European Woes Drag U.S. Indexes; Lowe's Net Rises 13%

Arthi Gupta
27 Feb, 2012
New York City

The U.S. indexes and commodities tracked lower on the weakness in world markets. G20 finance ministers rebuffed calls for more lending to the euro zone nations. El Paso agreed to sell EP Energy to Apollo-led consortium for $7.15 billion.

[R]9:35 AM New York – The U.S. indexes and commodities tracked lower on the weakness in world markets. G20 finance ministers rebuffed calls for more lending to the euro zone nations. El Paso agreed to sell EP Energy to Apollo-led consortium for $7.15 billion.[/R]

U.S. indexes and European markets edged lower as investors focused on the statement from G20 finance ministers that rebuffed the calls for more lending to the euro zone nations.

Ministers from largest 20 economies called on European leaders to increase the size of financial rescue fund before seeking help from the International Monetary Fund. However, Germany has resisted the calls to increase the fund size before countries begin to implement tougher austerity measures and lower government deficits.

Leaders at the G20 stressed for the combination of the European Financial Stability Fund and the European Monetary Mechanism to create a €750 billion or $ 1 trillion fund however, some estimates range as high as $2 trillion.

In addition, German lawmakers are expected to approve today the second Greek bailout package.

Italy raised €12.25 billion and Germany raised €2.545 billion in a bond auction today at lower yields.

In the week, investors are awaiting the release of U.S. durable goods orders, indexes for manufacturing activity and personal income and spending, and weekly jobless claims.

The major Asian markets closed lower as oil prices spiked and the volatile euro area debt crisis did not lift investor sentiment.

U.S. Sentiment Improves

Consumer sentiment in the U.S. rose in February, according to Thomson Reuters and the University of Michigan''s revised report released on Friday.

The consumer sentiment index for February was upwardly revised to 75.3 from the mid-month reading of 72.5 compared to the January reading of 75.0 and is at its highest level since February of 2011.

The current economic conditions index for February was upwardly revised to 83.0 from 79.6 compared to the reading of 84.2 in January.

El Paso Agrees to Sell EP Energy

El Paso Corporation agreed to sell its exploration and production business, EP Energy Corporation for approximately $7.15 billion to affiliates of Apollo Global Management, LLC and Riverstone Holdings, LLC.

The sale of EP Energy is dependent upon completion of the Kinder Morgan-El Paso transaction announced last October.

Billabong Rejects TPG Bid

Australia-based Billabong International Ltd. rejected a revised takeover proposal from U.S.-based private equity firm TPG Capital stating that the indicative price of A$3.00 per share or A$765 million underestimated the company.

Earnings Review

Lowe''s Companies, Inc. ((LOW)), the home improvement retailer stated fourth quarter sales climbed 11% to $11.63 billion from $10.48 billion in the same period a year ago. Net earnings in the quarter rose 13% to $322 million or 26 cents per diluted share compared to the net earnings of $285 million or 21 cents per share the prior year.

For fiscal year 2011, revenue rose 3% to $50.21 billion from $48.82 billion. Annual earnings declined 9% to $1.84 billion or $1.43 per share from $2.01 billion or $1.42 per share, a year earlier.

PPL Corporation ((PPL)), the energy and utility holding company announced increased fourth-quarter and year-end 2011 earnings compared with the results previously reported on February 10, due to a favorable U.S. Supreme Court decision affecting the company''s hydroelectric generation operations in Montana.

For the 2011 fourth quarter, PPL''s revised reported earnings were $454 million or 78 cents per diluted share as compared with the already announced totals of $401 million or 69 cents per share.

PPL''s revised 2011 reported earnings were $1.495 billion or $2.70 per share as compared with the previously announced totals of $1.442 billion, or $2.61 per share.

Separately, PPL Corp. agreed to acquire AES Ironwood, L.L.C. and AES Prescott, L.L.C., which together own and operate the 705-megawatt AES Ironwood combined-cycle natural gas-fired power plant in Lebanon, Pennsylvania for approximately $304 million.

Quicksilver Resources Inc. ((KWK)), the independent energy company said fourth quarter total revenue fell 10% to $216 million compared to $240 million from the prior-year quarter. Net income for the quarter slumped 85% to $49 million or 28 cents per diluted share compared to net income of $332 million or $1.82 per diluted share in the prior-year period.

Total revenue for the full-year 2011 climbed 0.9% to $936 million compared to $928 million in 2010. Full-year 2011 net income plunged 74% to $115 million or 67 cents per diluted share compared to net income of $449 million $2.52 per diluted share for 2010.

The AES Corporation ((AES)), the global power company reported fourth quarter revenue climbed 0.9% to $4.27 billion from $4.23 billion the last year. On an attributable basis, net loss narrowed 52% to $209 million or 27 cents per diluted share compared to the net loss of $436 million or 55 cents per share the prior year.