Nasdaq, S&P Down 1%; Record Gold

123jump.com Staff
07 Nov, 2007
New York City

U.S. stocks lost 1% in the morning trading. Oil reached a new high in Asia but fell in New York after weekly inventory report. Gold and silver reached a new three-decade high on falling dollar. Dollar declined against euro and pound after the comments fromt the Chinese official. General Motors reported its largest quarterly loss ever on non-cash charges. On operating basis GM lost more money in the third quarter and Toyota reported second best quarterly profit ever.

[R]11:00AM New York – U.S. stocks declined in the morning hours on falling dollar, rising metals prices, and less than expected decline in weekly oil inventory.[/R]

U.S. market averages fell in the first hour of trading on rising oil and metals prices, declining dollar, and a huge loss from General Motors.

Dow Jones Industrial Average declined 131 to 13,527, Nasdaq lost 29 to 2,796, and S&P 500 fell 17 to 1,503.29.

Chinese government official indicated that China may diversify its large and growing foreign currency reserve away from a ‘weak’ currency like dollar. China has $1.43 trillion in foreign reserves. Separately Japan reported that at the end of October its foreign currency reserve stood near $890 billion.

The comments from the Chinese official sent dollar to a record low against euro and pound and multi-year low against Australian dollar, Indian rupee, Thai baht, and Korean Won.

Gold surged to a high of $838 an ounce on record weakness in dollar.

General Motors reported its largest quarterly loss ever on $38.5 billion in non cash charge related to write-downs and tax credits. GM reported a net loss of $1.60 billion or $2.80 per share compared to a year ago loss of $497 million or 88 cents a share.

Separately Toyota reported profit rise of 11% in the second quarter ending in September of 451 billion yen on 12% rise in sales.

European markets edged lower on rising oil and metals prices in the early morning trading. U.K. and the Netherlands led the decliners with a fall of 0.8% followed by losses in France of 0.6%, in Spain of 0.5%, and Germany and Italy of 0.4%.

Oil and resources stocks gained but airlines and transportation stocks fell. Rio Tinto led the gainers with a rise of 3% followed by fractional increases in BHP Billiton, Mittal Arcelor, and Vedanta Resources. British Air fell 3% and Ryanair declined 3.7%.

Asian markets closed mixed on domestic news, weak dollar, and rising metals and oil prices. Shanghai led the gainers in the region with a rise of 1.7% followed increases in Malaysia f 1.6%, in Indonesia of 1.2%, in Australia of 1.1%, and in Hong Kong of 0.9%.

Australia hiked interest rates by o.25% to 6.75%, 11-year peak, and second increase this year. Property stocks rose in Hong Kong and Alibaba.com fell 18% on the second day of trading after nearly tripling on its first day of listing. Banks in Shanghai gained.


[R]6:00AM New York, 7:00PM Tokyo - Tokyo closes lower at 0.94% on rising yen. Japan’s foreign exchange reserves climb to record $804.8 billion in October.[/R]

In Tokyo trading Nikkei 225 declined from a 0.5% surge induced by bargain hunting in the morning session to close lower 0.94% or 152.95 to 16,096.68, while the broad Topix Index shed 17.90 to 1,556.69.

In the first section of the Tokyo Stock Exchange 8.5 billion shares valued at 1.0 trillion were traded and in the second section 476 million shares valued at 6.2 billion yen changed hands.

Of the Nikkei 225 stocks, 53 rose, 167 fell, and 5 were unchanged. Taiyo Yuden led gainers, rising 4.38%, followed rises in Nitto Boseki of 3.72%, in OJI Paper Company Limited of 3.71%, in Mitsui Minerals & Smelting of 3.71%, and Sumitomo Metal Mining of 2.57%.

Commodity stocks rose on soaring prices of metals. Copper prices rose 1% and gold jumped to a 27-year high of $827 per ounce.

Oil prices rose 1.3% to a record $98 per barrel. However, energy stocks fell. Inpex Holdings declined 2.40%, Nippon Oil Corp slid 3.82%, and Showa Shell Sekiyu K.K fell 1.35%.

Shimizu Corporation led decliners in the Nikkei 225 index plunging 7.38%, followed by losses of 7.05% in J Front Retailing, 6.81% in Ebara Corporation, 6.38% in Credit Saison Company, and 6.16% in Obayashi Corporation.

Exporters fell after the yen firmed to 113.76 from 113.78 against the dollar. Canon plummeted 1.55%, Matsushita Electric Industrial Company plunged 4.46% and Sony Corporation dipped 0.72%.

Japan’s Ministry of Finance announced today the country’s foreign exchange reserve assets climbed $ 8.883 billion to a record $954.484 billion as of October 31.

According to the statistics from the ministry, securities amounted to $804.839 billion, deposits stood at $125.420 billion, the International Monetary Fund was at $1.448 billion, SDR’s added up to $2.991 billion and gold accounted for $19.423 billion yen.

