U.S. Index Futures, Asian Stocks Gain on Intel Earnings
July 14 (Bloomberg) -- Intel Corp. Chief Financial Officer Stacy Smith talks with Bloomberg's Susan Li from Santa Clara, California, about the outlook for sales. Intel, the world's biggest chipmaker, reported record second-quarter sales and topped analysts' estimates with its forecast for this period, allaying concern that a rebound in technology spending is losing steam. Smith also discusses the company's investments in China. (Source: Bloomberg)
European stocks closed little changed after a six-day rally pushed valuations to the highest level in two months, offsetting a record profit forecast from Intel Corp., the world’s biggest chipmaker.
ICAP Plc led declining shares after saying trading volumes “slowed significantly” in June. BP Plc fell 2.3 percent as the company delayed testing of a new cap placed over its leaking Gulf of Mexico oil well. Technology companies limited the drop, with ASML Holding NV gaining 3.1 percent on better-than- estimated profit.
The Stoxx Europe 600 Index slipped less than 0.1 percent to 255.92, paring earlier losses in the final hour of trading. The measure had risen 8.2 percent over the previous six days, leaving the gauge trading at more than 16 times its companies’ reported profits, the highest valuation since May, according to Bloomberg data.
“The market needed a breather it was looking as if it got a little bit ahead of itself,” said Mike Lenhoff, London-based chief strategist at Brewin Dolphin Securities Ltd., whose parent company oversees $33 billion. “Earnings are coming in a little bit better than expected but the season is just getting under way. The market might not be quite confident enough about whether it should be pushing forward or not.”
National benchmark indexes rose in 11 of the 18 western European markets. Germany’s DAX rose 0.3 percent, while the U.K.’s FTSE 100 lost 0.3 percent and France’s CAC 40 declined 0.1 percent.
Retail Sales
In the U.S., a report today showed retail sales fell in June for a second month, indicating the pace of economic recovery moderated heading into the second half of 2010. Purchases decreased a more-than-projected 0.5 percent following a 1.1 percent May drop, Commerce Department figures showed.
ICAP dropped 4.6 percent to 416.1 pence after the biggest broker of transactions between banks said “volumes slowed significantly in June as customers’ and end investors’ risk appetites reduced.” The company also said analysts’ profit forecasts appear “reasonable.”
Numis Securities Ltd. lowered its recommendation for ICAP to “hold” from “add,” saying they do not expect to materially change their earnings estimates of 350 million pounds ($534 million).
BP dropped 2.3 percent to 401 pence as the company delayed testing the oil-well cap to give scientists more time to study the procedure used to measure pressure levels and crude fell below $77 a barrel.
Acergy, ITV
Acergy SA, a U.K. provider of oil services, sank 5.4 percent to 97.8 kroner as Chief Executive Officer Jean Cahuzac said BP’s leaking well may delay deepwater projects beyond 2011.
ITV Plc declined 3.9 percent to 52.4 pence after BofA Merrill Lynch Global Research lowered its recommendation for the U.K.’s biggest commercial broadcaster to “underperform” from “neutral,” citing the shares “expensive” valuations.
ARM Holdings Plc led a gauge of technology companies to two-week high, limiting declines in the Stoxx 600. The shares rallied 3.1 percent to 318.5 pence as Intel, whose processors run more than 80 percent of the world’s personal computers, reported second-quarter sales of $10.8 billion, topping the average analyst estimate of $10.3 billion. Net income was $2.89 billion, or 51 cents a share.
The chipmaker said its gross-profit margin will reach 66 percent this year and forecast third-quarter sales of about $11.6 billion, beating analysts’ estimates of $10.9 billion in a Bloomberg survey.
U.S. Earnings
Intel’s results followed better-than-estimated profit from Alcoa Inc. and CSX Corp. yesterday, among 23 companies in the S&P 500 to announce earnings this week. Earnings for the gauge’s companies are projected to have climbed 34 percent in the second quarter and by the same amount in 2010, according to analyst estimates compiled by Bloomberg.
STMicroelectronics NV, Europe’s biggest chipmaker, increased 2.3 percent to 6.92 euros and Infineon Technologies AG rose 2.4 percent to 5.31 euros.
ASML jumped 3.1 percent to 25.15 euros after reporting second-quarter net income of 239 million euros ($304 million) as chip companies increased spending to meet demand. That compared with a net loss of 104 million euros a year earlier and beat the average analyst estimate of 203 million euros.
London Stock Exchange Group Plc climbed 3.6 percent to 626.5 pence after reporting a 0.8 percent increase in first- quarter sales to 158.2 million pounds as the bourse made more money from technology.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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