Industrial Stocks Decline in Europe

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

European industrial stocks including Siemens and Philips fell after General Electric in the U.S. missed its earnings target. Stock market averages in the region fell more than 1% before the U.S. market close. U.S. averages fell 2% at close. Crude oil and base metals traded at elevated levels. Ahead of G7 meeting in Washington politicians worried about the strength in euro.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – European industrial stocks fell after earnings miss from General Electric shook investors.[/R]

Global Markets Update

European stock markets closed lower after earnings miss at the third largest company General Electric prompted a sell-off. Stocks in financial and insurance sectors declined. Most markets in Europe fell more than 1% and the U.S. stock averages, later, closed 2% lower. Cadbury Schweppes fell nearly 3% after it said that its U.S. beverage unit may have lost market share after it raises prices to cover higher cost of sugar and corn syrup.

Siemens lost 3.5% after the bribery investigation was widened to transmission unit and BAE Systems fell 5% on the ongoing investigation in its deal in Saudi arms contract. Electricite de France gained 1% after it is expected to make an offer for British Energy Group.

Jacquet Metals in Paris trading fell 4.5% after it reported revenue fall of 22% to 70 million euros. Sales in France fell 12% and in international markets declined 23%.

U.S. stocks fell after General Electric surprised the market with lower than expected earnings. GE reported 8% rise in sales to $42.24 billion but net income fell 6% to $4.3 billion. Financial services segment faced difficult market environment. Earnings per share fell to 43 cents from 44 cents a year ago. Frontier Airlines filed bankruptcy after struggling with rising fuel costs and high operating cost.

Frontier Airlines stock plunged 71% after it filed for protection from creditors. The company blamed the decision on its principal credit processor on unexpected increase in hold on cash from sale of airline tickets. The airline said it plans to operate full schedule and honor all tickets and reservations and will pay wages and suppliers.

Stocks in London fell after General Electric in the U.S. reported its profit decline in five years. The news sent markets in New York and Europe lower. In addition, mortgage lender trade associations forecasted tougher outlook for mortgage lending and asked the Bank of England to add more liquidity to the system. UK lenders group forecasted that mortgage volume may fall as much as 50%. A private equity group said that it will withdraw its offer for Friends and Provident at the end of the month.

Industrial production in India in February increased 8.6% after revised production in January gained 5.8%. The better than expected production data overshadowed the rise in inflation at the end of March. Wholesale inflation increased 7.4% for a year ending in the last week in March, forced the government to remove export incentives for sugar, rice and steel. Sensex edged higher by 0.7% or 112 to 15,807 and CNX Nifty added 0.95% to 4,777.80.

European Markets indexes

In London FTSE 100 Index closed lower 69.60 or 1.17% to 5,895.50, in Paris CAC 40 Index decreased 61.49 or 1.27% to close at 4,797.93 and in Frankfurt DAX index lower 100.75 or 1.50% to close at 6,603.57. In Zurich trading SMI decreased 53.69 or 0.73% to close at 7,258.96.

North American Markets indexes

Dow Jones Industrial Average dropped 256.56 or 2.04% to a close of 12,325.42, S&P 500 closed down 27.72 or 2.04% to 1,332.83, and Nasdaq Composite Index decreased 61.46 or 2.61% to close at 2,290.24. In Toronto TSX Composite closed down 219.81 or 1.09% to 13,689.77.

Of the 30 stocks in Dow Jones Industrial Average, 2 closed higher, 28 closed lower, and none was unchanged.

General Electric led the decliners in the Dow Jones Industrial with a plunge of 13% after it reported lower than expected earnings and lowered its earnings outlook. Intel dropped 3.5% followed by a loss in Disney of 3.3% and in American Express of 3.2%.

Wal-Mart and Procter & Gamble were the only two gainers with a rise of 0.4% and 0.04%.

Of the stocks in S&P 500 index, 56 stocks increased, 439 declined, and 5 were unchanged. Of the stocks in the index, 80 stocks fell more than 3% and none gained more than 3%.

General Electric led the decliners in the S&P 500 index with a loss of 13% followed by losses in Nvdia of 7%, in Varian Medical of 6.6%, in CIT Group of 6.5%, and in Hershey of 6.4%.

Ambac Financial led the gainers in the S&P 500 index with a rise of 2.9% followed by increases in Safeco of 2.4%, in UST Inc of 2.4%, in First Energy of 2.08%, and in Public Services Enterprises of 2%.

South American Markets Indexes

Brazil led the decliners in South American trading with a loss of 1.38% followed by decreases in Colombia of 0.95%, in Argentina of 0.90%, and in Mexico of 0.73%. Venezuela fell 0.35% and Chile gained 0.5%.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 378.43 or 2.92% to 13,323.73, in Hong Kong Hang Seng index increased 480.69 or 1.99% closed to 24,667.79. In Australia ASX 200 index lower 7.10 or 0.13% to close 5,439.30. In Malaysia KL Composite index decreased 1.40 or 0.11% closed to 1,246.79.

In South Korea Kospi Index increased 15.07 or 0.85% to close at 1,779.71, in Thailand SET index closed higher 6.12 or 0.75% to 827.10 and Indonesia JSE Index edged increased 68.00 or 3.04% to 2,303.93. Sensex index in India increased 112.54 or 0.72% to 15,807.64.

Commodities, Metals, and Currencies

Crude oil increased $0.11 to close at $110.22 a barrel for a front month contract, natural gas decreased 21 cent to $9.89 per mBtu, and gasoline futures increased 1.40 cents to close at 280.61 cents per gallon.

Gold decreased $4.80 in New York trading to close at $927.00 per ounce, silver closed down $0.35 cents to $17.69 per ounce, and copper for front month delivery increased 2.05 cents to $3.94 per pound.

Wheat futures decreased 25.75 cents in Chicago trading and closed at $9.10 per bushel. Sugar decreased 5.00 cent to $13.03 per pound. Soybean future closed down 23.50 cents to $13.49 a bushel.

Dollar edged lower and traded near a record low against euro to $1.5834 and edged lower against yen to 100.77.

Yields on U.S. bonds declined to 3.43% on 10-year bonds and fell on 30-year bonds to 4.29%.