Metals Rise, Housing and Stocks Fall

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

U.S.market averages traded sideways in the session after new home sales plunged 9% in November. Home prices declined as well. Dow Jones and S&P 500 closed up a fraction but Nasdaq declined a fraction. Oil and gold rose as commodities prices advanced in international markets. Former Prime Minister of Pakistan, Bhutto was laid to rest in her hometown. Nikkei 225 Index in Japan fell 1.6%. Germany led the European markets with a rise of 22% in 2007. Brazil led Latin manrkets with 43% gains.

[R]4:30PM New York, 10:30PM Frankfurt, 8:30AM Sydney[/R]

European Markets Indexes

In London FTSE 100 Index closed lower 30.90 or 0.48% to 6,466.90, in Paris CAC 40 Index decreased 0.23 or 0.004% to close at 5,627.25, and in Frankfurt DAX index also increased 28.72 or 0.36% to close at 8,067.32. In Zurich trading SMI lower 33.73 or 0.40% to close at 8,484.46.

Russia’s Micex index declined 1% to 1,888.86 but managed to gain 12% for the year. RTS Index dropped 0.1% to 2,290.51 and for the year rose 27.3%.

North American Markets indexes

Dow Jones Industrial Average closed up 6.26 or 0.05% to a close of 13,365.87, S&P 500 edged higher 2.12 or 0.14% to 1,478.49, and Nasdaq Composite Index traded down 2.33 or 0.09% to a close of 2,674.46. In Toronto TSX Composite gained 58.07 or 0.20% to close at 13,821.34.

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

General Motors led the decliners in the index with a loss of 2.9% followed by losses in Citigroup of 0.9%, in JP Morgan of 0.87%, in Boeing of 0.7%. Exxon Mobil led the gainers in the index with a rise of 1.4%, in AT&T of 1%, in Wal-Mart of 0.65%, and in Caterpillar of 0.6%.

Of the stocks in S&P 500, 262 closed higher, 229 fell, and 9 were unchanged.

Fifteen stocks fell more than 3% and none rose more than 3%.

Teradata Corp led the gainers in the index with a rise of 2.6% followed by increases in Nordstrom of 2.5%, in Smith International of 2.4%, in Archer Daniels of 2.3%, in U.S. Steel of 2.2%, and in Newmont Mining of 2.17%.

MBIA led the decliners in the index with a fall of 16% followed by losses in Ambac Financial of 14%, in Sovereign Bancorp of 4.9%, in E*Trade of 4.8%, in KB Home of 4.5%, and in MGIC Investment Corp of 4.4%.

South American Markets Indexes

In Latin Markets Venezuela led the gainer in the region with a rise of 0.5% followed by increases in Mexico and Brazil of 0.2%, and Colombia of 0.12%. Argentina led the decliners in the region with a fall of 0.8% followed by losses in Chile of 0.25% and in Peru of 0.15%.

According to Central Bank in Brazil, net debt declined to 42.6% of gross domestic product at the end of November. The ratio at the end of December is likely to rise back up to 43.5%. The ratio in November is lowest since December 1998. Rising exports, cheap credit, and fiscal discipline has helped the country to lower its annual budget deficit.

Bovespa Index led the region in 2007 with a rise of 43% followed by 36% gain in Peru, and 13% rise in Colombia.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 256.91 or 1.65% to 15,307.78, in Hong Kong Hang Seng index closed lower 472.33 or 1.70% to 27,370.60, in Australia ASX 200 decreased 11.00 or 0.17% to close 6,339.70.

In South Korea Kospi Index decreased 11.49 or 0.60% to close at 1,897.13, in Thailand SET index closed higher 3.86 or 0.62% to 630.73, and Indonesia JSE Index edged up 6.12 or 0.22% to 2,745.83. Sensex index in India declined 9.77 or 0.05% to 20,206.95.


Bond Yields decreased on 10-year U.S. bonds to 4.08% and 30-year bonds to 4.50%.

