European Stocks Climb for Ninth Day on Earnings Optimism
European stocks rallied for a ninth day, their longest winning streak since June 2010, as companies from Novartis AG to Reckitt Benckiser (RB/) Group Plc raised forecasts and the U.S. unemployment rate fell to an almost five-year low.
Novartis rose 2 percent, making the biggest contribution to the Stoxx Europe 600 Index’s gains. Reckitt Benckiser jumped the most since February 2009. Tele2 AB tumbled to a four-year low after Sweden’s second-largest phone company posted an unexpected loss and lowered its 2015 forecast for sales and profit. Telekom Austria AG slid 5.7 percent after buying frequency blocks at a spectrum auction.
The Stoxx 600 advanced 0.5 percent to 320.97, extending a five-year high. The gauge has increased 3.4 percent so far this month as U.S. lawmakers agreed to extend the government’s borrowing powers until 2014 and ended a partial government shutdown.
“The tapering debate will never go away,” Manish Singh, who helps manage $2 billion as head of investments at Crossbridge Capital in London, said. “While the jobs data didn’t move the needle dramatically and the revision was positive, the rate of increase shows a slowdown, if anything. This means investors see the Fed remaining accommodative for longer, which is positive for equities.”
American payrolls climbed less than projected in September, data released more than two weeks later than scheduled showed today. The addition of 148,000 workers followed a revised 193,000 rise in August that was larger than initially estimated, Labor Department figures showed. The median forecast of 93 economists surveyed by Bloomberg called for a 180,000 advance. The unemployment rate fell to 7.2 percent, the lowest level since November 2008.
The Federal Open Market Committee will hold a two-day meeting beginning on Oct. 29. The Fed will delay the first reduction in its monthly bond purchases until March because the closure of federal agencies slowed fourth-quarter growth and interrupted the gathering of data, economists said in a Bloomberg News survey.
Novartis AG (NOVN) climbed 2 percent to 69.25 Swiss francs after raising its full-year forecasts. Sales will increase at a low-to mid-single-digit percentage rate in constant currencies, and core operating income will match or exceed the previous year, Europe’s biggest drugmaker said. In July, the company forecast a low-single-digit percentage decline in earnings in 2013, with sales rising at a similar rate.
Reckitt Benckiser, the maker of Nurofen painkillers and Durex condoms, jumped 5.2 percent to 4,734 pence. Full-year revenue will grow at least 6 percent, including acquisitions and divestments and excluding results from the pharmaceutical unit. The company had expected non-pharmaceutical revenue growth at the upper end of 5 percent to 6 percent in 2013, including acquisitions and disposals, and stable operating-profit margins.
“European earnings are mixed, but expectations were low,” said Jean-Paul Jeckelmann, who helps manage $1.4 billion as chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland. “Guidances are that next year will be better and investors are pleased with this idea.”
Gjensidige Forsikring ASA rallied 8 percent to 109.40 kroner, its highest price since it sold shares to the public in December 2010. Norway’s largest insurer said it will pay an extraordinary dividend of 6 kroner a share ($1.01) and will adopt a policy that targets a pay-out ratio of at least 70 percent of profit after tax from 2014.
Transocean Ltd. gained 4.8 percent to 43.96 francs, its biggest increase since January. The dual-listed offshore-drilling contractor will replace Dell Inc. in the S&P 500 after the close of trading on Oct. 28, S&P said in a statement late yesterday.
BHP Billiton Ltd. (BLT) rose 4.1 percent to 1,950.5 pence after the world’s largest mining company upgraded its projection for full-year iron-ore production to 212 million tons from its earlier forecast of 207 million tons.
Tele2 slumped 12 percent to 75.65 kronor, leading a gauge of European telecommunications shares to its first loss in nine days. The company posted a third-quarter net loss of 171 million kronor ($26.7 million), missing the 518 million-kronor profit analysts had estimated. Tele2 also reduced its forecasts for 2015 sales to not more than 33.5 billion kronor and for earnings before interest, taxes, depreciation and amortization that year to a maximum of 7.3 billion kronor.
Telekom Austria plunged 5.7 percent to 5.92 euros, its biggest drop since September 2012, after buying half of the 28 available frequency blocks in a spectrum auction in Austria for 1.03 billion euros ($1.41 billion). The prices paid by operators in the sale exceeded expectations, Raiffeisen Centrobank analyst Bernd Maurer said.
Deutsche Lufthansa AG declined 2.4 percent to 14.51 euros after saying it expects an operating result of 600 million euros to 700 million euros in 2014. That compares with 524 million euros last year, according to a company statement.
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