European Market Snapshot: Markets Struggle Amid Poor U.S. Earnings and European Fiscal Issues
Severalcompanies including IBM, Texas Instruments, and Goldman Sachs released earningsreports that fell short of investors’ expectations. Goldman Sachs (GS)reported that second-quarter profits had fallen 83% to US$453M. Therelease comes after GS reached a settlement with the SEC to pay a $550M fine aswell as the firm’s requirement to pay a US$600M charge associated with a newtax on bonuses in the United Kingdom.
InEurope, Hungary experienced conflict in talks with the International MonetaryFund (IMF) and the European Union (EU). both the IMF and EU haveexpressed the need for fiscal austerity given Hungary’s significant debtburden. furthermore, Hungary’s debt sale raised less money than expected,which points to the fact that investors continue to lack confidence in theability of European governments to finance their debts.
The Stoxx Europe 600 rose 0.07% to close at 246.35.
In Germany, the DAX index suffered a loss of 0.69% onTuesday.
In the UK, the FTSE 100 declined 0.17%. Britishtelecommunications company, Cable & Wireless Worldwide, watched its stocksdrop close to 20% after releasing a profits warning. Cable & WirelessWorldwide has relied heavily on government contracts for revenue, so the UnitedKingdom’s move to austerity has resulted in a decrease in the number ofcontracts as the government aims to limit spending.
The French CAC 40 fell 0.53%.
Russia’s MICEX index was down 7.85 points or 0.59% atclosing time.
On currencies, the euro fell 0.03% to US$1.290 while thepound slid 0.07% to US$1.527. The Swiss franc rose again today to US$0.952, up 0.24%. The ruble stayed flat at US$ 0.033.
The yield on 10-year German bunds fell 1 bp to2.64%. The Spanish 10-year yield jumped 5.2 bps to 4.459%.
Sovereign CDS spreads narrowed for France (down 0.8 bps),Spain (down 6.6 bps), and Italy (down 3.7 bps). Corporate (includingfinancials) CDS spreads also narrowed with the iTraxx main down 0.7 bps to 120bps.
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Tags: cac 40, goldman sachs, imf, sachs gs, stoxx
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