World Markets Meander, News Corp Writes Down Australian Assets

Bikram Pandey
08 Aug, 2012
New York City

Stocks on Wall Street meandered and earnings drove trading activities on both sides of Atlantic. News Corp writes down value of Australian newspapers and other assets by $2.8 billion. World markets await economic data from China and Bank of Japan decision later in the week.

[R]4:40 PM New York – Stocks on Wall Street meandered and earnings drove trading activities on both sides of Atlantic. News Corp writes down value of Australian newspapers and other assets by $2.8 billion. World markets await economic data from China and Bank of Japan decision later in the week.[/R]

U.S. indexes struggled to trade higher and labor productivity rose more than estimated in the second quarter. Earnings related stocks dominated trading as world markets focused on the fate of the euro zone.

Markets in Europe closed higher and commodities gained in New York trading and Bank of England lowered its estimate of economic growth and also said it will take longer for the UK to emerge from the ongoing recession.

In New York trading, banks, resources linked stocks and select cyclical were higher and online travel agencies declined after priceline and Orbitz blamed weak European sales for the latest quarter earnings shortfall.

On the earnings front, Express Scripts second quarter revenues net plummeted 48.8%. priceline net surged 37.4%. Icahn Enterprises quarterly net declined 17%. Sotheby’s second quarter net plunged 33% and Walt Disney third quarter net jumped 24%. Dean Foods soared by one third after planned to raise $300 million through the sale of its WhiteWave unit.

Hewlett Packard gained 2.5% after it appointed a new head for its enterprise services division and lifted its profit outlook. McDonald’s Corp traded lower after July global sales were flat.

A123 Systems agreed to an investment of $450 million from China based Wanxiang. Alere second quarter net loss widens and Avnet net tumbled 44.1%. Dish Network said second quarter net dropped 32.5% and petroleum refiner HollyFrontier net quarter jumped 156.7% and Macy’s net soared 15.8%.

News Corp reported a $1.55 billion loss in the fourth quarter or 64 cents a share after it wrote down its Australian newspaper business and other assets by $2.8 billion.

The controversial news and entertainment company is embroiled in several regulatory and police inquiries in the UK that led to the closure of one of the oldest tabloids in the nation and resignation of several senior executives.

News Corp was forced to split its shrinking publishing division that includes Wall Street Journal and other Dow Jones assets from its entertainment and operations and its controversial news cable channel.

Across the Atlantic, European indexes fell on mixed earnings and the Bank of England cut growth outlook for the UK and French business sentiment dipped in July. DSM agreed to acquire Brazil-based Tortuga for about €465 million.

Stocks in Tokyo advanced higher for the third day and earnings announcement peak in the week. Nearly half of earnings missed expectations and investors dial back annual profit growth expectations. Nikon net plunges 49%.

Australian stock trading was driven by the local earnings news and investors also pinned hopes on economic stimulus in the U.S. and Europe. Rio Tinto reported a decline in earnings as iron ore price began to slide. Telstra and Tabcorp scheduled to release earnings tomorrow.

Commodities, Bonds and Currencies

The yield on 10-year bond traded higher to 1.64% and on 30-year bond edged higher to 2.74%.

The U.S. dollar inched higher to $1.235 to a euro and increased against the Japanese yen to 78.49 yen.

Immediate delivery futures of Texas crude oil decreased 28 cents to $93.39 a barrel and Brent crude added 11 cents to $112.11, futures of natural gas decreased 3 cents to $2.94 per mbtu and gasoline price decreased 1.2 cents to 297.89 cents a gallon.

In metals trading, copper decreased 2.6 cents to $3.41 per pound, gold rose $2.70 to $1,615.50 per ounce and silver fell 4 cents to $28.04.