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

Crude oil fell $0.56 to close at $96.06 per barrel for a front month contract, natural gas increased 16 cents to $7.36 per mBtu, and gasoline futures decreased 2.97 cents to close at 246.65 cents per gallon.

Gold edged higher $10.90 in New York trading to close at $842.70 per ounce, silver closed up 77 cents to $14.895 per ounce, and copper for front month delivery declined 6.00 cents to 307.20 per pound and in London copper futures rose $79.50 to $6,859.50 in yesterday’s trading .

Dollar edged lower against euro to $1.4717 and higher to 112.5950 yen.


[R]2:00PM New York, 7:00PM London – The UK home prices fell 0.5% in December.[/R]

Stocks in London fell after a report showed that house prices fell for the second consecutive month in December.

In London trading FTSE 100 declined 0.32% or 20.9 to 6,476.90, but rose 4% for the year compared to gain of 11% in 2006.

Of the 102 FTSE stocks 39 gained, 57 declined, and 6 were unchanged. Cairn Energy led the advancers with a rise of 3% followed by increase of 2% in Reed Elsevier.

U.K. mortgage lender Nationwide Building Society said in a press release today that house prices fell for the second consecutive month to 182,080 pounds. The price is 8,334 pounds higher than a year ago. Also the annual rate of house price inflation fell 4.8% in December compared to 6.9% in November and 10.5% in December 2006.

According to the mortgage lender, a third of the 30 towns and cities surveyed saw double digit growth in 2007. St Albans remains as the most expensive town in U.K. with an average price of almost 350,000 pounds, while Belfast saw the fastest rate of house price growth as prices rose by 200 pounds per day.

However, prices for homes in Newcastle and Durham fell 3% in the year.

Nationwide Chief Economist Fionnuala Earley believes tighter funding conditions and risk aversion from lenders has resulted in the decline in the mortgages availability for riskier borrowers, a development that is likely to “undoubtedly choke off new subprime lending in 2008”.

Bloomberg news reported today nine of the fourteen members of the House of Commons Treasury Committee said today Mervyn King’s term should be extended for another five years as his success on growth and inflation outweighs his delayed response to the ongoing subprime crisis.

Of the 102 FTSE index stocks Cairn Energy led advancers with a rise of 3% followed by gains of 2.02% in Reed Elsevier, of 1.46% in British Sky Broadcasting, of 1.33% in Persimmon, and in British Energy 1.32%.

Schroders Plc led declining 102 FTSE index shares with the loss of 2.51% followed by declines of 2.34% in Schroders Plc-NV, of 2.24% in BT Group Plc, of 1.75% in Standard Life, and of 1.45% in Severn Trent.

Banks also fell after Goldman Sachs Group reported yesterday that more U.S. banks are likely to experience more losses on subprime linked investments. Barclays shed 1.07%, Royal Bank of Scotland slipped 0.56% and Alliance &Leicester slumped 1.01%.

UBS AG said in a statement today it wouldn’t proceed on a planned acquisition of Standard Chartered Indian fund management unit. The sale and purchase agreement that was signed in January 2007 has since expired. UBS AG however contends that the decision is not linked to the $10 billion write-downs announced earlier this month. Standard Chartered Plc fell 0.32%.

Bloomberg news reported today that Spanish company Corporacion Dermoestietica has agreed to sell British unit Ultralese Limited to 3iGroup Plc for 174.5 million pounds.


[R]1:30PM New York, 5:30 PM London – Russia and Germany led the gainers in the region in 2007.[/R]

Banks in UK fell after the Nationwide Building Society reported a drop in housing prices, for the second month in a row. December home prices fell 0.5% from November to 182,080 pounds but rose 4.8% from a year ago. Home prices fell 0.8% in November from October month.

Alliance Leicester, Barclays, and Schroders lost more than 1%.

Of the 102 stocks in the FTSE 100 index, 39 declined, 57 rose, and 6 were unchanged.

