Alcoa Loss; Deeper European Recession

123jump.com Staff
07 Apr, 2009
New York City

U.S. stocks closed lower ahead of earnings season. Banks and real estate trusts declined for the second day of trading this week. Eurozone lowered its estimate of economic growth for the fourth quarter. Alcoa after the close reported second quarterly loss in a row on 41% fall in revenues.

5:00PM New York, 11:00PM Frankfurt, 8:00AM Sydney[R]– U.S. stocks closed lower ahead of earnings season. Banks and real estate trusts declined for the second day of trading this week. Eurozone lowered its estimate of economic growth for the fourth quarter. Royal Bank of Scotland plans to lay off 9,000 people. Japan left its key rate 0.1% and Australia lowered its rate to 3%. South Africa may have slipped into recession.[/R]

Global Markets

Earnings jitters and weakness in banks dragged U.S. market indexes lower. Soros predicted that recent market gains as bear market rally. Bank, real estate and financial services stocks fell for the second day of this week. The collapse of deal between IBM and Sun Micro also contributed to the weakness in tech stocks.

Alcoa after the close reported second quarterly loss in a row. Revenue declined 41% to $4.15 billion and a loss of 61 cents a share or $497 million compared to earnings of 37 cents a share or $3.3 million. Alcoa is in the process of raising $2.5 billion through bond offering and a sale of its stake in Rio Tinto to Chalco in China.

Casino stocks fell sharply after gambling revenues in February declined at a faster rate than in January. International Speedway plunged after it lowered its annual earnings estimate. Applied Materials fell after a recently placed order was trimmed.

U.K. manufacturing output drops 6.5% in the three months ending in February. Royal Bank of Scotland plans to cut 9,000 jobs to save nearly 2.5 billion pounds of cost.

The Luxembourg based European statistics office Eurostat revised its fourth quarter estimate to a decline of 1.6% from 1.5% on a decline in investment by 4% and household spending by 0.3%. The euro fell against dollar and yen on the weak data.

Three airlines in Europe reported weak traffic in March. Air France-KLM Group, the largest European carrier reported revenue passenger miles, a measure of traffic declined 9.4%. Traffic at SAS Group AB plunged 17% in the month and passenger count dropped 9.3%. Aer Lingus Group Plc traffic fell 13% and passenger count dropped 7% in the month.

The discount carrier Air Berlin Plc reported traffic rise of 4.2% and passenger count fall of 5.6%.

South Africa may have entered into a recession if the prediction of economic weakness by central bank Governor Tito Mboweni proves to be correct. Differing from the finance minister the governor estimates that the natural resource rich economy may have second quarter of ‘negative growth’ but he did not say by how much. In the fourth quarter of last year the economy shrank at 1.8% annual rate. The Finance Minister Manuel is estimated annual growth for this year of 1.2%.

By a unanimous vote the Bank of Japan left its key lending rate unchanged at 0.1% and accepted broader collateral from banks. The move is expected to improve credit access at smaller and regional banks. Stocks fell in the session. Softbank Mobile added 2 million net subscribers in fiscal 2008.

Stocks in Hong Kong fell as investors locked gains after a three-day rally of 11%. Shanghai stocks rose as Beijing announced health care reforms lifting pharmaceutical and medical shares increased. At the end of March, HK foreign exchange reserve rises to $186.2 billion.

Australian stocks declined after the Reserve Bank of Australia lowered rate by 0.25% to 3%. The rates have been cut by half in less than six months as the economy is facing its first recession in twenty years. The record low rates in five decades may have to be lowered more if economy remains weak.

North American Markets

Dow Jones Industrial Average decreased 186.29 or 2.34% to a close of 7,789.56, S&P 500 Index decreased 19.93 or 2.4% to 815.55, and Nasdaq Composite Index declined 45.10 or 2.8% to close at 1,561.61.

Of the stocks in S&P 500 index, 132 increased, 363 declined and 5 were unchanged.

Wynn Resorts led decliners in the S&P 500 index with a loss of 14.4% followed by losses in Prologis of 13.3%, in Host Hotel & Resort Inc of 12.3%, in General Motors of 11.9%, in Vornado Realty Trust of 11.5%.

Textron Inc led gainers in the S&P 500 index with a rise of 9.20% followed by gains in Lincoln National Corp of 8%, in United Health Group of 7.0% and in Humana Inc of 6.1%.

South American Markets Indexes

Mexico Bolsa Index decreased 183.79 or 0.9% to 20,623.42. Brazil Bovespa Stock Index lost 342.73 or 0.8% to 43,824.53.

Argentina benchmark index decreased 3.0%, Chile declined 0.31% and Peru decreased 3.4%. Colombia increased 0.2%. Venezuela Stock Market index fell 0.3%.

Europe Markets Review

In London FTSE 100 Index closed lower 63.02 or 1.58% to 3,930.52, in Paris CAC 40 Index decreased 27.44 or 0.94% to close at 2,902.31 and in Frankfurt DAX index lower 27.31 or 0.63% to close at 4,322.50. In Zurich trading SMI decreased 27.88 or 0.56% to close at 4,974.20.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 25.08 or 0.28% to 8,832.85, Hang Seng index in Hong Kong decreased 69.07 or 0.46% closed to 14,928.97, CSI 300 index in China higher 6.45 or 0.25% closed to 2,576.95. ASX 200 index in Australia decreased 50.30 or 1.34% closed to 3,706.30. The KL Composite index in Malaysia lower 3.93 or 0.43% closed to 919.84.

The Kospi Index in South Korea increased 2.25 or 0.17% to close at 1,300.10. SET index in Thailand closed lower 3.48 or 0.78% to 442.56 and JSE Index in Indonesia decreased 25.78 or 1.70% closed to 1,490.86. The Markets of India were closed today.

Commodities, Metals, and Currencies

Crude oil decreased $2.53 to close at $48.52 a barrel for a front month contract, natural gas decreased 16 cents to $3.57 per mBtu and gasoline futures decreased 0.99 cents to close at 148.25 cents per gallon.

Wheat futures closed down 17.250 cents in Chicago trading and closed at $5.3975 a bushel. Sugar increased 1 cent in trading at 12.23 cents a pound. Soybean future closed down 4.50 cent to $9.89 a bushel.

Gold increased $10.20 in New York trading to close at $883.00 per ounce, silver closed up $0.135 to $12.240 per ounce and copper for the front month delivery increased 1.70 cents to $1.9760 per pound.

Dollar edged higher against euro to $1.3269 and fell against yen to 100.52.

Yields on 10-year U.S. bonds decreased to 2.90% and with 30-year maturities closed down to 3.71%.