Hypo Real Fell 35%; Markets Declined 2.5%

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

Financial markets across Europe fell on the global slowdown as U.S. markets fell. Uk, Norway, and Spain fell more than 3%. France, Germany, and Switzerland declined more than 2%. Hypo Real Estate fell 35% after it revealed losses in subprime lending in the U.S. Commerzbank dropped 8$ and TUI fell 6%. Total S.A. said that fourth quarter profit rose 32% on higher refining margin of $30.10 ton. Accor revenue in 2007 rose 6% to 8.12 billion euros.

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

European Markets

In London FTSE 100 Index closed lower 190.10 or 3.06% to 6,025.60, in Paris CAC 40 Index decreased 152.69 or 2.83% to close at 5,250.82 and in Frankfurt DAX index closed lower 165.64 or 2.14% to close at 7,717.95. In Zurich trading SMI declined 219.44 or 2.68% to close at 7,973.92.

North American Markets indexes

Dow Jones Industrial Average lost 277.04 or 2.17% to a close of 12,501.11, S&P 500 closed down 35.30 or 2.49% to 1,380.95, and Nasdaq Composite Index traded down 60.71 or 2.45% to a close of 2,417.59.

In Toronto TSX Composite closed down 378.54 or 2.76% to close at 13,319.74.

Of the 30 stocks in Dow Jones Industrial Average, 1 closed higher, 29 closed lower, and none was unchanged.

Citigroup led the decliners in the index with a loss of 7.2% followed by losses in JP Morgan Chase of 5.5%, in Alcoa of 5.08%, in General Motors of 4.8%, and in Boeing of 4%. Home Depot was the only gainer in the index and closed 0.08% higher.

Of the stocks in S&P 500, 24 closed higher, 474 fell, and 2 were unchanged.

Nine stocks fell more than 3% and eighty nine stocks rose more than 3%.

E*Trade led the decliners in the index with a fall of 10% followed by losses in Circuit City of 9.77%, in CIT Group of 9.2%, in MEMC Electric of 8.8%, in Valero Energy of 8.3%, in Jacobs Engineering of 8.2%, and in Micron Technology of 8%.

Big Lots led the gainers in the index with a rise of 5.4% followed by gains in Tiffany of 4.7%, in Tenet Healthcare of 3.3%, in Southwest Air of 2.5%, and in First Horizon of 2.4%. Northrop Grumman and Raytheon gained more than 1.7%.

South American Markets Indexes

In Latin Markets Peru led the decliners in the region with a loss of 4.41% followed by decreases in Brazil of 3.67%, in Argentina of 2.96%, in Chile of 2.62%, in Colombia of 2.3%, and in Mexico of 2.17%.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 138.16 or 0.98% to 13,972.63, in Hong Kong Hang Seng index decreased 630.35 or 2.38% closed to 25,837.78, in Australia ASX 200 index closed lower 20.00 or 0.33% to close 5,960.00.

In South Korea Kospi Index decreased 18.93 or 1.07% to close at 1,746.95, in Thailand SET index closed lower 11.36 or 1.44% to 779.79. Sensex index in India decreased 476.96 or 2.30% to 20,251.09. Jakarta Composite Index in Indonesia fell 2.86% or 80.34 to close at 2,730.03 and in Singapore Strait Times Index fell 63.56 or 1.98% to close at 3,154.58.

Bond Yields decreased on 10-year U.S. bonds to 3.69% and 30-year bonds increased to 4.28%.

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

Crude oil fell $2.29 to close at $91.91 per barrel for a front month contract, natural gas decreased 15 cents to $8.20 per mBtu, and gasoline futures decreased 6.41 cents to close at 230.87 cents per gallon.

Gold decreased $0.80 in New York trading to close at $902.60 per ounce, silver closed down 27 cents to $16.15 per ounce, and copper for front month delivery decreased 9.70 cents to 324.20 per pound and in London copper futures increased $101.00 to $7,389.00.

Dollar edged lower against euro to $1.4830 and higher to 106.820 yen.


[R]1:00PM New York, 6:00PM London- U.K. inflation remains at 2.1% in December for the third month.[/R]

London stocks traded in the red as homebuilders, retailers and financial stocks declined.