Schroders led the decliners in the FTSE 100 index with a loss of 2.5% followed by losses in BT Group of 2.2%, in Standard Life of 1.8%, and in Severn Trent of 1.45%. Tesco, Rexam, SABMiller, and International Power lost more than 1%.

Cairn Energy led the gainers in the index with a rise of 3% followed by increases in Reed Elsevier of 2%, in BSkyB of 1.5%, and in Persimmon of 1.33%. British Energy, Smiths Group, and Land Securities added more than 1%.

In Paris trading stock changed a little ahead of the holiday weekend, however Alcatel-Lucent fell nearly 3% to 4.99 euros.

Air France –KLM rose 1.6% or 38 cents to 23.85 euros after the Italian finance minister named the carrier as preferred partner for the sale of Alitalia.

France’s national statistics office Insee reported that economy in the third quarter rose at 0.8% from the second quarter after rising at 0.3% in the second quarter. Consumer spending in the third quarter rose at 0.8% and corporate investment increased at 1.1%.

In German trading DAX index rose 0.4% led by a rise in Alliaz, Bayer, and Deutsche Boerse. The German market will reopen next year after short trading hours today.

DAX index has led other markets in western European region with a rise of 22%.

MAN AG rose 2.40 euros or 2.2% to close at 113.80 euros and Siemens AG advanced 41 cents to 0.34% to close at 108.86 euros.

Air Berlin Plc, the third largest discount carrier in Europe said that Deutsche Bank has added to its stake in the carrier and lifted it to 15.02% from 14.25%. Volatile stock of the airline has lost nearly 25% in 2007 on rising fuel cost and growing competition in the region.

In London FTSE 100 Index closed lower 30.90 or 0.48% to 6,466.90, in Paris CAC 40 Index decreased 0.23 or 0.004% to close at 5,627.25, and in Frankfurt DAX index also increased 28.72 or 0.36% to close at 8,067.32. In Zurich trading SMI lower 33.73 or 0.40% to close at 8,484.46.

Russia’s Micex index declined 1% to 1,888.86 but managed to gain 12% for the year. RTS Index dropped 0.1% to 2,290.51 and for the year rose 27.3%.

[R]12:00PM New York, 5:00PM London – Alitalia may be sold to Air France –KLM thorugh stock swap according to Italian finance minister.[/R]

ING has agreed to sell its reinsurance division in the U.S. to Berkshire Hathaway Inc.[/R]

After months of negotiations and bids withdrawal Italian Finance Minister Tommaso Padoa said today that his ministry and the government favors Air France-KLM for the sale of Alitalia.

The finance ministry holds 49.9% in the airline. Air France has offered to purchase the stake with its shares and valued the airline at half the current market value to 486 million euros or $720 million. The lack of cash in the deal shows the Aliltalia’s weakness in the market.

The national airline is estimated to lose nearly one million euros a day on high operating costs, overstaffed offices, and poor traffic and route networks in Europe and Asia.

The ministry intends to hold exclusive talks with Air France-KLM in the coming weeks to finalize the details of the agreement.

Senior ministers in the government had favored sale to local discount carrier Air One SpA but the workers unions worried that many more jobs may be lost if Air One operated the carrier.

ING Group announced today that it has reached an agreement with Berkshire Hathaway Group to sell its reinsurance unit NRG N.V. for approximately 300 million euros or $440 million.

The sale is part of ING’s strategy to focus on its core insurance, banking and asset management businesses. The sale will help ING to free up capital that will be tied up in potential long term claims that may arise from asbestos and tobacco liabilities.

NRG was established in 1968 as Nederlandse Reassurantie Groep, as a result of the merger of the two main Dutch reinsurance companies at the time. ING became majority shareholder in 1974 and the sole owner in 1991, following the acquisition of Victory Reinsurance Company.

ING decided in 1993 to run off NRG, stopping the underwriting of new business. ING suffered heavy losses after Exxon Valdez oil spill in 1989.

