U.S. Edge Lower, Asian Rally, Europe Declines

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

U.S. stocks edgeg higher in the morning trade but lost its momentum after three hours of trading. Earnings from Caterpillar, Honeywell International, and Microsoft lifted sentiment at the opening. Fiscal stimulus talks from the Whitehouse and top lawmakers in the U.S. Congress helped market regain its footing. Asian markets surged in the overnight trading and the European markets turned lower at close. Gold and oil gained on weak dollar.

[R]10:30AM New York – U.S. stocks edge higher on earnings, stimulus package, and rally in global markets.[/R]

U.S. stocks in the morning trading edged higher after a rally in Asia and Europe. Earnings from Caterpillar, Honeywell, Microsfot, and Juniper Networks, and Harley Davidson dominated trading sentiment.

Investors took a comfort as leading lawmakers in Congress and Whitehouse acted to enact $150 billion package. Several fund managers expressed their lack of enthusiasm for the size of the package and effect of it on consumer spending.

Microsoft reported surge in revenue and earnings on rising sales of Xbox and Vista. The positive guidance for the quarter and the year lifted tech stocks in the morning.

Caterpillar ((CAT)) reported fifth straight year of record sales and revenues and the fourth consecutive year of record profit.

For 2007, sales were $44.958 billion, up 8%, and earnings per share were $5.37, up 4% from 2006.

The company also reported record fourth-quarter sales and revenues of $12.144 billion, 10% higher than the fourth quarter of 2006, and earnings per share of $1.50, up 14% from a year ago.

Honeywell ((HON)) today announced full-year 2007 sales increased 10% to $34.6 billion from $31.4 billion in 2006. Earnings per share were up 25% to $3.16 versus $2.52 in the prior year.

Fourth quarter sales were up 12% to $9.3 billion versus $8.3 billion in 2006. Earnings per share increased 26% to $0.91 versus $0.72 in the prior year fourth quarter. Cash flow from operations was up 16% to $1.4 billion versus $1.2 billion in the prior year, and free cash flow was up approximately 20% to $1.1 billion versus $0.9 billion in the fourth quarter of 2006.



[R]6:00AM New York, 6:00PM Hong Kong – Hong Kong stocks gain led the rally in the Asia on fiscal stimulus package in the U.S. Crude oil and metal prices rose.[/R]

Hong Kong stock indexes traded in positive territory after calm returned to the financial markets as the U.S. Congress and the Bush Administration agreed on the stimulus plan. Commodities, metals, and energy prices surged higher.

While investors pushed stocks higher in the wake of fiscal stimulus, lower interest rate in the U.S. is likely to weaken dollar and push up prices of metals and crude oil. The move by the U.S. could be inflationary in China, India, and most countries around the world.

In Hong Kong trading Hang Seng Index gained 6.7% or 1,583.10 to 25,122.37, declining 0.3% for the week, while the China Enterprises Index of H shares rose 8.4% or 1,082.55 at 14,015.75, falling 3.8% for the week.

Daily trading turnover on the main-board was HK$126.7 billion compared to HK$142.4 billion yesterday.

Xinhua News Agency reported today that Shanghai Mayor Han Zheng said today at the first annual session of the municipal’s People Congress that the city aims to increase its Gross Domestic Product to Rmb 2 trillion by 2012.

Zheng added that the city will consolidate its position as a global financial and logistics center.

In 2007 Shanghai’s GDP was recorded at Rmb 1.2 trillion or Rmb 65,000 per capita.

The U.S. Congress and White House yesterday agreed on a fiscal economic stimulus package that will provide tax rebates of at least $600 per household with taxable income of less than $150,000. The rebate is likely to help consumer spending and help businesses to invest more in the business.

Businesses suffering losses can now reclaim taxes previously paid amounting to $70 billion.

Financial stocks rose as a result of renewed confidence in the global markets. China Construction Bank soared 9.8% to HK$6.19, China Life gained 8.4% to HK$33.50, Industrial & Commercial Bank of China spiked 8.1% to HK$5.2 and Bank of Communications jumped 11.6% to HK$9.89.

Bank of Communications also rose after Morgan Stanley increased the rating of the stock from “neutral” to “overweight”.

HSBC Holdings rallied 4.4 % to HK$120.5.

Energy stocks gained as well after crude oil prices from March delivery rose by $2.42 to $89.41 per barrel. Sinopec jumped 11.2% to HK$9.37 on the news.

