U.S. Stocks Fall, Emerging Markets Worries

123jump.com Staff
09 Dec, 2009
New York City

U.S. stocks trade lower on the emerging market worries and growing fears that Dubai contagion may spread to Greece, Spain, Ireland and other emerging markets. S&P lowered Spain sovereign debt rating by one notch. Crude oil and gold declined.

[R]10:30 AM New York – U.S. stocks trade lower on the emerging market worries and growing fears that Dubai contagion may spread to Greece, Spain, Ireland and other emerging markets. S&P lowered Spain sovereign debt rating by one notch. Crude oil and gold declined.[/R]

U.S. stocks reversed their course in the early morning after Dubai contagion worries resurface. The rating agency S&P lowered the sovereign debt rating one notch lower and said that the outlook for the debt is negative.

The feared Dubai contagion is now very much in focus and risk appetite around the world for sovereign debt and emerging market stocks was in retreat today.

S&P lowered Spain debt to AA+ from AAA and indicated the deterioration in the government finances will be longer and deeper than expected. Spain has gone through its own housing boom and bust that has impacted several local construction companies and banks.

Markets in Europe traded volatile. Greek 10-year government bonds fell for the fifth day in a row and yields increased to 5.49%. Greek Finance Minister Papaconstantinou reiterated that there is “absolutely” no chance that the government will default.

Two largest banks in Greece, National Bank of Greece SA and EFG Eurobank Ergasias SA declined more than 5%.

Dubai Financial Market General Index dropped more than 5% for the third day in a row and closed 6.4% lower to 1,533.36. The indexes in Saudi Arabia, Qatar, Egypt and Oman decreased between 2% and 4%.

Earnings Review

The Cooper Companies, Inc, the contact lens maker said fourth quarter sales rose 6% to $283.5 million from $266.8 million a year ago. Net income in the quarter rose 2% to $30.1 million or 66 cents per diluted share compared to net income of $29.5 million or 65 cents per share a year ago.

Net sales for the fiscal year 2009 rose 3% to $1.08 billion from $1.05 billion a year ago. Net income for the year rose 53.4% to $100.5 million or $2.21 per diluted share compared to net income of $65.5 million or $1.43 per share a year ago.

The Kroger Co, the traditional grocery chain said third quarter sales rose 0.6% to $17.7 billion from $17.6 billion a year ago. Net loss in the quarter was $874.9 million or $1.35 per diluted share compared to net income of $237.7 million or 36 cents per share a year ago.

Stagecoach Group plc, the UK based international public transportation company said first-half revenues rose 3% to £1.08 billion from £1.05 billion a year ago. Net profit for the first-half fell 12.7% to £60.6 million or 8.4 pence per diluted share compared to net profit of £69.4 million or 9.6 pence per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 135.75 or 1.34% to 10,004.72, and Hang Seng index in Hong Kong decreased 318.76 or 1.44% to 21,741.76, and CSI 300 index in China lower 69.54 or 1.92% to 3,554.48. ASX 200 index in Australia decreased 32.70 or 0.70% to 4,637.90. The FTSE Bursa KL Composite index in Malaysia was lower 5.70 or 0.45% to 1,255.76.

The Kospi Index in South Korea increased 6.39 or 0.39% to close at 1,634.17. SET index in Thailand closed lower 4.11 or 0.59% to 694.71. JSE Index in Indonesia decreased 2.59 or 0.10% to 2,481.30. The Sensex index in India decreased 102.46 or 0.59% to 17,125.22.

Europe Markets Review

In London FTSE 100 Index traded lower 0.29 or 0.01% to 5,222.84, in Paris CAC 40 Index increased 1.44 or 0.04% to 3,786.74 and in Frankfurt DAX index traded lower 7.54 or 0.13% to 5,681.04. In Zurich trading SMI decreased 14.63 or 0.23% to 6,385.11.