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23.11.2011 09:04

Stocks: Tuesday’s review

Asian stocks rose as Moody’s Investors Service and Standard & Poor’s affirmed the U.S.’s credit ratings even after a deficit-cutting committee failed to reach an agreement. Japan’s exporters gained as the yen weakened against the dollar. The U.S. deficit-cutting congressional committee said that it failed to reach an agreement, setting the stage for automatic spending cuts in 2013 and fueling concern that economic-stimulus measures that are set to expire will not be renewed. Losses in stocks were limited as Standard & Poor’s and Moody’s Investors Service said they won’t lower credit ratings on the U.S. due to the committee’s failure. S&P, which stripped the U.S. of its top AAA grade in August, said the political gridlock didn’t merit another downgrade because the inaction will trigger $1.2 trillion in automatic spending cuts.

Japan’s Nikkei 225 Stock Average fell 0.4 percent and Hong Kong’s Hang Seng Index added 0.1 percent. Australia’s S&P/ASX 200 slid 0.7 percent, while South Korea’s Kospi Index added 0.3 percent.

HSBC Holdings Plc, Europe’s biggest bank, fell 0.8 percent in Hong Kong, leading declines among companies which receive revenue from the region. Esprit Holdings Ltd., a clothier, dropped 3.2 percent to HK$8.38.

Some Japanese exporters rebounded from multi-year lows as the yen weakened against the dollar and euro, easing concern about their earnings outlook. Sony rose 3.1 percent to 1,305 yen after closing yesterday at the lowest level since 1987. Toyota edged up 0.1 percent to 2,387 yen after touching its lowest intraday level since 1996 today.

Tokyo Stock Exchange Group will acquire Osaka Securities Exchange in a transaction that values the smaller bourse operator at $1.68 billion. The companies agreed to a purchase price of 480,000 yen for each Osaka Securities Exchange share, which will be acquired in a tender offer, according to a statement from the Osaka Securities Exchange distributed through the Tokyo Stock Exchange. Osaka Securities rose 4.6 percent to 440,500 yen.

OneSteel Ltd. slumped 11 percent to 83 Australian cents after Chief Executive Officer Geoff Plummer said yesterday he won’t rule out shutting the steelmaker’s main Whyalla steel plant in South Australia should the company fail to improve performance using other measures.

Fosun International Ltd., the biggest stakeholder in Focus Media Holding Ltd. according to Bloomberg data, dropped 6.5 percent to HK$4.16 in Hong Kong after Muddy Waters LLC recommended investors sell Focus Media shares.

Olympus Corp. surged 20 percent to 869 yen. An independent committee investigating inflated payments to advisers for acquisitions by the scandal-hit company said it has found no links to organized crime so far in its probe, according to a statement by the endoscope maker.

European stocks declined, extending their biggest drop in three weeks, as borrowing costs rose in the euro area, outweighing rating companies’ reaffirmation of America’s credit grades. The Stoxx 600 slumped the most yesterday since Nov. 1 amid signs U.S. lawmakers would fail to reach an agreement on budget cuts, increasing the likelihood that the country would face another credit downgrade. Banks sank as dollar funding costs and euro-area bond yields surged. S&P and Moody’s maintained their U.S. credit ratings even as Congress’s special debt-reduction committee failed to reach an agreement, setting the stage for $1.2 trillion in automatic spending cuts. Spain’s three-month borrowing costs more than doubled at auction today, sending two-year yields toward the highest level since 2003, while Belgium’s 10-year bond yields rose to more than 5 percent, adding to concern the euro crisis is spreading.

National benchmark indexes retreated in all of the 18 markets in western Europe. France’s CAC 40 Index slipped 0.8 percent, Germany’s DAX Index lost 1.2 percent and the U.K.’s FTSE 100 Index slipped 0.3 percent.

Dexia led a selloff in banks, tumbling 8.1 percent to 23.9 euro cents in Brussels. UniCredit SpA fell 4.2 percent to 70.05 euro cents in Milan, while BNP Paribas SA lost 4.9 percent to 25.53 euros in Paris.

Commerzbank dropped 15 percent to 1.15 euros after Reuters reported that Germany’s second-biggest lender may need about about 5 billion euros ($6.8 billion) in additional capital if the European Banking Authority toughens its requirements for lenders. The newswire cited unidentified people familiar with the bank’s own estimates.

