 |
|
|
|
 |
News
|
|
|
 |
Overnight MarketWatch
By SHAW Stockbroking
US shares backtracked on Friday after disappointing results and massive write downs at insurer American International Group reignited credit crises concerns. Sentiment was also hit by soaring crude prices, drowning out positive news from the likes of Activision and Circuit City.
The Dow fell 120.90, or 0.94 per cent to 12745.88, while the broader S&P 500 shed 9.40, or 0.67 per cent to 1388.28. The NASDAQ also endured a down session, falling 5.72, or 0.23 per cent to 2445.52.
After market close on Thursday, Dow component AIG reported a steeper than expected loss of US$7.81 billion for the fiscal fourth quarter, dispelling investor hopes that turbulence in the credit markets has subsided.
The country’s largest insurer said it was planning to raise US$12.5 billion to bolster its weakened balance sheet. Shares in AIG fell 8.8 per cent on Friday, making it a 17.9 per cent retreat for the week.
Meanwhile, Citigroup said it planned to sell off around US$400 billion in assets, or 20 per cent of its total, over the next two to three years as a means of becoming more "fit" and profitable. The company plans to sell off non-core businesses in stages. Investors didn’t respond well to the plan, sending shares down 2.8 per cent.
Elsewhere in the sector, Bank of America shed 1.8 per cent. But it wasn’t all bad news for financials, with American Express adding 0.2 per cent, while JPMorgan managed a 1.1 per cent rally.
Outside of the financial sector, high profile laggards included Alcoa, DuPont and General Motors, whose shares fell 1.5 per cent, 1.8 per cent and 4.1 per cent respectively.
GM announced in a regulatory filing that it was taking advantage of the weak real estate market to buy its currently leased headquarters in downtown Detroit’s Renaissance Center for US$626 million.
Notwithstanding the broader retreat, there were a few bright patches. Circuit City said it had retained Goldman Sachs to help it explore "strategic alternatives to enhance shareholder value”. Its shares closed up 5.9 per cent.
Elsewhere, Activision, which will be the largest video game maker after a merger with a Vivendi SA unit, reported earnings that beat analysts' estimates on sales of the music play-along game "Guitar Hero." Its shares surged 14.2 per cent.
Looking ahead, investors readied themselves for a slew of profit reports due this week.
Wal-Mart Stores and J.C. Penney are among the retailers due to report. Wal-Mart shares were mostly flat on Friday, while J.C. Penney was down 0.7 per cent.
Profit reports are also due from Hewlett-Packard and Sprint Nextel whose shares were up 0.1 per cent and 4.5 per cent respectively.
In commodity markets, NYMEX light crude oil for June delivery was up US$2.27 to settle at a record US$125.96 per barrel, after hitting a trading record of US$126.20 earlier in the session. Last week a Goldman Sachs analyst predicted that crude prices could rise to as much as US$200 per barrel.
Meanwhile, COMEX gold for June delivery rose US$3.70 to US$885.80 an ounce.
UK
m
arkets
British shares retreated on Friday as record high crude prices and weakness on Wall Street dented investor sentiment. Specifically, the disappointing result from US insurer AIG pressured the British financial sector.
The benchmark FTSE 100 closed 66.1, or 1.05 per cent lower at 6204.70.
Among British insurers, Royal & Sun Alliance fell 3.1 per cent, Legal & General shed 1.7 per cent, Old Mutual was 3.4 per cent weaker and Aviva dropped 1.4 per cent.
The sector was also down on lingering concerns about the health of the UK mortgage market and the Bank of England’s decision last week to leave interest rates on hold at 5 per cent.
Among the banks, Alliance & Leicester and HBOS both fell 1.7 per cent. Lloyds TSB and HSBC were down 2.4 per cent and 1.8 per cent respectively.
Oil companies couldn’t take advantage of record crude prices, while airlines buckled under the pressure of the rising cost of one of their key inputs.
BP was down 0.7 per cent, while Royal Dutch slipped 0.8 per cent. Among the airlines, British Airways fell 4.3 per cent and EasyJet was off 5 per cent.
Investor’s continued to shun Carphone Warehouse’s decision to form a 1.1 billion bound joint venture with US based Best Buy. Carphone’s shares dropped 7.3 per cent.
