Earnings Worries; Records in Copper, Oil

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

U.S. stocks edged lower on negative news on earnings and rising crude oil and metal prices. Crude oil traded above $112 a barrel after weekly inventories report showed higher than expected decline. UPS lowered its earnings estimate on higher oil price and softer domestic shipment volumes. AMR cancelled 500 flights after several planes were grounded for inspections. Goldman Sachs reported a rise in hard to value level-3 assests and reported 35% decline in revenue.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – Nasdaq dropped 1% after weak tech sector stocks dragged the index lower. Rise in crude oil prices and lowered earnings expectations from UPS affected broader market.[/R]

Global Markets Update

U.S. stocks fell sharply after string of negative news. Crude oil surpassed $111 a barrel, UPS lowered its earnings estimates for the first quarter and Goldman Sachs reported higher level of level-3 assets and 35% decline in revenue at the end of the first quarter. American Airlines grounded 1,000 flights for inspections. Weekly crude oil and gasoline suggested a larger than expected declines at the end of last week prompting a rally in crude oil prices.

UK manufacturing index rose in the first quarter but consumer confidence in March fell. The International Monetary Fund lowered the growth estimate for UK to 1.6% from 1.8% for the current year. ONS reported first quarter total output rose 0.4% on the rise of 0.3% in manufacturing. Cairn Energy led gainers in the FTSE 100 index shares with a rise of 4.5% followed by increases in BG Group of 3.4%, in Vedanta Resources of 3%, in BHP Billiton of 2.4%, and Anglo American of 2.3%.

The new governor at the Bank of Japan left key interest rate unchanged at 0.5% and warned that economy is sluggish and private investment from businesses is declining. Japanese steelmakers agreed to pay nearly three times for the coking coal from Australia. Coal miners in Australia have raised prices for the last five years to take advantage of economic boom in China and India. Earlier South Korea agreed with a similar price hike.

China reported a decline in consumer confidence in the first quarter on rising food and energy prices. However, real estate sales continue to surge in March after falling for two months in a row. Stocks in Shanghai plunged 5% as investors worried that earnings in the first quarter will be lower than expected. Hang Seng index fell 1.4% but recovered from larger losses on rising energy and commodities stocks.

Stock in Mumbai edged higher on better than expected earnings from Yes Bank. The bank also said that it has no exposure to derivatives and risky loans linked to the U.S. loans. The news sent stocks in the banking sector higher. Sensex added 1.3% or 203 to 15,790. On the National Stock Exchange CNX Nifty advanced 0.8% or 37 at 4,747. Tata Power got a loan of $450 million to build a power plant in Mundra, Gujarat with a capacity of 4,000 MW.

European Markets indexes

In London FTSE 100 Index closed lower 24.60 or 0.41% to 5,990.20, in Paris CAC 40 Index decreased 31.91 or 0.65% to close at 4,912.69 and in Frankfurt DAX index lower 49.05 or 0.72% to close at 6,771.98. In Zurich trading SMI decreased 71.16 or 0.93% to close at 7,568.14.

North American Markets indexes

Dow Jones Industrial Average lost 49.18 or 0.40% to a close of 12,527.59, S&P 500 closed down 11.01 or 0.91% to 1,354.53, and Nasdaq Composite Index decreased 26.64 or 1.10% to a close at 2,322.12. In Toronto TSX Composite closed down 17.48 or 0.13% to 13,727.53.

Of the 30 stocks in Dow Jones Industrial Average, 4 closed higher, 26 closed lower, and none was unchanged.

General Motors led the decliners in the Dow Jones with a fall of 4% followed by losses in AIG of 2.75%, in Verizon of 2.7%, and in American Express of 2.6%. Boeing led the gainers in the Dow index with a rise of 4% followed by increases in Intel of 0.9%, in Chevron of 0.6% and in Citigroup of 0.25%.

Of the stocks in S&P 500 index, 84 stocks increased, 415 declined, and 1 was unchanged. Of the stocks in the index, 80 stocks fell more than 3% and 6 gained more than 3%.

CIT Group led the decliners in the S&P 500 index with a fall of 8.5% followed by losses in MBIA of 8.4%, in Lennar of 6.8%, in Tesoro of 6.65%, in Ambac Financial of 6.3%, and in Humana of 6%.

SanDisk led the gainers in the S&P 500 index with a rise of 5.95% followed by increases in Boeing of 4.1%, in Broadcom of 3.7%, in Precision Castparts 3.6%, and in Advanced Micro Devices of 3.2%.

South American Markets Indexes

Brazil led the decliners in South American trading with a loss of 1.74% followed by decreases in Mexico of 1.05%, in Argentina of 0.93%, and in Chile of 0.60%. Venezuela jumped 0.94% followed by increase of 0.6% in Colombia.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 199.80 or 1.49% to 13,250.43, in Hong Kong Hang Seng index decreased 267.07 or 1.09% closed to 24,311.69. In Australia ASX 200 index lower 53.50 or 0.95% to close 5,571.50. In Malaysia KL Composite index increased 4.64 or 0.38% closed to 1,225.71.

In South Korea Kospi Index decreased 18.85 or 1.06% to close at 1,754.71, in Thailand SET index closed higher 2.05 or 0.25% to 826.85 and Indonesia JSE Index edged decreased 37.03 or 1.62% to 2,249.77. Sensex index in India decreased 169.46 or 1.08% to 15,587.62.

Commodities, Metals, and Currencies

Crude oil increased $2.23 to close at $110.73 a barrel for a front month contract, natural gas increased 38 cent to $10.07 per mBtu, and gasoline futures increased 2.26 cents to close at 277.30 cents per gallon.

Gold increased $19.50 in New York trading to close at $937.50 per ounce, silver closed up $0.49 cents to $18.20 per ounce, and copper for front month delivery increased 11.00 cents to $4.00 per pound.

Wheat futures decreased 1.00 cents in Chicago trading and closed at $9.46 per bushel. Sugar increased 55.00 cent to $12.98 per pound. Soybean future closed down 61.50 cents to $13.13 a bushel.

Dollar edged lower and traded near a record low against euro to $1.5826 and edged higher against yen to 101.69.

Yields on U.S. bonds declined to 3.46% on 10-year bonds and fell on 30-year bonds to 4.31%.