World Markets Struggle; Russia GDP Shrinks 7.9%

123jump.com Staff
01 Feb, 2010
New York City

Indexes in Europe and Asia declined on the worries that further tightening by China will affect global commodities markets. Copper, tin and gold declined. Tenaris SA dropped on weak revenues. Vivendi SA declined on a jury verdict. Ryanair increased on smaller than expected loss.

[R]8:30 AM New York – Indexes in Europe and Asia declined on the worries that further tightening by China will affect global commodities markets. Copper, tin and gold declined. Tenaris SA dropped on weak revenues. Vivendi SA declined on a jury verdict. Ryanair increased on smaller than expected loss.[/R]

European market indexes were on the defensive after investors looked at global markets recovery. U.S. President is proposing $3.8 trillion in fiscal 2011 budget with additional stimulus of $100 billion and a record deficit of $1.6 trillion. The deficit by 2013 is expected to shrink to $700 billion or 4% of GDP.

Tenaris SA dropped on the worries that sales may have declined 30% in 2009, Ryanair increased after it reported smaller than expected loss.

Commodities in London trading fell after People’s Bank of China Deputy Governor Zhu Min in an interview suggested that the government is looking to tighten production capacity in steel, copper, cement and industries.

China has provided stimulus of 4 trillion yuan and increased bank lending to 10 trillion yuan and issued municipal bonds of 6 trillion yuan in 2009.

UK home prices increased in January by 0.1% to 157,000 according to the latest data released by Hometrack Ltd. The sixth monthly increase in a row matched the previous month gain but prices declined from a year 0.8%.

Vivendi SA declined more than 3% after a Manhattan federal court jury agreed with class action law suit proponents that the Paris, France based media conglomerate misled investors 57 times between 2000 and 2002. The company is defending $9.3 billion damage lawsuit and said it will appeal the verdict.

Earlier the Bank of England data showed that number of mortgages approved in December declined unexpectedly to 59,023 from 60,045 in November. Weak jobs market is expected keep prices and home sales in check.

The Bank of England is scheduled to release its decision on Feb 4 regarding bond purchase plan of 200 billion pounds. The central bank may pause the purchase plan if the economic recovery is strong enough.

Russia’s gross domestic product in 2009 declined sharply in line with the volatility in the commodities and energy markets. GDP dropped 7.9% in 2009 after surging at 5.6% in 2008.

GDP declined 10.9% in the second quarter and shrank at 8.9% in the third quarter, according to the State Statistics Service. Russia has yet to publish fourth quarter data but private estimates suggest a decline between 5% and 6%.

The price of Ural Crude declined from a peak of $143 in mid 2008 to $32 by the year-end followed by 83% increase in 2009 wreaked havoc to Russia’s exports and its economy.

Household spending dropped 8.1% and fixed capital investment declined 18.2% in the year according to the latest data release.

Earnings Review

Ipsen SA, the pharmaceutical company said fourth quarter sales increased 8.2% to €255.3 million from €235.9 million a year ago. Total drug sales rose 8.3% to €249.8 million from €230.6 million a year ago. Specialty care products sales rose 16.1% to €157.8 million from €135.8 million a year ago. Primary care products sales fell 2.9% to €92.0 million from €94.7 million a year ago.

Sales for the full-year rose 6.4% to €1.03 billion from €971.0 million a year ago.

Ryanair Holdings plc, the airline said third quarter total revenues fell 0.04% to €472.5 million from €472.7 million a year ago. Net loss for the quarter was €10.9 million or €0.74 per diluted share compared to net loss of €118.8 million or €8.06 per share a year ago.

SThree Plc, a UK based recruitment firm said full-year revenues fell 18% to £519.4 million from £631.5 million a year ago. Net profit for the full-year fell 84% to £6 million or 3.9 pence per diluted share compared to net profit of £37.8 million or 28.1 pence per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 6.98 or 0.07% to 10,205.02, and Hang Seng index in Hong Kong increased 121.76 or 0.61% to 20,243.75, and CSI 300 index in China lower 51.45 or 1.61% to 3,152.71. ASX 200 index in Australia decreased 45.50 or 1.00% to 4,524.10. Markets in Malaysia were closed today.

The Kospi Index in South Korea increased 4.01 or 0.25% to close at 1,606.44. SET index in Thailand closed higher 1.06 or 0.15% to 697.61. JSE Index in Indonesia decreased 23.25 or 0.89% to 2,587.55. The Sensex index in India decreased 1.93 or 0.01% to 16,356.03.

Europe Markets Review

In London FTSE 100 Index traded higher 8.42 or 0.16% to 5,196.94, in Paris CAC 40 Index decreased 10.93 or 0.29% to 3,728.53 and in Frankfurt DAX index traded lower 3.68 or 0.07% to 5,605.11. In Zurich trading SMI increased 0.60 or 0.01% to 6,441.32.