U.S. stocks Shrugg off Lower Opening

123jump.com Staff
22 Oct, 2007
New York City

U.S. stocks recovered from a sharply lower opening on the weakness in the Asian and European markets. Oil traded at elevated level in the opening hours. Dollar continues to slide against the European and Asian currencies. Merck reported 62% jump in third quarter earnings on 12% rise in sales and lower charges related to Vioxx. Schering Plough earnings in the quarter more than doubled on 9% rise in sales.

[R]10:00AM New York – U.S. stocks recovered from a sharply lower opening.[/R]

Dow Jones Industrial Average fell at the opening nearly 80 points to settle after 30 minutes of trading with a loss of 50 to 13,471.25. Nasdaq declined more than 25 points but managed to recover to a loss of 4.40 to 2,720.54. S&P 500 lost 13 points at the opening but retraced to a loss of 3.5 to 1,495.73

U.S. stocks at the opening fell sharply reflecting a global weakness. Asian markets fell more than 3% in the overnight trading led by a sharp decline in Indonesia, Singapore, Philippines, Hong Kong, and Australia.

European markets at mid-day trading declined. Markets across the region fell led by 2.6% drop in Norway followed by declines of 2% in Italy, and more than 1% declines in the UK, France, and Germany.

Merck ((MRK)) reported third quarter earnings of $1.53 billion from $940.6 million in the earlier year or 70 cents per share from 43 cents a year ago. Revenue in the quarter rose 12% and charges in the quarter declined. In the current quarter the company took a charge of $70 million related to Vioxx litigation compared to $598 million a year ago. The company also took a restructuring charge of $129 million and $325 million charge in relation to recent acquisition of drug research firm NovaCardia.

Schering Plough ((SCP)) reported third quarter sales increase of 9.2% to $2.81 billion from $2.57 billion on the strength in its cholesterol drug Zetia and Vytorin. Third quarter earnings increased to $750 million from $309 million or earnings per share increased to 45 cents from 19 cents a year ago.


[R]6:00AM, 7:00PM Tokyo – Asian markets corrected in the region on the weak closing in the U.S. Tokyo index fell 2.3%.[/R]

Japan stock index slumped the most in four weeks to 2.2% led by exporters as yen appreciated against the dollar on G-7 statement indicated global economic slowdown.

In Tokyo trading Nikkei 225 shed 2.24% or 375.90 to 16,438.47, while the broader Topix Index fell 1.8% to 1, 563.07.

Of the Nikkei 225 stocks 17 gained, 205 declined, and 3 were unchanged. Exporters fell as yen climbed to a 7-week high against the dollar. Canon fell 1.35%, Honda Motor Corporation dipped 2.09% and Sony Corporation retreated 1.88%.

In the first section on Tokyo Stock Exchange 8.9 billion shares worth 1.1 trillion yen were traded and on the second section 265 million shares valued at 5.1 billion yen changed hands.

The Bank of Japan governor Fukui Toshihiko said Saturday at a press conference after meeting with the IMF Committee the bank’s confidence that Japan economy is on track for sustained economic growth.

Separately, Japan’s Finance Minister Fukushiro Nukaga on Saturday urged the IMF to establish a new financial crisis resolution strategy to cope with any future crisis ignited by private capital flows. According to Nukaga, the Funds’ grip on global financial markets had weakened as private capital could now finance global imbalances without IMF funding that comes with policy recommendations. He added that the effective surveillance by the IMF was the first step to preventing a financial crisis.

Group of Seven Finance Ministers and Central Bank Governors said in a statement on Friday last week that the global economic growth will slow-down because of financial market turbulence, high oil prices, and the U.S housing market decline.

Permira Advisers LLP said today to Bloomberg News that the buyout fund would buy farm chemical maker Arysta Lifescience Corp for about 250 billion yen in Japan’s biggest leveraged buyout this year. 100 billion yen will be raised from the global buyout fund, while the remaining 150 billion yen will be leveraged with loans. The deal will be sealed in the first quarter of 2008 according to an earlier report in Nikkei News.

Of the index shares, Osaka Gas Company led advancers with a rise of 2.99%, followed by gains in Daiichi Sankyo of 2.81%, in Yahoo Japan Corp of 2.49%, in Takashimaya Company of 2.28% and in Marui Group of 1.37%.

Consumer credit lenders also advanced after brokerage J P Morgan lifted its recommendation for the industry on expectations that companies will be able to recover from refunds to customers as dictated by the government. Aiful surged 18% to 2,670 yen and Acom jumped 14% to 3,000 yen.

Nitto Boseki Company led the declining stocks in the Nikkei 225 Index with a sharp drop of 6.07%, followed by losses of 5.47% in Inpex Holdings, 5.47% in Itochu Corp, 5.36% in Sumitomo Metals and Mining Company and 5.26% in Kawasaki Heavy Industries.

Exporters tumbled as the yen climbed to a 7-week high against the dollar, strengthening to 113.98 from 114.03. Toyota Corporation 2.08%, Sony tumbled 1.88% and Canon plummeted 1.01%.

Nippon Steel Corp announced today that it would enter into a 16 billion yen joint venture with South Korea’s largest steel maker POSCO to produce direct reduced iron from dry dust in order to increase competitiveness in an industry that has been consolidating fast.

Nikkei News reported today Wal-Mart Stores Inc is planning to delist Seiyu supermarket from the Tokyo Stock Exchange and turn it into a wholly owned subsidiary. Wal-mart was reported to make a bid for the 50% of the company it does not own. Seiyu did not trade in Tokyo today.