European stocks rally for second week
Monday, 27 July 2009
LONDON, July 26 (Bloomberg): European stocks gained for a second week after companies from Roche Holding AG to Vodafone Group Plc reported better-than-estimated results, suggesting the economic slump is easing.
Roche, the world's biggest maker of cancer medicines, and Vodafone, the largest mobile-phone company, advanced more than 6 per cent. Rio Tinto Group, the third-biggest mining company, led gains among raw-material producers as base metals climbed. Lloyds Banking Group Plc surged 16 per cent on signs the U.K. housing market is stabilizing.
The Dow Jones Stoxx 600 Index rose 4.3 per cent this week to 219.67 as all 19 industry groups advanced. The benchmark index for European equities has rallied 11 per cent since July 10 as US companies from Goldman Sachs Group Inc. to Johnson & Johnson and Apple Inc. posted results that exceeded analysts' forecasts. The gauge completed a nine-day rally on July 23, the longest stretch of gains since 2006.
"The earnings season started very well in the US," said Manfred Hofer, head of equity analysis at LGT Capital Management in Pfaeffikon, Switzerland, which oversees about $73 billion. "The results have surprised positively because companies have carried out cost cutting and that has paid off but sales still leave something to be desired."
More than half of earnings at European companies that have reported results since July 8 beat analyst forecasts, according to Bloomberg data. Profits have shrunk 28 per cent in the period for companies on the Stoxx 600, while 37 of 69 companies have reported better-than-estimated results, the data show.
Among the 181 companies in the Standard & Poor's 500 Index that have posted second-quarter results, 75 per cent beat the average analyst forecast, according to data compiled by Bloomberg. That would be the highest full-quarter figure on record, Bloomberg data going back to 1993 show.
A report from the National Association of Realtors this week showed home resales in the US rose more than forecast in June for a third consecutive month, spurred by tax incentives, lower borrowing costs and foreclosure-driven declines in prices.
German business confidence rose for a fourth month in July, suggesting Europe's largest economy is shaking off its worst recession since World War II. Other reports showed Europe's manufacturing and service industries contracted more slowly in July, beating analysts' estimates.
Roche, the world's biggest maker of cancer medicines, and Vodafone, the largest mobile-phone company, advanced more than 6 per cent. Rio Tinto Group, the third-biggest mining company, led gains among raw-material producers as base metals climbed. Lloyds Banking Group Plc surged 16 per cent on signs the U.K. housing market is stabilizing.
The Dow Jones Stoxx 600 Index rose 4.3 per cent this week to 219.67 as all 19 industry groups advanced. The benchmark index for European equities has rallied 11 per cent since July 10 as US companies from Goldman Sachs Group Inc. to Johnson & Johnson and Apple Inc. posted results that exceeded analysts' forecasts. The gauge completed a nine-day rally on July 23, the longest stretch of gains since 2006.
"The earnings season started very well in the US," said Manfred Hofer, head of equity analysis at LGT Capital Management in Pfaeffikon, Switzerland, which oversees about $73 billion. "The results have surprised positively because companies have carried out cost cutting and that has paid off but sales still leave something to be desired."
More than half of earnings at European companies that have reported results since July 8 beat analyst forecasts, according to Bloomberg data. Profits have shrunk 28 per cent in the period for companies on the Stoxx 600, while 37 of 69 companies have reported better-than-estimated results, the data show.
Among the 181 companies in the Standard & Poor's 500 Index that have posted second-quarter results, 75 per cent beat the average analyst forecast, according to data compiled by Bloomberg. That would be the highest full-quarter figure on record, Bloomberg data going back to 1993 show.
A report from the National Association of Realtors this week showed home resales in the US rose more than forecast in June for a third consecutive month, spurred by tax incentives, lower borrowing costs and foreclosure-driven declines in prices.
German business confidence rose for a fourth month in July, suggesting Europe's largest economy is shaking off its worst recession since World War II. Other reports showed Europe's manufacturing and service industries contracted more slowly in July, beating analysts' estimates.