In London trading FTSE 100 slipped 3.06% or 190.1 to 6,025.60.

Of the 102 FTSE 100 stocks 5 gained, 95 declined, and 2 were unchanged.

The Office of National Statistics reported today that CPI annual inflation rate held steady at 2.1%, unchanged from November as gas and electricity bills increased less than last year.

However, the upward contribution to change in the CPI annual rate was from food, non-alcoholic beverages, clothing and footwear.

The statistics office added that Retail Price Index fell 4% in December from 4.3% in November on smaller increases in the average mortgage payments than a year ago in December, while the RPIX inflation, excluding mortgage interest payments, was 3.1% in December from 3.2% in November.

Separately, Chancellor of the Exchequer Alistair Darling said in London today that slow inflation “gives us a position of strength to face the current international uncertainty”.

Northern Rock chairman Bryan Sanderson said today at an extraordinary meeting in Newcastle today that the shareholders interest doesn’t exceed the need to pay the Bank of England’s 25 billion pound loan and avoiding nationalization.

Shareholders of the lender voted today on four resolutions to limit management’s ability to sell assets and issue new shares.

Northern Rock biggest shareholders such as SRM Global Advisers and RAB Capital Plc favor a private sell of the company as opposed to nationalization.

Of the FTSE 100 index shares Experian Group led gainers with a rise of 2.46% followed by gains in Sainsbury Plc of 1.78%, in ITV Plc of 1.30%, in Man Group Plc of 0.66%, and in Imperial Tobacco of 0.42%.

Sainsbury Plc and Experian gained after Goldman Sachs added companies to its “conviction buy” list.

Taylor Wimpey led decliners of the FTSE 100 index shares with a fall of 7.71% followed by losses in Home Retail Group of 6.85%, in Kingfisher Plc of 6.8%, in British land Company Plc of 6.62%, and in Carphone Warehouse of 6.24%.

Taylor Wimpey and other homebuilders fell after the company reported that orders declined 19% as of end of last year on the back of falling prices and tighter credit markets.

New homes sold before completion edged lower to 1.06 billion pounds by December 31 from 1.32 billion pounds in the previous year. Persimmon fell 3.11%.

Retailers also tumbled after Tesco said today that sales at U.K. stores open at least a year rose by 3.1% in the fourth quarter compared to 4.1% realized in the third quarter.

Next Plc fell 4.12% and Marks & Spencer shed 3.66%.

Financial stocks slumped on the news that Citigroup Inc. reported a net loss for the 2007 fourth quarter of $9.83 billion, or $1.99 per share compared to profit a year ago. Revenues in the quarter declined 70% from a year ago.

The loss includes $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.

Royal Bank of Scotland slipped 5.88% and Alliance and Leicester plunged 4.78%.


[R]11:00AM New York – U.S. stocks reached low for the day as investors worried that credit market turmoil and declining sale will hurt earnings in 2008.[/R]

Retailers declined after December retail sales fell 0.4% from November but rose 4.1% from a year ago.

Coldwater Creek ((CWTR)), women’s apparel retailer, declined 27% or $1.42 to $3.73 after it lowered its outlook for the fourth quarter loss between 16 cents and 20 cents from the earlier projection of break even. The company also said that same store sales are likely to decline in the mid-teen or high-teen in the quarter compared to a year ago.

Williams Sonoma fell 12% after it lowered its fiscal fourth quarter outlook and estimated that a quick turnaround is not likely. Williams ((WSM)) net revenues for the 9-week holiday period ended December 30, 2007 increased 4.4% to $1.021 billion versus the comparable 9-week holiday period ended December 31, 2006, including a comparable store sales decrease of 0.4%.

Howard Lester chairman and chief executive commented, “Our preliminary estimates for 2008 on a GAAP basis (52 weeks in 2008 versus 53 weeks in 2007) assume a flat to low-single digit decrease in net revenue and a mid-single to high-single digit decrease in diluted earnings per share.”

Citigroup fell $1.95 or 6.5% to $27.15 after it reported a sharply higher loss on subprime and consumer loans related write-down of $18.1 billion.

