UBS Rallies, Miners Rise

123jump.com Staff
04 Apr, 2008
New York City

European markets staged a tentative rebound on rising energy and metals prices. However, ongoing credit market problems persisted. Banks and financials were volatile and are likely to face more losses in the second quarter. UBS faced a critical shareholder and a former executive who plans to separate its investment banking from its wealth management unit. The move only reflects shareholders displeasure with the company performance.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – European markets gained on weak U.S. employment report and a steady rise in metals and energy prices.[/R]

Global Markets Update

European markets, after a volatile week of trading edged higher on Friday as financial stocks declined but energy and mining stocks gained.

SAP, the largest German software developer rose 4% after the company said it plans to cut its R&D spending to between 11% and 12% from 14% and improve operating margin, in a interview on Bloomberg TV.

Air Berlin, jumped 5% after its one of the key investor, Robert Hersov sold a stake of 18.6% to an institutional investor. Market rumors suggested that a takeover for the third largest European discount carrier cannot be ruled out.

France, struggling with its budget deficit, will not replace half the retiring civil service employees and lower its subsidies to corporations. The government plans to save 7 billion euros a year till 2011, a year before when France plans to balance budget. France is running 2.7% annual budget deficit and revised its estimate to 2.5% for the current year from 2.3%.

The latest U.S. payroll data offered another evidence of the U.S. economic recession. Non-farm payroll in March fell 80,000 after falling revised 76,000 in February and January. Private sector losses would have been higher had it not been the government payroll rising. Private sector lowered the payroll by 98,000 in the month but the government payroll increased by 18,000.

Stocks in UK rose as investors braved to buy stocks of utilities and mining companies. FTSE 100 index increased 0.95% or 55.8 to 5,947.10 and of the 102 in the FTSE 100 stocks, 67 rose, 28 declined and 7 were unchanged. The IMF report cautioned that UK and Ireland may be the next to face a housing market correction after the U.S. residential market collapse. British Energy rose 7.2% after media reports that France based EdF may bid for the company.

Inflation in March in India surged to a 4-year high on rising food and energy prices. Investors sold bank stocks and dragged market averages lower and worried that RBI many be forced to act and reduce liquidity in the system. Sensex fell 3.1% or 489 to 15,343.HDFC, ICICI and State Bank of India led the decliners in the Sensex index.

Japan stocks fell on Friday but for the week rose on global markets recovery. Financial stocks are still under the pressure and banks and securities companies are focus of intense speculation. Daiwa Securities annual profit fell 51% and reported a loss in the fourth quarter. Deputy Governor Shirakawa is likely to be appointed as the BOJ governor. Opposition party signaled its approval, if he is nominated.

Tax authorities in Australia have disputed $317 million in tax relief to BHP. The mining company intends to defend its position in the dispute involving a plant in Venezuela. Separately, Wesfarmers raised $710 million in the U.S. to refinance its short-term loans to acquire Coles Group. Portman, third largest iron ore exporter from Australia, acquired 10% stake in Golden West Resources to fend off an offer from Fairstar.

European Markets indexes

In London FTSE 100 Index closed higher 55.80 or 0.95% to 5,947.10, in Paris CAC 40 Index increased 13.01 or 0.27% to close at 4,900.88 and in Frankfurt DAX index added 21.67 or 0.32% to close at 6,763.39. In Zurich trading SMI increased 57.26 or 0.76% to close at 7,573.49.

North American Markets indexes

Dow Jones Industrial Average fell 16.61 or 0.13% to a close of 12,609.42, S&P 500 closed up 1.09 or 0.08% to 1,370.40, and Nasdaq Composite Index increased 7.68 or 0.32% to a close at 2,370.98. In Toronto TSX Composite closed up 116.90 or 0.86% to 13,668.19.

Of the 30 stocks in Dow Jones Industrial Average, 13 closed higher, 17 closed lower, and none were unchanged.

General Motors led decliners in the Dow Jones Index with a loss of 4.7% followed by losses in Bank of America of 2.4%, in Verizon of 1.9%, and in JP Morgan of 1.5%. Merck led the gainers in the index with a rise of 4.3%, followed by gains in United Technologies with 1.4%, and in Alcoa of 1.2%.

Of the stocks in S&P 500 index, 259 stocks increased, 237 declined, and 4 were unchanged. Of the stocks in the index, 31 stocks fell more than 3% and 24 gained more than 3%.

Wamu led decliners in the index with a fall of 11.5% followed by losses in National City of 8.2%, in Countrywide Financial of 7.2%, and in First Horizon of 7%. Allegheny Technologies led the gainers in the S&P 500 index with a rise of 12% followed by increases in Titanium Metals of 9%, in Dillards of 8%, and in JDS Uniphase of 5.8%.

South American Markets Indexes

In Latin Markets Venezuela led gainers in the region with a rise of 1.35% followed by increases in Peru of 1.17%, in Chile of 0.64%, and in Colombia of 0.61%. Brazil increased 0.46% but Argentina fell 0.03% and Mexico lost 0.46%.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 96.68 or 0.72% to 13,.293.22. In Australia ASX 200 index higher 10.70 or 0.19% to close 5,619.60. In Malaysia KL Composite index decreased 3.60 or 0.29% closed to 1,221.98. Market of Hong Kong was closed today.

In South Korea Kospi Index increased 2.86 or 0.16% to close at 1,766.49, in Thailand SET index closed lower 1.88 or 0.23% to 824.80 and Indonesia JSE Index increased 39.11 or 1.75% to 2,277.08. Sensex index in India decreased 489.43 or 3.09% to 15,343.12.

Commodities, Metals, and Currencies

Crude oil increased $2.38 to close at $106.21 a barrel for a front month contract, natural gas decreased 11 cent to $9.31 per mBtu, and gasoline futures increased 3.31 cents to close at 275.74 cents per gallon.

Gold increased $3.60 in New York trading to close at $913.20 per ounce, silver closed up $0.27 cents to $17.78 per ounce, and copper for front month delivery increased 5.30 cents to 395.45 per pound.

Wheat futures increased 39.00 cents in Chicago trading and closed at $9.91 per bushel. Sugar decreased 24.00 cent to $11.57 per pound. Soybean future closed up 20.00 cents to $12.77 a bushel.

Dollar edged lower and traded near a record low against euro to $1.5735 and edged lower against yen to 101.51.

Bond Yields decreased for 10-year U.S. bonds and closed at 3.46% and on 30-year bonds decreased to close at 4.31%.