Deutsche Bank, Michelin Declines; BP Shell Rise

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

European markets fell after a drop in commodities prices. BP and Royal Dutch Shell edged higher after they reported better than expected earnings. Deutsche Bank reported its first quarterly loss of 131 million after it wrote down loan values of 2.7 billion euros. Tire maker Michelin fell 9% after it reported first quarter sales decline of 2.6% and cut its full year earnings forecast. Eurotunnel will issue rights offering to raise 915 million euros and buy back convertible debt.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – European stocks fell on weak commodities and banking stocks ahead of the U.S. rate decision on Wednesday and on a decline in consumer confidence and falling home prices. Latin American markets fell sharply. Japan was closed today. The RBI in India hiked bank cash requirements in India.[/R]

Global Markets Update

Royal Dutch Shell reported first quarter 2008 revenue surged 55% to $114 billion compared to $73 billion a year ago and income attributable to shareholders increased 25% to $9.08 billion from $7.2 billion in the previous year.

Oil and gas production including oil sands production, for the first quarter was 3.522 million barrels of oil equivalent per day (boe/d), compared to 3.51 million of boe/d in the same quarter last year. Excluding the impact of divestments, Canadian royalty changes and production sharing contracts pricing effects, first quarter 2008 production increased by 1% compared to the same quarter last year.

In the quarter the oil company bought back $1.1 billion of its own stock and increased its dividend by 11% to 40 cents per share.

Deutsche Bank reported net loss of 131 million euros compared to net income of 2.1 billion euros a year ago on write down of loans worth 2.7 billion euros. The first quarterly loss in the last twenty quarters also included gains from capital gains in stake sales and lower tax costs. In the quarter the German bank wrote down 1.8 billion euros of leveraged loans and 885 million of residential mortgage securities in the U.S.

U.S. stocks edged lower on the falling home prices, a decline in consumer confidence and mixed earnings reports. The confidence index in April fell to 62.3. Home prices in February according to a controversial index that tracks metropolitan prices fell 12.7% after dropping 10.7% in January. On the earnings front Visa and MasterCard surged after reporting higher than expected earnings.

Countrywide Financial reported first quarter loss of $893 million or $1.60 per share compared to net income of $434 million or 72 cents per share. The quarter also saw steady gains from the sale of mortgages, origination of loan volume and rise in deposit base at the lenders bank branches. The accounting rule change helped the lender to report higher gains in loan sales. Countrywide provisioned $3 billion for credit market related charges.

MasterCard reported first quarter revenue rise of 29% to $1.18 billion and earnings surged to $446 million or $3.38 per share. Excluding one-time gains earnings rose to $398 million or $3.01 per share. Gross worldwide dollar volume processed by the card processor rose 15% to $453 billion and in the U.S. 9% to $259 billion. Earnings from Europe, Asia and Latin America contributed to the total earnings.

Valero, U.S. Steel and Heidrick & Struggles declined after they reported earnings. Valero reported earnings of 48 cents per share. U.S. Steel fell after it reported earnings of $1.98 compared to $2.30 per share on revenue of $5.2 billion. Heidrick & Struggles reported revenue increase of 7% to $153 million and earnings decline of 30% to $7.1 million. Martha Stewart reported a loss on 2% rise in sales.

The Reserve Bank of India left its key rate unchanged at 6% and issued a guideline to fight inflation and control liquidity. The central bank hiked cash reserve ratio by 25 basis points to 7.75%. The RBI also said that the inflation for the current fiscal year should be brought down to 5% and in the longer term to 3%. The central bank also estimated the economic growth rate in the current fiscal year between 8% and 8.5%.

China is expected to offer most of the value added tax as a rebate to oil refining companies to cover losses from the price control. Stock in Shanghai and Hong Kong edged higher on the news. Power generating companies surged on the hopes that similar rebate may be extended to the sector. Bank of China reported 85% rise in earnings. The earnings news lifted financial stocks but the gains were muted ahead of the U.S. Fed rate decision. China Coal surged on strong earnings.

