UK GDP Falls 1.6%, Pernord Ricard

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

Auto stocks in Germany rebounded. UK stocks fell as the first quarter GDP estimate showed a deeper decline than in the fourth quarter. UK GDP decline in first quarter was estimated at 1.6%. Banks in Ireland declined after a rating agency lowered its view. Pernord Ricard to raise 1 billion euros.

[R]3:00PM New York, 8:00PM London – Auto stocks in Germany rebound and stocks in UK fall as the first quarter GDP estimate showed a deeper decline than in the fourth quarter.[/R]

European markets rebounded after three days of decline, however the rebound was weak. UK first quarter GDP declined at a faster pace than in the fourth quarter last year and auto stocks in Germany rose on speculation. In Paris, Arcelor Mittal entered in negotiations with unions as steel demand remains weak.

National Institute of Economic and Social Research estimated that the UK GDP in the first quarter of this year declined at 1.5% after falling at a rate of 1.6% in the fourth quarter of last year. The private research group releases its preliminary estimate several weeks before the data release from the Office of National Statistics.

The report noted that the fall in output so far has been very similar to the recession that began in summer of 1979. If the profile of the current recession were to track the recession thirty years ago than the output will continue to drop for one more year before it reaches back to the output of 2008.

Irish banks declined sharply after the rating agency Moody’s Investors Services lowered its view on twelve banks. Bank of Ireland dropped 7% and Allied Irish Banks Plc declined 5.5%.

Of the stocks in FTSE 100 index 49 increased, 52 declined and 1 was unchanged.

Pearson Plc led decliners in FTSE 100 index with a loss of 4.9% followed by losses in Thomas Cook Group of 4%, in BG Group Plc of 3.3% and in Cairn Energy of 2.9%. Reed Elsevier Plc, Invensys Plc and Man Group dropped more than 2%.

Old Mutual Plc led gainers in the FTSE 100 index with a rise of 7.8% followed by gains in British Land Company Plc of 7.2%, in Smith & Nephew of 6.4%, in Land Securities of 5.9%, in Liberty International Plc of 5.6% and in Hammerson Plc of 4.8%.

Smith & Nephew Plc jumped after the rival Biomet Inc reported a small rise in third quarter sales.

In Frankfurt, Germany auto stocks led gainers in a rally that led the index higher. DAX Index closed up 0.8% after Goldman Sachs recommended clients to buy auto stocks. The ruling government coalition tripled subsidies for the purchase of low emission vehicles to 5 billion euros.

Steelmakers declined after Deutsche Bank issued cautious views on the recovery in the sector and indicated that market is ‘still too bullish’ and looking for earlier than expected recovery.

Of the stocks in DAX index, 9 declined and 21 increased.

Salzgitter AG led decliners in the DAX index with a loss of 1.6% followed by losses in Commerzbank of 0.7%, in Hannover Rueckversicherung AG of 0.7%, in Linde AG of 0.5%, in Henkel AG of 0.4%.

Daimler AG led gainers in the DAX index with a rise of 7.2% followed by gains in BMW of 6.4%, in SAP AG of 3.8%, RWE AG of 2.5%, in E.ON AG of 2.1%, in Deutsche Bank of 1.9%.

In Paris, France Pernord Ricard SA announced plans to raise 1 billion euros in rights offering and sale of a liquor brand to raise 500 million euros. The stock declined 7% after the company cut its earnings growth estimate to between 3% and 5% from 5% and 8% on a weakness in Eastern Europe and Russia. The company has already raised 577 million euros in other brand sales to bolster its finances.

Europe Markets Review

In London FTSE 100 Index closed lower 5.00 or 0.13% to 3,925.52, in Paris CAC 40 Index increased 18.75 or 0.65% to close at 2,921.06 and in Frankfurt DAX index higher 35.42 or 0.82% to close at 4,357.92. In Zurich trading SMI increased 25.60 or 0.51% to close at 4,999.80.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 237.84 or 2.69% to 8,595.01, Hang Seng index in Hong Kong decreased 454.11 or 3.04% closed to 14,474.86, CSI 300 index in China lower 97.60 or 3.79% closed to 2,479.35. ASX 200 index in Australia decreased 86.80 or 2.34% closed to 3,619.50. The KL Composite index in Malaysia lower 11.97 or 1.30% closed to 907.87.

The Kospi Index in South Korea decreased 38.03 or 2.93% to close at 1,262.07. SET index in Thailand closed higher 1.01 or 0.23% to 443.57 and JSE Index in Indonesia decreased 25.11 or 1.68% closed to 1,465.75. The Sensex index in India increased 207.47 or 1.97% closed to 10,742.34.