Weak Nokia Haunts European Stocks

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

European stocks closed mixed after earnings report from Nokia and strong interest in weekly auction at the Bank of England. The weekly auction attracted three times bid to nearly 49 billion pounds as interbank loan market remains seized. Societe Generale replaces its chief executive but keeps him as chairman for now. Nokia drops 14% after it offered weak earnings outlook on strong euro.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – European markets closed mixed. Nokia fell 14% after earnings warning and TUI surged on investor action.[/R]

Global Markets Update

Societe Generale appointed Frederic Oudea as its new chief executive and Daniel Bouton will re remain as chairman after the bank was engulfed in unauthorized trading losses of $8 billion and weak risk control systems.

Nokia reported first quarter earnings rise of 25% to 1.22 billion euros on sales increase of 28% to 12.66 billion and earnings per share increased to 32 cents from 25 cents a year ago. The earnings missed four analysts’ expectations between 1.31 and 1.37 euros per share interviewed by 123jump.com. Strong euro and weak sales in Europe and the U.S. and a decline in average price for handset are expected to hurt earnings for the rest of the year. Stock declined 14% in Helsinki and New York trading.

Hypo Real Estate Holding AG in Frankfurt trading fell 4% after surging 25% in the previous session after it reported that private equity buyout group J C Flowers & Co may take a stake in the company.

TUI AG in Frankfurt trading gained 3% after Norwegian investor Fredriksen increased his stake to 11.75% and replace board members and sell shipping line Hapag Lloyd.

Zodiac SA in Paris trading surged after the company said to Bloomberg that it is in advanced stage of discussions to acquire stakes and will announce sizable purchase soon. The aircraft sear maker and a supplier to Boeing and Airbus surged 8%.


Merrill Lynch large loss and asset write down surprised the market and U.S. stocks edged lower as new worries related to credit market emerged. Separately, American Airlines reported quarterly loss of $1.32 as its fuel bill surged 48%. Southwest earnings declined on higher operating and fuel costs. However, IBM reported better than expected earnings. TD Ameritrade earnings increased but the stock declined.

After the close Google reported earnings rise of 30% to $4.12 per share on revenue rise of 46% to $3.7 billion. Google stock surges 9% in the after hour trading to $500.

Stocks in Japan and Asia rose after earnings from several U.S. banks and large multinational companies met expectations. In Tokyo trading Nikkei 225 rose 1.92% at 13,398.30, and the broader Topix Index gained 1.7% to 1,293.32. METI reported that industrial production in February rose 1.6% and shipment increased 1.2% and inventories added 0.19%. Asahi Glass will close several factories in the U.S. and Canada as demand for glass products decline on the slump in the U.S. housing market.

China increased its reserve ratio requirements for banks to 16% and may increase again if economy does not slow down. Economists are expecting central bank to authorize additional tightening measures after a surge in inflation and rapid rise in property prices and food and energy costs. In Hong Kong trading, Hang Seng rose 1.6% to 24,258 but in Shanghai CSI 300 index fell 3% to 3,386. China reported a total international investment of $92 billion at the end of 2007.

Stocks in Mumbai trading rebounded 1.5% to 16,481 and CNX Nifty rose same to 4,958. Software exporters rose for the second day in a row. Annual wholesale inflation for the year ending on April 5 edged lower to 7.14%. Banks gained after the inflation report. Orchid Chemicals was the most active stock for the second day in a row on the BSE.

The Bank of England weekly auction received more than three times bids for its offer of 13.7 billion pounds as interbank credit market remain seized. The Libor rate declined a fraction, but still hovered near 5.9%, significantly above the BoE target. Separately, Taylor Wimpey issued cautionary earnings guidance for the rest of the year. Of the FTSE 100 stocks, 31 rose and 70 declined on weak trading sentiment.

European Markets indexes

In London FTSE 100 Index closed lower 65.80 or 1.90% to 5,980.40, in Paris CAC 40 Index increased 7.04 or 0.15% to close at 4,862.14 and in Frankfurt DAX index higher 21.03 or 0.31% to close at 6,681.81. In Zurich trading SMI decreased 77.07 or 1.06% to close at 7,173.63.

North American Markets indexes

Dow Jones Industrial Average gained 30.37 or 0.24% to a close of 12,649.64, S&P 500 closed up 3.17 or 0.23% to 1,367.88, and Nasdaq Composite Index decreased 3.68 or 0.16% to close at 2,346.43. In Toronto TSX Composite closed up 33.52 or 0.24% to 14,133.00.

Of the 30 stocks in Dow Jones Industrial Average, 17 closed higher, 12 closed lower, and one was unchanged.

Pfizer led the decliners in the Dow Jones index with a fall of 4% followed by losses in Merck of 2.53%, in Procter & Gamble of 2.5%, and United Tech Corp of 2.1%.

American Express led gainers in the index with a rise of 2.45% followed by gains in Citigroup of 2.35%, in IBM of 2.3%, in Disney of 1.8%, and in AIG of 1.6%.

Of the stocks in S&P 500 index, 236 stocks increased, 258 declined, and 6 were unchanged. Of the stocks in the index, 13 stocks fell more than 3% and 27 gained more than 3%.

International Game Technology led decliners in the S&P 500 index with a loss of 5.3% followed by Ryder Systems of 4.4%, in Danaher of 4.3%, in LSI Corp of 3.6%, in Gilead Sciences of 3.5%.

MGIC Investment Corp led the gainers in the S&P 500 index with a rise of 19% followed by gains in Leggett Platt of 14%, in Altera of 10%, in MBIA of 8.9%, in Ambac of 8.8%, in E*Trade Financial of 7.5%.

South American Markets Indexes

Brazil led the gainers in South American trading with a rise of 0.62% followed by increases in Colombia of 0.26%, in Chile of 0.23%, and in Argentina of 0.13%. Peru fell 0.51% and Mexico declined 0.23%.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 252.17 or 1.92% to 13,398.30, in Hong Kong Hang Seng index increased 380.61 or 1.59% closed to 24,258.96. In Australia ASX 200 index higher 48.70 or 0.89% to close 5,519.00. In Malaysia KL Composite index increased 2.90 or 0.23% closed to 1,256.54.

In South Korea Kospi Index increased 10.11 or 0.57% to close at 1,768.67, in Thailand SET index closed higher 12.05 or 1.45% to 845.43 and Indonesia JSE Index edged increased 3.86 or 0.16% to 2,341.78. Sensex index in India increased 237.01 or 1.46% to 16,481.20.

Commodities, Metals, and Currencies

Crude oil increased $1.12 to close at $114.91 a barrel for a front month contract, natural gas increased 20 cent to $10.40 per mBtu, and gasoline futures increased 4.99 cents to close at 293.09 cents per gallon.

Gold increased $16.30 in New York trading to close at $948.00 per ounce, silver closed up $0.06 cents to $17.85 per ounce, and copper for front month delivery increased 9.50 cents to $3.955 per pound.

Wheat futures increased 28.5 cents in Chicago trading and closed at $9.39 per bushel. Sugar increased 3.00 cent to $13.34 per pound. Soybean future closed down 36.00 cents to $13.61 a bushel.

Dollar edged lower and traded at a record low against euro to $1.5952 and edged lower against yen to 101.75.

Yields on U.S. bonds increased to 3.68% with 10 years of maturities and increased 4.49% with 30-year of maturities.