ECB Pumps $500 B Liquidity

123jump.com Staff
18 Dec, 2007
New York City

The European Central Bank two-week debt auction attracted bids from nearly 400 banks. The pre-announced rate of 4.21% or better, the second sch event ever, and the largest liquidity measure, generated $500 billion or 348 billion euro credit pumping in the market. Nestle fell after a broker downgrade. Copper fell in London trading but gold crossed above $800 oer ounce. Brokerages, banks, and property stocks fell in the region. Switzerland led the decliners in the region.

[R]4:00PM New York, 10:00PM Frankfurt, 8:00AM Sydney[/R]

[R]Global Markets Indexes[/R]

Dow Jones Industrial Average closed up 65.27 or 0.48% to a close of 13,232.47, S&P 500 edged higher 0.59% or 9.08 to 1,454.98, and Nasdaq Composite Index traded up 21.57 or 0.77% to a close of 2,596.57. In Toronto TSX Composite lost 19.18 or 0.14% to close at 13,367.93.

Of the 30 stocks in Dow Jones Industrial Average, 24 closed higher, 6 closed lower, and none were unchanged.

General Motors led the gainers in the index with a rise of 2.9% followed by increases in Pfizer of 2.4%, in AIG of 2.3%, in IBM of 2.2%, and in Alcoa of 1.9%. DuPont led the decliners in the index with a fall of 0.7% followed by losses in JP Morgan and Proctor & Gamble of 0.6%, and in Citigroup of 0.5%.

Of the stocks in S&P 500, 367 closed higher, 127 fell, and 6 were unchanged.

Three stocks fell more than 3% and twenty one stocks rose more than 3%.

H&R Block led the gainers in the index with a rise of 6% followed by increases in Hess Corp of 5.6%, in Freddie Mac and Fannie Mae of 5.5%, in Gamestop Corp of 4.9%, and in Synovus Financial of 4.8%. E*Trade led the decliners in the index with a fall of 4.5% followed by decreases in Countrywide of 3.4%, in Coach of 3.2%, and in Goldman Sachs of 2.9%.

In London FTSE 100 Index up by 22.30 or 0.36% to 6,300.10, in Paris CAC 40 Index increased 18.42 or 0.33% to close at 5,533.30, and in Frankfurt DAX index also increased 42.70 or 0.55% to close at 7,868.14. In Zurich trading SMI closed down 54.11 or 0.63% to 8,490.48.

In Tokyo Nikkei 225 Index declined 41.93 or 0.27% to close at 15,207.86, in Hong Kong Hang Seng index closed up 136.29 or 0.51% to 26,732.87, in Australia ASX 200 declined by 39.20 or 0.62% to close at 6,292.60.

In South Korea Kospi Index increased 21.65 or 1.18% to close at 1,861.47, Thailand closed down 3.72 or 0.45% to 813.90, and Indonesia edged lower 18.69 or 0.70% to 2,646.23. India closed lower by 181.71 or 0.94% to 19,079.64.

In Latin Markets Brazil led the gainers with a rise of 2.2% followed by increases in Mexico of 4.2%, and in Mexico of 0.9%. Colombia led the decliners with a loss of 2.6% followed by losses in Peru of 1.5%, in Chile and Argentina of 0.07%, and in Venezuela of 0.03%.

Bond Yields decreased on 10-year U.S. bonds to 4.14% and 30-year bonds declined to 4.56%.

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

Crude oil fell $0.93 to close at $89.70 per barrel for a front month contract, natural gas increased 10 cents to $7.13 per mBtu, and gasoline futures decreased 3.24 cents to close at 230.30 cents per gallon.

Gold edged higher $8.10 in New York trading to close at $807.40 per ounce, silver closed up 19 cents to $14.165 per ounce, and copper for front month delivery lost 0.45 cents to 288.45 per pound and in London futures fell $165.50 to $6,350.00.

Dollar edged lower against euro to $1.4404 and higher to 113.315 yen.


[R]10:00AM New York – U.S. stocks edged higher after the release of earnings from Goldman Sachs and Adobe and housing starts report. ECB pumped $500 billion of liquidity in euro zone.[/R]

Dow Jones Industrial Average rebounded at the opening 64.61 to 13,232.97, Nasdaq increased 13.04 to 2,587, and S&P 500 edged higher 7.92 to 1,453.82.

