European Stocks Waver on U.S. Worries

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

European markets fell after February retail sales declined in the U.S. and new worries related to martgage securities defaults. Carlyle Capital Corp and a group of 13 lenders failed to agree on refinancing of $17 billion in debt. Carlyle Capital is expected to a default on margin call tomorrow and may lose all of its assets to lenders. UBS and Credit Suisse fell 4%. Unicredit fourth quarter profit declined 0.8%.. BMW 2007 net income increased 9% and boosted dividend by 51%.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – European stock markets rallied on the second day after Central banks in the U.S. and Europe coordinate a liquidity injection move. Crude oil jumped to a record high above $110.[/R]

Global Markets Update

Stocks in the morning fell sharply after the release of February retail sales, import and export prices and weekly unemployment data. Dow, S&P 500 and Nasdaq fell quickly by 1%. The market reversed its direction after research from S&P. The credit analyst revised his estimate of sub-prime loan losses by $20 billion to $285 billion and added that most of the losses are already reported. The relatively positive note lifted market sentiment.

S&P research note indicated that majority of subprime loan losses may have been released by the financial institutions.

U.S. stocks rebounded from earlier losses after S&P credit analyst estimated total losses related to subprime loans of $285 billion. The statement further added that nearly 65% of these losses are already announced. The relatively positive tone in the note lifted mood in trading and financial and consumer stocks rebounded. S&P and other agencies are at the heart of the credit market malaise as they rated 85% of subprime loans issued between 2005 and 2007 as AAA, many of these are now worthless.

Carlyle Capital Corporation may lose all of its remaining assets as early as next week after the company and lenders failed to agree on refinancing terms. The fund assets may be liquidated adding more strains to already volatile credit markets and dragging dollar to a record low against euro. The recent decline in mortgage securities prices prompted margin calls of $98 million due tomorrow. Carlyle will not meet these margin calls and is forced to surrender its collateral assets of $17 billion.

European markets declined on the weakness in financial and brokerage stocks.

BMW reported 2007profit increase 10% to 3.13 billion or 4.78 euros per share after it sold 1.5 million cars and lower tax rate of 19% from 30.3% a year ago. The company raised its dividend by 51% to 1.06 euros. BMW fell 4% on the earnings report to three-year low. Casino Guichard-Perrachon SA reported 2007 net income increased 814 million euros from 600 million euros and sales increased 11% to 25 billion euros.

Aeroports de Paris reported sales increase of 10% to 2.29 billion euros and net income doubled to 321.8 million euros. ADP increased its dividend by 73% to 1.63 euros and company cautioned not to expect similar growths in the future. One time gain from a stake sale in Beijing Capital International Airport was 110 million euros. After London Heathrow airport, Charles de Gaulle is the second busiest airport and Frankfurt airport is the third in passenger volume.

European Markets

In London FTSE 100 Index closed lower 84.00 or 1.45% to 5,692.40, in Paris CAC 40 index decreased 66.91 or 1.42% to close at 4,630.19 and in Frankfurt DAX index lower 98.81 or 1.50% to close at 6,500.56. In Zurich trading SMI increased 6.69 or 0.09% to close at 7,251.73.

North American Markets indexes

Dow Jones Industrial Average gained 35.50 or 0.29% to a close of 12,145.74, S&P 500 closed up 6.71 or 0.51% to 1,315.48, and Nasdaq Composite Index added 19.74 or 0.51% to a close of 2,263.61. In Toronto TSX Composite closed down 146.15 or 1.10% to 13,443.50.

Of the 30 stocks in Dow Jones Industrial Average, 18 closed higher, 12 closed lower, and none were unchanged.

General Motors led the decliners in the index with a loss of 2.9% followed by losses in AIG of 2.7%, in JP Morgan of 1.3%, and in Merck of 1.22%. Boeing Company led the gainers in the index with a rise of 2.4% followed by gains in McDonalds of 2.22%, and in Alcoa of 1.8%.

Of the stocks in S&P 500 index, 325 stocks increased, 172 declined, and 3 were unchanged. Of the stocks in the index, 10 stocks fell more than 3% and 48 gained more than 3%.

Bear Stearns led the decliners in index with a loss of 7.4% followed by losses in Cardinal Health of 6.11%, in Ford Motor of 5.4%, in McKesson Corp of 3.97%, in Sprint Nextel of 3.7%. Humana led the gainers in the index with a rise of 10% followed by gains in Fannie Mae of 9.2%, in Pulte Homes of 7.5%, in Nucor Corp of 7.4%, and in Peabody Energy of 7.24%.

South American Markets Indexes

In Latin Markets Mexico led the gainers in the region with a rise of 1.43% followed by increases in Argentina of 0.74%, and in Brazil of 0.17%. Colombia added 0.15%. Peru led the decliners in the region with a loss of 0.6% followed by declines in Venezuela of 0.17% and in Chile of 0.02%.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 427.69 or 3.33% to 12,433.44, in Hong Kong Hang Seng index decreased 1121.12 or 4.79% closed to 22,301.64. Australia ASX 200 index decreased 122.00 or 2.32% to close 5,135.90. In Malaysia KL Composite index decreased 31.24 or 2.53% closed to 1,201.35.

In South Korea Kospi Index decreased 43.21 or 2.60% to close at 1,615.62, in Thailand SET index closed lower 12.69 or 1.53% to 814.31 and Indonesia JSE Index edged decreased 115.65 or 4.52% to 2,440.59. Sensex index in India decreased 770.63 or 4.78% to 15,357.35.

Bond Yields increased on 10-year U.S. bonds to 3.53% and on 30-year bonds increased to 4.45%.

Commodities, Metals, and Currencies

Crude oil increased $0.35 to close at $110.27 per barrel for a front month contract, natural gas increased 24 cent to $10.25 per mBtu, and gasoline futures decreased 5.07 cents to close at 267.79 cents per gallon.

Gold increased $13.30 in New York trading to close at $993.80 per ounce, silver closed up 42 cents to $20.42 per ounce, and copper for front month delivery decreased 1.20 cents to 382.50 per pound.

Wheat futures decreased 38.50 cents in Chicago trading and closed at $12.44 per bushel. Sugar increased 43 cent to 13.59 cents per pound. Soybean future closed up 7.750 cents to $14.02 per bushel.

Dollar edged lower and traded at a record low against euro to $1.5638 and edged lower against yen to 100.471.