Weak U.S. Opening, Crude Rebounds

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

Global markets appear to be in a retreat after Asian markets closed down, European markets trend lower and the U.S. indexes are expected to open weak. Crude oil spiked above $133 a barrel. The weather forecast from the U.S. suggested busy hurricane season with a possibility of 9 significant hurricanes. BHP and Rio Tinto fell in the European trading as investors book profit in the sector. Metals and mining stocks have surged nearly 45% in two months.

[R]9:00AM New York – U.S. stocks are expected to open lower on a rebound in crude oil prices. Asian markets closed lower and European markets trended lower on weak resources related stocks.[/R]

World markets were in retreat after a week of volatile trading and crude oil price surging to record levels on a daily basis. The commodities, metals, agricultural products and crude oil in Asia traded lower at close. European stocks struggled after the release of weak economic read by Royal Bank of Scotland. The bank forecasted weak economic growth as most leading indicators for the UK economy suggested a sharp slow-down. Most Asian markets closed lower led by a fall of nearly 5% in Pakistan.

Crude oil spiked again in the morning trading in New York and London on active hurricane season forecast. National Oceanic and Atmospheric Administration predicted a busy hurricane season and estimated at least nine powerful hurricanes. Crude oil surged more than $2 a barrel to $133.20 in the morning trading in New York.

The Karachi Stock Exchange 100 Index fell 4.8% after the Pakistan central bank raised interest rate to stem the rising inflation. The inflation in Pakistanis is running at 25-year high. Governor of the State Bank of Pakistan Shamshad Akhtar raised discount rate by 1.5% to 12%, increased cash reserve requirements for all deposits with longer than one year maturity to 9% and statutory liquidity ratio to 19%. The inflation in Pakistan is hovering at two decade high of above 26%.

U.S. Earnings Review

Aeropostale, Inc the teen apparel retailer said first quarter revenues rose 22% to $336.3 million from $275.8 million a year ago. Net income in the quarter jumped 27% to $17.5 million or 26 cents per diluted share compared to net income of $13.8 million or 18 cents per share, a year ago.

Aeropostale, Inc stock ((ARO)) closed at $32.72 in Thursday’s trading.

CA, Inc a leading software company said fourth quarter revenues rose 7.33% to $1.09 billion from $1.01 billion a year ago. Net income in the quarter was $71 million or 13 cents per diluted share compared to net loss of $20 million or 4 cents per share, a year ago.

CA reported subscription and maintenance revenue rose 8% to $951 million, while professional services revenue rose 11% to $103 million. Total product and services bookings rose to $1.47 billion, from $1.13 billion in the year-ago quarter.

For the full fiscal year, CA earned $500 million or 93 cents per share compared with $118 million or 22 cents per share last year. The company's full-year adjusted profit totaled $1.19 per share. CA's fiscal year revenue rose 8.5% to $4.28 billion.

CA, Inc stock ((CA)) closed in Thursday’s trading at $24.17.

The Gap, Inc, Clothing retailer said first quarter revenues fell 5% to $3.38 billion from $3.55 billion a year ago. Net income in the quarter jumped 40% to $249 million or 34 cents per diluted share compared to net income of $178 million or 22 cents per share, a year ago.

The Gap, Inc stock ((GPS)) in the Thursday trading at $18.29.

Pacific Sunwear of California, Inc, a clothing retailer said first quarter revenues dipped 0.5% to $266.9 million from $268.1 million a year ago. Net loss in the quarter was $37.1 million or 53 cents per diluted share compared to net loss of $5.1 million or 7 cents per share, a year ago.

Pacific Sunwear of California, Inc stock ((PSUN)) closed at $10.11 in Thursday’s trading.

European Markets Review

European stocks traded mixed in the morning with resource stocks leading the decliners. Commodity stocks after a three week surge are now facing a sell-off from investors. BHP led the decliners with a fall of 3% in London trading to 2,041 pence. BHP, the leading metals miner and oil producer had run up 48% in the last two months of trading lost nearly 6% during the week.

In the UK, the FTSE 100 lost 19.90 or 0.5% in the mid morning trade at 6,161.70. In France the CAC 40 index lost 0.71% to 4,992.81.

In Frankfurt, the DAX 30 index lost 21.92 points or 0.31% to 7,048.41.The Swiss Market Index lost 31.73 or 0.42% to 7,546.30.

Commerzbank and Allianz are planning a joint bid for Deutsche Postbank.

Asian Markets Review

In Tokyo Nikkei 225 Index closed lower 33.74 or 0.24% to 14,012.20, in Hong Kong Hang Seng index decreased 329.05 or 1.31% closed to 24,714.07. In Australia ASX 200 index lower 58.90 or 1.01% to close 5,768.00. In Malaysia KL Composite index decreased 2.79 or 0.22% closed to 1,274.78.

In South Korea Kospi Index decreased 7.48 or 0.41% to close at 1,827.94, in Thailand SET index closed higher 1.05 or 0.12% to 875.59 and Indonesia JSE Index edged decreased 38.00 or 1.52% to 2,465.96. Sensex index in India decreased 257.47 or 1.52% to 16,649.64.