Metals Decline, Nasdaq Down 1.7%

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

U.S. stocks fell for the fourth day in a row on weak tech, energy, and resource stocks. Exxon Mobil, ConocoPhillips, Sunoco, Tesoro, and Chevron led the decliners in the energy sector. Google, Research in Motion, Apple, and SanDisk led the decliners in the tech stocks. E*Trade plunged 59% on the worries that the bank may not have enough resources to cover losses in sub-prime loans. Copper, gold, silver, and oil fell. Yen closed at 11-year high against the dollar.

[R]5:00PM New York, 11:00PM Frankfurt, 9:00AM Sydney[/R]

U.S. stocks fell for the fourth day in a row led by a weakness in tech, energy, resource, and financial stocks. A sharp drop in Microsoft, Google, Research in Motion, SanDisk, and Nvidia led the Nadaq down more than 1% for the second day in a row.

E*Trade plunged 59% on the worries that the bank and online brokerage service may declare a loss and a broker warning that it may not have enough reserve to cover widening losses in its sub-prime lending business.

Blackstone Group reported a net loss of $113 million compared to profit of $372 million from a year ago. Blackstone declined more than 8%.

The Bank of China raised capital requirements by 0.5% to 13.5% for its commercial banks to stem rising liquidity in the stock markets and sharply rising real estate prices. The Reserve Bank of Australia said that inflation is likely to run higher than its target estimate between 2% and 3%.

The dollar fell to 11-year low against yen but rebounded against euro. Oil recovered from its worst level and gold and copper declined. With the rising yen against dollars metals, oil, and agricultural commodities prices have come under pressure. Gold lost 3.5%, oil lost 2%, silver lost 5%, and copper dropped 1.2%. Copper fell on the Chinese Customs reported that October imports declined 6% to 204,242 metric tons.

[R]Global Markets Indexes[/R]

Dow Jones Industrial Average fell 39.34 or 0.30% to a close of 13,003.40, S&P 500 dropped 1.43% or 15.17 to 1,438.53, and Nasdaq Composite Index declined 42.45 or 1.62% to a close of 2,585.49. In Toronto TSX Composite lost 271.46 or 1.96% to close at 13,598.36.

Of the 30 stocks in Dow Jones Industrial Average, 14 closed higher, 16 closed lower, and none were unchanged.

Alcoa led the decliners in the index with a fall of 3.3% followed by declines in Exxon Mobil of 2.7%, in Disney of 2.2%, in Hewlett Packard of 1.8%. Johnson & Johnson led the gainers in the index with a rise of 1.8% followed by increases in Home Depot of 1.5%, in Citigroup of 1.4%, in IBM of 1.1%, and Wal-Mart of 1%.

Of the stocks in S&P 500, 191 closed higher, 302 fell, and 7 were unchanged. Eighty five stocks fell more than 3% and thirteen stocks rose more than 3%.

Southwest Air led the gainers in the index with a rise of 8.5% followed by increases in Tenet Healthcare of 7.1%, in Family Dollar of 4.4%, in Whirlpool of 4.3%, in Mattel of 4.2%. E*Trade Financial led the decliners with a plunge of 59% followed by losses in NVidia of 10%, in National Oilwell of 9.9%, in Console Energy of 9.8%, in Free Port McMoran of 9.5%, in Allegheny Technology of 8.6%, in Fluor Corp of 8.3%, in Peabody Energy of 8.1%, in Monsanto of 7.75%.

In London FTSE 100 Index closed up 33.00 or 0.52% to 6,337.90, in Paris CAC 40 Index increased 11.38 or 0.21% to close at 5,535.56, and in Frankfurt DAX index fell 5.56 or 0.07% to close at 7,806.84. In Zurich trading SMI added 24.89 or 0.30% to close at 8,442.04.

In Tokyo Nikkei 225 Index retreated 386.33 or 2.48% to close at 15,197.09, in Hong Kong Hang Seng index closed down 1,117.68 or 3.88% to 27,665.73, in Australia ASX 200 closed down 90.40 or 1.38% to close 6,455.30. India closed down 0.9% or 170.33 to 18,737.27.

In South Korea Kospi Index decreased 67.05 or 3.37% to close at 1,923.42, Thailand closed down 12.71 or 1.45% to 861.93, and Indonesia edged lower 35.76 or 1.32% to 2,671.90.

Philippines declined 85.29 or 2.31% to 3,618.37. Singapore declined 88.55 or 2.46% to 3,511.12 and Malaysia dropped 19.90 or 1.42% to 1,382.35.

