentum Slips

&ldquo The market is very skittish,&rdquo David Pavan, a portfolio manager at ClariVest Asset Management LLC in San Diego, California, said in a phone interview. His firm oversees about $3.5 billion. &ldquo You see very sharp love and hate on a day-to-day basis. Today is a very strong preference for cheap stocks. Higher growth stocks get really hit hard.&rdquo

Biotechnology Stocks

The Dow Jones Internet Composite Index sank 4.2 percent and the Nasdaq Biotechnology Index plunged 5.6 percent, the most since 2011. Alexion Pharmaceuticals Inc. dropped 7.5 percent, the most in the S& P 500. The drugmaker, which trades at 101 times reported earnings, has lost 22 percent since closing at a record on Feb. 27.

The Nasdaq Composite trades at 35 times reported earnings of the companies in the index. That&rsquo s twice the ratio for the S& P 500, which trades at 17 times earnings. Bed Bath & Beyond, a Nasdaq component, lost 6.2 percent.

Alcoa Inc. this week unofficially began the earnings season as it posted profit that beat analysts&rsquo estimates. Earnings for members of the S& P 500 probably climbed 1 percent in the first quarter, analysts now forecast, after anticipating a 6.6 percent rise in January.

&ldquo There&rsquo s still a continual rotation out of the high-flying momentum stocks of 2013 into more value-driven opportunities,&rdquo Chad Morganlander, a Florham Park, New Jersey-based portfolio manager for Stifel Nicolaus & Co., which oversees more than $150 billion. &ldquo This will continue in the coming weeks as investors look for consistency in earnings. You have concerns about high valuations and flat revenue growth, which is a perfect cocktail for a sector rotation out of growth and into value.&rdquo

Gain Erased

The S& P 500 jumped 1.1 percent yesterday, the most since March 4, on the Fed minutes, pushing its two-day advance to 1.5 percent. Today&rsquo s plunge erased the index&rsquo s gain for the year. The gauge has fallen 3 percent from a record on April 2.

&ldquo These things feed on themselves,&rdquo said Tom Caldwell, chief executive officer of Caldwell Securities Ltd. The Toronto-based firm manages about C$1 billion ($915.3 million). &ldquo We&rsquo ve had a month of the market getting tired and letting off steam. It&rsquo s not a dramatic trend reversal. The market is waiting for some good news, waiting for a new revelation if you will.&rdquo

Benchmark 10-year securities rose as investors re-priced projections for when the central bank will increase borrowing costs. Treasuries remained higher after the U.S. sale of $13 billion in 30-year bonds was met with the highest demand since December.

Rate Forecast

The Federal Reserve played down forecasts for rates to increase faster than projected earlier, with some members saying comments had been &ldquo misconstrued,&rdquo according to minutes of its March 18-19 meeting released yesterday.

The MSCI Emerging Markets Index gained for a fifth day, rising 0.6 percent to the highest level since November as China&rsquo s plans to connect the stock exchanges of Hong Kong and Shanghai bolstered speculation the country will lure more investors.

Stocks rallied on both venues after China said it would allow a combined 23.5 billion yuan ($3.8 billion) of cross-border trading. The Shanghai Composite Index advanced 1.4 percent and the Hang Seng China Enterprises Index gained 0.4 percent. The gauge of mainland companies listed in Hong Kong earlier fell as much as 1.5 percent following the trade data.

Significant Impact

&ldquo The quota will have a significant impact on the Hong Kong market because it accounts for about a quarter or fifth of the daily turnover,&rdquo said Sam Chi Yung, a strategist at Delta Asia Securities Ltd. &ldquo The quota amount is a starting point.&rdquo

The China export data weighed on European equities, as the Stoxx Europe 600 fell 0.5 percent, reversing an earlier gain of 0.6 percent. Fifteen of the 19 industry groups retreated.

European bonds rallied. The yield on 10-year U.K. gilts fell seven basis points to 2.62 percent, while German 10-year bunds lost five basis points to 1.52 percent.

The yield on Greek 10-year bonds rose five basis points to 5.94 percent after dropping to 5.80 percent yesterday, the lowest since February 2010.

&ldquo Bond markets have woken up on a positive note on the back of a dovish set of Fed minutes,&rdquo said Richard McGuire, a fixed-income strategist at Rabobank International in London. &ldquo All euro zone markets are firmer. This is a classic case of an improving liquidity outlook raising all boats.&rdquo

Greek Bonds

Greece ended a four-year exile from international markets with a bond sale of $4.2 billion, more than the government estimated. The coupon on the bonds, which will be settled next week, is 4.75 percent, the Athens-based Finance Ministry said in an e-mailed statement announcing the sale.

The yen gained to the strongest in three weeks against the dollar as the China export data revived demand for safer assets. The Japanese currency advanced 0.5 percent to 101.48 per dollar. It climbed 0.3 percent versus the euro. The shared currency rose to $1.3888.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, slipped 0.1 percent to 1,005.13 for a fifth day of losses. It earlier slid to 1,004.08, the lowest level since Oct. 30.

Metals Rally

Brent crude fell for the first time in three days, eroding its premium to West Texas Intermediate to the least since September, amid signs Libyan exports may recover as stronger gasoline demand buoys U.S. prices. WTI for May delivery fell 19 cents to $103.41 a barrel on the New York Mercantile Exchange.

Copper futures for delivery in May rose less than 0.1 percent to $3.045 a pound. China&rsquo s imports of unwrought copper and copper products rose 11 percent to 420,000 tons in March from a month earlier.

Nickel extended its longest rally since October 2010 in London on mounting concern that global demand will exceed supply after Indonesia, the world&rsquo biggest supplier of mined metal, barred unprocessed-ore exports. The metal rose 2.3 percent to settle at $17,080 a metric ton in London.