“European stocks fell for a second day, paring their biggest monthly advance since July, as companies from AstraZeneca Plc to Banco Santander SA (SAN) slid after reporting earnings. U.S. futures and Asian shares fluctuated.
AstraZeneca sank 5.1 percent after the drugmaker forecast that profit and sales will slide this year. Santander and Royal Dutch Shell Group Plc both declined more than 1.5 percent as fourth-quarter earnings missed analysts’ estimates.
The Stoxx Europe 600 Index (SXXP) retreated 0.4 percent to 287.46 at 12:45 p.m. in London, as about three stocks fell for every one that rose. The equity benchmark has still advanced 2.8 percent in January, its eighth month of gains and its longest winning streak since 1997. Futures on the Standard & Poor’s 500 Index expiring in March added less than 0.1 percent today, while the MSCI Asia Pacific Index was little changed.
“Over the last six months, we’ve had a big re-rating of stocks, but we haven’t had the earnings power coming through,” Toby Nangle, head of multi-asset allocation at Threadneedle Asset Management told Francine Lacqua on Bloomberg Television. “Earnings are going to be critical. We need to get delivery on what we’ve already paid for.”
The valuation for the Stoxx 600 has climbed to 12.2 times estimated earnings from a price-earnings ratio of 10.6 at the end of June. Some 19 companies on the Stoxx 600 report earnings today, according to data compiled by Bloomberg. In western Europe, 58 percent of companies reporting earnings since Jan. 8 have beaten analysts’ estimates. About 57 percent have exceeded projections for revenue.
