Global Markets Look Beyond Greek Saga

Bikram Pandey
08 Feb, 2012
New York City

Global markets Struggled as Greek debt negotiations stall with deadline looming and cost of bailout increase. BHP Billiton reported a record revenues and strong earnings of $9.94 billion in the first half on the sustained Chinese demand for iron ore. Caesars Entertainment public offering shots up.

[R]4:25 PM New York – Global markets traded sideways as Greek debt negotiations stall with deadline looming and cost of bailout increase. BHP Billiton reported a record revenues and strong earnings of $9.94 billion in the first half on the sustained Chinese demand for iron ore. Caesars Entertainment public offering shots up.[/R]

The U.S. indexes struggled on the hopes that Greek negotiations will end as political parties end their differences. However the Greek stalemate continues to keep investors on the edge.

Indexes continued their steady climb in the last five months as the steady stream of improving economic data and consistent earnings from a large number of companies for the second quarter in a row sustained buying.

In other economic news, U.S. mortgage applications rose 7.5% last week but Greek tax collection in January dropped 18% and the expectation of privatization revenues are likely to be cut in half on the lack of interest from international buyers.

In earnings news, CVS Caremark, Ralph Lauren and Time Warner reported flat income growth and Sprint Nextel loss widened. Ralph Lauren Corp soared 9% after the company estimated faster sales growth in the current fiscal year. Moody’s Corp said fourth quarter earnings declined 30% and Western Union lowered annual earnings outlook.

CVS fourth quarter income was flat at $1.06 billion and Cognizant fourth quarter net increased to $240 million. Moody’s fourth quarter net dropped to $96.2 million. Ralph Lauren third quarter net was nearly unchanged at $169 million. Time Warner fourth quarter net inched up to $773 million.

European markets gained as Greek economy deteriorates and Germany sold €3.293 billion of 5-year notes at 0.91% yield. Nokia plans to cut 4,000 manufacturing jobs at two factories in Europe and one location in Mexico. BMW vehicle sales rose 6.6% in January.

German exports slumped, and the Danish and Hungarian surplus declined in December. French business sentiment remained stable in January. The National Bank of Poland and Iceland left rates unchanged.

The UK indexes traded sideways and the UK shop price inflation fell but permanent job hiring rose for the first time in four months in January. Reckitt Benckiser quarterly net soared 26%. Thomas Cook planned to sell stake in India unit.

Stocks in Tokyo gained after Toyota Motor estimated 200 billion profit in the current fiscal year. The Nikkei index closed above 9,000 for the first time in three months on the back of a sustained rise in world market indexes.

BHP Billiton, the largest Australian company reported earnings declined 6% in the six month period on the fall in iron ore prices and rising operating costs. Separately, Rio Tinto announced expansion of $3.4 billion in Western Australia. In trading, Australian stocks advanced.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond increased to 1.98% and 30-year bond closed flat at 3.14%.

The U.S. dollar traded down 0.03% to $1.325 to one euro and edged up against the Japanese yen at 77.702.

Immediate delivery futures of Texas crude oil rose 50 cents to $98.91 a barrel and futures of natural gas fell 2 cents to $2.44 per mbtu and gasoline price increased 5 cents to 297.8 cents a gallon.

In metals trading, copper decreased 2.70 cents to $3.90 per pound, gold decreased $12.50 to $1,735.90 per ounce and silver fell 32 cents to $33.90.