Stocks: Weekly review
Asian stocks added to recent gains this week, largely thanks to Tokyo’s Nikkei Average hitting its best level since last month’s earthquake as corporate results impressed.
The level of earnings being reported for the first quarter showed how much progress many Japanese companies had been making ahead the March 11 natural disaster. Investors were largely undaunted when, on Wednesday, Standard & Poor’s, the rating agency, lowered its long-term outlook on Japanese sovereign debt to negative from stable.
The Bank of Japan also left its policy unchanged at Thursday’s meeting.
The Nikkei 225 Average ended its week on Thursday at 9849.74, up 1.7% over its four trading days.
Sony had a tough week after it admitted the reason it had closed down its online gaming network was because the personal details of more than 70m users had been hacked. The company fell 8.7% over the week.
Canon was one of the Nikkei’s best performing stocks with shares up 8.6% over the week.
Most of the region’s other indices fell over the week, however. Chinese and Hong Kong stocks were hit by ongoing fears about the future of monetary policy from Beijing. The People’s Bank of China has already imposed four 25 basis point interest rate increases since October and has also raised several times the rate of reserves required to be held by banks. Investors are also wary of a possible revaluation of the renminbi.
Over the week, the Shanghai Composite fell 3.2% to 2,912.14 and the Hang Seng lost 1.7% to 23,720.81.
Germany’s Xetra Dax index climbed to a three year high on Friday at 7,514.69, before closing up 3 per cent on the week at 7,294.58. The FTSE Eurofirst index itself, however, climbed 1.4 per cent over the week to 1,156.81.
Ericsson topped the premier league of European equities this week, beating a horde of other stocks just below it which also reported successful first quarters. The Swedish telecoms equipment and networks group climbed 16.4 per cent to SKr91.75 over the week after first-quarter sales soared.
Carmakers enjoyed strong quarterly performances also. Germany’s Volkswagen gained 8.7 per cent over the week to €120.40 after first-quarter sales and operating profit beat forecasts.
Domestic rival and major VW shareholder Porsche climbed 10.6 per cent to €48.93 after it too saw improving sales from emerging markets, particularly from China.
French carmaker Renault reported forecast-beating results but warned of slower production in the coming months as a result of pressures on the supply chain. The shares, however, climbed 7.1 per cent to €41.14.
UBS, the Swiss bank, rose 4.3 per cent over the week to SFr17.29 after reporting first-quarter net new money inflows into its wealth management business of SFr11.1bn, beating market forecasts of SFr7.9bn. The bank said it was not deviating from its current targets immediately, but said it expected “relatively good inflows over the coming quarters”.
Deutsche Bank, meanwhile, climbed 7.3 per cent to €44.10 after posting a first-quarter net profit of €2.1bn, well in excess of the €1.8bn expected by the market and its second-best quarterly profit.
Wall Street has seen strong gains this week as first-quarter earnings have largely beaten forecasts. So far, out of the 298 companies that have reported 77 per cent have beaten analysts’ expectations, ahead of the 73 per cent beat-rate in the last quarter.
Wall Street paused for breath Friday after the multiyear highs reached in the previous session following mixed results from the likes of Caterpillar, Research in Motion, Merck and Microsoft.
Caterpillar, the world’s largest earthmoving equipment maker by revenues, stormed past expectations reporting a nearly 60 per cent jump in revenues and a fivefold increase in profits. The stock was up 2.7 per cent to $115.62.
But shares in Research in Motion plunged 13.9 per cent after the BlackBerry maker issued a surprise profit warning. The Canadian company said it expected profits this quarter of $1.30-$1.37 a share, down sharply from the $1.47-$1.55 a share it was forecasting last month.
Elsewhere in the technology sector, Microsoft lost 0.6 per cent after reporting that its Windows operating system had suffered a rare slip in revenues.
Elsewhere on Wall Street Merck, the US pharmaceutical company, reported a tripling in its first-quarter net income thanks to growing demand for its drugs to treat diabetes and HIV.
Chevron reported first-quarter earnings up 36 per cent thanks to the higher oil price. Net income for the oil group rose to $6.21bn, or $3.09 per share, which were ahead of analysts’ expectations.
Chevron was one of the many oil majors to have reported strong results this season. This week, ExxonMobil, the world’s largest company by market capitalisation, reported its best quarterly performance since 2008 when oil prices were last above $100 a barrel.