U.S. Consumer Confidence Dips; European Debt Worries

Bikram Pandey
29 Mar, 2011
New York City

U.S stocks gained after the release of consumer confidence and metropolitan residential price indexes. The home prices declined 3.1% in January from a year ago and consumer confidence dipped to a 3-month low. GE agreed to acquire France based Converteam for $3.2 billion.

[R]4:00 PM New York – U.S stocks gained after the release of consumer confidence and metropolitan residential price indexes. The home prices declined 3.1% in January from a year ago and consumer confidence dipped to a 3-month low. GE agreed to acquire France based Converteam for $3.2 billion.[/R]

U.S. stocks traded higher after a dip in the early trading and crude oil eased for the third day in a row but managed to edge higher after the release of consumer confidence and home price data.

The confidence index tracked by the Conference Board declined to 63.4 in March from the revised 72 in February. The confidence has been dented on the rise in commodities and retail gasoline prices and a drop in home values.

Separately, residential price index in metropolitan areas declined 3.1% in January from a year ago led by 9.1% drop in Phoenix.

General Electric Co. agreed to acquire 90% of France based electric equipment maker Converteam for $3.2 billion. Converteam’s 2010 revenues were $1.5 billion and operating earnings of $239 million and GE expects operational synergies to produce $250 millions of savings in the next five years.

The company makes equipment that facilitates the transfer of electricity from the wind turbines to power grid and senior management will hold 10% in the company that could be sold to GE in the next five years for no more than $480 million.

Apollo Group dropped as much as 10% after it estimated lower than expected annual revenues and reported second quarter net loss of $64.0 million. The company also said new students’ enrollment dropped 45% from a year ago.

Lennar first quarter net income increased to $27.4 million and McCormick first quarter net income rose to $76.8 million. Phillips-Van Heusen fourth quarter net income increased to $52.2 million and Progress Software first quarter net income rose to $20.5 million.

Across the Atlantic, European markets drifted lower in the early trading and indexes in Germany and France dropped more than 0.6% but trimmed the losses in the afternoon.

Italian banks dropped after UBI Banca planned 1 billion euros of capital addition ahead of the European stress test. The surprise announcement dragged the Italian benchmark index down 1.4%.

As usual, rating agencies lagging the market development today downgraded the debt of Portugal and Greece and a rating agency said that private bond holders are likely to face losses in the event of debt restructuring by any of the two nations.

UK GDP in the fourth quarter was revised higher to a shrink of 0.5% compared to the previous estimate of 0.6% decline. 2010 economic growth was unrevised at 1.5%. Household spending declined 0.3% in real terms in the last quarter of 2010 and for the year declined 0.8%, the most in 33 years.

Stocks in Tokyo dropped 1.3% on lingering radiation leak worries but closed down 0.2%. Tepco said higher level of toxic plutonium was found at the troubled nuclear power plant and Japanese government denied the speculation that the electric utility is likely to be nationalized. Still, Tepco dropped 18% to record low.

Stocks in Mumbai traded higher for the sixth day in a row after crude oil prices eased. The index has soared 6% since the low on March 21. Hero Honda Motors won a government approval for foreign investment. Punjab National Bank and Corporation Bank sold stocks to the government of India at a premium.

Fractional gains in commodities prices lifted Australian index. Rio Tinto extended its Riversdale Mining offer for the fourth time and said it acquired consent of 41.04% of shareholders. The extended offer also increased the price to A$16.50 a share.

Commodities, Bonds and Currencies

Yield on 10-year bond increased to 3.49% and on 30-year bond rose to 4.54%.

The U.S. dollar increased to $1.409 to a euro and rose against the Japanese yen to 82.41 yen.

Immediate delivery futures of Texas crude oil increased $0.75 to $104.72 a barrel, of natural gas decreased 0.12 cents to $4.31 per mbtu and gasoline prices increased 1.48 cents to 304.22 cents a gallon.

In metals trading, copper prices increased 0.90 cents to $4.35 per pound, gold decreased $2.00 to $1,419.30 per ounce and silver decreased $0.05 to $37.03.