Technology stocks also gained after Microsoft Chie Executive Steve Ballmer forecasted that annual sales will top $60.5 billion lifting Lenovo stock 15%.


[R]5:00AM New York, 7:00PM Tokyo – Japanese stocks surged on Asiawide rally. Unemployment in December fell to 5% and consumer price index rose 0.2% in December.[/R]

Stocks in Japan participated in stockmarket surge across Asia as the U.S. stimulus plan positively influenced investor sentiment.

In Tokyo trading Nikkei 225 soared 4.1% or 536.38 to 13,629.16, down 1.7% for the week, while the broader Topix Index rose 4.7% or 60.32 to 1,344.77.

In the first section of the Tokyo Stock Exchange 11 billion shares worth 1.3 trillion yen were traded and in the seond section 429 million shares valued at 5.6 billion yen changed hands.

Of the Nikkei 225 stocks, 218 rose, and 6 declined. Mizuho Financial Group led advancers with a rise of 10.89% after confidence returned in the market as the Bush administration and Congress agreed on the stimulus plan.

Other financial stocks gained as well. Mitsubishi UFJ Financial Group climbed 7.88% and Resona Holdings jumped 7.69%.

The Statistics Bureau announced in Tokyo today that the Japan’s consumer price index rose 0.2% in December from the previous month and gained 0.7% in the month from a year ago.

Food prices rose 0.3% from previous month and 0.9% for the year and housing edged up 0.1% from previous month and year. Fuel, light and water charges also rose 1.2% from the previous and 3.6% from a year ago, while furniture and household prices declined 0.2% and 1.7% from previous month and year respectively.

Furthermore, clothing and footwear slumped 0.4% from November and gained 0.6% on the year. However, transport and communication 0.9% from November and 2.6% year on year.

On the overall general prices, excluding fresh food jumped 0.3% from November and 0.8% from last year.

Statistics in the Ku-area of Tokyo, which is used to gauge prices in Japan, reveal that the consumer price index in January fell 0.4% from December, but rose 0.2% from last year. Food prices gained 0.5% on the month but were unchanged for the year. However housing prices remained unchanged for both the month and the year.

Fuel, light, and water charges gained 1.0% from the previous month and 1.5% from last year. Also furniture and household utensils declined 0.1% from December and fell 2.3% for the year. Clothes and footwear slumped 7.2% from the previous month and 0.4% from last year.

According to the Statistics Bureau, the number of employed persons in November rose 0.4% from the precious year at 64.33 million while the number of unemployed fell 5% year on year to 2.46 million.

The unemployment rate on a seasonally adjusted basis declined 3.8% in November.

In addition the family income and expenditure survey showed the average monthly consumption pattern per household in November fell 0.6% from a year ago in real terms to 282,836 yen, while for worker’s households the amount of monthly income per household plummeted 2.1% in real term from the previous year at 435,640 yen.

Of the Nikkei 225 index stocks Mizuho Financial Group led advancers with a rise of 10.9% followed by gains in Hino Motors Limited of 10.88%, in Chiyoda Corp of 10.02%, in Sumitomo Osaka of 9.84%, and in Komatsu Limited of 9.38%.

Commodity stocks also rose as crude oil prices for March ddelivery spiked by $2.42 to $89.41 per barrel.

Chipmakers also gained as Microsoft led gainers on Wall Street after increasing its annual sales forecast to $60.5 billion. Advantest Corporation closed up.

Kao Corporation led decliners in the Nikkei 225 index stocks with a drop of 3.66% followed by declines in Nippon Light Metals of 3.30%, in Nissan Chemical Industries of 2.24%, in Fast Retailing of 0.73%, and in Comsys Holdings of 0.47%.

KDDI Corporation announced today that third quarter net income soared to 69 billion yen from 55 billion yen a year ago, while sales rose 5.5% to 904.4 billion after the company grew its subscriber base.

Operating profit also gained 40% to 121.4 billion yen and s further expected to rise 6.2% from the October forecast.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 536.38 or 4.10% to 13,629.16, in Hong Kong Hang Seng index increased 1583.10 or 6.73% closed to 25,122.37, in Australia ASX 200 index higher 279.90 or 5.02% to close 5,860.30.

In South Korea Kospi Index increased 29.41 or 1.77% to close at 1,692.41, in Thailand SET index closed higher 31.14 or 4.27% to 759.72, and Indonesia JSE Index edged increased 103.79 or 4.12% to 2,620.49. Sensex index in India increased 1139.90 or 6.62% to 18,361.66.