Investors focus on US earnings season

Company results were on the minds of investors yesterday as global markets fell on the back of lower expectations for earnings season.

DUBLIN

The Irish market bucked European trends yesterday to advance to 3,514.33. Upward moves by Bank of Ireland, Ryanair and Smurfit Kappa helped the index outperform.

Continuing with its forward momentum, Bank of Ireland was strong again, advancing by as much as 7 per cent at one point, before closing off its highs, up by 5 per cent on the day at €0.14.

Ryanair gained on the day on “reasonable volumes”, adding 2.5 per cent, or 13 cent, to finish up at €5.22.

Packaging group Smurfit Kappa was particularly strong, gaining almost 6 per cent or 57 cent into the close, to close up at €10.02. However, the move was seen as “anamolous” by dealers, and was put down to a possible trading error.

Trading levels were “reasonably busy” in food group Kerry, with about 500,000 trades in the stock yesterday. It added 1 per cent, or 37 cent, to advance to €39.80.

Going against the grain was CRH which was weak on low trading levels. It gave up 2.3 per cent, or 36 cent, to finish down at €15.00.

LONDON

UK stocks dropped for a second day as investors awaited the start of the US earnings season.

The FTSE 100 index lost 10.95 points, or 0.18 per cent,to 6,053.63 at the close in London, erasing an earlier gain of as much as 0.4 per cent.

Recruitment firms Michael Page International and Hays slid 3.8 per cent to 398.8 pence and 1.5 per cent to 84.55 pence, respectively. The UK recruitment companies retreated as smaller rival Robert Walters said the market remained challenging and may not improve in 2013.

Debenhams fell 7.7 per cent to 108.1 pence, its largest slump in almost four years. The UK’s second largest department store chain cut its forecast for full-year margin growth after increasing promotions to attract shoppers. Vodafone advanced by 1.7 per cent to 162.4 pence after Verizon said it may buy Vodafone’s holding in the joint venture.

EUROPE

Most European stocks fell after German exports dropped and investors speculated recent gains have overshot the outlook for company profits.

The Stoxx Europe 600 index fell by 0.1 per cent to 286.23 in London as three shares fell for every two that gained. Germany’s DAX Index slipped by 0.5 per cent, while France’s CAC 40 was little changed.

“We have to realise that economic data coming out of the euro zone is going to be very poor,” said Bob Parker, senior adviser at Credit Suisse Asset Management in London.

“I would want to diversify in equities across the euro zone. Markets are going to be frustrating. We are going to see a lot of day-to-day volatility.”

Car sales in western Europe slid by 16 per cent in December, according to a report yesterday, sending shares of car manufacturers down. BMW lost 3.4 per cent to €73.21, while Daimler declined by 1.3 per cent to €42.50. Renault slipped 2 per cent to €39.67.

US

US stocks fell yesterday as the market consolidated from last week’s rally on the “fiscal cliff” deal in Congress and investors awaited the start of the earnings season with lowered expectations.

The benchmark SP index has fallen 0.7 per cent in the wake of the 4.3 per cent jump in the two days surrounding the conclusion of the fiscal cliff debate, and investors have found few catalysts to extend the brief rally.

“The path of least resistance at the moment is lower just because we had that explosion to the upside after in Washington,” said Ken Polcari, director at O’Neil Securities in New York. “People are concerned about earnings.”

(Additional reporting: (Bloomberg/Reuters)