Since then, NRG’s life reinsurance subsidiaries were sold and a number of the remaining insurance liabilities were successfully settled.

The acquisition will be made by one of the insurance companies within the Berkshire Hathaway Group. The sale for approximately 300 million euros will result in a capital loss after tax of around 100 million euros for ING in 2007 and an improvement of 47 basis points of the debt to equity ratio of ING Group in 2008.

The transaction is subject to regulatory approval and is expected to close in the first half of 2008.


[R]11:00AM New York – Early rally in U.S. averages fades as trading enters in the second hour.[/R]

Dow Jones Industrial Average rose 35.61 to 13,394.32, Nasdaq increased 9.45 to 2,686.24, and S&P 500 gained 5.07 to 1,481.34.

November new home sales decline of 9% was the steepest level in sixteen years. The new home sales declined to a seasonally adjusted rate of 647,000. The Commerce Department also revised the October new home sales rise to 1.7% at annual rate of 711,000 from 728,000.

November sales fell 34.4% from a year ago in November, second largest decline after 35.3% plunge in 1991.

The median sales price of new houses sold in November 2007 was $239,100; the average sales price was $293,300. The seasonally adjusted estimate of new houses for sale at the end of November was 505,000. This represents a supply of 9.3 months at the current sales rate.

Home builders fell sharply after the report. D R Horton dropped 53 cents to $13.13, Toll Brothers lost 39 cents to $19.95, and Lennar declined 51 cents to $17.19.

Bank stocks after one hour of trading declined on the talks of asset sale from Merrill Lynch, HSBC, and Citigroup. Citigroup is likely to face another round of debt losses as much as$10 billion in the current quarter. The bank may sell its non-strategic assets including stake in Brazilian credit card processor, student and auto loan operations, and branch networks in emerging markets.

Citigroup ((C)) fell 7 cents to $29.50, Merrill Lynch declined 24 cents to $52.96, and HSBC lost 45 cents to $83.62.

Berkshire Hathaway has agreed to buy a reinsurance company from ING for $433 million. Berkshire also plans to start a new bond reinsurance companies to insure bonds issued by state, municipal agencies, and other state government agencies. The current malaise in the credit market has hurt the rating agencies stocks including Ambac and MBIA.

MBIA ((MBI)) dropped $3.23 or 14.6% to $19.02 and Ambac lost $4.09 or 14.4%, to $24.96.

Genesco ((GCO)) jumped 14% or $4.57 to $37.63 after a judge ruled that Finish Line must complete its takeover offer for the company. The judge said that Finish Line and its financial advisor should have factored current earnings troubles at Genesco and should not be used as a reason not to go ahead with the offer.

In Tokyo Nikkei 225 Index closed lower 256.91 or 1.65% to 15,307.78, in Hong Kong Hang Seng index closed lower 472.33 or 1.70% to 27,370.60, in Australia ASX 200 decreased 11.00 or 0.17% to close 6,339.70.

In South Korea Kospi Index decreased 11.49 or 0.60% to close at 1,897.13, in Thailand SET index closed higher 3.86 or 0.62% to 630.73, and Indonesia JSE Index edged up 6.12 or 0.22% to 2,745.83. Sensex index in India declined 9.77 or 0.05% to 20,206.95.

Pakistan stock market is closed for three days on account of assassination of the former Prime Minister Benazir Bhutto. The Karachi Index is expected to decline between 4% and 10% when it opens on Monday and may fall further if political instability continues. The index for the year has appreciated sharply and is one the best performing markets in the world. Karachi Index is up 47% for the year so far.


[R]5:00AM New York, 7:00PM Tokyo- Japan’s core consumers prices increase 0.6% for the year in November. Industrial production plummets 1.6% in November.[/R]

Stocks in Japan closed the year in negative territory on weakening global credit markets and rising inflation as energy costs continue to soar.

