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06.01.2012 08:35

Stocks: Thursday’s review

Asian stocks retreated, snapping a two-day rally, after Australia’s services industry shrank and the euro weakened ahead of France’s plans to sells as much as 8 billion euros ($10.4 billion) of debt. France plans to sell as much as 8 billion euros of debt today in the country’s first test this year of investor appetite for its bonds amid threats of a downgrade of its AAA rating by credit companies. Luxembourg Prime Minister Jean-Claude Juncker said the European Union is facing a recession of unknown scope.

Asian exporters declined as the euro dropped toward an 11- year low against the yen and fell to a four-month low against the won. A weaker euro cuts the value of European income at Japanese and South Korean companies when repatriated.

Sony Corp., a Japanese electronics maker that gets 21 percent of its sales from Europe, fell 2.2 percent as a weaker euro cut the earnings outlook for exporters.

Canon Inc., a camera maker that depends on Europe for almost a third of its sales, lost 1.2 percent to 3,390 yen.

Samsung Electronics Co., the world’s second-largest maker of mobile phones by sales, sank 2.3 percent to 1.055 million won in Seoul.

European stocks (SXXP) declined for a second day as concern that the region’s banks will have to raise capital overshadowed a report showing that U.S. companies added more workers to their payrolls than economists had predicted.

UniCredit SpA, which announced a rights offer at a 43 percent discount yesterday, slumped to a 19-year low. Societe Generale SA dropped 5.4 percent after announcing it will cut corporate- and investment-banking staff. In the U.S., private employers added 325,000 workers to payrolls in December, according to a report from Roseland, New Jersey-based ADP Employer Services. That was the biggest increase in records going back to 2001. The median projection in the survey called for an advance of 178,000.

Societe Generale, France’s second-largest lender, retreated 5.4 percent to 16.08 euros after saying it will cut about 1,580 jobs at its corporate and investment bank, about 10 percent of the unit’s total staff.

Nokia Oyj rose 7.1 percent to 4.16 euros after Credit Suisse Group AG raised its recommendation to “outperform” from “underperform.” The company considers Risto Siilasmaa, the founder of security software maker F-Secure Oyj, as the frontrunner to become its next chairman, a person familiar with the matter said.

Petrofac Ltd. (PFC), the U.K. oilfield-services provider, advanced 1.9 percent to 1,493 pence after agreeing with Schlumberger Ltd. (SLB) to cooperate on production projects.

Brenntag AG (BNR) fell 1.2 percent to 71.40 euros, its biggest drop in four weeks. Brachem Acquisition SCA sold an 8.7 percent stake in the chemical distributor to institutional investors for about 315 million euros.

CRH Plc (CRH) and HeidelbergCement AG (HEI) fell 2.7 percent to 15.06 euros and 2.8 percent to 33.61 euros, respectively. Credit Suisse lowered its recommendation on both companies to “underperform” and said volumes, prices and margins in the building-materials business will remain “challenged.”

U.S. stocks rose as banks rallied and employment data bolstered optimism in the economy, helping to erase earlier losses triggered by reduced profit forecasts at companies including Target Corp. and J.C. Penney Co.

Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and SunTrust Banks Inc. rose at least 2.5 percent after Deutsche Bank AG saw “encouraging signs” for banks’ fourth-quarter earnings. LSI Corp. rallied 6.8 percent after the chipmaker was raised to “outperform” from “neutral” at Wedbush Securities. Target and J.C. Penney each lost more than 3 percent.

S&P 500 1,281 +3.34 +0.26%, NASDAQ 2,668 +19.69 +0.74%, Dow 12,415 -3.74 -0.03%

Target (TGT) and J.C. Penney cut their earnings forecasts as retailers (S5RETL) reported mixed December same-store sales results. Gap Inc., Target and Kohl’s Corp. reported sales that trailed analysts’ estimates after mistiming promotions or running out of inventory during a projected record holiday shopping season.

J.C. Penney dropped 3.2 percent to $33.81. The retailer forecast fourth-quarter earnings of 65 cents to 70 cents a share, less than the average analyst estimate of $1.08 a share. Target lost 3 percent to $48.49. The second-largest U.S. discount retailer cut its fourth-quarter profit forecast to no more than $1.43 a share, below the average analyst estimate of $1.48, according to a Bloomberg survey.

Gap fell 3.3 percent to $18.27, while Kohl’s slipped 1 percent to $46.88.

Macy’s Inc. added 3.7 percent to $33.87. The Cincinnati- based retailer reported a 6.2 percent increase in same-store sales, topping the 4.6 percent estimate.

Alcoa Inc. is scheduled to mark the unofficial start of the fourth-quarter earnings season on Jan. 9. Profit at S&P 500 companies rose 6.2 percent during the September-December period, according to analyst estimates compiled by Bloomberg, which would mark the slowest growth since the third quarter of 2009.

Market Focus

  • The Bank of Japan decided by a 7-2 majority vote to hold the interest rate at -0.10%
  • Earnings Season in U.S.: Major Reports of the Week
  • U.S. commercial crude oil inventories decreased by 4.7 million barrels from the previous week
  • Australian unemployment rate stable at 5.6% in June
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