Inflation Rises; Financials Fall

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

July wholesale price index in Germany and in the U.S. surged as crude oil and food prices increaes around the world. PPI index in July increased at 1.2% in the U.S. and in Germany soard at 27-year record at 8.9% rate. In Asia, the Bank of Japan left its key rate at 0.5% and hinted lower expectations of global economic growth. In earnings news, Home Depot, the largest home improvement chain second quarter revenue fell 5.4% and earnings declined 24%.

[R]9:20AM New York – Producer price indexes in the U.S. and Germany surge. The Bank of Japan left its key rate at 0.5%. Home Depot second quarter revenue declined 5.4% and earnings fell 25%.[/R]

A further indication of global economic slowdown lowered market averages in Europe and in Asia. The Bank of Japan left its key rate at 0.5% and cited further weakening in the global economy. July producer price index in Germany rose at 2% from June and surged 8.9% from the month a year ago. The index surged at the highest rate since it increased at 9.1% in 1981.

July Producer Price Index rose at 1.2% after rising at 1.8% in June, according to the Labor Department in Washington. Core index, that excludes the food and energy related items increased at 0.7% in July after rising at 0.2% rate in June.

U.S. housing starts fell dropped to the lowest level in 17 years to 965,000 annual rate in July after logging a rate of 1.084 million in June.

Financial stocks in the U.S. are likely to fall more today after negative comments on Lehman Brothers and AIG. JP Morgan analysts estimated $4 billion write down for at the brokerage firm and Goldman Sachs analyst estimated that the insurance company may need to raise large amount of capital as it may face significantly higher credit losses.

The Home Depot, the largest home improvement retailer second quarter revenue declined 5.4% from a year ago to $21 billion on comparable same store sales declined 7.9%. Earnings in the quarter declined 25% to $1.2 billion from $1.6 billion a year ago and earnings per share fell to 71 cents from 81 cents a year ago.

Staples, Inc. in the preliminary earnings for the second quarter indicated North American retail sales declined 1% and comparable sales in the U.S. and in Europe fell 7%. The results do not include the performance of the recently acquired Corporate Express business.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 300.40 or 2.28% to 12,865.05, Hang Seng index in Hong Kong decreased 446.30 or 2.13% closed to 20,484.37. ASX 200 index in Australia decreased 118.60 or 2.38% to close 4,866.40. The KL Composite index in Malaysia decreased 14.94 or 1.38% closed to 1,069.42.

The Kospi Index in South Korea decreased 26.30 or 1.68% to close at 1,541.41, SET index in Thailand closed lower 5.90 or 0.85% to 691.33 and JSE Index in Indonesia decreased 42.65 or 2.05% to 2,042.50. The Sensex index in India decreased 101.93 or 0.70% closed to 14,543.73.

Europe Markets Review

In London FTSE 100 Index traded lower 80.20 or 1.47% to 5,370.00, in Paris CAC 40 Index decreased 74.54 or 1.68% to 4,374.30 and in Frankfurt DAX index traded lower 80.64 or 1.25% to 6,352.24. In Zurich trading SMI decreased 90.14 or 1.25% to 7,141.26.

Earnings Review

Mesa Air Group, Inc, operate as regional air carriers providing scheduled passenger and airfreight service said third quarter revenues rose 4.0% to $353.9 million from $340.3 million a year ago. Net loss in the quarter was $3.7 million or 14 cents per diluted share compared to net income of$2.6 million or 8 cents per share, a year ago.

Mesa Air Group, Inc ((MESA)) in the last one year traded as high as $6.24 in August 2007 and as low as $0.29 in July 2008. Based on the yesterday’s closing price the company has a market cap of $14.50 million.

Schawk, Inc, a provider of brand point management services, enabling companies of all sizes to connect their brands with consumers to create deeper brand affinity said second quarter sales declined 6.5% to $133.4 million from $142.7 million a year ago. Net income in the quarter decreased 11.37% to $0.8 million or 3 cents per diluted share compared to net income of$9.9 million or 36 cents per share, a year ago.

Schawk, Inc ((SGK)) in the last one year traded as high as $24.71 in October 2007 and as low as $9.92 in July 2008. Based on the yesterday’s closing price the company has a market cap of $367.69 million.