Market Updates
Asia, Europe Strength Lifts NY
123jump.com Staff
19 Sep, 2007
New York City
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Stock index futures in New York are indicating higher opening. Oil is trading near record level and gold in international markets traded higher. Asian markets surged across the region on 0.5% rate cut in the U.S. The Bank of Japan left the rate unchaged at 0.5%. Morgan Stanley reported 17% decline in earnings on 13% drop in revenue. India surged 4% leading the Asian region. European markets are up more than 2% across the region at mid-day trading. August CPI dropped 0.1%.
[R]9:30AM New York – Stock indexes are expected to open higher after a surprise rate interest rate cut on Tuesday.[/R]
Market index futures are up 0.3% in Dow, Nasdaq, and S&P 500 ahead of the regular trading hours in New York.
The Commerce Department reported August housing starts declined 2.6% to a seasonally adjusted annual rate of 1.33 million. The starts declined nearly 7% to a rate of 1.367 million.
The Labor Department reported August consumer price index dropped 0.1% and the so called core index, excluding food and energy cost jumped 0.2%.
Morgan Stanley ((MS)) earnings in the fiscal third quarter dropped 17% on 13% rise in net revenue. Earnings in the quarter dropped to $1.526 billion from $1.851 billion a year ago. Return on equity in the quarter fell to 17.1% from 23.3% a year ago. Diluted earnings per share fell 41% to $1.44 from $2.45.
Weakness in the recently spun-off Discover Financial Services and a write down of $940 of loans dragged the results lower. The investment banking fees surged 45% but fixed income trading and sales net revenue fell 3%.
[R]6:00AM NewYork,7:00PM Tokyo - Tokyo surged 3.67% higher, the most in five years, while the broader Topix Index rose 3.8%. Bank of Japan kept interest rates on hold at 0.5% to forestall further economic slump. Cosmo Oil to sell 28.85% stake to UAE controlled company.[/R]
Tokyo stocks soared 3.7%, most in five years, bucking yesterday’s downtrend, led by energy-related stocks and exporters on easing concerns of global shortage of credit and economic slowdown in the U.S. Oil prices continue to scale record high. Of the 225 Nikkei stocks, 216 advanced, 7 declined, while 2 traded unchanged.21stocks firmed by more than 5% and only 2 stocks shed more than 1%.
In Tokyo trading, the Nikkei 225 jumped 3.7%, or 579.74 to 16,381.54, reversing yesterday’s losses when the market retreated by 2.2%. Commodity and energy-related stocks led the rally as the oil prices scaled $82 per barrel yesterday. The Bank of Japan kept its interest rate on hold at 0.5% by 8 to 1 vote, remaining as the lowest benchmark rate among developed economies. The decision by the Bank of Japan is against the backdrop of shrinkage in the GDP by an annualized 1.2% in the second quarter and efforts to stave off a decade-old deflation. Governor Toshihiko Fukui said he will gradually increase interest rates to avoid inefficient investment and sustain long-term economic growth. Fukui also noted that Japanese investor held 1,555 trillion yen worth of financial assets, up 2.9% a year earlier. Market watchers also lowered economic growth forecast for the fiscal year to 1.8% from an estimate of 2.2%.
The 10-year bonds fell as Bank of Japan’s Mizuno voted against holding the rate, supporting an interest rate hike to curb excessive borrowing. The slide, the biggest in 6 months, saw the yield on the 10-year note rising by 6 basis points to 1.59%. The price of the 1.7% note due September 2017 slipped 0.527 to 100.947 yen.
Of the index shares, commodity stocks and exporters gained the most, while Japan’s biggest lender by assets Mitsubishi UFJ Financial Group, gained the most in two years, soaring 6.11%. Oil company Inpex Holdings paced the advancers, surging 100,000 yen or 8.93% on news that oil traded at a record $82.37 per barrel in yesterday’s trade. Engineering firm JGC added 8.42% followed by Sumitomo Metal Mining, which gained 8.26% spurred by the continued rally of metal prices. Tokyu Land Corporation spiked 7.89%, and Sojitz Corporation completed the top five gainers, climbing 7.86%.
Food and confectionary company’s Meiji Seika and Nisshin Oillio led decliners shedding 5.6% and 1.11% respectively. OJI Paper Company slipped 0.91%, while Topy Industrial slid 0.63%.
Exporters, especially automobile manufacturers spurred the rally on stocks as expectations that the U.S., Japan’s biggest export market, might slip into an economic recession eased followed a better-than-expected interest rate cut of half percentage points by the Federal Reserve. Toyota Motor Corporation advanced 4.52%. The company generated 35% of its sales from North America last year. Honda, the second biggest automaker in Japan, also rallied 3.47% on its exposure to the U.S. market.
Financial stocks further posted significant gains, with Mitsubishi UFJ advancing 6.11% despite news that its subsidiary Union Bank of California was fined $31.6 million by U.S. regulators for failing to establish and maintain adequate anti-money laundering program. Mizuho Financial also firmed 4.94%.
Cosmo Oil, Japan’s fourth largest oil refiner, announced that it will sell a controlling 20.85% stake for 82.9 billion yen to the International Petroleum Investment Company, a company based in Abu Dhabi.
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