UK Drops on Weak Global Markets

Ivaylo
19 Apr, 2007
New York City

The FTSE 100 declined sharply for a second session in a row on Thursday tracking losses in Asian markets overnight. Chinese economy growth had increased by 11% in the first quarter sparking fears that the country would boost interest rates further, triggering a sell-off not only in Shanghai but also in Japan and Hong Kong. The news pullled the FTSE 100 42.7 points, or 0.7% , lower to 6,406.0.

[R]9:30AM FTSE 100 declines Thursday on heavy losses in Asian markets.[/R]

The UK market was lower on Thursday. By mid-day, the FTSE 100 42.7 points, or 0.7% , lower to 6,406.0.

Advancers

Mid-cap WH Smith led the advancers, up 2.8%, supported by a 7% rise in first-half profit before tax. The book and stationery retailer announced that while it remained cautious about consumer spending in its markets, it was confident in the outcome for the full year.

Life assurer Prudential gained 0.6% after it reported an 8% increase in sales on an annual premium equivalent basis.

Defensive drug stocks also advanced, with GlaxoSmithKline up 0.7% and AstraZeneca 0.6% higher.

Decliners

Mining stocks, widely seen as a proxy for global and Chinese growth, were hit the worst, with Antofagasta down 2% and Kazakhmys 1.5% weaker. Rio Tinto was down 1.7% despite an upbeat production report.

Oil large-caps were also lower as the price of crude oil dipped below $63 a barrel. BP slid 1.1% while BG Group and Royal Dutch Shell both dropped 0.8%.

Fund managers were also weak as equities markets are under pressure. Amvescap fell 2.2%.

As the pound strengthened its position above the $2 mark for a third consecutive day, dollar earners continued to decline. BAE Systems, the defence group, lost 2.7%. Rexam, the aluminium can producer, gave up 2% and engine maker Rolls-Royce fell 2%.

[R]9:00AM Asian stocks tumbled sharply Thursday on concern of interest rate hike in China.[/R]

Asian markets finished lower on Thursday. Japan Nikkei closed 1.7% lower, giving up 295.35 points, to 17,371.97, as consumer electronics group Sony shed more than 2.1%. export-related shares lost heavily. Canon shed 2.1%, Mazda Motor Corp fell 2.4% and Toyota Motor Corp was down 0.6%.

Other regional markets plunged as well. The Singapore Straits index fell 3.2% to 3,291.28, while Hong Kong Hang Seng index lost 2.3% to 20299.71. China Mobile, the world''s largest mobile-phone operator by users, slid 4.1 %. China Life Insurance Co., the nation biggest insurer, tumbled 3.4%.

Taiwan Weighted Price Index lost 1.4% to 7,888.63. Australian S&P/ASX 200 was down 1.2% to 6,148.30. BHP Billiton, the world largest mining company, dropped 2.6 %. Rio Tinto, the third largest, slid 2.3%. Seoul Kospi index shed 1.4% to 1,513.66 and Malaysian KLSE Composite ended down 1.7%. Shanghai Composite Index in China dipped 4.5%.

China first-quarter gross domestic product rose 11.1% from a year earlier and inflation last month accelerated to a two-year high of 3.3%, the statistics bureau announced in Beijing, after China market close. The market expected 10.4% GDP growth and inflation of 2.7%.

[R]8:00AM NY-7:00PM Mumbai Sensex ends lower, banks, select large-caps advance.[/R]

The Sensex on BSE finished 52.49 points, or 0.38%, lower at 13,619.70.

The session was highly volatile as the index traded within a range of 235 points. The market-breadth was weak as 1,358 stocks declined, 1,151 advanced and 84 stocks were unchanged. Of the 30 stocks in the Sensex, 14 advanced, while the rest declined. The turnover on BSE was Rs 3,642 crore, lower than Rs 3,977.99 crore on Wednesday. On NSE, the turnover was Rs 8,194.26 crore, also lower than Rs 8,600.37 crore on Wednesday.

Economic news

Union Minister of Commerce & Industry Kamal Nath announced today that in the fiscal 2006 exports from India reached $125 billion. The Minister also said that merchandise exports had almost doubled in three years, from $63.84 billion in 2004 to $125 billion, representing an annual compounded growth of 25% compared to 12.73% in the previous three years.

The government also announced today the abolition of service tax on all exports. It extended duty concessions to special economic zones and set a target of $160 billion for merchandise exports during the fiscal 2007.

Trading highlights

New issue Advanta was the most-active stock with a turnover of Rs 503.35 crore followed by Reliance Industries and ICRA.

IPO

Advanta India ended higher at Rs 850.05. It listed on BSE at Rs 640, and had declined sharply to a low of Rs 591, before hitting a high of Rs 992.90. Advanta India is a subsidiary of United Phosphorus.

Advancers

SBI led the gainers today, advancing 1.7% to Rs 1,053 on a volume of 9.05 lakh shares. The biggest state-run lender had rallied sharply from a low of Rs 1,014, to a high of Rs 1,062.40. ICICI Bank ended 0.9% higher to Rs 905, rebounding from an initial 3% decline to Rs 870.10. Reportedly, the Reserve Bank of India will probably permit Temasek and the Government of Singapore Investment Corporation to increase their stakes in the private bank to 10% each. Temasek holds 7.41% stake in ICICI Bank and Government of Singapore Investment Corp 2.29%.

