U.S. Indexes Flat; China Hikes Reserve Requirements

Arthi Gupta
18 Feb, 2011
New York City

U.S. indexes traded lower after China unexpectedly hiked the reserve requirement ratio. G20 nations finance ministers meet in Paris with Portugal and global economic imbalances in focus. Nordstrom agreed to buy HauteLook for as much as $180 million. Ford in a venture with Russia-based Sollers.

[R]9:00 AM New York – U.S. indexes traded lower after China unexpectedly hiked the reserve requirement ratio. G20 nations finance ministers meet in Paris with Portugal and global economic imbalances in focus. Nordstrom agreed to buy HauteLook for as much as $180 million. Ford in a venture with Russia-based Sollers.[/R]

U.S. stocks trade sideways as markets in Europe trade lower and in Asian closed higher. China lifted bank reserve requirements for the second time this year and G20 finance ministers and central bankers are scheduled to meet in Paris later today.

Ministers and bankers renew efforts to address global economic imbalances and Portugal financed will be in focus. The leaders have been struggling to balance high U.S. borrowings and high consumption in Europe and export driven economies in Asia.

The minutes of the January policy board meeting of the Bank of Japan stated that members of the central bank''s policy board felt more confident of the economic recovery amid signs of a rebound in exports.

China Lifts Reserve Requirement Ratio

The People''s Bank of China on Friday raised commercial banks'' reserve requirement ratio by 50 basis points. This is the second hike this year and follows six increases in 2010. New rates will be effective from February 24, the central bank said in a statement.

Large banks will be required to keep 19.5% in reserves and smaller banks are required to keep nearly 16% of deposits in reserves.

U.S. Leading Economic Index Rises

The Conference Board said its leading economic index for the U.S. edged higher 0.1% in January following a downwardly revised 0.8% increase in December.

The report also showed that the coincident economic index rose 0.1% in January following a revised 0.3 % increase in December.

Anglo American Forms JV with Lafarge

Anglo American plc announced a joint venture with French cement giant Lafarge SA to combine their cement, aggregates, ready-mixed concrete, asphalt and contracting businesses in the United Kingdom, comprising Tarmac Limited and others.

Nordstrom Buys HauteLook

Nordstrom entered into an agreement to buy online private sale marketplace HauteLook for $180 million in Nordstrom stock with a portion subject to ongoing vesting requirements. The deal also includes a three-year earn-out of up to $90 million in Nordstrom stock subject to company performance and vesting requirements for the existing management team.

Borders Gets Approval for Store Closures

Borders Group Inc., the bookstore chain said that the bankruptcy court approved its previously-disclosed store closure program.

The company entered into agreements with experienced liquidators to conduct an orderly wind down of the 200 underperforming stores under the program. Borders expects these stores to be closed by the end of April.

Cowen Group Acquires LaBranche

Cowen Group, the asset management company entered into a merger agreement to acquire LaBranche in a stock-for-stock transaction valued at about $192.8 million. The transaction represents a 16% premium to LaBranche''s closing price on February 16.

J&J Inches Closer to Acquire Crucell

Johnson & Johnson and Crucell N.V. said that the minimum acceptance condition of Johnson & Johnson''s offer to acquire Crucell N.V. has been satisfied. The initial offering period of the offer expired on February 16.

Ford in JV with Sollers

Ford Motor Co. said it signed an agreement with Russian automaker Sollers OJSC to launch a new 50:50-owned joint venture in Russia. The venture, which would be called Ford Sollers, will manufacture and distribute Ford vehicles, and the operations are expected to start by the end of this year.

Earnings Review

Amerigroup Corporation ((AGP)), the healthcare solutions provider reported fourth quarter revenues rose 10.2% to $1.50 billion from $1.36 billion in the fourth quarter of 2009. Net income in the quarter soared 98% to $79.63 million or $1.59 per share compared with net income of $40.22 million or 79 cents per share last year.

Anglo American plc ((AAL)), the mining company said fiscal year 2010 group revenue increased 34% to $27.96 billion from $20.86 billion in the prior year. Profit for the period surged 169% to $6.54 billion or $5.18 per share from $2.43 billion or $1.98 per share in the previous year on higher metal prices.

Barnes Group Inc. ((B)), the maker of airframe and turbine engine stated fourth quarter net sales grew 10.4% to $283.27 million from $256.47 million in the prior-year quarter. Net income in the quarter surged 86% to $11.52 million or 21 cents per diluted share compared to net income of $6.21 million or 11 cents per share last year.

Campbell Soup Company ((CPB)), the world''s largest soup said second quarter sales decreased 1% to $2.13 billion from $2.15 billion in the comparable period. Net earnings in the quarter fell 7.7% to $239 million or 71 cents per diluted share compared to net earnings of $259 million or 74 cents per share in the prior year.

Calpine Corporation ((CPN)), the wholesale power generation company reported fourth quarter operating revenues declined 4.5% to $1.47 billion from $1.54 billion in the preceding year. Net loss in the quarter narrowed 44.2% to $24 million or 5 cents per diluted share compared to net loss of $43 million or 9 cents per share last year.

CF Industries Holdings, Inc. ((CF)), the fertilizer producer said fourth quarter revenues surged 144% to $1.2 billion from $506.7 million last year. Net earnings in the quarter soared 290% to $200.3 million or $2.78 per share compared to net earnings of $51.4 million or $1.04 per share a year earlier.

Dr Pepper Snapple Group Inc. ((DPS)), the soft drinks maker reported fourth quarter net sales edged higher 4% to $1.41 billion from $1.36 billion with increases across all segments. Net income edged down 2% to $112 million from $114 million in the prior year. Earnings per share grew to $0.49 from $0.44 a year ago quarter on lower share count.

EOG Resources, Inc. ((EOG)), the oil and gas explorer reported fourth quarter net operating revenues increased 1.1% to $1.78 billion from $1.76 billion last year. Net income in the quarter plunged 87% to $53.7 million or 21 cents per diluted share compared to net income of $400.4 million or $1.58 per share in the year-ago quarter.

Intuit Inc. ((INTU)), the provider of business and financial management solutions reported second quarter net revenue rose 5% to $878 million from $837 million last year. Net income in the quarter declined 36% to $73 million or 23 cents per diluted share compared to net income of $114 million or 35 cents per share in the previous year.

Nordstrom, Inc. ((JWN)), the fashion specialty retailer said fourth quarter net sales increased 10.9% to $2.82 billion from $2.54 billion last year on same-store sales increase of 6.8%. Net income in the quarter rose 35% to $232 million or $1.04 per share compared to net income of $172 million or 77 cents per share for the year-ago quarter.

Net sales for the fiscal year 2010 increased 12.7% to a record $9.31 billion from $8.26 billion the prior year. Same-store sales for the fiscal year 2010 rose 8.1%. For the fiscal year 2010, net income rose 39% to $613 million or $2.75 per share compared to net income $441 million or $2.01 per share for the fiscal year 2010.