In Tokyo trading Nikkei 225 fell 1.65% or 256.91 to 15,307.78, and is down 11% for the year, while the broader Topix Index declined 1.6% or 24.26 to 1,475.68, a 12% plunge for the year.

In the first section of the Tokyo Stock Exchange 8.8 billion shares valued at 1.0 trillion yen were traded and in the second section 308 million shares valued at 5.3 billion yen changed hands.

Of the Nikkei 225 stocks 14 gained, 203 declined, and 8 were unchanged. Takeda Pharmaceutical Company led gainers with a rise of 3.03% followed by Nippon Oil Corp gaining 2.02%.

The Ministry of Internal Affairs and Communication’s Statistics Bureau reported today that Japan’s consumer price index fell 0.2% in November from the previous month, but soared 0.6% for the year in November to 100.7.

Food prices index fell 1.1% for the month and increased 0.9% for the year to 100.6, housing was unchanged for the month and year at 99.8, while fuel, light and water charges gained 0.9% for the year and 2.2% from a year ago to 105.8.

Consumer prices for the Ku-area of Tokyo however rose 0.2% for the month and 0.4% from the previous month in December. Food prices increased 0.6% from November and 0.7% from a year ago. Housing prices were unchanged from November but increased 0.2% for the year at 100.2.

Food, light and water charges also increased 0.2% for the month and gained 1.6% from a year earlier.

Japan’s Ministry of Industry Trade and Economy said today that the number of employed increased 0.4% from a year ago in November to 64.33 million and the number of unemployed fell 5% from a year ago to 2.46 million.

METI statistics noted that labor force in the month stood at 66.79 million and people not in labor force were at 43.65 million.

Average monthly consumption for a household of two or more in November fell 0.6% to 282,836 yen, while average monthly income per household slid 1.5% in nominal terms and 2.1% in real terms from previous year to 435,640 yen.

In addition, expenditures declined 0.9% in nominal and 1.5% in real terms to 302,879 yen from a year ago.

METI reported that industrial production fell 1.6% from previous month and increased 2.9% for the year in November to a seasonally adjusted 110.4. Production is expected to rise 4.0% in December and to remain unchanged in January.

Inventories increased for the eleventh successive month by 2.5%.

Minister of Economy and Fiscal Policy Hiroko Ota said in Tokyo today inflation induced by high energy “may choke off spending by consumers and companies”.

Of the Nikkei 225 index stocks Takeda Pharmaceutical Company led gainers with a rise of 3.03% followed by gains in Nippon Oil Corp of 2.02%, in Mazda Motor Corporation of 1.64%, in Daiwa Securities of 1.40%, and in Kubota Corporation of 0.66%.

Japan Airlines led decliners in the Nikkei 225 stocks with a fall of 5.56% followed by losses of 4.57% in Chiyoda Corp, 4.43% in Meiji Seika, 3.80% in Mitsumi Electric Company, and 3.77% in Credit Saison Company.

Japan Airlines stock fell sharply on Nikkei reports it may sell its preferred shares to raise 150 billion yen. The carrier is reportedly seeking agreements with Mitsubishi Corp, Mitsui & Company and four other lenders by the end of March.

Financial stocks fell after Goldman Sachs said Citigroup, JP Morgan Chase, Merrill Lynch may write-down an additional $34 billion in subprime linked investments in the current quarter. Mitsubishi UFJ Financial Group fell 3.15%, Mizuho Financial Group slipped 2.91%, and Sumitomo Mitsui Financial Group declined 2.77%.

Exporters fell after U.S. orders for durable goods rose by a less-than-expected 0.1% in November. Canon edged down 2.62%, Toyota Motor Corporation fell 1.95%, and Sony tumbled 2.21%.

Bloomberg news reported today Mitsubishi Motor Corporation signed an agreement with the Russian government granting it incentives including reduced custom duties on imported auto parts to assemble vehicles in the country. Mitsubishi Motor Corp closed down 1.05%.