Citigroup also said that it will sell preferred stocks worth $14.5 billion and lowered its dividend by 41%. Merrill Lynch accepted investment of $6.6 billion from a consortium of investors including $1.2 billion from Mizuho Bank in Japan and funds controlled by Kuwait and Korea. China declined to invest in Citigroup.

Genentech ((DNA)) reported late evening yesterday that fourth quarter profit increased 6% on 7% rise in sales. In the quarter the revenue jumped to $2.97 billion and earnings increased to $632 million and earnings per share rose to 59 cents from 55 cents a year ago.

State Street ((STT)) reported that the fourth quarter net income of $223 million or 57 cents per share compared to $309 million or 91 cents per share. The fourth quarter earnings included 71 cents per share charge for legal reserve of $620 million.

[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]5:00AM New York, 7:00PM Tokyo – The Bank of Japan lowers economic growth assessments for several regions.[/R]

Stocks in Japan plummeted dragged by exporters on a strengthening yen and the Bank of Japan Governor Toshihiko Fukui low assessments of regional economies.

In Tokyo trading Nikkei 225 declined 0.98% or 138.16 to 13,972.63, below 14,000 for the first time since November 2005, while the broader Topix Index declined 2% or 27.38 to 1,350.20

Of the Nikkei 225 stocks 51 gained, 168 fell, and 6 were unchanged.

Fast Retailing led advancing stocks with a rise of 8.76% after first quarter sales increased 11% and profit soared 8.7%. Fast Retailing stocks closed 2.6% higher.

The Bank of Japan said today in its regional economic report for January 2008 that conditions in four of the nine branches were worsening, and lowered its assessments of Hokkaido, Tohoku, Hokuriku and Kanto-Koshinetsu.

According to the report, housing investment fell in all of Japan’s regional economies because of the revised building standards laws introduced in June 2006 that imposed stricter rules for obtaining building permits.

Also small businesses are increasingly becoming cautious of the economic outlook as rising oil prices and raw material prices squeeze profits.

The Bank of Japan Governor Toshihiko Fukui said at a quarterly meeting of central bank branch managers in Tokyo today that the economy is expected to slow. Commented Fukui: “Economic growth will keep slowing for the time being, although it’s expected to pick up moderately thereafter.”

The Nikkei news online reported yesterday that Mizuho Corporate Bank is mulling to buy a stake in $1.2 billion of Merrill Lynch.

Mizuho is reportedly in the final stages of buying the preferred shares from the troubled U.S. broker by the end of this month and shares will likely be convertible to common shares.

Of the Nikkei 225 index shares, Fast Retailing led gainers with a rise of 8.76% followed by rises in Eisai Company Limited of 3.39%, in CSK Holdings Corporation of 2.71%, in Kyowa Hakko Kog of 2.65%, in Seven & I Holdings of 2.60%.

Hitachi Zosen led decliners in Nikkei 225 stocks with a fall of 9.92% followed by losses in Mitsui Engineering & Shipbuilding of 8.22%, in Nippon Mining House of 7.40%, in Kawasaki Heavy Industries of 6.92%, and in Komatsu Limited of 6.92%.

Hitachi Zosen and other shipbuilders fell after weekend reports the Baltic Dry Index fell the most since 1989 and on news that the economy in Japan is slowing. Mitsui OSK Lines fell 3.72%.

Exporters also plunged heavily as the yen strengthened the most in seven weeks to as high as 107.38 against the dollar yesterday. However, at the close of trade the yen slipped to 107.56 from 107.57.

Canon Incorporated declined 2.11%, Toyota Motor Corporations lost 1.78% and Honda Motor Corporation declined 4.40%.

Bloomberg news reported today that Japan Airlines Corporation plans to forgo raising cash through selling its credit card unit and instead sell 100 billion yen of securities, including preferred shares to banks, petroleum and trading companies.

Japan Airlines is presently in talks with Mitsubishi UFJ Financial Group, Mizuho Financial Group, Sumitomo Mitsui and Development Bank of Japan to sell the new securities.

Nippon Oil Corp said today it will be processing less crude oil this month as warmer weather has lowered the demand for kerosene. The company had originally planned to process 30.15 million barrels.



[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%.