GDP, Unemployment Data, U.S. Indexes Fall

123jump.com Staff
27 Aug, 2009
New York City

U.S. stocks staged uptick in the morning trading after the release of final second quarter GDP data. Unemployment claims decreased 10,000. Cash-for-clunkers program helped to sell 700,000 vehicles. Drought conditions persist in India.

[R]10:10 AM New York – U.S. stocks staged uptick in the morning trading after the release of final second quarter GDP data. Unemployment claims decreased 10,000. Cash-for-clunkers program helped to sell 700,000 vehicles. Drought conditions persist in India.[/R]

U.S. stocks edged higher after the release of final read on the economic growth and unemployment claims. Global corporations around the world reported weak earnings as regional economies are still struggling. Accor, Diego, Fortis China Telecom, Glecore, Tata Steel and Cnooc were the latest to report earnings.

Asian markets closed down and European markets edged lower.

In the early trading in New York, crude oil decreased 1% and natural gas fell more than 3%. Dollar held firm but gold edged higher. Yields on 10-year bonds held at 3.45% and 30-year bonds at 4.21%.

U.S. Q2 GDP Shrinks at 1%, Unemployment Claims Fall

The final read on the second quarter suggested that the economy shrank at 1% annual rate, matching the preliminary read, according to the latest data from the Commerce Department. The government stimulus program and fewer job losses contributed to the mild decline in the economy.

Corporate profits increased 5.7% in the quarter from the first, the sharpest rise since the first quarter of 2005. Consumer spending fell at 1% pace after rising at 0.6% in the first quarter. Inventory buildup is driving the current manufacturing expansion but in the second quarter declined at $159.2 billion annual pace after dropping at $113.9 billion in the first quarter and $37.4 billion in the fourth.

The government spending played a key role in supporting the economy in the second quarter. The smaller decrease in real GDP in the second quarter compared to the first reflected smaller decrease in inventory investment and in fixed investment.

Current-dollar GDP, the market value of the nation's output of goods and services decreased 1.0%, or $34.7 billion, in the second quarter to a level of $14,143.3 billion. In the first quarter, current-dollar GDP decreased 4.6%, or $169.3 billion.
U.S. Weekly Claims Fall

Separately, the preliminary unemployment claims in the last week decreased 10,000 from the revised claims in the previous week of 580,000. The unemployment rate in the week decreased to 4.6% from the revised 4.7% rate in the previous week.

Cash-for-Clunkers

Transportation Department estimated that the “cash-for-clunkers” program facilitated 700,000 vehicles sales before ending on August 24.

Earnings Review

Accor SA, the hotel operator said first-half revenues fell 9.3% to €3.41 billion from €3.76 billion a year ago. Net loss in the first-half was €150 million or €0.68 per diluted share compared to net profit of €310 million or €1.39 per share a year ago.

China Telecom Corp, the telecoms industry said first-half sales rose 14% to Rmb 103.1 billion from Rmb 90.4 billion a year ago. Net profit in the first-half fell 28.6% to Rmb 9.0 billion compared to net profit of Rmb 12.6 billion a year ago.

China Telecom Corp, in the last one year traded as high as HK$4.44 in August 2008 and as low as HK$1.80 in October 2008. Based on the yesterday’s closing price of HK$3.79 the company has a market cap of HK$306.73 billion.

Cnooc Limited, the producer of offshore crude oil and natural gas company said first-half revenues fell 42% to Rmb 40.64 billion from Rmb 70.04 billion a year ago. Net profit in the first-half fell 55% to Rmb 12.4 billion or Rmb 0.28 per diluted share compared to net profit of Rmb 27.54 billion or Rmb 0.62 per share a year ago.

eLong, Inc, an online travel service provider in China said second quarter revenues rose 1.4% to Rmb 81.9 million from Rmb 80.8 million a year ago. Net income in the quarter was $9.5 million or Rmb 0.19 per diluted share compared to net loss of Rmb 20.3 million or Rmb 0.40 per share a year ago.

Diageo plc, the drinks firm said full-year sales rose 14.8% to £9.3 billion from £8.1 billion a year ago. Net profit for the full-year rose 6.6% to £1.62 billion or 65.0 pence per diluted share compared to net profit of £1.52 billion or 58.9 pence per share a year ago.

Fortis N.V., the insurer said first-half revenues rose 65% to €8.57 billion from €5.19 billion a year ago. Net profit in the first-half fell 45% to €886 million or €0.36 per diluted share compared to net profit of €1.6 billion or €0.75 per share a year ago.

Glencore International, the commodity-trading company said first-half sales fell 47% to $45.2 billion from $86.2 billion a year ago. Net profit in the first-half fell 57% to $1.12 billion compared to net profit of $2.63 billion a year ago.

Lihir Gold Limited, the global gold producer said first-half revenues rose 97% to A$564.1 million from A$286.7 million a year ago. Net loss for the first-half was A$300.9 million compared to net profit of A$36.5 million a year ago.

Westfield Group, the retail property group said first-half revenues fell 6% to A$2.07 billion from A$2.21 billion a year ago. Net loss for the first-half was A$708 million compared to net profit of A$1.3 billion a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 165.74 or 1.56% to 10,473.97, Hang Seng index in Hong Kong decreased 213.57 or 1.04% to 20,242.75 and CSI 300 index in China lower 16.08 or 0.51% to 3,156.30. ASX 200 index in Australia decreased 3.70 or 0.08% to 4,450.80. The FTSE Bursa KL Composite index in Malaysia closed higher 4.34 or 0.37% to 1,176.90.

The Kospi Index in South Korea decreased 14.79 or 0.92% to close at 1,599.33. SET index in Thailand closed lower 5.88 or 0.89% to 652.40 and JSE Index in Indonesia decreased 24.02 or 1.01% to 2,356.06. The Sensex index in India increased 11.22 or 0.07% to 15,781.07.

Europe Markets Review

In London FTSE 100 Index traded lower 8.37 or 0.17% to 4,882.21, in Paris CAC 40 Index decreased 2.82 or 0.08% to 3,665.52 and in Frankfurt DAX index traded lower 35.25 or 0.64% to 5,486.72. In Zurich trading SMI decreased 20.65 or 0.33% to 6,156.32.