Toyota Motor Corporation second quarter net income increased 11% to 450.9 billion yen beating the estimates of 445 billion yen.

The automakers profits were spurred by increased sales in Russia and Asian countries on the popularity of Camry. Sales in the U.S. however declined 5% to 671,000 vehicles and in Europe increased 7.5% to 302,000 vehicles.

Sales in the quarter rose to 6.49 trillion-yen from 5.83 trillion yen. Net income is expected to rise to 1.7 trillion yen in the fiscal year 2008 ending in March from 1.65 trillion in the fiscal year 2007. Annual sales in the fiscal 2008 are estimated at 25.4 trillion yen.
Toyota will open an assembly plant in Russia to meet rising demand driven by annual wage gains of 6% in the last two years.

SoftBank Corp also reported today that second quarter net income grew 64% to 21.3 billion yen after it attracted more new customers then NTT DoCoMo and KDDI Corp combined. UBS and Credit Suisse raised the stock rating. Softbank closed 0.60% up.

Yamada Denki reported first half net income increase of 31% and raised its full year forecast by 7.3% on sales of flat panel televisions and computers.

Mitsubishi Heavy Industries Limited received a one billion yen order from Electrobas Termonuclear S.A., electric utility of Brazil, related to nuclear reactor. Mitsubishi Heavy fell 2.83%.

[R]4:00AM New York, 8:00PM Sydney - The Australia index 1% traded in the positive due to gains in mining shares.[/R]

ASX 200 index gained 1% or 64.40 to close at 6,692.40. BHP Billiton added 1.6%, Newcrest Mining Ltd increased 6.3%, and Woodside Oil gained 3.4%.

Preliminary stock turnover reached 1.87 billion, worth a total value of A$6.66 billion, with 742 stocks up, 561 down, and 366 unchanged.

Comdek topped the most active stock list with 99.54 million shares changing hands worth A$6.7 million.

The Reserve Bank of Australia today raised interest rates by 25-basis points to 6.75%, marking the sixth increase since the 2004 election. The interest rates are at 11-year high.

Prime Minister Howard apologized to the people struggling to pay off their mortgages, saying the decision will have negative consequences for a lot of borrowers. He said he sympathized with them.

The statistics bureau reported that home prices surged 10.6% in the third quarter from a year ago.

Australian conglomerate Wesfarmers received approval for its A$19.7 billion ($18.5 billion) takeover of supermarket giant Coles, in the largest buyout in Australia.

Shareholders trust that the new owner can reverse a two-year decline in sales growth at the supermarket giant. Of the total shareholders 99% voted in favor of the merger, above the required 75% for the transaction. The approval finally puts an end to 15 months of tussling for control of Coles, which twice rejected cash offers from buyout firms led by Kohlberg Kravis Roberts & Co.

Wesfarmers plans to spend A$5 billion on Coles 3,000 supermarkets, Kmart discount department stores and Officeworks stationery outlets to increase sales. Coles added 1.4% and Wesfarmers edged higher 1%.

Telstra shareholders have rejected the dominant Telco''s new executive pay structure, with early figures showing the majority of votes were cast against the company''s remuneration report. In a non-binding voting of the 3.63 billion share holders voting, only 1.83 billion were in favor of the pay rises at Telstra''s annual general meeting today.

The Australian dollar crossed through the $0.93 today to reach 23-year high on hike in interest rate. The Australian dollar was trading at $0.9374 up almost one and a half cents from yesterday''s close of $0.9230. During the day, it traded between a low of $0.9275 and reached a 23-year high of $0.9386.

Of the ASX 200 index shares, Bolnisi Gold led the gainers with a rise of 12.6% followed by increases in Independence group by 7.7%, in Pan Australia Resource Limited by 7.1%, in Mincor Resources by 6.5%, and in Newcrest Mining by 6.3%.

Of the ASX 200 index stocks, CSR Limited led the decliners with a fall of 2.4% followed by Macquarie DDR TR on 2.5%, Ansell Limited by 3.7%, in Downer EDI Limited by 4.2%, and 11.1% in Emeco Holdings L.

In the resource stocks Rio Tinto put on 3.4%. In the energy sector Santos and Oil Search were up at 2.2% and 4.2% respectively after oil prices rose to a record high of more than $97 a barrel overnight.

In the gold sector Lihir Gold added 5% after a near three-decade peak in gold price at $834.80 an ounce.

The banks were mixed, with National Australia Bank gaining 1%, Commonwealth Bank adding 0.6%, Westpac dipping 2% and Australia and New Zealand losing 0.3%.

CSR dipped 2.4% after the company reported a fall in first half profit and forecast an expected dip in annual earnings. The company said its sugar operations continue to be hampered by lower commodity prices and a high Australian dollar.

The retailers were stronger after Woolworths added 2.5%, David Jones increased 1.5% and Harvey Norman gained 2.5%.