Market averages after thirty minutes of trading edged higher on better than expected earnings from Adobe, Goldman Sachs and weak housing start report.

Building permits for privately owned homes in November declined 1.5% to a seasonally adjusted annual rate of 1,152,000, from the revised October rate of 1,170,000 and is 24.6% below the revised November 2006 estimate of 1,527,000. Single-family authorizations in November were at a rate of 764,000 5.6% below the October level of 809,000.

Privately-owned housing starts in November declined by 3.7% seasonally adjusted annual rate of 1,187,000 from the revised October estimate of 1,232,000 and 24.2% below the revised November 2006 rate of 1,565,000. Single-family housing starts in November were at a rate of 829,000; 5.4% below the October level of 876,000.

Privately-owned housing completions declined 1.4% in November to a seasonally adjusted annual rate of 1,344,000 from the revised October estimate of 1,402,000 and 28.7% below the revised November 2006 rate of 1,885,000. Single-family housing completions in November were at a rate of 1,088,000, 4.1% below the October level of 1,135,000.

Best Buy ((BBY)) reported third quarter earnings of 53 cents per share or $228 million compared to 31 cents or $150 million a year ago. Revenue in the quarter increased 17% to $9.93 billion. For the year the company raised its guidance to $3.20 from $3.15 per share. Best Buy stock fell 1.5% in the morning trading.

Goldman Sachs ((GS)) reported earnings rise of 2% on net revenue increase of 14%. Goldman Sachs reported fourth quarter revenue increase of 14% to $10.74 billion and net income increase of 2% to $3.22 billion. Diluted earnings per share in the quarter increased to $7.01 compared to $6.59 a year ago and $6.14 in the third quarter of 2007.

For the fiscal year revenue rose to $45.99 billion and earnings increased to $11.60 billion. Earnings per share increased 26% to $24.73 from $19.69.

Adobe reported fourth quarter revenue increase of 34% to $911.2 million from $682.2 million a year ago and earnings rose 30.3% to $275.8 million from $163.4 million. Diluted earnings per share jumped to 38 cents from 30 cents a year ago.

The European Central Bank offer for 348.6 billion euros ($502 billion) lending to banks at lower than prevailing interest rate between banks received strong demand in the euro zone banks. The central bank is providing additional liquidity for the last two weeks of the year to ease the current credit crunch in the market. The fresh lending managed to lower the interbank rate from a high of 4.9% a week ago to below 4.28%.

The Central Bank received bids from nearly 400 institutions with a total bids worth 377 billion euros. The ECB had pre-announced that it will accept all bids that are received at a rate higher than 4.21% following a similar move in the second week in August of this year to pump 95 billion euro liquidity in the market.


[R]9:00AM New York - Goldman Sachs fourth quarter revenue rose 14% and earnings increased 2% from a year ago.[/R]

Goldman Sachs reported fourth quarter revenue increase of 14% to $10.74 billion and net income increase of 2% to $3.22 billion.

Diluted earnings per share in the quarter increased to $7.01 compared to $6.59 a year ago and $6.14 in the third quarter of 2007.

For the fiscal year revenue rose to $45.99 billion and earnings increased to $11.60 billion. Earnings per share increased 26% to $24.73 from $19.69.

Return on average tangible common equity was reported at 38.2% and average common shareholder equity was 32.7% for the year.

In the quarter the company repurchased 4.12 million shares at a total cost of $8.96 billion.

For the year, investment banking net revenue rose 34% to $7.56 billion, fixed income, currency, and commodities (FICC) net revenue rose 13% to $16.17 billion, and equities net revenue increased 33% to $11.3 billion.

For the year, assets management reported 28% increase in assets under management to $868 billion and generated net revenue of $4.49 billion.

In the quarter, Net revenues in FICC were $3.30 billion, 6% higher than the fourth quarter of 2006, reflecting significantly higher net revenues in currencies and commodities. The increase in commodities reflected a gain of approximately $800 million from the sale of a majority interest in 14 power generation facilities held by Cogentrix Energy, Inc. In addition, net revenues in mortgages and interest rate products were higher. Net revenues in credit products declined significantly, reflecting lower results from equity investments, partially offset by a gain of approximately $500 million, net of hedges, related to non-investment-grade credit origination activities. Results from equity investments declined in part due to a gain of approximately $500 million on Accordia Golf Co., Ltd. during the fourth quarter of 2006.