The current Governor Mervyn King was reappointed to the post at the Bank of England by the Treasury Committee in the UK. During the hearing King said that inflation in 2009 may rise above 3%. Separately, the Bank of England reported that UK banks issued 64,000 mortgage loans in March compared to 72,000 in February. Mortgage lender HBOS said that it will launch £4 billion rights issue to meet capital requirements.

BP reported its quarterly profit increased 63% to $7.2 billion and profit at Royal Dutch Shell increased 25% to $9.08 billion.

European Markets indexes

In London FTSE 100 Index closed lower 1.00 or 0.02% to 6,089.40, in Paris CAC 40 Index decreased 35.65 or 0.71% to close at 4,977.10 and in Frankfurt DAX index lower 39.99 or 0.58% to close at 6,885.34. In Zurich trading SMI decreased 88.14 or 1.17% to close at 7,462.00.

North American Markets indexes

Dow Jones Industrial Average fell 39.81 or 0.31% to a close of 12,831.94, S&P 500 closed down 5.43 or 0.39% to 1,390.94, and Nasdaq Composite Index increased 1.70 or 0.07% to close at 2,426.10. In Toronto TSX Composite closed down 260.25 or 1.85% to 13,825.60.

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

Merck led decliners in the Dow Jones index with a loss of 10.4% followed by losses in General Motors of 3.4%, in Alcoa of 3%, and in Caterpillar of 1.8%. Chevron led gainers in the Dow with a rise of 2.4% followed by gains in Wal-Mart of 2.2%, in Disney of 1.02% and in McDonalds Corp of 1%.

Of the stocks in S&P 500 index, 238 stocks increased, 260 declined, and 2 were unchanged. Of the stocks in the index, 48 stocks fell more than 3% and 29 gained more than 3%.

Merck led decliners in the S&P 500 index followed by declines in Monsanto of 9%, in Deer & Company of 6%, in Titanium Metals of 6%, in Total System Services of 5.9% and Freddie Mac and Fannie Mae of 5.8%. Office Depot led gainers in the index with a rise of 8.7% followed by increases in Watson Pharmaceuticals of 6.8%, in Safeway of 5.8%, in Motorola of 5.7%, in SuperValu of 5.46%, and in Ambac Financial of 5.3%.


South American Markets Indexes

Brazil led decliners in the South American trading with a fall of 2.82% followed by decreases in Argentina of 1.92%, in Chile of 1.28%, and in Mexico of 1.15%. Venezuela fell 0.9%.

Peru added 0.52% and Colombia increased 0.47%.

Asian Markets

In Hong Kong Hang Seng index increased 247.86 or 0.97% closed to 25,914.15. In Australia ASX 200 index higher 4.20 or 0.07% to close 5,606.90. In Malaysia KL Composite index decreased 11.66 or 0.90% closed to 1,283.65. There was holiday in Japan.

In South Korea Kospi Index decreased 11.66 or 0.64% to close at 1,811.51, in Thailand SET index closed lower 2.79 or 0.33% to 833.63 and Indonesia JSE Index edged increased 49.22 or 2.18% to 2,303.53. Sensex index in India increased 362.50 or 2.13% to 17,378.46.

Commodities, Metals, and Currencies

Crude oil decreased $3.42 to close at $115.33 a barrel for a front month contract, natural gas decreased 53 cent to $10.80 per mBtu, and gasoline futures decreased 9.37 cents to close at 293.70 cents per gallon.

Gold decreased $18.70 in New York trading to close at $876.80 per ounce, silver closed down $0.48 cents to $16.64 per ounce, and copper for front month delivery decreased 4.80 cents to $3.88 per pound.

Wheat futures decreased 32.50 cents in Chicago trading and closed at $8.08 per bushel. Sugar decreased 19 cent to $11.87 per pound. Soybean future closed down 4.00 cents to $12.93 a bushel.

Dollar edged lower but traded near record low against euro to $1.5567 and edged higher against yen to 104.01.

Yields on U.S. bonds decreased to 3.80% with 10 years of maturities and decreased 4.53% with 30-year of maturities.