Stocks: Monday's review
Japanese stocks declined on the lowest volume in three months after Citigroup Inc. downgraded the country’s auto sector to “sell,” amid continuing supply disruptions in the wake of last month’s record earthquakeю
The Nikkei 225 fell 6.4 percent through April 8 from March 10, a day before the magnitude-9 earthquake hit.
Toyota Motor Corp. (7203), Honda Motor Co., and Nissan Motor Co., the country’s top three carmakers, declined at least 2.2 percent after Citigroup cut its rating on Japan’s auto industry, saying investors haven’t priced in the impact on earnings from the earthquake and tsunami that hit on March 11.
Sharp Corp. slid 0.8 percent after the electronics maker said a disruption of gas supplies forced it to suspend some production.
Suruga Bank Ltd. (8358) tumbled 7.5 percent as the lender said one its borrowers has filed for bankruptcy and may be unable to repay its loans.
Among stocks that rose, Tokyo Electric Power Co., the utility that is battling to cool nuclear reactors crippled by the tsunami in Fukushima, gained the most on the Nikkei and was the most actively traded stock in Japan.
The company, whose stock price has dropped 77 percent since the reactor accident started last month, will borrow or buy at least 100 gas turbines with a combined capacity of 1 million kilowatts to increase power supply during Japan’s summer, public broadcaster NHK reported.
Kansai Electric Power Co. increased 2.4 percent to 1,858 yen after the utility agreed to buy two Griffin Energy coal-fired power stations in Western Australia.
Mining and energy-related companies also rose. Inpex Corp., Japan’s largest energy explorer, climbed 3 percent to 654,000 yen.
Japan Petroleum Exploration Co. (1662), the second-biggest oil driller, advanced 1.7 percent to 4,155 yen.
European stocks declined, dragging the Stoxx Europe 600 Index from a one-month high, as carmakers and construction companies fell before the start of the U.S. earnings-reporting season.
Daimler AG (DAI) dropped 2.7 percent as Credit Suisse Group AG downgraded auto companies.
Hochtief AG (HOT) tumbled 9.5 percent after the builder warned earnings may halve this year.
British banks limited losses after the U.K.’s Independent Commission on Banking released its report on the industry. Barclays Plc (BARC) gained 2.8 percent to 305.35 pence and Royal Bank of Scotland Group Plc (RBS) increased 2.3 percent
Alcoa Inc. (AA), the largest U.S. aluminum producer, unofficially kicks off the first-quarter reporting season after the close of trading in New York today.
Eleven companies in the Standard & Poor’s 500 Index are scheduled to release results this week, including JPMorgan Chase & Co. (JPM), Bank of America Corp. and Google Inc.
Daimler dropped 2.7 percent to 50.65 euros in Frankfurt after Credit Suisse lowered its recommendation for the world’s largest maker of commercial vehicles to “neutral” from “outperform” and cut its share price estimate by 13 percent to 65 euros.
Schneider Electric SA (SU) declined 3.7 percent to 117 euros after three people with knowledge of the matter said the company is weighing a takeover offer for Tyco International Ltd. (TYC) that would make the French company the world’s biggest maker of security systems.
Husqvarna AB (HUSQB) sank 7.2 percent to 50.10 kronor after the world’s largest maker of lawnmowers said first-quarter sales and operating profit in the Americas fell short of expectations.
U.S. stocks turned mixed Monday, with blue-chips rising and the broader market erasing earlier gains, as investors await corporate reports due after the market closes and later this week.
Stocks posted broad-based gains earlier in the session on a spate of deal news and a drop in oil prices following talk of a cease fire in Libya. But the tone turned more cautious in the afternoon, as investors were awaiting the early results of the first-quarter reporting period.
Alcoa, which is scheduled to report after the closing bell Monday, will be the first Dow stock to issue results. JPMorgan (JPM, Fortune 500), another Dow component, and Google (GOOG, Fortune 500) are also slated to post results later this week.
the 2% pullback in oil prices weighed on shares of energy producers and industrial companies. Alcoa (AA, Fortune 500) and Caterpillar (CAT, Fortune 500) dragged on the Dow, while Exxon Mobil (XOM, Fortune 500) and Chevron (CVX, Fortune 500) were also weak.
Companies: Endo Pharmaceuticals (ENDP) announced plans to buy American Medical Systems (AMMD) for $2.9 billion in cash and stock. Shares of American Medical jumped 32%, while Endo stock rose 5%.
Communications services company Level 3 (LVLT) announced plans to buy rival Global Crossing (GLBC) in an all-stock deal valued at $3 billion.
Shares of Tyco (TYC) were up 3.5%, amid speculation that France's Schneider Electric is considering a bid for the Swiss industrial conglomerate.
On the down side, shares of Tenet Healthcare (THC, Fortune 500) sank 13% as the company filed suit against Community Health Systems, which is pursuing a hostile takeover bid for Tenet.
Shares of major U.S. automakers Ford and GM were also under pressure. Ford (F, Fortune 500) fell 3%, while GM (GM) was down 2.8%.