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European stocks’ winning streak dries up as commodity rout eases

21 July 2015 17:42 (UTC+04:00)
European stocks’ winning streak dries up as commodity rout eases

By Bloomberg

European stocks halted the longest rally in more than a year as Novartis AG led drugmakers lower after results missed analysts’ estimates. Gold rebounded from a five- year low and oil in New York held near $50 a barrel.

The Stoxx Europe 600 Index fell for the first time in 10 days, slipping 0.2 percent at 7:15 a.m. in New York. Italian bonds were little changed after 10 days of gains and the Bloomberg Dollar Spot Index ended a four-day rally. International Business Machines Corp. dropped in early trading after sales declined while Apple Inc. gained before reporting earnings. Time Warner Inc. plans to sell its first bonds in euros, according to people familiar with the deal.

Stocks had been rising as turmoil in Greece subsided and the European Central Bank’s bond purchases supported financial markets. While gold rebounded on Tuesday, the outlook for precious metals and oil has soured as the Federal Reserve moves closer to its first interest-rate increase since 2006. Apple, Microsoft Corp. and Verizon Communications Inc. are among 22 companies in the Standard & Poor’s 500 Index reporting earnings.

“It’s time to refocus on the hard facts that earnings season tends to give us, and away from Greece and China,” said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank AG, in Bonn, Germany. “Markets across the world have had such a strong rebound, so what’s next? I don’t think anyone wants to take any big positions before we get a clearer picture of how fundamentals are doing.”


Drugmakers Fall


The Stoxx 600 slipped, with trading volume 24 percent lower than the 30-day average, according to data compiled by Bloomberg. S&P 500 futures fell less than 0.1 percent, after the index briefly reached a record on Monday. It closed 0.1 percent away from its all-time high, while the Nasdaq Composite Index extended a record.

Novartis lost 2.1 percent after the world’s biggest drugmaker by sales reported a decline in second-quarter earnings. A gauge of health-care stocks slid 0.7 percent, the worst performance among 19 industry groups in the Stoxx 600.

French distiller Remy Cointreau SA slipped 2.2 percent after posting sales that missed analyst estimates, while Tele2 AB dropped 4 percent after profit fell short of projections.

IBM declined 5 percent in early New York trading after reporting a slide in second-quarter sales across all of its major business units.


China Trading


The MSCI Emerging Markets Index advanced for the first time in three days, rising 0.4 percent. The Shanghai Composite Index swung to a gain of 0.6 percent after falling as much as 2 percent. A total of 543 companies were suspended from trading just after the open on mainland Chinese exchanges Tuesday, or 19 percent of all listings, down from 576 at the close Monday.

The Hang Seng China Enterprises Index in Hong Kong increased 0.8 percent.

New Zealand’s dollar strengthened 0.6 percent to 66.06 U.S. cents after data showed net immigration in the year through June climbed to a record. Dairy prices may recover by the end of the year, Finance Minister Bill English told reporters Tuesday, according to Interest.co.nz. The Australian dollar was little changed after the country’s central bank said the currency remains too strong.

The euro added 0.3 percent to $1.0859 and the yen was little changed at 124.37 per dollar.

The Bloomberg JPMorgan Latin America Currency Index ended Monday at the weakest level on record and that day’s close for the Bloomberg JPMorgan Asia Dollar Index was the least since 2010.


Oil Slips


Time Warner is joining SoftBank Group Corp., Iberjaca Banco SA., Banca Popolare dell’Emilia Romagna and Banco Popular Espanol SA in seeking to sell debt in the euro, according to people familiar with the deals, who asked not to be identified as they aren’t authorized to speak publicly.

The Bloomberg Commodities Index rose 0.3 percent. Gold gained 1 percent to 1,106.95 an ounce and copper advanced with nickel in London.

West Texas Intermediate oil was little changed at $50.10 after dropping as low as $49.77 before a weekly Energy Information Administration report on U.S. stock piles on Wednesday. U.S. crude inventories probably decreased by 1.75 million barrels in the week ended July 17, based on the median estimate in a Bloomberg survey of eight analysts. Brent slipped 0.1 percent to $56.58.

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