By James Langton
(August 3 – 09:00 ET) – Stocks look to be in for a rough ride as profit concerns are slugging markets overseas. Telecoms and networkers are particularly taking a hit.
Rumours of a profit warning from Cisco, along with skepticism around Nokia and Alcatel, a warning from semiconductor maker Kulicke & Soffa Industries Inc., and word that Motorola is bracing suppliers for lower demand is making for a tough day so far.
The European Central Bank and the Bank of England both left rates unchanged, but that was expected and so it’s not doing much to buoy traders. There are no major data releases on either side of the border to bail out stocks either. U.S. jobless claims rose 2,000 to 276,000, lower than expected.
Stocks are down sharply across Europe. The FTSE has dropped 78 points to 6,313. The CAC 40 is down 140 points to 6,389. The DAX is off 110 points to 7,002.
Profit warnings are spooking tech investors, but they are bolstering some of the financials and oils. Deutsche Bank AG reported that its second-quarter net income more than doubled, thanks to proceeds from its stake in Allianz AG and improved fees and trading income. Royal Dutch also doubled its profit. Insurer John Hancock reported strong profits, however Societe Generale SA posted weak results.
In M&A news, Rio Tinto Ltd. has upped its hostile bid for rival North Ltd. by 2% to US$1.75 billion
Overnight in Asia, Japan initiated some selling. The Nikkei finished down 392 points to 15,814. The Hang Seng slid just three points to 17,274.
In earnings news at home, Brookfield Properties Corp., which is in the midst of buying both Carma Corp. and Gentra Inc., saw its profit rise to US28¢ a share, up from US17¢ a share in the period last year.