In Latin Markets Brazil led the decliners with a fall in Bovespa of 4.34% followed by decreases in Bolsa Index in Mexico of 3.34%, in Peru and Argentina of 1.80%. Chile Stock Market Select lost 1.25% and Colombia IGBC Index lost 0.08%.

Bond Yields were unchanged on 10-year U.S. bonds to 4.21% and 30-year bonds to 4.60%.

[R]Commodities, Metals, and Currencies[/R]

Crude oil fell $1.70 to close at $94.62 per barrel for a front month contract, up 43.50% for the year, natural gas increased 6 cents to $7.96 per mBtu, and gasoline futures decreased 3.95 cents to close at 241.65 cents per gallon.

Gold edged lower $27.00 in New York trading to close at $807.70 per ounce, silver closed down 78 cents to $14.76 per ounce, and copper for front month delivery lost 3.65 cents to $310.90 per pound and in London trading closed down $185 to $7,004.50

Dollar edged higher against euro to $1.4536 and lower to 109.79 yen.


[R]11:00AM New York – The U.S. market averages edge higher after a week of losses in world markets.

The U.S. market averages traded sideways after ninety minutes of opening in New York. Dow Jones Industrial Average gained 58 to 13,100, Nasdaq added 1 to 2,629, and S&P 500 increased 4 to 1,458.

IBM agreed to acquire Cognos Inc. for $58 per share or $4.9 billion. Cognos ((COGN)) with world-wide staff of 4,000 serves 25,000 customers and it will contribute to the rising profitability at software division at IBM. Cognos jumped $4.17 to $57.15 and IBM added $1.87 to $102.12.

Business intelligence software developers have been in demand as more customers dig for trends in their customer behavior. SAP AG purchased Business Objects for $7 billion a month ago and Oracle acquired Hyperion Solutions for $3.3 billion seven months ago.

Blackstone Group ((BX)) reported third quarter net loss of $113.2 million compared to profit of $372 million a year ago on revenue rise of 14% to $526 million. The recently listed unit in the company jumped as high as $38 in an offering that raised $4.13 billion.

In the earnings news this morning, EchoStar Communications reported earnings per share of 44 cents, Hewitt Associates lost $2.55 per share, Osiris Therapeutics lost 36 cents, and Tyson Foods earned 9 cents.

European markets traded lower after the U.S. markets opened. Norway led the decliners in the region with a loss of 2.4% followed by losses in the Netherlands of 1.4%, in Germany of 0.5%, in France of 0.3%, and in Switzerland of 0.14%.

European banks regained the momentum after a week of losses swirling around the Barclays. Deutsche Bank, UBS, and RBS gained more than 4%. HSBC fell 0.6% ahead of earnings report.

Asian markets closed sharply lower on the first day of trading this week. Hong Kong led the decliners in the region with a loss of 3.9% followed by losses in Taiwan and South Korea of 3.35%, in Japan and Singapore of 2.5%, in Thailand of 1.5%, in Australia and Indonesia of 1.3%, and in India of 0.9%.

Nikkei 225 fell for the sevenths session in a row as worries of slower exports growth and rising yen hobbled investors. Financials, automotive, and electronics companies fell sharply.

The Bank of China raised reserve requirements for commercial banks for the ninth time this year. The latest hike of 0.5% in capital requirement is now raised to 13.5% to reduce liquidity flowing in the market. The recent trade surplus has increased liquidity in renminbi which has struggled to find higher yielding assets. The real estate prices are at a record high, bank deposits still yield below inflation rate, and individual investors have poured excess cash into stock market driving the major indexes above 140% for the year so far. The indexes have corrected in the last five weeks and lost 15%, but stocks are still trading at earnings multiple above 45.


[R]6:00AM New York, 7:00PM Tokyo - Tokyo stocks plummeted 2.50% on stronger yen and sub-prime losses. Wholesale inflation increased 2.4% in Japan. Current account surplus rises 40.4% to 2.883 trillion yen.[/R]

Japan stocks averages opened the week sharply lower on rising yen and as losses associated to sub-prime mortgage crisis haunted financial stocks and sparked a sell off.

In Tokyo trading Nikkei 225 plunged 2.48% or 386.33 to 15,197.09, the lowest in fifteen months, while the broader average Topix Index declined 2.54% to 1,456.

In the first section of the Tokyo Stock Exchange 9.8 billion shares worth 1.2 trillion were traded and in the second section 403 million shares valued at 6.1 billion yen changed hands.

Of the Nikkei 225 stocks 15 gained, 208 slumped, and 2 were unchanged. Of the index stocks, 40 lost more than 3%. Dowa Holdings led decliners after the non-ferrous metal processor lowered its profit forecast last week and brokerage Nomura cut the rating on the stock from “buy” to “neutral”.

