Parmalat Falls, Cadbury, SABMiller Rise

123jump.com Staff
15 May, 2008
New York City

European nations registered 0.7% growth in the first quarter after growing at 0.5% in the fourth quarter of 2007. Sustained exports to the Middle East and Asian nations have helped companies in the region despite a sharp rise in energy prices. Reflecting a similar demand from Asian nations, Baltic Dry Index retraced its 50% loss from the peak in November of 2007 in the last three months. Ocean freight rates for commodities are now priced at a record high seen in the fourth quarter of last year.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – Tech and energy companies rallied in the U.S. markets. Cadbury and SAB Miller rose on earnings and outlook. Barclays reported £1.7 billion charge.[/R]

Global Markets Update

Economic growth in the EU 15 and EU 27 nations was recorded at 0.7% compared to the fourth quarter according to Eurostat in Luxembourg. In the fourth quarter growth rate in the EU 15 nations was 0.4% and in the EU 27 nations was at 0.5%. On a seasonally adjusted basis the economy grew at 2.2% in 15 nations and at 2.4% in 27 nations compared to 2.2% and 2.5% a year ago.

Baltic Dry Index traded in London that measures the ocean freight rates that move commodities and petroleum products reached a record high reached in November of 2007. The index had fallen nearly 50% in February to as low as 5,500 and since then has climbed back to 10,650 at close today. The index has rebounded as tight credit markets have forced several ship contracts to be canceled at the same time demand from China and other Asian countries remain robust. U.S. crude oil imports have declined only 5% this year despite a near 50% rise in crude oil price in the last twelve months.

Parmalat SpA fell 11% after it reported first quarter earnings of 90.2 million euros compared to 110.3 million euros a year ago. Net revenue in the quarter rose 6.7% or 8.8% on a constant currency basis to 926.9 million euros. In Italy the revenues rose 10.1% to 302.6 million euros and in Canada revenue gained 3.7% to 295 million euros. The milk processing company suffered from fixed price contracts in Italy and 13% rise in the cost of raw milk. The company is expected to benefit from higher legal settlement and price revisions in Europe and Canada.

UK stocks edged higher after Cadbury indicated that profit margin will be 1.5% higher than a year ago and BT Group reported fourth quarter sales increased 2.5%. SABMiller second half profit rose 24% to $1.07 billion and for the year profit rose $2.02 billion. However, Barclays reported a loss of £1.1 billion in the quarter on the charge of £1.7 billion related to credit market losses and still has exposure to £14 billion pounds to subprime and other asset backed loans at the end of the first quarter.

CNET Networks, Inc agreed to be acquired by CBS at $11.50 per share or $1.8 billion. The technology and tech news publisher had regained its footing after the tech bubble in the late nineties. In the year 2007 the company had reported revenue of $406 million and earnings of $177 million. CBS locked in a competitive struggle with News Corp has been acquiring Internet properties to increase its audience reach.

U.S. stocks opened modestly higher. Barclays in its interim report suggested that the first quarter earnings will be lower than in the quarter a year ago and took a charge of £1.7 billion related to losses in the credit market. Tier 1 ratios of capital and equity declined as well in the quarter. The bank has one of the weakest capital ratios in the industry and has no plans to raise capital. CNET agreed to be acquired by CBS for $1.8 billion.

Tech stocks in the U.S. lifted broader market indexes. Nasdaq index gained 1.2% in the late afternoon on a steady rise in Apple, Research in Motion, Intel, Cisco and Google. Carl Ichan and Paulson & Company acquire a stake in Yahoo hoping to elect board that favors a deal with Microsoft. Retailers also rallied after JC Penney reported lower than expected fall in earnings. Barclays reported a large loss related to credit market assets.


European Markets indexes

In London FTSE 100 Index closed higher 35.80 or 0.58% to 6,251.80, in Paris CAC 40 Index increased 2.27 or 0.04% to close at 5,057.51 and in Frankfurt DAX index lower 2.19 or 0.03% to close at 7,081.05. In Zurich trading SMI increased 88.82 or 1.17% to close at 7,683.43.

North American Markets indexes

Dow Jones Industrial Average rose 94.28 or 0.73% to a close of 12,992.66, S&P 500 closed up 14.91 or 1.06% to 1,423.57, and Nasdaq Composite Index increased 37.03 or 1.48% to close at 2,533.73. In Toronto TSX Composite closed up 201.75 or 1.38% to 14,828.06.

Of the 30 stocks in Dow Jones Industrial Average, 22 closed higher, 8 closed lower, and none was unchanged.

General Motors led the gainers in the Do Jones Index with a rise of 5.2% followed by increases in Intel Corp of 4.75%, in JP Morgan Chase of 2.4%, in Hewlett Packard of 2.3%, in Citigroup of 2.06% and in Alcoa of 1.76%. United Tech led the decliners in the Dow Jones Index with a loss of 1.1% followed by losses in Wal-Mart Stores of 0.6%, in General Electric of 0.4%.

Of the stocks in S&P 500 index, 391 stocks increased, 107 declined, and 2 were unchanged. Of the stocks in the index, none stocks fell more than 3% and 45 gained more than 3%.

Celgene Corp led the decliners in the S&P 500 index with a loss of 2.8% followed by losses in Electronic Arts of 2.4%, in CBS Corp of 2.3%, in Medco Health Solutions of 2.1% and in WellPoint of 2.1%. Agilent Technologies led the gainers in the S&P 500 index with a rise of 8.6% followed by increases in Peabody Energy of 7.8%, in NVidia of 7.7%, in Allegheny Tech of 7.6% and in EMC Corp of 6.7%.

South American Markets Indexes

Brazil led the gainers in the Latin American markets with a rise of 2.09% followed by increases in Argentina of 1.6%, in Peru of 1.14%, in Mexico of 0.66% and in Chile of 0.32%. Colombia led the decliners in the index with a loss of 0.44% followed by losses in Brazil of 0.38%.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 133.19 or 0.94% to 14,251.74, in Hong Kong Hang Seng index decreased 19.77 or 0.08% closed to 25,513.71. In Australia ASX 200 index higher 18.00 or 0.31% to close 5,890.70. In Malaysia KL Composite index increased 6.41 or 0.50% closed to 1,294.15.

In South Korea Kospi Index increased 41.96 or 2.28% to close at 1,885.71, in Thailand SET index closed higher 6.67 or 0.79% to 855.61 and Indonesia JSE Index edged increased 0.47 or 0.02% to 2,449.81. Sensex index in India increased 375.19 or 2.21% to 17,353.54.

Commodities, Metals, and Currencies

Crude oil increased 5 cents to close at $124.27 a barrel for a front month contract, natural gas decreased 21 cents to $11.39 per mBtu, and gasoline futures decreased 1.25 cents to close at 316.79 cents per gallon.

Gold increased $13.50 in New York trading to close at $880.00 per ounce, silver closed up 7 cents to $16.68 per ounce, and copper for front month delivery increased 5.75 cents to $3.738 per pound.

Wheat futures increased 7.50 cent in Chicago trading and closed at $7.71 per bushel. Sugar decreased 5 cent to $11.00 per pound. Soybean future closed down 32.00 cents to $13.47 a bushel.

Dollar edged lower and traded near record low against euro to $1.5446 and edged higher against yen to 104.75.

Yields on U.S. bonds decreased to 3.81% with 10 years of maturities and decreased to 4.55% with 30-year of maturities.