Spanish Bailout in Slow Motion, Carlyle Keeps the Deal Offensive

Bikram Pandey
30 Aug, 2012
New York City

World markets were on the defensive after latest economic data from the euro zone, Japan, South Korea showed more weakness and the U.S. personal spending rose the most in five months and income gained for the eighth month in a row. Carlyle keeps the offensive in deal making.

[R]4:00 PM New York – World markets were on the defensive after latest economic data from the euro zone, Japan, South Korea showed more weakness and the U.S. personal spending rose the most in five months and income gained for the eighth month in a row. Carlyle keeps the offensive in deal making.[/R]

Spain and the euro were in focus after a string of latest data from international markets. Market indexes were on the defensive ahead of Fed chairman’s comments tomorrow.

The euro weakened after Germany reported unemployment increased for the fifth month in a row and Spain said inflation reached to 2.7%. In addition, the euro zone economic sentiment indicator declined to the lowest level since 2009 and Slovakia’s prime minister said that there is a 50% chance that the euro zone will break up.

In the U.S., personal spending in July increased 0.4% from June and rose 1.3% from a year ago month. U.S. indexes fell after weekly jobless claims remained unchanged at 374,000 and personal income rose in July. In Japan, retail sales declined 0.8% in July, the first decline in eight months.

European markets fell sharply after Spain’s Prime Minister Mariano Rajoy said he will make a decision on the larger bailout requests only after he knows conditions attached. He spoke after a meeting with French President Francois Hollande in Madrid.

In the deal news, Carlyle Group agreed to purchase DuPont Performance Coatings for $4.9 billion and completed its third deal of the month. Earlier in the month the leveraged buyout group acquired Getty Images for $3.3 billion and purchased a stake in the asset manager TCW Group and last month took a majority stake in largest East Coast based oil refinery in a deal with Sunoco.

Among earnings, Bio-Reference declined but net soared 25%. Networking gear maker Ciena declined on weak sales outlook. Costco reported sales increase in August. Greif net declined 39% and lowered fiscal outlook. Pandora Media jumped.

The European indexes declined and German unemployment rate held at 6.8%. Italy raised €7.29 billion in a bond auction today at lower borrowing costs. Scotiabank agreed to acquire ING Direct for C$3.1 billion. Carrefour net loss narrowed in the first-half.

Euro zone sentiment weakened, German unemployment rate held at 6.8% but the number of unemployed increased for the fifth month in a row, Spanish inflation rose and Danish industrial confidence deteriorated in August. Swedish current account surplus declined in the second quarter.

The UK indexes slid in listless trading and mortgage approvals rose in July. Accenture agreed to acquire Singapore-based NewsPage. Barclays appointed Antony Jenkins as a director and chief executive. JJB Sports plunged 82% after deciding to seek a buyer.

The benchmark index in Tokyo declined 1% after retail sales fell in July and on a decelerating auto sales growth and stagnant wages. Construction machinery stocks declined after iron ore prices fell to the low last seen in 2009.

Australian stocks closed lower as iron ore prices declined to a 3-year low. Fortescue chairman, Andrew Forrest increased stake in the third largest iron ore company for the second day in a row. Building approvals dropped 17.3% in July from the previous month and private sector capital spending increase slowed to 3.4% rise.

Commodities, Bonds and Currencies

The yield on 10-year bond decreased to 1.62% and on 30-year bond fell to 2.74%.

The U.S. dollar inched lower to $1.2509 to a euro and decreased against the Japanese yen to 78.62 yen.

Immediate delivery futures of Texas crude oil decreased 86 cent to $94.63 a barrel and Brent crude increased 26 cents to $112.80, futures of natural gas rose 0.06 cents to $2.74 per mbtu and gasoline price edged down 1.43 cents to 308.60 cents a gallon.

In metals trading, copper decreased 0.25 cents to $3.44 per pound, gold fell $5.20 to $1,657.80 per ounce and silver decreased 43 cents to $30.49.