A Sharp Rise in PPI, Home Builders Fall

123jump.com Staff
10 Mar, 2008
New York City

Familiar worries of the U.S. economic malaise dragged mining and banks lower. Rio Tinto and BHP Billiton declined 6% after the weak trading in the U.S. and in the European region. Copper, zinc, and nickel, tin, and led prices in London declined. HSBC fell on the persisten uncertainty related to credit markets. Bovis Homes Group plunged 12% and led the home builder lower after it reported lower earnings and said that home prices may not rise in 2008. Persimmons dropped 4%, Taylor Wimpey lost 6%.

[R]1:00PM New York, 6:00PM London - U.K. output price annual inflation increase to 5.7% in February. Manufacturing output remains unchanged in the quarter to January.[/R]

London stock averages fell driven by commodity stocks that declined on heightened expectation demand for metal will slump as U.S. growth slows. Homebuilders fell after Bovis Home Group reported today that 2007 annual profit fell 6% to £86.9 million.

Market Sentiment

In London trading FTSE 100 stocks dropped 1.24% or 70.8 to 5,629.10. Antofagasta Plc led decliners in the FTSE 100 stocks on the concern that commodities demand will drop as economic growth in the U.S. cools.

Other commodity stocks fell as well. BHP Billiton declined 5.85% and Anglo American Plc shed 4.42%.

Output price annual inflation at 5.7% in February

The Office of National Statistics reported today on its web site that the output price annual inflation was at 5.7% in February, while input price annual inflation jumped from 18.9% the previous month to 19.4% in February.

Month-on-month output prices measure for all manufactured products increased 0.3% in February.

Excluding volatile sectors, out prices had an annual increase of 3%, while on a seasonally adjusted basis the measure climbed 0.2% between January and February.

Month-on-month, the input prices measure of UK manufacturers'' materials and fuels rose 1.3% driven by the rise in crude oil prices, while in seasonally adjusted terms the index climbed 1.7% between January and February.

The ''narrow'' input prices measure, which excludes volatile sectors, rose 8.2% in the year to February and gained 0.9% between January and February.

Manufacturing out falls in 10 out of the 13 sub-sectors

Separately, the Office of National Statistics reported today that manufacturing output slumped in 10 of the 13 sub-sectors in the quarter to January 2008.

While transport equipment industries rose 2.2% in the three months to January, the mining and quarrying sector rose 1.9% and the energy supply sector also fell by the same margin.

Electricity supply output increased by 3.4% in the quarter to January as input fuel for energy generation was switched from gas to coal.

In the three months to January, manufacturing output jumped by 0.4%. While 8 of the 13 sub-sectors increased output, 5 sub-sectors decreased output in the latest month.

Output in machinery and equipment industries increased 2% and output in chemicals and man-made fibres industries rose by 1.4%. Also output for transport equipment industries declined by 1.3% in the latest month.

Total production output decreased by 0.1% between December and January and mining and quarrying output fell by 4.1%. Energy supply output plunged by 0.2%.

U.K. budget to protect poor, environment

Bloomberg news reported today that Chancellor of the Exchequer Alistair Darling on March 12 will announce a budget to the House of Commons to lower utilities bills for the country’s low income consumers. The government is likely to provide tax incentives to companies that buy less polluting cars such as Toyota’s Prius or Honda Motor’s Civic Hybrid.

Gainers & Losers

British American Tobacco led advancers in the FTSE 100 stocks with a rise of 2.85% followed by increases in Associated British Food of 2.50%, in Reuters Group Plc of 1.86%, in British Energy of 1.76%, and in Imperial Tobacco of 1.58%.

Antofagasta led decliners in the FTSE 100 stocks with a drop of 7.44% followed by losses in Kazakhmys Plc of 6.73%, in Rio Tinto Plc of 6.01%, and in Vedanta Resources of 5.98%.

Antofagasta and other commodity stocks fell on declining metal prices and rising speculation that the U.S. is in recession.

Homebuilders fell after Bovis Home Group reported annual profit plunged 6% to £86.9 million from £92.6 million a year ago. Revenues declined 7% to £555.7 million from £597.3 million.

Bovis added uncertainties remain in looking ahead to selling season activity. Home Retail Group shed 4.86% and Persimmon declined 4.31%.

Stuart Rose to replace Terry Burns at Marks & Spencer

Retailer Marks & Spencer revealed in a statement today that CEO Stuart Rose will replace Terry Burns, who will step down as non-executive chairman. The change will give Rose time to focus on the company’s products and mentor new business leaders.

Finance Director Ian Dyson will also be responsible for retail and personnel under the new changes.


International Markets

In Tokyo Nikkei 225 Index closed lower 250.67 or 1.96% to 12,532.13, in Hong Kong Hang Seng index increased 203.72 or 0.91% closed to 22,705.05. Australia ASX 200 index decreased 83.60 or 1.59% to close 5,180.40.

In South Korea Kospi Index decreased 38.80 or 2.33% to close at 1,625.17, in Thailand SET index closed lower 14.92 or 1.82% to 806.65 and Indonesia JSE Index edged decreased 128.59 or 4.84% to 2,527.87. Sensex index in India decreased 51.80 or 0.32% to 15,923.72. Malaysia plunged 9.50% or 123.11 to 1,173.22 on the election results.

In London FTSE 100 Index closed lower 70.80 or 1.24% to 5,629.10, in Paris CAC 40 index decreased 51.97 or 1.13% to close at 4,566.99 and in Frankfurt DAX index lower 65.91 or 1.01% to close at 6,448.08. In Zurich trading SMI decreased 119.14 or 1.66% to close at 7,055.01.