Cigarette large-cap ITC advanced 1.2% to Rs 159. Auto maker Hero Honda gained 1.1% to Rs 656 and Maruti Udyog added 0.9% to Rs 775. Larsen & Toubro was 0.4% higher to Rs 1,666, on news that the company had plans for facilities in China for machines, switchgear, valves, tyre-curing and pressing and coal gassification.

Index heavy Reliance Industries gained 0.4% to Rs 1,493. The stock had rebounded from a low of Rs 1,462, and surged to a high of Rs 1,499.50, a record high. Reliance has scheduled board of directors meeting on April 26 2007 and review unaudited financial results for the quarter and year ended in March 2007.

Decliners

ACC led the decliners, plunging 3.5% to Rs 788 despite posting a surge of 54.5% in the first quarter net profit. The cement company reported an advance in net profit ending in March to Rs 363.75 crore from Rs 235.42 crore from a year ago. Net sales grew 26.1% to Rs 1,674.83 crore from Rs 1,327.52 crore a year earlier. Satyam tumbled 3% to Rs 448.

HDFC lost 1.9% to Rs 1,564 ,Bajaj Auto dipped 2.2% to Rs 2,441, BHEL declined 2% to Rs 2,503 and ONGC slipped 1.% to Rs 895.

IT stocks declined on profit-taking. Infosys was down 1.8% to Rs 2,040, Wipro lost 0.4% to Rs 584, Satyam Computers dipped 2.6% to Rs 449.80 and TCS declined 0.2% to Rs 1,244.95.

[R]6:30AM European markets were lower Thursday on interest rate fears.[/R]

European markets declined Thursday. By mid morning, Frankfurt Xetra Dax shed 1.3% to 7,186.14, the CAC 40 in Paris lost 1.1% to 5,774.27 and London FTSE 100 slid 0.8% to 6,396.4. National benchmarks slid in all 17 western European markets that were open.

Advancers

Nokia, the biggest mobile phone maker in the world, gained 1.5% ahead of the Finnish company first-quarter results. Nokia market share is seen increasing to its highest level in 13 quarters, but slipping sales prices were expected to dent profits.

Schneider Electric SA advanced 1.5% after the maker of circuit breakers said first-quarter sales increased 22% to 3.89 billion euros, fueled by acquisitions and increased sales of electrical products. The company said Europe had an excellent start to the year.

Decliners

Among the London-listed miners, Antofagasta fell 2%, while Spanish oil group Repsol shed 1.9%.

German utility RWE dipped 4.6%, while Lufthansa fell 3.2%. Both stocks were trading without the rights to the latest dividend payment.

Logitech International SA dropped 8.2%. Fourth-quarter profit and revenue trailed analysts estimates after the maker of computer mice said sales of Web cameras fell.

Oil and precious metals

Crude oil recovered from early losses to trade for more than $63 a barrel in New York. Crude oil for May delivery rose 2 cents to $63.15 a barrel in after-hours electronic trading on the New York Mercantile Exchange in early trade in London.

Gold fell in London on speculation a rally that took the metal to the highest in eleven months was overdone. Silver also dropped. Gold for immediate delivery dropped $3, or 0.4%, to $687.05 an ounce. Silver for immediate delivery declined 6 cents, or 0.6%, to $13.895 an ounce. Among other precious metals for immediate delivery in London, platinum gained $7.50 to $1,302.50 an ounce, while palladium dropped $2 to $380.50 an ounce.

Currencies

The euro traded at around two-year highs Thursday, less than one U.S. cent off its record, after the European Central Bank reiterated that another interest rate increase for the euro zone by June was likely. The euro rose to $1.3616, a level not seen since December 2004, before falling back to $1.3576 in morning European trading.

The pound rose as high as $2.0092, then settled back to $2.0029, down slightly from the $2.0057 it fetched late Wednesday in New York. The dollar also fell against Japanese yen, dropping to 117.93 yen from 118.61 yen late Tuesday.

[R]5:00AM Platinum advances sharply Wednesday, gold and palladium edge higher.[/R]
July platinum rallied $26 to settle at $1,306.90 an ounce on the New York Mercantile Exchange. June gold gained 80 cents to close at $693.30 an ounce, while May silver shed 4.5 cents to $13.975 an ounce, and June palladium advanced $2.45 to $382.80 an ounce. May copper declined 5.8 cents on profit-taking to settle at $3.6190 per pound. July copper slipped 5.55 cents to finish at $3.6235 a pound.

In energy trading on the Nymex, crude oil futures finished little changed near $63 a barrel as a government report showing U.S. oil refineries are accelerating gasoline production. The front-month May light, sweet crude oil contract ended 3 cents higher at $63.13 a barrel. Front-month May gasoline gained 2.75 cents, or 1.3%, to finish at $2.0833 a gallon, while May heating oil rose 0.88 cents, or 0.5%, to finish at $1.8066 a gallon. Natural gas for May delivery finished 7.9 cents higher at $7.497 a million British thermal units.

May Arabica coffee futures dipped 0.25 cents on profit-taking and closed at $1.0935 a pound. July coffee finished 0.15 cents weaker at $1.1210 a pound. Most-active July cocoa slid $33 on speculative profit-taking and origin selling to end at $1,956 a metric ton. May soybeans finished 8.5 cents lower at $7.1550 per bushel. May corn advanced 10.25 cents to close at $3.6350 per bushel, July corn rose 10 cents to $3.7525 a bushel.