Asset Management net revenues were $1.17 billion, 25% higher than the fourth quarter of 2006, reflecting higher management and other fees. During the quarter, assets under management increased $72 billion, or 9%, to $868 billion, reflecting non-money market net inflows of $16 billion, primarily in fixed income assets, money market net inflows of $42 billion and market appreciation of $14 billion in fixed income and equity assets.

As of November 30, 2007, total capital was $206.97 billion, consisting of $42.80 billion in total shareholders’ equity (common shareholders’ equity of $39.70 billion and preferred stock of $3.10 billion) and $164.17 billion in unsecured long-term borrowings. Book value per common share was $90.43, an increase of 25% compared with the end of 2006 and an increase of 7% compared with the end of the third quarter of 2007.

The Board declared a dividend of $0.35 per common share to be paid on February 28, 2008 to common shareholders of record on January 29, 2008. The Board also declared dividends of $351.84, $387.50, $351.84 and $346.84 per share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, respectively (represented by depositary shares, each representing a 1/1,000th interest in a share of preferred stock), to be paid on February 11, 2008 to preferred shareholders of record on January 27, 2008.


[R]8:00AM New York, 6:30PM Mumbai - Sensex fell for the second day in row./R

Stocks in Mumbai closed weak on Tuesday with the benchmark index recording a loss of 0.9% or 181.7 at 19,079 after reaching a low of 19,009.35 and a high of 19,375.07. At day''s low Sensex lost 252 points.

Hindustan Unilever, Larsen & Toubro, HDFC, ICICI Bank and Reliance Industries led the decliners in the BSE-30 index with a loss of 1.75% or more.

Among the Bombay Stock Exchange shares, 1,193 stocks rose, 1,672 stocks declined, and 27 stocks remained unchanged. Of the Sensex 30 index, 18 declined. Trading turnover on the BSE amounted to 8,007 crore rupees, lower than 9,641 crore rupees reported on Monday. Turnover on the National Stock Exchange was at 19,519 crore rupees.

In the broader markets, S&P CNX Nifty slid 0.6% or 34.7 with the 50-share index closing at 5,742 levels. Stocks in oil & gas and healthcare sector were in demand, while selling pressure was visible in banking, metal and realty stocks.

Of the NSE-50 stocks, Tata Power Comapany, Sterlite Indus India, Unitech Ltd, VSNL and HDFC Bank were the leading decliners with a loss of over 1.8% each.

BPCL, Sun Pharma, Cipla, ITC Ltd, Cairn India and NTPC were the key gainers in the broader index with a rise of 1.6%.

In Tokyo Nikkei 225 Index declined 41.93 or 0.27% to close at 15,207.86, in Hong Kong Hang Seng index closed up 136.29 or 0.51% to 26,732.87, in Australia ASX 200 declined by 39.20 or 0.62% to close at 6,292.60.

In South Korea Kospi Index increased 21.65 or 1.18% to close at 1,861.47, Thailand closed down 3.72 or 0.45% to 813.90, and Indonesia edged lower 18.69 or 0.70% to 2,646.23. India closed lower by 181.71 or 0.94% to 19,079.64.

Reliance Industries declined 1.8% to 2,728.9 rupees on reports that the company has paid advance tax of 1,045 crore rupees in the third quarter ended 15th December 2007.

Reliance Communications fell 0.5% to 714.4 rupees on news reports that it has earmarked an investment of about 800 crore rupees to roll out a telecom network — fixed and mobile — in Uganda, in the Eastern Africa.

ITC gained 2.2% to 197.9 rupees, Tata Tea gained 1.3% to 880.6 rupees, and Hindustan Unilever shed 3.4% to 211.2.

Videocon industries added 0.5% to 619.4 rupees, Lloyd Electric advanced 1.2% to 174 rupees and Titan Industries jumped 5% to 1,459.65 rupees.

Sun Pharmaceuticals surged 4% to 1,137.95 rupees, Cipla gained 3.8% to 215.75 rupees, Dr. Reddy''s Laboratories advanced 0.1% to 717.45 rupees and Ranbaxy Laboratories climbed 1.1% to 410 rupees.

Tata Steel fell 0.9% to 816.35 rupees, Sterlite Industries retreated 1.8% to 959 rupees, while and Hindalco Industries slid 0.5% to 199.7 rupees. Steel Authority of India remained unchanged at 259.75 rupees.

