Deere & Co up 5% on Strong Earnings

Elena
15 Aug, 2007
New York City

Wall Street plunged at opening Wednesday, with continuous fears about a global credit crunch stifling positive sentiment, generated by data which showed the slowest consumer price inflation growth in eight months. An announcement from the Fed Reserve that it is ready to inject more cash to the banking system if needed, failed to bring relief. The Dow Jones fell below 13,000.

[R]09:45AM Wall Street opened steeply lower amid fears about global credit crunch.[/R]

Wall Street plunged at opening Wednesday, with continuous fears about a global credit crunch stifling positive sentiment, generated by data which showed the slowest consumer price inflation growth in eight months. An announcement from the Fed Reserve that it is ready to inject more cash to the banking system if needed, failed to bring relief. The Dow Jones fell below 13,000.

Shares of Countrywide Financial Corp. ((CFC)), the biggest U.S. mortgage lender, fell 2% after Merrill Lynch downgraded the stock. Among other stocks driven by analyst comments, drinks and snacks giant PepsiCo ((PEP)) was downgraded to neutral from buy at Goldman Sachs, with the broker citing valuation. The stock added 1%. At the same time, the broker upgraded Molson Coors Brewing ((TAP)) to buy, sending its stock up 1.3%.

Agricultural equipment maker Deer & Co.'s ((DE)) said its Q3 earnings rose 23% o $537.2 million, or $2.37 a share, compared with $436 million, or $1.85 a share a year earlier. H.J. Heinz Co. (HNZ: chart) projected Q1 sales growth of about 9% and earnings per share of 62 cents to 63 cents, above analyst expectations. The stock rose 3.5%.

In early trading, the Dow Jones industrial average fell 49.91, or 0.38%, to 12,979.01, trading below 13,000 for the first time since April 25. The Standard & Poor's 500 index was down 2.98, or 0.21%, at 1,423.56, and the Nasdaq composite index was down 4.43, or 0.18%, at 2,494.69. Bonds rose, with the yield on the benchmark 10-year Treasury note at 4.70% from 4.73% late Tuesday.


[R]09:00AM U.S. stock futures indicated a lower opening, despite benign inflation data.[/R]

U.S. stock futures were indicating steeply lower opening on Wednesday, as growing concerns about the strength of the credit market offset upbeat economic data. The Commerce Department said that U.S. consumer prices rose only 0.1% in July on falling gasoline prices, marking the slowest inflation rate in eight month. The core consumer price index increased 0.2% for the second straight month.

In corporate news, Bank of America ((BAC)) and Countrywide Financial ((CFC)) refused to lend money when hedge funds use mortgages, collateralized debt obligations and subprime securities as collateral. Countrywide Financial slipped 7% in the pre-open after it was downgraded to sell from buy at Merrill Lynch. The broker cited concerns about liquidity in the mortgage sector.

On the earnings news front, Applied Materials ((AMAT)) dropped 4% in pre-open trade after the low end of the chip equipment maker's quarterly earning missed estimates. European food makers advanced after Nestle ((NSRGY)) posted an 18% profit rise, raised its earnings forecast and announced a $21 billion stock buyback.

S&P 500 futures fell 8.5 points at 1,425.80 and Nasdaq 100 futures dropped 13.75 points at 1,901.00. Futures on the Dow Jones Industrial Average dropped 74 points.


[R]8:30AM New York, 8:30PM Hong Kong – Asian markets plunge on weakness in U.S. trading.[/R]

Asian markets fell precipitously as fears emanating from U.S. mortgage markets spread in the region. In the overnight trading broader averages fell nearly 2%, dragging the regional markets lower. Indonesia led the region with a loss of 6.44% after dropping 2% in the previous session, followed by losses of 4.1% in Philippines, 3.6% in Taiwan, and 3.3% in Australia. Hong Kong fell 2.8% and Japan dropped 2.2%.

In Sydney trading ASX 200 fell 176.80 points or 2.96% to close at 5,788.00. Of the 201 stocks in the index 188 declined, 8 gained and 8 stocks were unchanged. Outlook for the rest of week remains week as traders expects unwinding of the leveraged trading at the end of this week. Basis Capital reported that fund investors may lose 80% on the subprime securities meltdown in the U.S.

Arrow Energy led the stocks in the index with a plunge of 13% followed by 10% losses in Alco finance, Mount Gibson, Zinifex, Babcock & Brown, Murchison Metals, Oxiana Resources, and Compass Resources.

Resources and financial stocks led the decline in the broader market. BHP Billiton, Goodman Group, Oil Search, Macquarie Bank, Harvey Norman, Lihir Gold, Axa Asia Pacific fell more than 4%. AMP Limited, St George Bank, Westpac Banking, and QBE Insurance, and Tishman Speyer dropped more than 2%.