Elsewhere, British Energy lost 2 per cent on the prospect for a bidding war for the nuclear generator faded ahead of Friday’s deadline for offers for the government's 35 per cent stake.
European
m
arkets
European shares fell on Friday after downbeat financial earnings and a record high oil price weighed on the broader market. Much of the negative news in the financial sector was confined to the insurers.
France’s CAC 40 fell 95.02, or 1.88 per cent to 4960.56, while Germany’s DAX gave up 68.71, or 0.94 per cent to close out the week at 7003.17.
News of AIG's results followed a torrid week for the continent’s insurers. European insurer AXA disappointed investors with its results. On Friday, AXA shares were down 1.9 per cent.
Europe's largest insurer Allianz fell 1 per cent after saying its Dresdner Bank unit had posted a quarterly operating loss of 453 million euros. Allianz said it could not give a meaningful forecast for earnings at the bank because of financial market uncertainty.
Meanwhile, Societe Generale fell 2 per cent and BNP Paribas shed 2.1 per cent.
Sanofi-Aventis dropped nearly 6 per cent after generic drug maker Schweizerhall said it was close to winning approval for a generic version of the French firm's blockbuster blood-thinning drug Plavix in Germany.
European carmakers were down on news of disappointing results and a downbeat forecast from Toyota. Peugeot was down 1.1 per cent, BMW lost 4.2 per cent and Daimler fell nearly 1 per cent.
Japanese
m
arkets
Japanese shares retreated on Friday after an appreciated yen pressured the country’s exporters. Sentiment was further dented by a downbeat outlook from Toyota.
The benchmark Nikkei 225 fell 287.92, or 2.06 per cent to 13655.34.
Toyota lost 3.3 per cent after the world's largest automaker posted a bigger-than-expected 28 per cent drop in quarterly net profit due to a stronger yen and sliding US sales, and said it expects this year's net profit to sink 27 per cent.
Among other exporters, Honda gave up 3.9 per cent Canon fell 2.6 per cent and Sony shed 3.1 per cent.
Elsewhere, Takeda Pharmaceuticals fell 2.8 per cent after the drug maker posted a 77 per cent drop in quarterly operating profit and forecast a sharp fall in annual income on costs for its purchase of US biotech firm Millennium Pharmaceuticals.
Meanwhile, Olympus skidded 5.8 per cent after Credit Suisse cut its rating to neutral from outperform, saying the firm's earnings outlook was a negative surprise.
On the upside, Japan Tobacco jumped 3.8 per cent after the company said it might raise the price of domestic cigarettes to account for high raw materials costs and help offset sluggish demand.
Hong Kong
m
arkets
Hong Kong shares backtracked after China’s Vice Premier Wang Qishan said inflation was the country's biggest economic problem. His comments came as data showed that China's producer price inflation rate edged up to 8.1 per cent in April, stoking investor fears that China may tighten its monetary policy.
The benchmark Hang Seng fell 386.62, or 1.52 per cent to 25063.17.
Among the high profile movers, HSBC fell 1.4 per cent after Morgan Stanley downgraded it to underweight from equal-weight on the US debt crisis.
Meanwhile, shares in oil refiners Sinopec and PetroChina gave up 3.3 per cent and 2 per cent respectively after crude prices struck a record above US$124 a barrel, further squeezing their margins. Domestic fuel prices are capped by the government.
Elsewhere, China Mobile fell 1.6 per cent, while other Chinese telecom plays rose on speculation that an industry reshuffle could be on the cards.
China Unicom added 0.25 per cent after gaining as much as 3 per cent in intraday trade. Fixed-line operator China Telecom rose 1.26 per cent and China Netcom gained 1.4 per cent.
The Overnight MarketWatch report is provided by SHAW Stockbroking's egoli - simple but informative market news for the everyday investor.
egoli news: A view of the Australian market, from your perspective, as it happens. For more information go to http://www.egoli.com.au/egoli/egolihome.asp
12 May 2008
print this article...
|
|
|
Home |
Advertising |
Disclaimer |
Contact Us |
About Us |
Feedback |
Privacy Policy
Copyright © Reed Business Information. All material on this site is subject to copyright. All rights reserved.
No part of this material may be reproduced, translated, transmitted, framed or stored in a retrieval system for public or private use without the written permission of the publisher.
|
|
|
|