Bharat Heavy Electricals declined 1.2% to 2,395.1 rupees while Larsen & Toubro shed 2.8% to 3,967.8 rupees. Suzlon Energy gained 1.8% to 1,861.8 rupees.

ICICI Bank fell 2.3% to 1,140.65 rupees and HDFC Bank slid 1.3% to 1,685 rupees. State Bank of India declined 0.5% to 2,303.7 rupees.

Maruti Suzuki India gained 0.9% to 1,019.65 rupees and NTPC surged 1.7% to 232.4 rupees. HDFC fell 2.3% to 2,812.3 rupees.


[R]6:00AM New York, 8:00PM Tokyo – Stocks in Tokyo fell for the fifth session in a row as weakness in financial sector drag averages.[/R]

In Tokyo trading Nikkei 225 pared a 0.7% decline by mid-day to close down 0.27% or 41.93 to 15,207.86, while the broader Topix Index shed 2.93% to 1,469.77.

In the first section of the Tokyo Stock Exchange 9 billion shares valued at 1.1 trillion yen changed hands while in the second section 305 million shares worth 10 billion yen were traded.

Of the Nikkei 225 stocks 101 gained, 106 declined, and 18 were unchanged. IHI Corp led advancers with a rise of 4.2% followed by Dowa Holdings.

The New York Federal Reserve Bank’s Buffalo branch general economic index fell 10.3 in December from 27.4 in November. Economists forecasted the index would be at 20%.

U.S. National Association of Home Builders/Wells Fargo index of homebuilder confidence was at 19, the lowest in 24 years. Home builders’ confidence has been at its low for the last three months in a row as housing market continues to suffer from tighter mortgage standards, rising inventory of homes for sale, and falling home prices.

Kyodo news reported yesterday that consumer loan and credit companies would set up an association on Wednesday to self-regulate the industry as the revised money lending business law moves into the second stage of implementation.

The new legislation mandates the Japan’s Financial Services Agency to exert a stronger influence in consumer loan companies and other non-bank moneylenders.

Separately, consumer lender Takefuji Corp said yesterday that it will lower its maximum interest rate on January 25th, 2008 to 18% from the current 27.3% before the new legislation is enacted by the Diet. The new rules require consumer lenders to limit the rate to 20% as of late 2009.

Bank of Japan reported yesterday in its quarterly preliminary report that the outstanding balance of financial assets fell by 20 trillion to 1.536 quadrillion yen at the end of September as a result of valuation losses on securities precipitated by the credit market turmoil.

The balance of shares and equities stood at 173.20 trillion, down from 189.96 trillion at the end of June. Furthermore, government bonds and investment trust beneficiary certificates stood at 35.37 trillion yen, while 10.11 trillion was for outward investment in securities. Individual assets held in cash and deposits were up 0.4% to 770.49 trillion yen.

Japan’s Finance Minister Fukushiro Nukaga said at a press conference in Tokyo today that new bond sales for the next fiscal year starting on April 1st, 2008 would be kept below 25.4 trillion yen.

Nukaga said the government will aim at bolstering economic growth and revitalize rural areas, and would tap about 10 trillion yen of reserved funds in “zaito” loans to affiliated agencies and local government.

Of the Nikkei 225 index shares IHI Corp led advancers with a rise of 4.18% followed by rises of 3.82% in Sumco Corp, of 3.44% in Showa Denko K.K, and of 2.89% in Toto Limited.

Exporters also gained after the yen weakened to 113.15 from 112.95 yesterday as economists bet the Bank of Japan will keep interest rates on hold at 0.5% on Thursday. Casio Computers firmed 0.08% and Sony Corporation added 0.49%.

Chiyoda Corp led the decliners in Nikkei 225 index with a fall of 4.98% followed by losses in Nikon Corp of 4.68%, in Alps Electric Company Limited of 4.63%, in Komatsu Limited of 4.41%, and Taiyo Yuden Company of 3.17%.

Shipbuilders also slumped on concerns economic growth is easing. Kawasaki Heavy Industries fell 2.47%.

Aeon Corp said on Monday that it is seeking investor support to block 15 billion yen takeover of drugstore CFS by Ain Pharmaciez Inc at a shareholders meeting on January 22nd, 2008. Aeon needs the support of at least 18% of voting rights to veto the takeover.