Stocks: Weekly review
Asian equities prospered this week in spite of a big aftershock in Japan that rattled investors’ nerves on Thursday.
Although the 7.1 magnitude tremor happened during the Asian night while all the region’s markets were closed, equity indices in Europe and US felt the impact of investor concerns.
On Friday, however, Tokyo’s Nikkei 225 Average was up 1.9 per cent to 9,768.08, overcoming early losses that took the indicator to its lowest level of week. Over the five sessions, the Nikkei rose 0.6 per cent.
Tokyo Electric Power had another miserable week, but its losses slowed markedly as traders spoke of some corrective buying after engineers said no additional damage had been caused to its Fukushima nuclear plant by Thursday’s aftershock. On Friday, the shares were up 23.5 per cent, but remained 6.5 per cent lower over the week at Y420.
Banking stocks in Japan turned higher in the past two sessions after the country’s central bank said it was offering a further Y1,000bn ($11.7bn) in emergency loans to help the banks finance rebuilding efforts following March’s earthquake and tsunami. Chiba Bank was up 1.1 per cent over the week to Y478, while Mitsubishi UFJ Financial added 0.9 per cent to Y393.
Shanghai and Hong Kong stocks shrugged off the latest interest rate increase by the People’s Bank of China – a 25 basis point rise to 6.31 per cent. This was the fourth such move from the central bank since October and investors appeared relieved that a measured approach to monetary tightening had been maintained.
The Shanghai Composite index climbed 2.1 per cent to 3,030.02 over the week, led by its financial components, including a 5.4 per cent gain by Hua Xia Bank to Rmb13.64.
Hong Kong’s Hang Seng index was up 2.5 per cent over the week to 24,396.07.
Seoul’s Kospi Composite had a turbulent week, but gained 0.3 per cent to 2,127.97. Samsung Electronics had the biggest negative impact after it reported that its first-quarter profit had fallen to a two-year low. The shares were down 4.5 per cent over the week to Won898,000.
Indian shares jumped 1.5 per cent on Monday but slipped during the remainder of the week to stand just 0.2 per cent higher at 19,451.45 over the five sessions, as concerns over corruption re-emerged after charges were brought against three telecoms groups and a former government minister.
European stocks continued their bull run this week, led by banking stocks, which were boosted by Portugal’s decision to seek financial assistance from the European Union.
The FTSE Eurofirst 300 closed 0.4 per cent higher on Friday at 1,148.45, up 0.6 per cent on the week. The index has now risen 7.5 per cent from a low hit after the Japanese earthquake.
Portuguese financials rose in the wake of Wednesday evening’s announcement by José Sócrates, outgoing prime minister, that Lisbon would seek financial aid from the European Union.
Friday’s close saw Banco BPI 5.9 per cent higher than a week earlier, at €1.31, while Millennium BCP rose 3.9 per cent to €0.61.
Lisbon’s PSI 20 index was 0.6 per cent higher for the week at 7,911.39.
Other peripheral eurozone markets also benefited from renewed interest in banking stocks. Spain’s Ibex 35 climbed 1.7 per cent to 10,914.4, with Banco Santander gaining 2.7 per cent to €8.63.
Greek stocks saw choppier trading as speculation about debt restructuring continued, but the Athens General index recovered from falls in the first half of the week to end 0.3 per cent higher at 1,530.98.
Italy’s MIB index was 2 per cent higher at 22,389.98. Intesa Sanpaolo gained 7.1 per cent to end the week at €2.26. The bank’s announcement on Wednesday that it would carry out a €5bn rights issue had been widely anticipated. The move followed similar steps by UBI Banca and Banco Popolare.
Parmalat, whose shares surged last month as investors priced in a possible takeover move by Lactalis, slipped 4 per cent to €2.30 on speculation that the French company could drop its interest in the dairy producer.
Germany’s Dax index pushed 0.6 per cent higher to 7,217.52.
An announcement by Commerzbank of an €11bn capital increase saw its shares surge on Wednesday as short-sellers closed positions, but it ended the week 3.9 per cent lower at €5.25. The share price has fallen by 17.1 per cent from a peak on March 3.
Insurance companies with exposure to the Japanese earthquake continued their gradual recovery, although they dipped following reports of a large aftershock on Thursday. Munich Re ended the week 1.5 per cent higher at €115.80, while Swiss Re gained 4 per cent to SFr56.61.
French energy companies were hit by the state’s decision to cancel a proposed gas price hike and curb electricity increases. EDF fell 6.7 per cent to €27.38, while GDF Suez was 3.3 per cent lower at €27.42.
Airlines were dragged lower by concerns about higher oil prices. Lufthansa slipped 1.9 per cent to €14.72, and Air France by 1.5 per cent to €11.47.
Carmakers ended the week lower despite denials by senior industry figures of supply chain problems stemming from Japan.
Shares in Expedia made strong gains after the online travel company announced it was splitting in two, and the wider markets were led higher by material and energy stocks as a weaker dollar pushed up commodity prices.
Investors reacted positively to the news that Expedia was spinning off its lucrative TripAdvisor business, sending shares in the company up 14.8 per cent to $25.71.
Analysts roundly approved of the move, saying that the plan could help unlock value for the high-growth and high-margin TripAdvisor. “We view such corporate activity as a positive catalyst for Expedia shareholders,” said analysts at Citi Investment Research.
In the wider markets, the S&P 500 was up 0.4 per cent to 1,339.34 in early trading, recovering from the 0.2 per cent losses in the previous session. On Thursday, the S&P 500 had lost 0.7 per cent in the minutes after news that another earthquake had hit the already devastated north-east coast of Japan. However, the index closed only 0.2 per cent lower for the day after the tsunami warning was lifted and officials at the nuclear agency reported no further troubles.
The Dow Jones Industrial Average added 0.3 per cent to 12,450.06 on Friday and the Nasdaq Composite rose 0.4 per cent to 2,807.58.
Material stocks led the gains as the dollar has hit a fresh 15-month low, lifting commodity prices. Freeport-McMoRan, the largest copper miner in the world by market capitalisation, was up 1.8 per cent to $58.49 while Alcoa, the aluminium producer, added 1.3 per cent to $18.35. The S&P materials index added 1 per cent.
In the energy sector the advance was led by oilfield services stocks. Nabors Industries, the world’s largest land rig contractor, added 3.7 per cent to $31.62 while Helmerich & Payne gained 3.5 per cent to $69.87. The S&P energy index was up 0.8 per cent.
Elsewhere in the energy sector Hercules Offshore lost ground after announcing that it was under investigation by the Department of Justice and the Securities and Exchange Commission. Shares in the oil exploration group were down 9.8 per cent to $5.75.
Seagate Technology added 8.2 per cent to $15.90 after the hard-disk manufacturer reported third-quarter sales that topped analysts’ estimates and announced that it will reinstate its dividend payments.
Costco Wholesale lost 0.9 per cent to $77.15 after Goldman Sachs cut its rating on the stock to “neutral” from “buy”. In the previous session the warehouse club chain reported that same-store sales had risen 13 per cent in March, beating analysts’ expectations.
Bally Technologies lost 1 per cent to $37.29 after the gaming-technology company cut its annual earnings estimate to between $1.82 to $1.95 a share, from $2 to $2.15 a share. Analysts forecast $2.02 a share on average.