World Markets Lower on China, Euro Worries; Google Stock to Split

Bikram Pandey
13 Apr, 2012
New York City

U.S. stocks declined after Wells Fargo and JP Morgan Chase reported better than expected earnings but rising expenses worries outweighed. Sentiment was weak after credit default swap on Spanish bonds rose to a record high and China reported weakest quarterly economic growth in nearly four years.

[R]4:00 PM New York – U.S. markets declined after Wells Fargo and JP Morgan Chase reported better than expected earnings but concerns on the rising expenses outweighed. Market sentiment was weak after credit default swap on Spanish bonds rose to a record high and China reported weakest quarterly economic growth in eleven quarters.[/R]

U.S. indexes traded lower on the final day of this week after earnings season kicked in full swing.

International developments weighed on the market sentiment after China reported steady decline in the economic growth in the first quarter and Spanish credit default rose to a record high as investors perceptions deteriorate.

The Chinese gross domestic product expanded 8.1% on an annual basis in the first quarter compared to 8.9% rise in the fourth quarter, the weakest in 11 quarters.

In earnings news, JPMorgan quarterly net fell on 6% rise in revenues and Wells Fargo profit increased 11%. The improving economic backdrop helped two large banks to increase mortgage fees and revenues.

JP Morgan Chase net declined to $5.38 billion or $1.31 a share from $5.56 billion or $1.28 a year ago and revenues increased 6% to $27.4 billion. CEO Jamie Dimon indicated loan loss reserve is likely to decline and bank is expected to release more capital for lending.

Wells Fargo earnings in the fourth quarter increased to $4.25 billion from $3.76 billion and earnings per share increased to 75 cents from 67 cents.

In other news, Coinstar soared on first quarter outlook and Google Inc said first quarter net surged 61% to $2.89 billion and announced a 2-for-1 stock split. India based software services provider Infosys declined 7% on lowered fiscal revenue outlook. iGATE first quarter net soared 34.6%.

Across the Atlantic, German and Spanish inflation eased but Italian inflation increased in March. Hungarian and Italian production and Dutch surplus declined in February. UK wholesale price inflation eased to a two-year low in March.

The European indexes declined and rising Italian and Spanish yields dampened investor sentiment. The construction and equipment maker Bauer said full year 2011 profit declined driven by poor performance in its construction segment.

Stocks in Tokyo gained for the second day in a row and market indexes advanced 1.2% on Friday. For the week, the Nikkei edged down 0.5% and held on to gains of 14% in the year so far. Sony Corp extended losses for the third day.

Australian indexes closed higher and barely gained in the week as commodities prices advanced. Qantas chief executive backed the second airport proposal in Sydney. ANZ lifted rates again and broke ranks with the Reserve Bank.

Commodities, Bonds and Currencies

The yields on 10-year U.S. bond decreased to 1.99% and 30-year U.S. bond edged lower to 3.14%.

The U.S. dollar edged higher to $1.309 to one euro and inched higher against the Japanese yen to 80.98 yen.

Immediate delivery futures of Texas crude oil decreased 65 cents to $102.99 a barrel and Brent crude futures fell 49 cents to $121.06.

In New York trading, futures of natural gas decreased 0.001 cents to $1.982 per mbtu and traded near a decade low and gasoline price declined 1.36 cents to 334.30 cents a gallon.

In metals trading, copper fell 10 cents to $3.62 per pound, gold declined $21.30 to $1,659.30 per ounce and silver decreased $1.11 to $31.41.