World Markets Fall; Credit Worries

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

Credit market worries continue to drive negative sentiment in world markets. Asian markets closed sharply lower on the worries of falling exports and talks of rising credit defaults. Rising inflation also dragged emerging markets in Asia and in Europe lower. European markets edged lower despite a sharp reversal in crude oil prices. U.S. market indexes fell as investors speculate on Freddie Mac, Fannie Mae and Lehman Brothers. Gold rebounded.

[R]9:35AM New York – Stock markets in the U.S., Europe and in Asia continue decline as credit worries remain at the center of investors focus.[/R]

Stocks in Asia closed lower and in Europe edged lower after crude oil rose and more worries related to credit markets surface. The spreads in the credit markets continue to increase on the increasing worries related to Freddie Mac and Fannie Mae, health of Leman Brothers and earnings worries at Morgan Stanley and Goldman Sachs. Markets in Japan and India fell sharply. U.S. stocks opened lower on falling dollar and earnings worries in the financial sector.

Initial claims of unemployment filed in the last week ending on August 16 fell 13,000 to 432,000 as companies battle rising materials cost and weak consumer demand. The claims for the year are running at 15% higher than last year and in July the claims have averaged as high a 445,000, highest since the end of the year.

Citibank analyst lowered earnings for Goldman Sachs, Morgan Stanley and Lehman Brothers for the latest quarter.

Crude oil futures prices rose as much as $4 a barrel above $119 and Russia and U.S. spar over the latest battleground, Georgia. The U.S. will like Russia to leave the occupied territory of Georgia and Russia cited the U.S. occupation of Iraq for more than three years.

Inflation in India accelerated from its record level to another peak. Latest wholesale price index for the year ending on August 9 rose to 12.63% from 12.44% for a year ending at the end of the previous week. The inflation is measured on a rolling annual period at the end of each week.

Holcim, one of the world’s largest cement companies reported second quarter net income declined to Sfr 696 million from Sfr 2.07 billion a year ago. Earnings before interest and taxes fell to Sfr 1.23 billion. The ongoing slow down in the U.S. construction industry dragged profits lower.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 99.48 or 0.77% to 12,752.21, Hang Seng index in Hong Kong decreased 539.20 or 2.58% closed to 20,392.06. ASX 200 index in Australia decreased 54.30 or 1.10% to close 4,875.20. The KL Composite index in Malaysia decreased 1.78 or 0.17% closed to 1,071.43.

The Kospi Index in South Korea decreased 28.12 or 1.83% to close at 1,512.59, SET index in Thailand closed lower 13.52 or 1.96% to 676.53 and JSE Index in Indonesia increased 18.55 or 0.90% to 2,088.25. The Sensex index in India decreased 434.50 or 2.96% closed to 14,243.73.

Europe Markets Review

In London FTSE 100 Index traded lower 3.50 or 0.07% to 5,368.30, in Paris CAC 40 Index decreased 45.39 or 1.04% to 4,320.48 and in Frankfurt DAX index traded lower 40.97 or 0.65% to 6,276.83. In Zurich trading SMI decreased 82.90 or 1.17% to 7,017.11.

U.S. Earnings Review

The Gymboree Corporation, children''s clothing retailer said second quarter sales grew 13% to $205.7 million from $182.4 million a year ago. Net income in the quarter jumped 38% to $8 million or 27 cents per diluted share compared to net income of$5.8 million or 19 cents per share, a year ago.

The Gymboree Corporation ((GYMB)) in the last one year traded as high as $47.69 in May 2008 and as low as $25.99 in July 2008. Based on the yesterday’s closing price the company has a market cap of $1.06 billion.

Hot Topic, Inc, the teen clothing retailer said second quarter revenues climbed 3% to $166.8 million from $161.7 million a year ago. Net loss in the quarter was $450,000 or $0.01 per diluted share compared to net loss of $1.7 million or 4 cents per share, a year ago.

Hot Topic, Inc ((HOTT)) in the last one year traded as high as $9.00 in August 2007 and as low as $3.90 in January 2008. Based on the yesterday’s closing price the company has a market cap of $300.31 million.

Limited Brands, Inc, specialty apparel maker said second quarter revenues fell 13% to $2.28 billion from $2.62 billion a year ago. Net income in the quarter fell 61% to $102 million or 30 cents per diluted share compared to net income of$264.4 million or 67 cents per share, a year ago.

Limited Brands, Inc ((LTD)) in the last one year traded as high as $24.24 in August 2007 and as low as $14.41 in March 2008. Based on the yesterday’s closing price the company has a market cap of $6.12 billion.