Lousy Performance in Telecom Drags European Markets Lower
By David A. Gaffen
Staff Reporter
3/14/01 7:12 AM ET
Rumors that Nokia (NOK:NYSE ADR - news) would announce an earnings
shortfall are causing a frenzy in European markets. Telecommunications
stocks are hurting indices across the board, and traders said the market
responded early on to chatter that the cell phone maker would follow its rivals
and warn that earnings or revenue will fall short of expectations.
Most major European indices are down sharply, including London's FTSE
100, which hit a 27-month low today.
The Finnish cellular phone maker declined to comment on the rumors. The
company is expected to meet with a group of investors Thursday. It's hard to
see just how a warning from Nokia would damage already ugly sentiment in
the markets. Its chief rivals, Swedish Ericsson (ERICY:Nasdaq ADR - news)
and Illinois-based Motorola (MOT:NYSE - news), have already said they'll fall
short of expectations in the first quarter.
Speculation about such a shortfall has been in the market for weeks.
TheStreet.com earlier wrote a story about the possibility that this would
happen. But we also took a look at the possibility it would actually top
expectations . One trader in London cited the Nokia rumors as the prime
reason for the lousy action in Europe today; it was also seen as responsible
for the poor performance in U.S. equity futures this morning.
Lately the FTSE was down 140 points to 5580, which is a 2.5% loss.
Germany's Xetra Dax was hit hard, down 188 to 5774, a 3.2% decline. And
Paris' CAC 40 lost 152 to 5034, a 3% loss. Finland's Helsinki General
Index dropping 261 to 7829, a 3.2% drop.
"There were rumors of a warning, just a lot of rumors out there," said one
London-based trader, who declined to be identified. He said the selling, which
began overnight, has picked up as the session has progressed. U.S. equity
futures are deeply in the red, accentuating the selling in Europe.
There is also ongoing concern about Japan's staggering economy. Overnight,
the rating agency Fitch put 19 Japanese banks on credit review, but Tokyo's
Nikkei 225 finished the day higher, gaining 23.89 to 11843.59. The Hang
Seng was off 162.19, or -1.20%, to 13330.84. |