Bank of Japan announced today in its monthly report on the Corporate Goods Price Index that the Domestic Corporate Goods Price Index rose for the 44th month in a row to 2.4% in October from a year ago. However, the producer price index rose 0.3% from a month ago. In September the rate had increased by 1.7%. The Import Price Index also rose 7.5%, but on a month on month basis it rose 3.4%, while the Export Price Index dropped 0.1%.

Of the Domestic Corporate Goods Price Index, textile products rose 1.4% from the previous and 3.1% from a year earlier, lumber and woods products fell 0.1% from a year earlier. Petroleum and coal products firmed 3.8% from a month earlier and 11.1% a year ago, while metal products climbed 0.3% for the month and 3.4% on a yearly basis.

The Cabinet Office reported today in the monthly Consumer Confidence Survey consumer confidence fell to a 3- year low in October to 42.8 points from 44.1 in September owing to dropping wages, a weakening job market and rising oil prices.

According to the Survey, the overall livelihood and income growth slipped from 42.2 points to 41.0 points in October and unchanged at 42.2 points respectively. A measure of employment in the survey plunged from 46.4 points to 45.3 points. Furthermore the willingness to buy durable goods fell to 42.8 points from 45.5 points, painting a gloomy outlook.

Equally, a measure of expectations on wages fell 0.2% as the jobless rate fell to 4% in September from 3.6% in August.

The Ministry of Finance announced today that Japan’s current account surplus soared for the ninth month by 40.4% in September from a year earlier to 2.883 trillion yen before seasonal adjustment. In August the surplus increased by 42.1%. Economists had forecasted a gain to 2.66 trillion yen.

The Finance Ministry also added that surplus for the April to September fiscal half expanded 34.1% on year to 12.424 trillion yen, the fourth fiscal half of growth buoyed by growing automobile exports to Europe and Asia.

Of the Nikkei 225 index shares, Dowa Holdings paced advancers with a rise of 13.52%, followed by gains of 8.17% in TDK Corp, 6.93% in Chiyoda Corp, 6,86% in Furukawa Electric Company, and 6.18% Bridgestone Corp.

Financial stocks declined as more U.S banks announced negative profit outlooks in the wake of the U.S. housing slump. Wachovia announced it might have lost $1.7 billion, while Bank of America and JP Morgan Chase & Co announced fourth quarter results might be affected by the credit crunch. The Daily Telegraph, London based newspaper, also reported that Europe’s HSBC Holdings would announce $1 billion in write-downs tied to sub-prime losses.

Also in the region, China increased reserves by 0.5% to 13.5% of deposits to prevent the economy from overheating. Mitsubishi UFJ Financial Group fell 1.85%, Mizuho Financial Group plunged 2.45%, and Sumitomo Mitsui Financial Group dropped 2.13%.

Exporters continued on the downtrend as the yen rose to an 18-month high against the dollar at 110.45 from 110.47, while it was quoted at 161.58 from 161.60 against the euro. Canon Incorporated climbed down 2.69%, Sony Corp shed 2.62% and Toyota Motor Corporation fell 2.76%.

Dai Nippon Printing Company led rising index shares, gaining 5.30% followed by rises in Secom Company Limited to 3.27%, in Denki Kagaku of 2.78%, in Sapporo Holdings of 1.91% and in Clarion Company Limited of 1.52%.

Dai Nippon Printing Company Limited gained on strong earnings performance after the company announced net income increase to 21.8 billion yen against 21.5 billion yen estimate.

Brewer Sapporo Holdings gained on Kyodo reports the Brewer Association of Japan reported yesterday shipments of beer and fermented beverages rose 0.8% to 39.32 million cases in October on price promotions.

Isuzu Motors, 5.9% owned by Toyota Motor Corp reported today first half net income fell to 37 billion yen from 55.4 billion a year ago. Operating profit fell 16% to 48.3 billion yen. Sales rose 6% to 874.5 billion yen spurred by sales in South East Asia and the Middle East.

Full year net income forecast for the company was unchanged at 80 billion yen, while full year sales projections were raised to 1.75 trillion yen. Isuzu Motors closed 4.04% down.

[R]6:00PM Sydney, - 2:00AM New York - The Australia index declined 1.4% weighed down by loses in mining and energy stocks.[/R]

ASX 200 index fell 1.4% or 90.4 to close at 6,455.30. Woodside Petroleum Ltd declined 5.9%, Newcrest Mining Ltd was lower at 4.7%, and Rio Tinto put on 6.7%.

