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16.05.2011 07:54

Stocks: Weekly review

Worries about the potential wider financial impact of the problems faced by Tokyo Electric Power emerged as the key theme on the Japanese equities markets this week.
The Nikkei 225 fell to a two-week low in heavy volume on Friday – down 0.7 per cent on the session to 9,648.77 and extending its losses over the week to 2.3 per cent – on fears Japan’s banks looked likely to be asked by the government to ease the crisis- stricken generator’s debt burden
Tepco’s main creditor Sumitomo Mitsubishi fell 3.8 per cent on Friday to Y2,452. Mitsubishi UFJ Financial was 2.8 per cent weaker at Y383. Over the week they lost 3.8 per cent and 3.3 per cent respectively.
Resource stocks across the region were buffeted by the week’s volatility on commodities markets, although bargain hunting on Friday took some shares in the sector higher on the week.
Australia’s S&P ASX 200 came off a closing low of 4,696.10 on Thursday to end Friday’s session at 4,711.36, a loss for the week of 0.8 per cent.
Rio Tinto bounced 0.5 per cent on Friday to A$80.2, enough to take it 0.2 per cent higher on the week.
Newcrest Mining rose 0.3 per cent on Friday to A$38.3, limiting its weekly loss to 2.4 per cent.
European stocks slipped back over the week as nervousness over a worsening in Greece’s debt crisis combined with lacklustre earnings reports to keep equity bulls on the defensive.
The FTSE Eurofirst 300 index lost 0.4 per cent to 1,140.53 on Friday, pushing the continent’s benchmark into negative territory by the same percentage over the five trading days.
Shares of National Bank of Greece highlighted the volatility towards eurozone peripheral assets after the downgrade of the nation’s sovereign debt by Standard & Poor’s. The bank had losses in excess of 4% on both Monday and Thursday but ended the week just 2.2% lower after a successful midweek auction of Treasury bills.
Fears over Greek debt also weighed on the wider banking sector, particularly on those with the biggest holdings of Greek bonds.
In Paris, BNP Paribas lost 1.5 per cent and Société Générale gave up 2.6 per cent over the week, while Commerzbank sank 6.2 per cent in Frankfurt.
Underwhelming earnings reports weighed on Europe’s insurance sector at the end of the week.
Aegon, the Dutch owner of US insurer Transamerica Corp, was hit by a 12 per cent drop in first-quarter profit as it posted lower investment gains, causing the stock to retreat 6.8 per cent over the week to €4.97.
But there was better earnings news for French steel pipe producer Vallourec, which topped Friday’s Eurofirst leaderboard after surging 6.1 per cent to €89.18.
The blue chips closed mix this week with the S&P 500 was flat over the week. The Dow Jones Industrial Average down 0.2 per cent over the five days, and the tech-heavy Nasdaq Composite index was still up 0.4 per cent over the week.
The week on Wall Street began with strong gains as the markets recovered from 1.7 per cent losses in the previous week and sentiment continued to ride high following bumper official employment numbers on Friday.
But on Wednesday the rebound was derailed by a sharp drop in commodity prices, which dragged down the energy and material sectors. Energy and material stocks fell 3 per cent and 2.7 per cent respectively over the day, leading the benchmark S&P 500 index down 1.1 per cent to its worst one day drop in nearly two months.
This left the S&P energy index down 1.6 over the week and the materials index 1.4 per cent lower.
Both indices are down 5.1 per cent and 4.6 per cent respectively so far in May.
Financial stocks also helped to drive the market lower on Friday, as the sector suffered from renewed unease over the mounting debt crisis in Greece.
JPMorgan Chase was down 2.1 per cent to $43.18 while Suntrust Banks fell 1.4 per cent to $27.72. The S&P financial index lost 1.3 per cent, the worst performing sector on Wall Street.
Losses on Friday were limited by some upbeat data showing a rise in consumer confidence this month. The University of Michigan consumer sentiment index came in at 72.4 for May, a three-month high, as Americans turned more optimistic about the economy.
Separately, the Consumer Price Index of inflation showed that prices had not risen dramatically in May, with the price of goods excluding food and energy gaining a modest 0.2 per cent.
Microsoft’s $8.5bn acquisition of Skype was the big deal news of the week, and left shares in the technology group down 3.2 per cent to $25.04 over the five days.
Goldman Sachs shares fell 6.6 per cent over the week to $140.34 after Wall Street analysts said the bank could still face charges from the US Department of Justice for its conduct during the financial crisis.
Dick Bove of Rochdale Securities on Thursday dropped Goldman to “sell”, while Chris Maimone of Standard & Poor’s lowered his rating to “hold”.
Elsewhere in the sector, Citigroup lost 7.6 per cent to $41.78 after putting into effect a one-for-10 reverse stock split on Monday.
These losses helped the S&P financial index drop 2.1 per cent over the week.

16.05.2011 08:05

Asian stocks close:

16.05.2011 07:32

FOREX: weekly review

Market Focus

  • The Bank of Japan decided by a 7-2 majority vote to hold the interest rate at -0.10%
  • Earnings Season in U.S.: Major Reports of the Week
  • U.S. commercial crude oil inventories decreased by 4.7 million barrels from the previous week
  • Australian unemployment rate stable at 5.6% in June
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