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Business News/ Market / Stock-market-news/  US stocks fall with Europe as Amazon drops; treasuries advance
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US stocks fall with Europe as Amazon drops; treasuries advance

Amazon plunged 12% after the online retailer posted a Q2 loss of $126 million; Visa Inc. declined 3.4%

The Nasdaq 100 Index fell 0.7% at 9:34 am in New York, as Amazon sank 12%. The Standard & Poor’s 500 Index dropped 0.4% after closing at a record for two straight days. Photo: BloombergPremium
The Nasdaq 100 Index fell 0.7% at 9:34 am in New York, as Amazon sank 12%. The Standard & Poor’s 500 Index dropped 0.4% after closing at a record for two straight days. Photo: Bloomberg

London: US equities fell with European stocks as companies from LVMH Moet Hennessy Louis Vuitton SA to Amazon.com Inc. missed earnings estimates. Russian shares retreated, while Treasuries and the dollar rose.

The Nasdaq 100 Index fell 0.7% at 9:34 am in New York, as Amazon sank 12%. The Standard & Poor’s 500 Index dropped 0.4% after closing at a record for two straight days. The Stoxx Europe 600 Index slipped 0.3%, dropping from a two-week high. Russia’s Micex Index declined 1.4%. The Bloomberg Dollar Spot Index advanced to the strongest level in more than a month. The yield on 10-year Treasuries slid 2 basis points to 2.48%.

While LVMH missed analysts’ projections, better-than- estimated results from Facebook Inc. to Royal Bank of Scotland Group Plc 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 US 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 US 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 ($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 12% after the world’s largest online retailer posted a second-quarter loss of $126 million, wider than analysts had estimated. Pandora Media Inc. sank 11% after the biggest Internet radio service reported listener growth that missed some analysts’ projections. Visa Inc. declined 3.4% 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 on Friday. About 78% of those that have posted results this season have beaten analysts’ estimates for profit, while 66% exceeded sales projections, according to data compiled by Bloomberg. Profits probably rose 6.2% in the second quarter, while sales gained 3.3%, 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% after a 1.2% decrease in May that was previously reported as a 0.7% gain, data from the commerce department showed on Friday in Washington. Demand for all durable goods — items meant to last at least three years — increased 0.7%.

The Stoxx 600 slid on Friday after three daily gains that sent it to its highest level since 7 July. The gauge is less than 2% away from its six-year high reached 10 June and has increased 1.2% this week for a second weekly advance.

LVMH lost 6.1% 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 4.9% after offering to buy 21st Century Fox Inc.’s Sky Italia unit and 57% stake in Sky Deutschland AG to expand in Europe. Sky Deutschland rose 1.4%.

European shares

RBS jumped 11% 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 ($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 4.8% after Europe’s largest airline group posted second-quarter profit that exceeded estimates.

Germany’s DAX Index lost 0.5%. 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% on Friday, heading for a 0.7% weekly gain, a second weekly increase. The MSCI AC Asia Pacific Index rose 0.2% on Friday, climbing to its highest level since June 2008 and sending its weekly advance to 1.3%.

Russian surprise

Russia’s Micex extended its drop this week to 2.3%, and the ruble weakened 0.1% against the dollar. The US 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% from 7.5%. 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%, following a 19% surge in the Hang Seng China Enterprises Index since 20 March, 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% to a three- month high. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 0.5% on Friday.

The MSCI Emerging Markets Index fell 0.2%, trimming this week’s advance to 1.5%.

UK natural gas jumped 5.4%, a third consecutive advance, according to broker data on Bloomberg. Platinum rose 0.3% to $1,472.48 an ounce, the first increase in four days.

Dollar strengthens

The Bloomberg Dollar Spot Index, which tracks the US currency against 10 major counterparts, rose 0.1% to 1,013.40, the highest level since 18 June. The gauge has increased 0.4% this week.

The pound was little changed against the dollar after data showed the UK economy expanded 0.8% in the second quarter. The increase followed a 0.8% 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 $1.6984 for an eighth straight decline. BLOOMBERG

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Published: 25 Jul 2014, 07:35 PM IST
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