US shares rose on Wednesday after FedEx and Texas Instruments flagged larger than expected quarterly earnings. Meanwhile, investors mulled Lehman Brothers’ US$4 billion fiscal third-quarter loss and its plan to raise capital.
The Dow climbed 38.19, or 0.34 per cent to 11268.92, while the broader S&P 500 was up 7.53, or 0.61 per cent at 1232.04. The NASDAQ gained 18.89, or 0.85 per cent to close at 2228.7.
Late Tuesday, FedEx said it expected fiscal first-quarter earnings of US$1.23 per share, above consensus forecasts of US95c per share. The company cited falling commodity costs. FedEx shares closed 3.7 per cent dearer on Wednesday.
The announcement was particularly encouraging because FedEx is widely seen as a bellwether for the broader economy.
Meanwhile, Texas Instruments added 0.6 per cent after narrowing its earnings and sales forecast to a range that sat at the higher end of analyst estimates.
Fellow technology play Research in Motion gained 5.4 per cent after launching a flip version of its smart phone. The Blackberry maker is looking to increase its presence in the retail consumer market.
Wall Street also benefited from a bout of bargain hunting, particularly among resource stocks. Exxon Mobil added 2.7 per cent and Chevron was up 3 per cent despite another slide in crude prices.
NYMEX light crude for October delivery fell US68c to US$102.58 a barrel, its lowest close since 1 April.
Gold prices also weakened with COMEX gold for December delivery down US$29.50 to US$762.50 an ounce.
But like its energy counterparts, Freeport McMoRan Copper & Gold defied weakness in the commodities market and advanced 6.2 per cent.
However, financial stocks continued to struggle with ongoing credit market concerns.
Lehman Brothers posted a US$3.9 billion fiscal third-quarter loss, its biggest quarterly loss in 158 years.
The company also said it would spin off part of its commercial real estate assets and cut its dividend in an effort to regain its financial footing.
Lehman also confirmed speculation that it was looking to sell a 55 per cent stake in its investment management division, which includes money manager Neuberger Berman.
The broker’s shares rose as much as 10 per cent after the announcement and it looked like its plan to manage market concerns had paid off. But by the closing bell, Lehman shares were down 6.9 per cent.
Other firms with souring mortgage bets also took a hit, with Wachovia down 7.4 per cent and Washington Mutual tumbling 29.7 per cent.
Elsewhere in the sector, Merrill Lynch and Goldman Sachs fell 5.9 per cent and 2.5 per cent respectively.
Among the sector’s Dow components, JPMorgan was down 0.2 per cent, Bank of America edged 0.4 per cent lower and Citigroup fell 1.1 per cent. American International Group dropped 4.7 per cent and American Express lost 0.2 per cent.
UKmarkets
British stocks closed lower on Wednesday as Lehman Brothers’ poor results across the Atlantic made waves on the financial sector. Retailers were pressured by poor consumer sentiment, but losses were off-set by rising oil stocks.
The FTSE 100 closed 49.40, or 0.91 per cent lower at 5366.20.
HBOS was down 2.8 per cent, Barclays hurt 5.3 per cent and Royal Bank of Scotland slipped 3.6 per cent.
In the insurance sector, RSA lost 6.5 per cent and Prudential was 0.7 per cent weaker. Old Mutual fell 3.5 per cent after the company said it had set aside another US$250 million of capital to support its Bermuda business.
Retailers were hurt after Next unveiled a 12 per cent fall in interim profit and said trading conditions remained very volatile. Shares in the fashion chain lost 2 per cent. Rival Marks & Spencer was hurt 4 per cent
Also in earning related news, Sports Direct was 2.3 per cent weaker after it reported flat first quarter sales and said trading conditions remained the toughest in its history.
Mining shares were on the back foot after a fall in metals prices. Kazakhmys was 8.8 per cent lower, Xstrata fell 5.6 per cent and Eurasian Natural Resources slipped 7.9 per cent. Aussies Rio Tinto and BHP Billiton lost 2.7 per cent and 1.4 per cent respectively.
OPEC’s decision to cut oil output helped boost the energy sector. Cairn Energy was up 1.6 per cent, BG Group was 0.9 per cent higher and Tullow Oil rose 0.4 per cent. BP fell 1 per cent, while Royal Dutch Shell edged 0.4 per cent higher.
Positive broker comments saw UK property companies British Land and Land Securities up 4.8 per cent and 3.3 per cent respectively.
European markets
Like their counterparts across the channel, European markets were hurt by uncertainty over Lehman Brothers’ future and its inability to raise capital. Financials were worst hit by the news, but healthcare stocks helped limit the pain.
Germany’s DAX fell 23.09, or 0.37 per cent to 6210.32, while France’s CAC 40 lost 9.68, or 0.23 per cent to 4283.66.
BNP Paribas lost 2 per cent, Credit Agricole slid 4.8 per cent and Societe Generale fell 4.1 per cent. In Spain, Santander dipped 3.2 per cent on rumours the bank was considering a joint bid for Deutsche Postbank's stake in Deutsche Bank.
Postbank shares climbed 4.1 per cent and Deutsche Post shares rose 1.2 per cent.
Shares of French drug maker Sanofi-Aventis were up 7.2 per cent after the company said former GlaxoSmithKline North American president Chris Viehbacher would be its new chief executive officer.
Other defensive drug makers also advanced with Roche climbing 2.2 per cent and Novartis advancing 1.8 per cent.
In an attempt to shore up earnings, paper producers Stora Enso and UPM-Kymmene said they would cut capacity and plan to shed 3,300 jobs between them. Stora stocks advanced 5.7 per cent and UPM-Kymmene was up 4.7 per cent.
On the downside, luxury goods retailer Richemont slipped 7.7 per cent despite posting a trading update saying it was well placed to weather a slowdown in the US.
Watch maker Swatch Group lost 7.5 per cent.
Japanese markets
Japanese investors saw the market fall on Wednesday as exporters slipped on a firmer yen and uncertainty over the global economy. A fall in oil prices also pressured the market as commodity based stocks felt the squeeze.
The benchmark Nikkei 225 lost 54.02 points, or 0.4 per cent, to 12346.63.
Exporters Canon and Sony were cheaper, losing 3.9 per cent and 2.8 per cent respectively.
Mitsubishi fell 2.7 per cent and Mitsui Co shed 1.9 per cent, fuelled by losses in energy and crude.
Oil and gas explorer Inpex Holdings shed 2.7 per cent.
Meanwhile, financials bucked the trend as Mitsubishi UFJ added 3.2 per cent and Mizuho Financial Group climbed 2.8 per cent.
Hong Kongmarkets
Hong Kong shares sank on Wednesday as the market edged closer to a 17 month low. Commodity stocks led losses, while property shares continued to slump on further broker downgrades.
The Hang Seng Index finished 491.33 points, or 2.4 per cent lower at 19999.78.
China Overseas Land tumbled 11.5 per cent after the company released its sales revenue, showing a 40 per cent fall from July’s figures.
Guangzhou R&F Properties lost 8.4 per cent after CLSA downgraded the company to sell.
Gold miner Zijin Mining plummeted 9.3 per cent after the precious metal fell to its weakest price in nearly a year.
Lower oil prices saw PetroChina and CNOOC lose 3 per cent and 5.4 per cent respectively.
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