Unemployment Claims, PPI Rise; Stocks Fall

Darlington Musarurwa
19 Feb, 2009
New York City

U.S. stocks edged sideways after the higher than expected claims of unemployment and a rise in producer price index. Bond yields fell.The euro rebounded on the speculation that Germany will provide additional liquidity to banking system and offer economic stimulus package to industries.

[R]10:30PM New York – U.S. stocks edged sideways after the higher than expected claims of unemployment and a rise in producer price index. Bond yields fell.[/R]

In the U.S., initial claims of unemployment were unchanged at the end of last week to 627,000, unchanged from the previous week. Total number of people claiming benefits rose 170,000 to 4.99 million. In all 598,000 people lost their jobs in January and the jobless rate rose to 7.6% at the end of January.

Producer price index in January increased 0.8% after falling 1.9% in December. The index declined 1% from a year ago, largest decline in three years.

Whole Foods Market Inc jumped 15% in the early morning trading in New York after it reported fiscal first quarter earnings of 25 cents, ahead of analysts estimates. Hewlett Packard increased 5% after it cut its earnings outlook for the current year.

In European trading euro rebounded on the speculation that Germany will provide additional liquidity to banking system and offer economic stimulus package to industries. The euro rose to $1.2680 but still hovered near $1.251, the low reached in November of last year.

Nestle SA, Swiss food and drinks giant said full-year sales rose 2.2% to Sfr 109.9 billion. Net profit in the full-year rose 69% to Sfr 18.0 billion.

The Bank of Japan left its key lending rate unchanged at 0.1% in a unanimous vote. The central bank also widened the asset purchase facility as stated earlier and proposed to lend directly to the corporation. In the current plan the bank will purchase corporate bonds of 1 trillion yen or $11 billion that are rated A or higher.

The central bank will purchase these bonds of maturities of less than one year in an auction with a minimum yield. The central bank is looking to provide liquidity through the purchase of highest quality bonds.

The yen against dollar fell to 93.53 after the rate decision.

The central bank also expanded its lending facility to financial institutions to 3 trillion yen for commercial paper and unlimited collateral loans to banks and brokerage houses.

Exporters of electronics, technology and automobiles are squeezed as yen rises and sales weaken in international markets. Leading exporters including Toyota, Nissan, Matsushita and Sony has declared losses for the first time in several years and do not expect profits to improve in the fiscal 2010 too.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 23.21 or 0.31% to 7,557.65, Hang Seng index in Hong Kong increased 7.36 or 0.06% closed to 13,023.36, CSI 300 index in China higher 23.57 or 0.99% closed to 2,298.41. ASX 200 index in Australia increased 35.70 or 1.05% closed to 3,448.90. The KL Composite index in Malaysia higher 4.36 or 0.49% closed to 899.59.

The Kospi Index in South Korea decreased 6.09 or 0.55% to close at 1,107.10. SET index in Thailand closed higher 2.02 or 0.46% to 441.62 and JSE Index in Indonesia decreased 6.91 or 0.52% closed to 1,323.70. The Sensex index in India increased 27.45 or 0.30% closed to 9,042.63.

Europe Markets Review

In London FTSE 100 Index traded higher 1.25 or 0.03% to 4,008.08, in Paris CAC 40 Index decreased 0.82 or 0.03% to 2,873.25 and in Frankfurt DAX index traded higher 14.58 or 0.35% to 4,219.54. In Zurich trading SMI increased 23.32 or 0.47% to 4,978.79.