U.S. Weekly Jobless Claims at 4-Year Low, Import Prices Decline

Arthi Gupta
12 Jul, 2012
New York City

U.S. indexes rose after weekly jobless claims fell, import prices declined in June and foreclosure activity dropped in the first-half. Japan-based Dentsu agreed to acquire UK-based Aegis Group for $4.9 billion.

[R]10:05 AM New York – U.S. indexes rose after weekly jobless claims fell, import prices declined in June and foreclosure activity dropped in the first-half. Japan-based Dentsu agreed to acquire UK-based Aegis Group for $4.9 billion.[/R]

U.S. indexes declined and weekly jobless claims fell by 26,000 and import prices fell more than anticipated.

The latest minutes of meeting from the Fed also dashed hopes of any immediate stimulus measures

European indexes dropped after the economic outlook for the euro area continued to be on the downside. Euro-zone's industrial output rose 0.6% on a monthly basis in May, following a 1.1% decrease in April..

Asian stocks fell after weak jobs report from Australia and an unexpected rate cut by the Bank of Korea.

The Bank of Japan left its policy interest rate range unchanged between zero and 0.1% and tweaked its asset purchase program but kept the total purchase and lending program at 70 trillion yen or $879 billion.

However, the central bank cut its fiscal 2012 economic growth forecast to 2.2% and inflation forecasts to 0.2% from the 0.3% estimate in April and estimated growth in the next fiscal year to decrease to 1.7% and core inflation at 0.7%.

The Bank of Japan tweaked its asset purchase and lending operation after it missed its target for six month operations in the last few weeks and the central bank was forced to buy more short term securities.

The central bank will increase the purchase of select short term securities by 5 trillion yen or $63 billion and reduce by the same amount set aside for the fixed-rate loans.

Only few hours before the Bank of Japan announcement, the central banks in Brazil and Korea lowered their benchmark rates and a week after the central banks in China, UK and the euro zone offered more monetary stimulus.

India's industrial production rebounded in May led by strong manufacturing activity.

Overall production, which includes mining, manufacturing and electricity, grew 2.4% in May from last year, the Central Statistics Office said. Manufacturing output advanced 2.5% annually in May.

The International Energy Agency projected oil demand growth in 2013 would be 1.0 million barrels per day compared to 0.8 in 2012.

U.S. Weekly Jobless Claims Fall

First time claims for U.S. unemployment benefits unexpectedly fell in the week ended July 7, according to a report released by the U.S. Labor Department today.

The report showed that jobless claims fell 26,000 to 350,000 from the previous week's revised figure of 376,000. The 4-week moving average was 376,500, a decrease of 9,750 from the previous week's revised average of 386,250.

U.S. Import Prices Slump

Import prices in the U.S. fell more than expected in June driven by a substantial decline in fuel prices, according to a report released by the U.S. Labor Department today.

Import prices slumped 2.7% in June following a revised 1.2% drop in May and export prices fell 1.7% in June after dropping 0.4% in May.

U.S. Foreclosure Activity Drops

A total of 1,045,801 U.S. properties with foreclosure filings was reported in the first-half, a 2% increase from the previous six months but still down 11% from the first half of 2011, according to RealtyTrac.

The report also shows that 0.79% of all U.S. housing units, one in 126 had at least one foreclosure filing in the first six months of the year.

Dentsu Agrees to Acquire Aegis

Dentsu Inc., the Japanese advertising firm agreed to acquire Aegis Group Plc, the British media and digital marketing communications group for 240 pence per share for £3.16 billion or $4.9 billion in cash.

The offer represents a premium of approximately 48% to the closing price per Aegis share on Wednesday.

Earnings Review

Chevron Corporation ((CVX)), the energy corporation estimates second quarter earnings to be higher than the first quarter. Upstream results are projected to be lower due to lower average crude oil prices and downstream earnings are expected to be significantly higher, reflecting improved refining margins and gains on asset sales.

Fastenal Company ((FAST)), the industrial and construction supplies provider reported second quarter net sales rose 14.7% to $804.89 million from the comparable period in 2011. Net earnings in the quarter climbed 19.3% to $112.31 million or 38 cents per diluted share from $94.11 million or 32 cents per share a year before.

Infosys Ltd ((INFY)), the India-based software exporter said first quarter revenues climbed 5% to $1.75 billion from a year-ago quarter. Net profit for the quarter advanced 8.3% to $416 million from $384 million last year. Earnings per ADS grew to $0.73 from $0.67 last year.

Marriott International, Inc. ((MAR)), the hotel operator said second quarter total revenue fell 6.6% to $2.78 billion from the same quarter last year. Net income for the quarter rose 6% to $143 million or 42 cents per diluted share compared to $135 million or 37 cents per share for the year-ago quarter.

Texas Industries, Inc. ((TXI)), the heavy construction materials supplier reported fourth quarter revenues edged modestly lower to $174.6 million compared to $175.8 million in the prior year. Net income swung to $60 million or $2.15 per diluted share compared to net loss of $9.1 million or 33 cents per share last year.

SAP AG ((SAP)), the German business software maker stated second quarter total IFRS revenue increased 18% to €3.90 billion. IFRS operating profit gained 7% to €0.92 billion compared to €0.86 billion in 2011.