Danske Bank A/S still advanced, rising 1.4 percent to 75 kroner after Cevian Capital AB, a Swedish investment company, bought a 5.02 percent stake in Denmark’s largest lender on behalf of itself and Carl Icahn.

Nokia dropped 8.8 percent to 4.19 euros as Pacific Crest Securities Ltd. said in a report that the Finnish phone maker shipped fewer devices running Windows Phone 7 than predicted, while sales for the company’s Lumia product were “disappointing.”

Thomas Cook Group Plc plunged 75 percent to 10.2 pence as Europe’s second-largest tour operator said it has held talks with banks on financing. The company agreed to relaxed loan conditions a month ago. Rival TUI Travel Plc slid 9.2 percent to 136.7 pence.

Pandora A/S jumped 10 percent to 55.05 kroner for the biggest jump on the Stoxx 600 after the Danish jewelry maker reported a third-quarter profit of 341 million kroner ($62 million), beating most analysts’ estimates.

Zodiac Aerospace rallied 4.6 percent to 55.29 euros after the maker of aeronautical equipment forecast about 20 percent growth in sales on a like-for-like basis in its first quarter, as the company supplies parts to new aircraft programs at Boeing Co. and Airbus SAS. Zodiac also plans to increase its dividend payment by 20 percent to 1.20 euro apiece.

British Land Co. rose 1.5 percent to 461 pence after Bank of America Corp. upgraded the U.K.’s second-largest REIT to “buy” from “neutral.” Separately, UBS AG cited British Land as the “most defensive of the U.K. majors.”

U.S. stocks fell, driving the Standard & Poor’s 500 Index to its longest slump in almost four months, as slower-than-estimated economic growth overshadowed signs the Federal Reserve may provide more stimulus. Stocks fell as revised Commerce Department figures showed that gross domestic product climbed at a 2 percent annual rate from July through September, less than projected and down from a 2.5 percent prior estimate. Equities briefly turned higher as some Fed officials said the central bank should consider easing policy further, according to minutes of their Nov. 1-2 meeting.

Benchmark gauges also rose earlier today after the International Monetary Fund revamped its credit-line program to encourage countries facing outside shocks to turn to the fund with few conditions attached, as European leaders fail to end their debt turmoil. Michael Meister, finance spokesman for German Chancellor Angela Merkel’s Christian Democratic party, said “we haven’t any new bazooka to pull out of the bag.”

Dow 11,493.72 -53.59 -0.46%, Nasdaq 2,521.28 -1.86 -0.07%, S&P 500 1,188.04 -4.94 -0.41%

Alcoa Inc. (AA) and Bank of America Corp. (BAC) slid at least 2.1 percent to pace losses in the Dow Jones Industrial Average.

Campbell Soup lost 5.3 percent to $31.84. The company reported fiscal first-quarter sales of $2.16 billion, trailing the average analyst estimate by 2.4 percent, according to Bloomberg data.


Hewlett-Packard Co. slipped 0.8 percent to $26.65 after losing as much as 6 percent following profit forecasts that missed analysts’ estimates.

Gilead Sciences Inc. rose the most in the S&P 500, climbing 6.9 percent to $38.76. The world’s largest maker of HIV medicines was boosted to “outperform” from “Market Perform” at BMO Capital Markets, which said the company’s acquisition of Pharmasset Inc. “is a positive step toward longer-term sustainable growth.”

Medtronic Inc. climbed 4.5 percent, the most since Aug. 23, to $34.75. The world’s biggest maker of heart-rhythm devices reported second-quarter earnings that beat analysts’ expectations on rising international sales of cardiovascular and spinal products.

Netflix Inc.  slipped 5.4 percent to $70.45, the lowest price since March 2010. The video-streaming and DVD subscription service agreed to sell $400 million in stock and convertible notes to bolster cash as it increases spending for online rights to films and TV shows. Wedbush Securities Inc. cut its 12-month price estimate to $45 a share, saying the move was probably “prompted by deteriorating performance and liquidity.”

Market Focus

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  • Eurozone: Consumer Confidence, January -4.9
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