BHP Billiton announced today that it was considering returning $33 billion to shareholders through a share buyback if its proposed merger with Rio Tinto goes ahead.

The company said a combined group would have the financial flexibility to return significant capital to its shareholders.

The company flagged an initial share buyback, or other appropriate mechanism, of about A$30 billion after completion of the proposed merger.

BHP Billiton said the cash distribution would allow ""the combined group to have an efficient balance sheet while maintaining flexibility for future investment''''. The miner said it ""continues to seek to engage in discussions with Rio Tinto'''' about a potential merger, which would create the world''s largest producer of coking coal, thermal coal, copper and aluminium.

""To date Rio Tinto has not agreed to these discussions,'''' BHP Billiton said in a statement. BHP Billiton said a merger was the ``most logical and compelling consolidation opportunity for both companies'''' and could create synergies and cost savings in the order of $3.7 billion.

The company said its iron ore operations in the Pilbara region of Western Australia and coal operations in NSW and Queensland were key areas for synergies and savings. BHP Billiton said it would cost about $650 million over two years to implement the synergies, with the full cost savings to be achieved seven years after a merger.

Media reports in London suggest BHP Billiton is considering selling its $30 billion petroleum division to help fund the transaction.

A delay in shipments due to limitations in port and rail facilities has pushed coal prices at Australia''s Newcastle port to a record. Annual contract prices are set to gain as a result.
Power station coal for delivery for the next three months climbed for a third week, by $1.43 to $83.51 a metric ton in the week ended November 9.

Ships intending to load were experiencing a delay of 14 days on average during the past week compared to 1.2 days for general cargoes.

According to Newcastle Port Corp''s website, at least forty-two vessels were reported to be queuing off the port in the week ended this morning, two more than the previous week. In June the queue reached a record 79 after storms disrupted operations and hasn''t been less than 37 this year.

A total of 1.5 million tons of coal was loaded, less than the 1.9 million tons a week earlier. Total of 7.3 million tons are targeted for shipment through the New South Wales port this month.

China, the fastest growing economy in the world, became a net importer of coal for the first time this year, worsening a shortage of the fuel in Asia. Coal consumption, spurred by global economic growth, has outpaced exports from Australia, Indonesia and South Africa.

The Reserve Bank of Australia (RBA) today ramped up its inflation forecasts, saying it is now likely to exceed the bank''s target band of between 2% and 3%.

The RBA said in its latest monetary policy statement that both underlying and CPI inflation would remain close to 3% throughout 2008 and 2009, putting further upward pressure on interest rates.

""The most recent data indicate that the economy had more momentum than expected through the middle of 2007,'''' the RBA said. This prompted economists to speculate that the RBA could follow up with another interest rate rise next month, while others see a move in the first quarter next year.

The RBA expects inflation will leave the central bank no leeway for error.

""Somewhat lower outcomes could eventuate if global economic conditions prove to be weaker than expected, which might occur if there were further significant disturbances in global financial markets,"" the RBA said in its quarterly monetary policy statement.

The RBA lifted the official cash rate by one quarter of a percentage point to 6.75% last week.
It was the tenth time rates have climbed since 2002 and now at their highest level since July 1996 – four months after the Howard Government first came to power.

Of the ASX 200 index shares, Rio Tinto led the gainers with a rise of 6.7% followed by increases in Resmed Inc by 4.8%, in Computershare Limited by 4.1%, in Wesfarmers Limited by 3.2%, and in Sigma Pharmaceutical by 3%.

Of the ASX 200 index stocks Sino Gold Mining led the decliners with a fall of 6.8% followed by losses in Mount Gibson Iron of 7.4%, Flight Centre by 8,3%, in Lynas Coporation Limited by 9.9%, and in AED Oil Limited of 14%.

In the other stocks the banking counters all lost, Westpac Banking declined 2.2%, Commonwealth Banking slid 0.1%, National Australia Bank was down 0.5% and ANZ was lower at 2%.

In energy sector Santos fell by 5.2%. In the gold sector Lihir was down 5.9%. The retailers were mixed, Woolworths put on 0.9 %, Harvey Norman was lower at 1% and David Jones lost 3.1%.

Media stocks were mixed with News Corp putting on 2.6%, Fairfax losing 1% and PBL declining 0.8%.

In the news, telecom giant Telstra was four cents cheaper at $4.64 after it agreed to an out of court settlement of up to $5 million to settle a class action against the telco, it was announced today in the Federal Court of Australia.

Flight Centre hit heavy turbulence after it announced it had agreed to buy one of North America''s biggest travel agents, Liberty Travel, for $135 million (A$149.22 million). Flight Centre shares dipped 8.3% to $24.99.