Of the eight stocks that managed to climb higher, James Hardie led the pack with a gain of 2.27 on 10.7 million share volume, followed by 1% rise in Duet Group, and fractional increases in Downer, Ivesta Property, Southern Cross Broadcasting, Metcash, and Lion Nathan.

In Shanghai trading Shanghai Composite Index fell 0.1% to close at 4,869.88 after the traders took profit snapping a five-day rally. China reported July industrial production rise of 18%, lower than 19.4% in June. For the year 2006 the industrial production increased at 16.6% and few days ago China reported second quarter economic growth at 11.9%.

Shenzen Development Bank reported its first half profit of Rmb1.12 billion compared to Rmb463.6 million on 18% rise in lending. Net interest income increased 42% and fee income jumped 51% and bad loan ratio declined to 7% from 7.98%, but still high by the international standard. The capital adequacy ratio jumped to 3.88% from 3% but still below the required level of 8%.

Hong Kong Exchanges reported second quarter profit of HK$1.41 billion on revenue of HK$1.757 billion. The revenue in the quarter jumped 69% and earnings increased 124%. Earnings per share jumped to $1.32 from 59 Hong Kong cents. Average daily turnover value on the exchange jumped 93% to HK$65.9 billion from HK$34.1 billion.

The exchange reported that 32 new companies were listed on the main board in the first half of this year and raised $194 billion in public offering. At the end of the quarter there were 1,002 companies were listed on the main board and 194 were on the Growth Enterprise Market with a total market capitalization of $15.8 trillion.


[R]7:00AM New York, 8:00PM Tokyo – Asian stocks plunged as fears of American subprime fallout deepened. Banks and brokerage companies fell across the region.[/R]

Asian markets closed lower on the worries that U.S. economy may decline if housing problem spreads. Investors in the last seven years have suffered losses in Worldcom, Tyco, Enron and several other American companies’ scandals. Fearful investors are worried that more losses may be hidden in the balance sheets of banks in America. International investors have never been compensated for these losses.

In Tokyo trading Nikkei 225 closed 2.2% or 369 points lower to 16,475.61 as evidence mounted that the brokerages companies in Japan and private funds in Australia report losses. Of the 225 stocks in index, 214 closed lower, 10 stocks closed higher and only 1 managed close unchanged. The Topix Index fell 43.31 or 2.6% to 1,594.15 with trading volume of 2 billion shares and 2.9 trillion yen. The banking index of top 85 banks in Japan has fallen nearly 20% in the last five weeks of trading.

Worries persist that the U.S. mortgage market problem may deepen and inflict damage to the banks in Japan. Banks in Japan have reported losses from the subprime loans in the U.S. but reported losses so far have been relatively smaller. Analysts have projected that the Japanese bank exposure to losses in U.S. subprime market is not likely to exceed $10 billon. Mitsubishi UFJ reported that it has 5 billion yen or $42 million in losses at the end of July. Sumitomo Mitsui also said that it has billions of yen losses yet to be determined in the quarter that ended in June 30th. Mizuho Financial Group earlier reported losses of 600 million yen after selling its portfolio of 50 billion yen in subprime holding.

The Bank of Japan drained liquidity from the system for the second day as overnight interest rate fell below its target rate. The Bank of Japan mopping up of liquidity is now lifting yen as traders unwind carry trade and repatriate yen. Yen edged a fraction higher against dollar and euro. One dollar fetched 116.7445 yen and one euro was priced at 157.2009 in the trading.

Trend Micro led the stocks in the index with a loss of 7.4% followed losses of 6.8% in Millea Holdings, 6% decline in Sumitomo Mitsubishi, Toho Zinc, Sumitomo Metals and Mining, Mitsui Sumitomo, and Nippon Sheet and Glass. NGK Insulators led the index with a gain of 3.2% followed by 1.5% rise in Nitto Boseki, Mitsui Chemicals and GS Yuasa Corp. Comsys Holdings closed up 1% and Denki Kagaku, KDDI, Showa Denko edged a fraction higher.

Banks, brokerages, and real estate companies fell sharply for the second day. Mitsubishi UFJ led the bank stocks with a loss of 5.3% after losing similar value in the previous day. Bank of Yokohama, Shinsei Bank Ltd, Chiba Bank, Sumitomo Trust, and Mitsui Trust fell 5% or more.

Nippon Oil, Toho Zinc, Sumitomo Metals, Nippon Mining, and Kobe Steel dropped between 2% and 5%. Seiyu Ltd, grocery retailer fell 10% after reporting losses and lowering earnings guidance for the year.

Matsushita fell 5% after telephone handset maker Nokia offered to replace 46 million batteries made by Matsushita. Several users in Japan and China have reported that batteries have a tendency to overheat and under certain conditions can catch fire.