Inflation Surges, European Economies Contract

123jump.com Staff
14 Aug, 2008
New York City

U.S. stocks fell after a sharp rise in inflation and weakening European economies. Consumer price index in July rose at 0.8% and so called core rate of inflation increased at 0.3%, above the target range of the Fed. The sharp increase in inflation, as measured by CPI, has increasingly been viewed as a lagging indicator and many people experience higher inflation that recorded by the index. European economies shrank in the second quarter at 0.2% after rising at 0.7% in the first quarter.

[R]9:35AM New York - U.S. stocks fall after inflation surges in July. European stocks fell as Euro-zone economy shrinks in the second quarter from the previous quarter.[/R]

Consumer Price Index in July surged to 0.8% and excluding food and energy the index increased at 0.3%. The sharp increase in the index depressed stocks in the pre-market trading.

European economy shrank at 0.2% rate in the second quarter from the first quarter after rising at 0.7% in the quarter. The economy still expanded from a year ago at 1.5% rate according to the Eurostat. Japan only a day ago reported shrink of 2.4% in the second calendar quarter. In another report, inflation was recorded at 4% in July, lower than expected in the euro zone.

Wal-Mart Stores net income in the second quarter rose 17% to $3.45 billion or 87 cents a share compared to $2.95 billion or 72 cents a share. Revenue in the quarter rose 10% to $102.7 billion compared to $93 billion. The company forecasted full-year earnings between $3.43 and $3.50 a share compared to its previous estimate of between $3.30 and $3.43 a share.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 66.25 or 0.51% to 12,956.80, Hang Seng index in Hong Kong increased 99.39 or 0.47% closed to 21,392.71. ASX 200 index in Australia increased 29.50 or 0.60% to close 4,981.10. The KL Composite index in Malaysia decreased 3.10 or 0.28% closed to 1,109.43.

The Kospi Index in South Korea increased 9.47 or 0.61% to close at 1,572.19, SET index in Thailand closed higher 4.00 or 0.57% to 705.60 and JSE Index in Indonesia increased 43.12 or 2.09% to 2,106.64. The Sensex index in India decreased 368.94 or 2.44% closed to 14,724.18.

Europe Markets Review

In London FTSE 100 Index traded lower 65.20 or 1.20% to 5,513.80, in Paris CAC 40 Index increased 42.18 or 0.96% to 4,445.15 and in Frankfurt DAX index traded higher 27.48 or 0.43% to 6,449.67. In Zurich trading SMI increased 48.27 or 0.67% to 7,241.77.

Earnings Review

Ctrip.com International, Ltd, a travel service provider for hotel accommodations, airline tickets and packaged tours in China said second quarter revenues rose 30% to RMB375 million or $55 million from RMB288 million a year ago. Net income in the quarter increased 35% to RMB119 million or $17 million or 25 cents per diluted ADS compared to net income of RMB151 million or $22 million or 32 cents per ADS, a year ago.

Ctrip.com International, Ltd ((CTRP)) in the last one year traded as high as $70.89 in May 2008 and as low as $35.91 in August 2007. Based on the yesterday’s closing price the company has a market cap of $2.87 billion.

Macy''s, Inc, an apparel retail company said second quarter revenues fell 3% to $5.7 billion from $5.8 billion a year ago. Net income in the quarter fell 1.35% to $73 million or 17 cents per diluted share compared to net income of $74 million or 16 cents per share, a year ago.

Macy''s, Inc ((M)) in the last one year traded as high as $35.76 in October 2007 and as low as $14.33 in July 2008. Based on the yesterday’s closing price the company has a market cap of $8.69 billion.

North American Energy Partners Inc, a resource services provider to oil, natural gas and other natural resource companies said first quarter revenues rose 54.5% to $259.0 million from $167.6 million a year ago. Net income in the quarter was $19.1 million or 52 cents per diluted share compared to net loss of$8.6 million or 24 cents per share, a year ago.

North American Energy Partners Inc ((NOA)) in the last one year traded as high as $24.50 in June 2008 and as low as $9.68 in February 2008. Based on the yesterday’s closing price the company has a market cap of $540.97 million.

TechTarget Inc, sells marketing services and products to information technology companies said second quarter revenues rose 19% to $29.4 million from $24.6 million a year ago. Net income in the quarter fell 47% to $1.7 million or 4 cents per diluted share compared to net income of $3.2 million or 6 cents per share, a year ago.

TechTarget Inc ((TTGT)) in the last one year traded as high as $18.69 in September 2007 and as low as $6.90 in August 2008. Based on the yesterday’s closing price the company has a market cap of $317.06 million.

Tegal Corporation, a leading designer and manufacturer of plasma etch and deposition systems used in the production of integrated circuits and nanotechnology devices said first quarter revenues rose 3% to $4.7 million from $4.6 million a year ago. Net loss in the quarter was $0.8 million or 11 cents per diluted share compared to net loss of $0.6 million or 9 cents per share, a year ago.

Tegal Corporation ((TGAL)) in the last one year traded as high as $6.50 in February 2008 and as low as $3.11 in January 2008. Based on the yesterday’s closing price the company has a market cap of $29.96 million.

WNS (Holdings) Limited, a leading provider of global business process outsourcing services said first quarter revenues rose 9.3% to $122.9 million from $112.5 million a year ago. Net income in the quarter decreased 60.4% to $3.3 million or 8 cents per diluted share compared to net income of $8.4 million or 20 cents per share, a year ago.

WNS (Holdings) Limited ((WNS)) in the last one year traded as high as $25.35 in August 2007 and as low as $12.81 in January 2008. Based on the yesterday’s closing price the company has a market cap of $721.82 million.