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European markets lower as earnings down

Friday, October 26 08:59:47

European equity markets eased today, weighed down by a fresh batch of gloomy corporate outlooks with demand for everything from cars to building materials hit by the euro zone crisis. Results from global giants Apple and Amazon undershot expectations overnight, while in Europe, Renault, Saint Gobain, Gucci and Publicis weighed in with gloomy earnings and outlooks. So far, 40 percent of European companies have missed third-quarter profit expectations, compared with around 30 percent in the United States, according to Thomson Reuters StarMine data. "The outlook is the basic problem, not so much the current figures, but the uncertainty over the outlook. That is adding pressure to the market right now," said Oliver Roth, head trader at Close Brothers Seydler.

The FTSEurofirst 300 was down 0.5 percent at 1,090.30 points by 0738 GMT, taking its losses for the week so far to 1.9 percent. Ericsson was the top faller, down 4.4 percent, after posting a slightly smaller than expected 42 percent drop in quarterly profit on shrinking margins, staying cautious on outlook and announcing more cost cuts to cope with the global economic slowdown.

"Consensus estimates for the DJ Stoxx 600 appeared to have troughed in mid-September, with a slight upward revision to both FY12 and FY13 forecasts, but this now looks like more of respite as the downward revisions continue," Robert Quinn, chief European equity strategist at S and P Capital IQ, said in a note. "We expect further weakness in the results of cyclical names." Publicis brought more bad news for the advertising sector -- seen as a bellwether for the global economy -- reporting a marked slowdown in its organic growth in the third quarter a day after rival WPP cut revenue outlook.

Falling demand in Europe also prompted French building materials group Saint-Gobain to warn that 2012 profits would suffer more than previously expected, while car maker Renault said volumes will fall short of last year's levels after posting a 13 percent. The protracted recession in the euro zone is also hurting banks, prompting Standard and Poor's to cut the credit ratings of several French banks including BNP Paribas, and put others like Societe Generale and Credit Agricole on negative outlook late on Thursday. Shares in BNP dropped 3.3 percent and banks were the biggest drag on the FTSEurofirst 300, taking 1.7 points off the index.