[R]5:00AM New York, 9:00PM Sydney - The Australia index lost 0.2% after loses in resource stocks.[/R]

ASX 200 index lost 0.2% or 11 to close at 6,339.90.

The Preliminary market turnover was 355.4 million shares worth $1.105 billion with 348 stocks closed higher, 503 traded lower, and 292 were unchanged. Flinders Diamonds was the most actively traded stock with 37.9 million shares worth $3.68 million changing hands.

Rams Home Loans Group Ltd today extended a $500 million loan and the maturity of two of its funding facilities from December 31 to May 2.

The company also disclosed that it had also extended a separate $250 million facility to January 31 from December 31 as it failed to refinance more than $6 billion ($5.3 billion) in short-term loans this year.

Rams also indicated that it has received initial approvals to refinance $4.25 billion in short-term loans, including $1.5 billion with Westpac and $2.75 billion with lenders that were not identified.

Australia''''s fourth-largest bank, Westpac Banking Corp bought the Rams brand and branch network for $140 million last month and agreed to provide $1.5 billion in funding after the company failed to refinance short-term loans when subprime- linked losses escalated in August and investors shunned risky credits.

Centro Properties Group today indicated that two of its units, Centro Direct Property Fund and Centro Direct Property Fund International will pay reduced dividends for the fourth quarter.

Centro Direct Property Fund is worth $2.4 billion ($2.1 billion) and Centro Direct Property Fund International has a net worth of $1.9 billion. The parent Centro Group lost nearly 80% of its market cap in one week.
Centro and its Retail Group announced on December 17 that it was suspending dividends after experiencing difficulties in meeting the February 15 deadline to refinance its $3.9 billion debt.

Centro shares declined 5.9% while Centro Retail was down 1%.

The Board of IMX Resources today signed a detailed Heads of Agreement with Jilin Tonghua Iron & Steel Mining Company Ltd for the purchase of Cairn Hill magnetite /copper ore in South Australia and a 16.4 million share placement at 85 cents per share to raise $13.93 million ($12.3 million) representing a 9.9% stake.

According to a statement issued by IMX Resources NL''''s Managing Director Duncan Mcbain the terms of the agreement, Tonghua Mining will purchase 100% of the production of Cairn Hill ore from the initial project at approximately 1.2 million to 1.4 million tons per year, for a 3-year period.

Tonghua Mining plans to construct a processing facility in China to process the Cairn Hill ore to produce a high-grade magnetite concentrate and a copper/gold concentrate. Tonghua Mining also has the first right of acceptance for any additional production over the 1.4 million tons per year.

At the cessation of the contract, IMX Resources will have the first right to purchase the processing facility at market price. IMX rose 12% after the news.

The Australian dollar closed stronger again today after reaching 0.8792, the highest since December 14, before settling at 0.8730 at the close.

Of the ASX 200 index shares, Fortescue Metals led the gainers with a rise of 17.6% followed by increases in Australand Properties of 4.8%, in Challenger Finance of 3.7%, in Valad Property of 3.3%, and in Santos Limited of 2.9%.

Of the ASX 200 index stocks Centro Properties led the decliners with a fall of 5.9% followed by losses in APN/UKA European of 4.9%, in Sundance Resource of 4.5%, in Mincor Resources of 4.5% in, and in Bunnings Warehouse of 4.3%.

Stocks in energy sector were higher, with Woodside adding 1%, Santos up 2.9%, and Oil Search gaining 0.4%.

The gold miners were up with Newcrest adding 2% and Lihir advancing 1.2%.

The banking sector was mixed, with ANZ gaining 0.4%, Commonwealth Bank of Australia up 1.6%, the National Australia Bank was lost 0.7% and Westpac shed 0.1%.

The retailers were mixed, with David Jones adding 0.4%, Wesfarmers adding 1.1%, and Harvey Norman shed 0.7%.

The media sector was also mixed, with Fairfax was down 1.3%, News Corp lost 1.1%, Consolidated Media Holdings declined 3.9%, and Crown shed 1.5%.