Weak Retail Sales, Citigroup $9.8B Loss

123jump.com Staff
15 Jan, 2008
New York City

U.S. stocks declined sharply in the morning hours after a weak retail sales in December and huge loss from Citigroup. December retail sales declined 0.4% from November but rose 4.1% from a year ago. Total retail sales for the year 2007 were up 4.2% from 2006. Citigroup reported fourth quarter revenue decline of 70% and a loss of $9.83 billion or $1.99 per share. Subprime-loan and consumer creidt losses in the quarter were $18.1 billion.

[R]9:50AM New York – U.S. stocks traded sharply lower after thirty minutes of trading.[/R]

U.S. stocks decline after retail sales decline and huge loss at Citigroup.

Dow Jones Industrial Average declined 99.22 to 12,678.34, Nasdaq lost 24.50 to 2,453.80, and S&P 500 decreased 15.05 to 1,401.59.

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $382.9 billion, a decrease of 0.4% from the previous month, but 4.1% above December 2006.

Total sales for the 12 months of 2007 were up 4.2% from 2006. Total sales for the October through December 2007 period were up 4.9% from the same period a year ago.

The October to November 2007 percent change was revised from a gain of 1.2% to a rise of 1.0%.

Retail trade sales were down 0.4% from November 2007, but were 4.3% above last year.

Gasoline station sales were up 18.5% from December 2006 and sales of non-store retailers were up 12.1% from last December.

Citigroup Inc. ((C)) reported a net loss for the 2007 fourth quarter of $9.83 billion, or $1.99 per share. Results include $18.1 billion in pre-tax write-downs and credit costs on sub-prime related direct exposures in fixed income markets, and a $4.1 billion increase in credit costs in U.S. consumer primarily related to higher current and estimated losses on consumer loans.

In the fourth quarter Citigroup revenue declined 70% to $7.2 billion and lost $9.833 billion from a profit of $5.12 billion a year ago. Losses per share in the quarter were $1.99 compared to earnings of $1.99 per share.

A rare bright spot in the quarter were international segments. International consumer revenues increased 45%, driven by organic volume growth, the impact of recent acquisitions, a $507 million pre-tax gain on Visa Inc. shares, and a $313 million pre-tax gain on the sale of an ownership interest in Nikko Cordial''s Simplex Investment Advisors. Average deposits and loans increased 21% and 30%, respectively, and investment sales were up 24%.

Citigroup reported another quarter of loan write-downs related to loans to the housing market resulting in write-downs of $17.4 billion on sub-prime related direct exposures. These exposures on September 30, 2007 were comprised of approximately $11.7 billion of gross lending and structuring exposures and approximately $42.9 billion of net collateralized debt obligations super senior exposures (CDO super senior gross exposures of $53.4 billion).

On December 31, 2007, sub-prime related direct exposures were comprised of approximately $8.0 billion of gross lending and structuring exposures and approximately $29.3 billion of net CDO super senior exposures (CDO super senior gross exposures of $39.8 billion).

For the full year 2007, net income was $3.62 billion, or $0.72 per share.

[R]3:00AM New York, 7:00PM Sydney- ASX 200 index declined 0.3%.[/R]

ASX 200 index lost 0.3% or 20 to close at 5,960.

The Preliminary market turnover was 1.69 billion shares worth $6.13 billion with 542 shares moving up, 700 moving down, and 342 unchanged.

Centro Properties was the most actively traded stocks with 140.1 million shares worth $87.4 million changing hands.

Centro Properties chief executive Andrew Scott resigned and head of the U.S. shopping mall division, Glenn Rufrano will take over the position. Centro, the second largest Australian mall owner, had financed most of its expansion on credit market. The company accumulated a portfolio of 700 shopping centers in the U.S. and acquired a debt of A$3.9 billion in the process.

The current credit market malaise has choked off Centro from securitizing mortgages and repaying the debt it owes Lenders have extended the deadline to repay the debt by February 15th.

Qantas was fined US$68 million in a Washington court after pleading guilty to charges of playing a part in a conspiracy to fix rates for international air cargo shipments. The airline was given 15 days to pay the fine, which had been agreed to under a plea deal.

JPMorgan Chase & Co raised Australia''s largest steelmaker, BlueScope Steel Ltd''s full-year profit forecast by 10% because of rising prices in Asia.

According to a J P Morgan research report reported by Bloomberg News, BlueScope Steel net income is expected to reach $526 million ($472 million) for the 12 months ending June 30, up from an earlier estimate of $477 million and against last year''s profit of $686 million. BlueScope rose 1% after the release of earnings estimate from JP Morgan.

Mirvac Ltd today disclosed plans to redevelop the town site of 270 hectares in Binningup in Western Australia at a cost of $1 billion. Mirvac said work on the site is expected to commence in 2009, and estimated to complete the project in 20 years. Binningup Beach is located approximately 140km south of Perth.

Rio Tinto Ltd subsidiary Energy Resources of Australia Ltd registered a 14% increase in annual production at its Ranger uranium mine in the Northern Territory.

The company said its production had risen to 5,412 ton of uranium oxide in 2007. During the fourth quarter of 2007, production totaled 1,553 tonnes, up 14% from the third quarter, but was down 7% from the same period in 2006.

The Australian dollar closed half a US cent higher today heightening expectations that interest rates will fall in the US, making Australian investments more attractive.

At the close, the dollar was trading at US$0.8997, up from yesterday''s close of US$0.8944.

The U.S. Federal Reserve Bank is widely anticipated to cut interest rate at the end of this month. The move would widen the interest rate differential between the U.S. and Australia.

Of the ASX 200 index shares, Energy Resource Australia led the gainers with a rise of 9% followed by increases in Lynas Corporation Limited of 8%, in Paladin energy of 7.2%, in Henderson of 5.2%, and in Kagara limited of 5.1%.

Of the ASX 200 index stocks, Centro Retail led the decliners with a fall of 44.4% followed by losses in Centro Properties of 30.2%, in MFS Limited of 19.3%, in Sundance Resource of 8.5% and in Transfield Service of 6.7%.