U.S. Housing Starts Fall and Production Growth Slows, World Markets Advance

Nichole Harper
18 Feb, 2015
New York City

U.S. stocks traded sideways and investors focused on domestic earnings and overlooked Friday deadline for Greece to submit loan extension. U.S. housing starts declined 2% in January and permits declined 0.7% and industrial production gained 0.2%.

[R]2:35 PM New York – U.S. stocks traded sideways and investors focused on domestic earnings and overlooked Friday deadline for Greece to submit loan extension. U.S. housing starts declined 2% in January and permits declined 0.7% and industrial production gained 0.2%.[/R]

Stocks traded sideways investors shifted focus to domestic earnings and European indexes closed at a seven-year high after Greece was said to prepare to apply loan extension with the revision in terms.

European markets have moved beyond the Greek debt talk outcome as most investors believe that the European Central Bank has erected sufficiently strong firewall to prevent the Greek exit contagion spreading to other countries.

In the U.S., housing permits in January fell 0.7% from the revised December rate but soared 8.1% from a year ago month to 1,053,000.

Housing starts in January dropped 2% to 1,065,000 from revised December estimate, the Department of Commerce said today.

The Producer Price Index decreased 0.8% in January on a seasonally adjusted basis followed by 0.2% decrease in December and in November, the U.S. Department of Labor announced.

January industrial production rose 0.2% after falling 0.3% in December. Manufacturing production increased 0.2% and mining dropped 1%, the U.S. Federal Reserve Bank reported.

On Wall Street trading, Tollbooth Strategy Index edged up 0.08% or 8.20 to 10,529.48.

S&P 500 index fell 4.77 or 0.2% to 2,095.76 and the Nasdaq Composite Index edged down 0.62 or 0.01% to 4,898.65.

U.S. Movers

Duke Energy Corp ((DUK)) rose 19 cents to $79.58 after the electric power producer reported said total revenues in the year ending in December jumped 5.1% to $23.92 billion from a year ago period.

Net income in the quarter tumbled 29.3% to $1.88 billion or $2.66 per diluted share compared to $2.66 billion or $3.76 from the same quarter last year.

Fossil Group Inc ((FOSL)) tumbled 18.2% or $18.52 to $80.83 after the fashion accessories retailer stated net sales in the fourth-quarter ending in December were nearly flat at $1.06 billion from a year ago period.

Net income in the quarter jumped 3.8% to $154.1 million or $3 per diluted share compared to $148.5 million or $2.68 from the same quarter last year. Stock plunged after earnings per share missed the estimate of at $3.07 a share and annual outlook disappointed some analysts.

For the first quarter, Fossil estimated earnings per share between 59 cents and 69 cents and forecasted earnings per share for the fiscal 2015 in the range of $5.45 to $6.05 per share.

European Markets

European market indexes traded at a seven-year high on the hopes that Greece debt talks will produce a positive outcome as early as this week.

Expectations ran high on trading desks of London and Frankfurt that Greece will seek an extension of loan and meet the demands laid out by international creditors.

After a month of tense negotiation between Greek leaders and euro zone finance and political leaders, Greece is expected to ask for additional loan of 7 billion euros without rollback of austerity measures.

However, market sentiment can change quickly if Greece fails to meet the demand laid out by the IMF and European Central Bank. There are still more than 50% chance that Greece will push for additional loan without the austerity measures, as stressed by Greece’s finance and prime ministers.

In London trading, FTSE 100 index slid 0.2% or 16.38 to 6,881.75 and in Frankfurt the DAX index gained 0.4% or 41.09 to 10,936.71.

In Paris, CAC 40 index jumped 0.8% or 37.46 to 4,791.45.

Credit Agricole SA climbed 6.3% to €12.73 after the France-based bank and insurance company reported revenues in the year ending in December dropped 1.1% to €15.85 billion from €15.68 billion a year ago period.

Net income in the year declined 6.8% from a year ago to €2.34 billion compared to €2.51 billion and diluted loss per share increased to €0.65 from €0.18.

The bank added in Italy, as of December loan outstanding amounted to €33.3 billion, an increase of 0.8% and deposits amounted to €35.9 billion, mainly due to an increase of new customer inflows of 1.7% in the final quarter of the year.

Vivendi SA gained 0.7% to €20.97 after the France-based pay-television service provider received an offer from Altice SA for the acquisition of its 20% stake in Numericable-SFR at a price of €40 per share, representing a total amount of about €3.9 billion or $4.45 billion.

Asian Markets

Stocks in Tokyo advanced and the yen edged lower after optimism ran high that Greece and the euro zone will overcome differences.

Japan Post offered 50% premium to acquire Australia-based Toll Holdings. Bridgestone said annual net income soared 49%. Electric Power is looking to raise $1 billion.

Stocks in Tokyo powered ahead on the hopes that Greece and the euro zone will settle differences and bring stability in the region.

Domestic earnings also supported market enthusiasm and Japan Post offered 50% premium to Australia-based Toll Holdings.

The Nikkei 225 Stock Average climbed 212.08 or 1.2% to 18,199.17 and the broader Topix index jumped to 20.60 or 1.4% to 1,482.67.

The yen weakened to 119.14 against one dollar.

In a broad rally market indexes advanced and military contractors were in focus after Prime Minister Narendra Modi highlighted growth potential in the sector.

Speaking at the Aero India show in Bengaluru, Modi stressed that India is not looking to be the number in arms imports in the world.

Modi also nudged international contractors to go beyond systems assembly at local plants and accelerate technology transfer to win nearly $25 billion of annual contracts.

Defense contractors, Bharat Electronics, BEML, Astra Microwave and Pipavav Defence advanced.

Pipavav Defence soared 13% on speculation that Mahindra & Mahindra may approach the company to acquire as much as 25% in the company followed by a tender offer for the rest of the stake.

Indian rupee rose 18 paisa to 62.34 against one dollar.

The Sensex Index advanced 184.38 or 0.6% to close at 29,320.26. The CNX Nifty rose 59.75 or 0.7% to 8,869.10.

Markets in mainland China were closed for the rest of the week to celebrate the Lunar Year.