Earnings worries dent global stocks

Tue Jan 14, 2014 7:29am EST
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By Francesco Canepa

LONDON (Reuters) - Global shares fell on Tuesday as weak earnings pre-announcements in the United States fuelled worries that the upcoming reporting season may disappoint, leaving some indexes looking expensive after a bumper 2013.

The dollar steadied against a basket of six major currencies .DXY, bouncing from its lowest level since January 2 after a two-day drop sparked by much a weaker-than-expected U.S. jobs number on Friday.

All major European stock indexes fell after a batch of U.S. companies posted weak earnings or forecasts on Monday. Underscoring concerns, JPMorgan Chase (JPM.N: Quote) reported lower-than-expected earnings per share on Tuesday, sending its shares slightly lower in pre-market trade.

Almost 10 of every 11 earnings pre-announcements for the current earnings season from companies in the U.S. S&P 500 .SPX index have cut estimates, Thomson Reuters data showed.

"The absence of good news in the fourth quarter reporting season is likely to be a headwind for the market," said Daniel McCormack, a strategist with Macquarie.

The FTSEurofirst 300 .FTEU3 of pan-European shares was down 0.4 percent at 1158 GMT, with the broader MSCI World index .MIWD00000PUS, which tracks shares in 45 countries, also down 0.4 percent at 402.52 points.

U.S. stock index futures pointed to a flat-to-higher start for the cash market after the worst one-day fall since November for the U.S. S&P 500 .SPX index.

After the S&P 500's jump of almost 30 percent last year, its forward price-to-earnings ratio is the highest in nearly seven years. Investors are weighing the risk of paying such a high premium for earnings that may see growth stall.   Continued...

A man looks at at an electronic stock quotation board outside a brokerage in Tokyo January 14, 2014. REUTERS/Issei Kato