U.S. Stocks Trade Lower; TARP Unwinding

123jump.com Staff
21 Oct, 2009
New York City

U.S. stocks trade lower as investors face rising interest rates in UK and Asia. Treasury Secretary Geithner indicated that initial TARP programs may be terminated and bank capital purchase program will be permitted to expire at the end of this year. Yahoo, Boeing and Morgan Stanley are in focus.

[R]9:30 AM New York – U.S. stocks trade lower as investors face rising interest rates in UK and Asia. Treasury Secretary Geithner indicated that initial TARP programs may be terminated and bank capital purchase program will be permitted to expire at the end of this year. Yahoo, Boeing, SanDisk and Morgan Stanley are in focus after earnings.[/R]

Investors are digesting a barrage of earnings in the U.S, Europe and Asia. Most companies around the world are reporting better than expected earnings and the positive earnings surprise is especially pronounced in India, China and Australia.

UK, Australia and New Zealand are likely to lead the world as central bankers set the stage for higher interest rates.

Third quarter U.S. companies earnings are ahead of expectations with the average of more than 15% according to the data compiled by Ticker.com, largely on the strength in the banking and industrial companies.

Stocks in the early trading edged lower after Boeing reported $3.5 billion in charges related to Dreamliner production delays.

State Bank of India raised $750 million through the benchmark bond sales to foreign investors that yielded 4.5% due October 2014. The five-year bonds were priced to yield 226.4 higher than the U.S. Treasury bonds.

BHP Billiton in its quarterly output reported improved production at its Western Australia mines but also alerted that Chinese demand for the rest of the year is expected to be softer.

Third quarter oil production increased 18% to 41.21 million barrels and oil and natural gas production is expected to increase 10% for the year. Iron ore production at mines in Pilbara region increased 11% to 30.1 million tons.

Earnings Review

The Boeing Company, the commercial plane maker reported third quarter revenues rose 9% to $16.69 billion from $15.3 billion a year ago. Net loss in the quarter was $1.6 billion or $2.23 per diluted share compared to net income of $695 million or 96 cents per share a year ago.

Yahoo! Inc, the Internet media company said third quarter sales fell 11.7% to $1.58 billion from $1.79 billion a year ago. Net income in the quarter rose 242.7% to $186.1 million or 13 cents per diluted share compared to net income of $54.3 million or 4 cents per share a year ago.

SanDisk Corporation, the maker of flash memory cards said third quarter revenues rose 14% to $935.2 million from $821.5 million a year ago. Net income in the quarter was $231.3 million or 99 cents per diluted share compared to net loss of $165.9 million or 74 cents per share a year ago.

Canadian National Railway Company, the railroad transportation company said third quarter revenues fell 18% to $1.85 billion from $2.26 billion a year ago. Net income in the quarter fell 16.5% to $461 million or 97 cents per diluted share compared to net income of $552 million or $1.16 per share a year ago.

Deutsche Bank AG, the global investment bank expects full-year net profit approximately €1.4 billion. The pre-tax income for the third quarter 2009 will be in the range of €1.3 billion. The Tier 1 capital ratio is expected to be approximately 11.7% at the end of the third quarter. It is expected that all business segments will report positive results.

Deutsche Bank AG, in the last one year traded as high as €58.29 in October 2009 and as low as €15.38 in January 2009. Based on the yesterday’s trading closing price of €53.21 the company has a market cap of €32.91 billion.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 3.45 or 0.03% to 10,333.39, Hang Seng index in Hong Kong decreased 66.85 or 0.30% to 22,318.11, and CSI 300 index in China lower 8.29 or 0.25% to 3,369.28. ASX 200 index in Australia decreased 7.60 or 0.16% to 4,838.60. The FTSE Bursa KL Composite index in Malaysia was lower 5.68 or 0.45% to 1,260.06.

The Kospi Index in South Korea decreased 5.29 or 0.32% to close at 1,653.86 SET index in Thailand closed lower 9.25 or 1.27% to 716.35. JSE Index in Indonesia decreased 25.42 or 1.02% to 2,476.80. The Sensex index in India decreased 213.84 or 1.24% to 17,009.17.

Europe Markets Review

In London FTSE 100 Index traded lower 47.35 or 0.90% to 5,196.05, in Paris CAC 40 Index decreased 50.25 or 1.30% to 3,821.20 and in Frankfurt DAX index traded lower 55.33 or 0.95% to 5,756.44. In Zurich trading SMI decreased 59.41 or 0.92% to 6,367.88.

ASX 200 Index Movers

Babcock & Brown Power led the decliners in the ASX 200 index of 5.0% followed by losses Viterra Inc of 4.4%, in Minara Resources Limited of 4.2%, in Nexus Energy Limited of 3.9% and in Awb Limited of 2.7%.

Virgin Blue Holdings Limited gainers in the ASX 200 index with a rise of 8.8% followed by gains in Alesco Corporation Ltd of 7.9%, in Aquila Resources Limited of 7.8% and in Transfield Services Limited of 6.7%.

Nikkei 200 Average Movers

Taiyo Yuden Co., Ltd. led the decliners in the Nikkei 225 index of 4.2% followed by losses in Mitsui Fudosan Co., Ltd. of 4.0%, in Mitsui Chemicals, Inc. of 3.3%, in Seven & I Holdings Co., Ltd of 3.2% and in Mitsubishi Estate Company, Limited of 2.8%.

Japan Airlines Corporation led gainers in the Nikkei 225 index with a rise of 7.6% followed by gains Hitachi Zosen Corporation of 5.3%, in Fast Retailing Co., Ltd of 4.9% and in Fukuoka Financial Group, Inc. of 4.6%.