Euro Struggles, Greece Credibility in Question

123jump.com Staff
19 Jan, 2010
New York City

European markets trade lower as lawmakers and regulators voice their concerns how Greece will implement its debt reduction plan. The euro declined. Japanese stocks declined after JAL Corp filed for bankruptcy protection with $25 billion in debt.

[R]3:30 PM Frankfurt – European markets trade lower as lawmakers and regulators voice their concerns regarding Greece debt reduction plan. The euro declined. Japanese stocks declined after JAL Corp filed for bankruptcy protection with $25 billion in debt.[/R]

Markets in Asia closed mixed and in Europe close lower on the growing worries about Greece’s ability to meet its deficit targets.

Japan Airlines Corp filed for bankruptcy protection after four government bailouts failed to resuscitate the troubled carrier with $25 billion in debt. Once the largest airline in Asia, JAL has struggled to stay profitable in the last five years under shrinking global travel and several management missteps. The airline will be delisted from the Tokyo Stock Exchange with all shareholding wiped out under the bankruptcy laws.

European market indexes were weak as more finance ministers in Europe voice their concerns about Greece and likely contagion that may spread to Portugal and Spain.

Greek Finance Minister George Papaconstantinou said that the 2010 deficit will be lower than 8.7% of GDP. Finance minister of Holland, Wouter Bos said that Greece may have long term deficit issues that are not addressed in the current plan to lower deficit.

Greek 10-year bonds declined to yield 5.9% and the euro fell to $1.4311.

Seasonally adjusted construction activities decreased 1.1% both in euro area (EA16) and fell 0.6% in EU27 in November 2009, compared with the previous month. In October, production fell by 0.4% and 0.3% respectively.

UK annual inflation measured at consumer price level was 2.9% in December, increased from 1.9% in November.

Earnings Review

Burberry Group plc, the luxury goods group said third quarter sales rose 15.5% to £380 million from £329 million a year ago. Retail sales rose 17% to £249 million from £213 million a year ago. Wholesale revenues rose 10.5% to £105 million from £95 million a year ago. Licensing revenues rose 24% to £26 million from £21 million a year ago.

Comparable store sales increased 10%.

Alstom SA, the power-station equipment and train maker said third quarter sales rose 3% to €4.69 billion from €4.56 billion a year ago. Orders fell 31% to €4.2 billion from €6.1 billion a year ago. Power business received orders fell 31% to €2.7 billion from €3.9 billion a year ago. Transport business orders fell 27% to €1.6 billion from €2.2 billion in a year ago.

For nine months sales rose 6.7% to €14.4 billion from €13.5 billion a year ago. Orders fell 47% to €11.4 billion from €21.5 billion a year ago. Power business received orders fell 47.5% to €7.4 billion from €14.1 billion a year ago. Transport business orders fell 46% to €4 billion from €7.4 billion in a year ago.

Casino Guichard Perrachon SA, the French retailer said fourth quarter net sales rose 2.2% to €7.32 billion from €7.17 billion a year ago. France sales fell 3.3% to €4.65 billion from €4.81 billion a year ago.

For the full-year net sales fell 1.2% to €26.8 billion from €27.1 billion a year ago. France sales fell 4.8% to €17.7 billion from €18.6 billion a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 90.18 or 0.83% to 10,764.90, and Hang Seng index in Hong Kong increased 217.97 or 1.02% to 21,677.98, and CSI 300 index in China higher 6.80 or 0.19% to 3,507.48. ASX 200 index in Australia decreased 49.90 or 1.02% to 4,861.20. The FTSE Bursa KL Composite index in Malaysia was higher 2.36 or 0.18% to 1,300.35.

The Kospi Index in South Korea decreased 1.56 or 0.09% to close at 1,710.22. SET index in Thailand closed lower 10.41 or 1.39% to 736.48. JSE Index in Indonesia increased 23.52 or 0.89% to 2,666.07. The Sensex index in India decreased 155.02 or 0.88% to 17,486.06.

Europe Markets Review

In London FTSE 100 Index traded lower 48.27 or 0.9% to 5,446.12, in Paris CAC 40 Index decreased 28.57 or 0.72% to 3,948.89 and in Frankfurt DAX index traded lower 47.30 or 0.80% to 5,871.25. In Zurich trading SMI decreased 62.47 or 0.95% to 6,541.31.