Markets ended a week in which there had been solid net gains on a subdued note following mixed economic data from the US. Warnings from sector heavyweight Royal Dutch that earnings progress in future would be leaner made for another negative day among top oil stocks.
Unsettled on Thursday by bottom-of-the-range third quarter results from the Anglo-Dutch giant, the weak sentiment persisted yesterday following guarded comments from brokers.
Royal Dutch lost 96 cents at €67.19 and Total Fina Elf €4.60 at €163. There was some resilience from Eni and Repsol, but the sector still finished the week some 13 per cent below its peaks of this year.
The broker approach to oil stocks is best summed up by Deutsche Bank, which feels that sentiment is increasingly moving against the sector as investors anticipate earnings slippage from the second half of next year. International crude prices edged up to stay above $30 a barrel, helped by the latest stories of petrol stock-building by consumers in Europe. But the self-doubt that has hit the sector periodically since mid-summer was in full swing yesterday.
Telecoms stocks edged lower ahead of a big week for results statements. France Telecom reports third-quarter earnings on Tuesday and BT of the UK on Thursday. The last thing the industry wanted was what it received yesterday: a profits warning from Sprint of the US. Deutsche Telekom shed 91 cents at €41.30 and France Telecom eased to €121.80.
A bullish forecast that worldwide sales of semiconductors would rise 37 per cent this year to a record $205 billion and grow to $319 billion by 2003 gave a boost to the technology sector. The projection came late on Thursday in the annual Semiconductor Industry Association global forecast. The influential annual report said sales of chips for data networking, broadband, wireless, opto-electronics and continued strong demand for personal computers would spur the gains. The study added that sales were likely to grow 22 per cent next year to $249. Chipmaker Infineon rose 3.6 per cent to 52.73, its best level for almost a month, still recovering from its all-time low of 46.49 in October. On the Neuer Markt, Dialog Semiconductor jumped 10.4 per cent to €34.
Intervention by the European Central Bank to prop up the euro appeared to have little impact to prop up the bourses.
Banks held their ground although the real action was in the UK as Abbey National confirmed its bid approach to the Bank of Scotland.
