Bloomberg News

Europe Stocks Fall With U.S. Futures Before Jobs Report

April 05, 2013

European Stocks Fall With S&P 500 Futures

Financial traders monitor data on computer screens beneath a display of the DAX Index curve at the Frankfurt Stock Exchange in Frankfurt. Photographer: Ralph Orlowski/Bloomberg

European stocks fell for a third day and U.S. equity-index futures dropped as analysts cut estimates for growth in America’s monthly payrolls. Commodities declined as bond yields from France to Austria slid to records.

The Stoxx Europe 600 Index extended declines, losing 1.5 percent at 7:25 a.m. in New York as airline shares tumbled on concern an outbreak of bird flu in China will hurt travel demand. Standard & Poor’s 500 Index (SXXP) futures retreated 0.6 percent. The euro weakened 0.1 percent to $1.2921. France’s 10- year bond yield dropped to 1.747 percent, the lowest level since Bloomberg began compiling the data in 1990. The won sank 0.7 percent. The S&P GSCI gauge of 24 commodities fell 0.3 percent.

Analysts cut estimates for payrolls growth last month after reports this week showed companies added fewer workers than forecast and jobless claims rose more than estimated. Retail sales in the euro area fell 0.3 percent in February from the previous month, a report showed today, after European Central Bank President Mario Draghi said yesterday officials “stand ready to act” to bolster the flagging economy.

“Markets are going to be vulnerable to bad news from the States,” Philip Saunders, head of global asset allocation at Investec Asset Management Ltd., which oversees more than $100 billion, told Francine Lacqua on Bloomberg Television in London. “Obviously, there will be doubts and concerns from month to month. Having a modest growth environment in the U.S. on an improving track is important.”

Airline Stocks

The Stoxx 600’s decline extended this week’s retreat to 2.1 percent. The gauge is on course for a third weekly drop, the longest stretch of losses in more than 10 months. Deutsche Lufthansa AG, Air France-KLM Group and International Consolidated Airlines Group SA fell more than 5 percent as the death toll from a new strain of bird flu in China, known as H7N9, rose to six people.

Portugal’s PSI-20 Index (PSI20) climbed 0.8 percent, trimming this week’s slide to 1.7 percent. Prime Minister Pedro Passos Coelho faces a pending Constitutional Court ruling on the legality of some elements in this year’s budget that may challenge the Portuguese government’s ability to meet deficit targets.

The cost of insuring against losses on Portuguese sovereign debt rose amid speculation a court is about to rule today on whether elements of the government’s budget breach the constitution. Credit-default swaps insuring the nation’s bonds increased as much as 15 basis points to 412.

The decline in S&P 500 futures indicated the U.S. gauge will extend this week’s 0.6 percent retreat. A government report at 8:30 a.m. in Washington will show a gain of 190,000 jobs in U.S. payrolls last month, according to economists surveyed by Bloomberg. That’s down from a projection of 200,000 at the end of March and after a 236,000 advance in February. The jobless rate probably stayed at 7.7 percent last month.

Earnings Season

Alcoa Inc. is due to unofficially kick off the first- quarter earnings-reporting season in the U.S. on Monday. Profits at companies in the S&P 500 will fall 1.9 percent in the period from a year earlier, the first decline since 2009, according to analysts’ estimates compiled by Bloomberg.

The MSCI Emerging Markets Index slid 1 percent for a fifth day, the longest losing streak since March 19, with the MSCI BRIC Index sliding 10 percent from this year’s peak. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost 3.1 percent, the most since July. South Korea’s Kospi sank 1.6 percent, capping the worst week since May, and the won slid to a seven-month low as the risk of conflict with North Korea spurred capital outflows. Benchmark gauges in Russia and India slipped at least 0.5 percent.

Austria’s 10-year yields fell seven basis points to 1.51 percent, while Belgium’s also dropped 12 basis points to 1.95 percent.

The S&P GSCI dropped for a sixth day, the longest losing streak since May 14. West Texas Intermediate oil fell 0.4 percent to $92.85 a barrel, and is heading for the biggest weekly decline since September. Soybeans declined as much as 0.9 percent to the lowest price since Jan. 11 on prospects the bird flu in China will curb demand for the oilseed.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net;

To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net;


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