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10.10.2012 07:04

Stocks: Tuesday’s review



Asian stocks outside Japan advanced, led by Chinese banks and raw-material producers after crude oil and copper futures rebounded. Japanese stocks fell as markets reopened after a public holiday. The world economy will expand 3.3 percent this year, the slowest pace since the 2009 recession, and 3.6 percent next year, the International Monetary Fund said today. That compares with July predictions of 3.5 percent in 2012 and 3.9 percent in 2013. The Washington-based lender now sees “alarmingly high” risks of a steeper slowdown.

Nikkei 225 8,769.59 -93.71 -1.06%

S&P/ASX 200 4,505.3 +23.44 +0.52%

Shanghai Composite 2,112.73 +38.31 +1.85%

BHP Billiton Ltd., the world’s No. 1 mining company and Australia’s biggest oil producer, gained 0.7 percent in Sydney.

Industrial & Commercial Bank of China Ltd. rose 2.2 percent in Hong Kong, pacing gains among Chinese lenders.

HTC Corp. tumbled 7 percent in Taipei after Asia’s No. 2 smartphone maker posted a record decline in quarterly profit.


European stocks declined for a second day as the region’s finance ministers gathered in Luxembourg to discuss the sovereign-debt crisis.

Bankia SA (BKIA) led the decline, falling to a two-month low. Alcatel-Lucent (ALU) SA dropped to the lowest in at least 23 years as Credit Suisse Group AG said weakness should continue into the third quarter. Vedanta Resources Plc led mining companies higher, limiting losses in Europe.

The Stoxx Europe 600 Index slipped 0.5 percent to 270.20 in London.

National benchmark indexes fell in all but two of the 18 western European (SXXP) markets.

FTSE 100 5,803.2 -38.54 -0.66% CAC 40 3,382.25 -24.28 -0.71% DAX 7,231.16 -60.05 -0.82%  

Finance ministers from all the 27 countries in the European Union convened in Luxembourg today in the lead up to a summit of the region’s leaders in Brussels on Oct. 18-19.

Ministers from the 17-nation euro area yesterday declared the 500 billion-euro ($649 billion) European Stability Mechanism operational. They also said Spain, the permanent rescue fund’s biggest potential near-term customer, isn’t on the verge of tapping it.

German Chancellor Angela Merkel arrived in Greece today for the first time since the debt crisis began in 2009 after the finance ministers yesterday hailed the country’s determination to cut its budget and reshape its economy, raising the chances that aid will keep flowing to Greece.

Dow Jones reported that Greece’s creditors are yet to reach an agreement on how best to tackle the country’s debt crisis. The newswire cited people with direct knowledge of the matter.

In Washington, the International Monetary Fund cut its global growth forecasts to 3.3 percent this year, the slowest since the 2009 recession, and reduced its estimate for next year to 3.6 percent. That compares with July predictions of 3.5 percent in 2012 and 3.9 percent in 2013.

Bankia dropped 9.8 percent to 98 euro cents, extending its losses since Sept. 21 to 32 percent. The lender’s parent company, BFA, will book losses of more than 4.5 billion euros this year as it cleans up the balance sheet, Expansion reported today. The newspaper said the company will return to profit from 2013, without saying where it got the information.

Banco Popular Espanol SA (POP), Spain’s sixth-largest lender by assets, dropped 2.7 percent to 1.43 euros, for a 10th day of losses.

Alcatel-Lucent dropped 5.1 percent to 73.9 euro cents, the lowest price since at least October 1989, as Credit Suisse reiterated its underperform recommendation for the French phone- equity supplier, the equivalent of a sell rating. Analysts said “weak trends” in the first half may continue into the third quarter.

Leoni AG (LEO) and Aggreko Plc (AGK) declined 4.3 percent to 28.87 euros and 3.4 percent to 2,240 pence, respectively, after HSBC Holdings Plc downgraded both companies to neutral from overweight, a recommendation similar to buy. Capita Plc slid 3.7 percent to 740 pence as its shares were cut at Panmure Gordon & Co. and Seymour Pierce Ltd. to sell and hold, respectively.

Marine Harvest ASA (MHG) slid 3.1 percent to 4.75 kroner after the world’s biggest salmon farmer said its third-quarter profit will miss analyst forecasts because of “challenging market conditions” in Chile and Canada.

Vedanta Resources (VED) paced advancing shares on the Stoxx 600, climbing 2.1 percent to 1,090 pence. The company reported a 22 percent increase in oil and gas output for the second quarter to a record after ramping up production at its Rajasthan block in India.

Rio Tinto Group gained 1.5 percent to 3,030 pence. The world’s third-largest mining company today said it will deepen cost cutting efforts after it lowered its estimates for China’s economic growth to below 8 percent.

STMicroelectronics NV (STM) climbed 2.9 percent to 4.44 euros after Europe’s largest semiconductor company and Ericsson AB said they’re working with an adviser on options for their unprofitable chipmaking venture ST-Ericsson.

Hays Plc (HAS) jumped 5.7 percent to 79.5 pence, the biggest advance on the Stoxx 600. The shares rebounded from yesterday’s 4.4 percent selloff after the U.K. recruiter reported first- quarter net fees that fell less than estimated.

Major U.S. stock indices ended the session in a significant reduction in the vicinity of the minimum values ​​on concerns about global economic growth.

The pressure on the index has increased worries about further deterioration in the global economy. The reason for these concerns is the decline in the IMF forecasts global growth in 2012-2013, as stated in the report, published on the eve. According to the forecasts presented in the report, this year the world economy will grow by 3.3%, and by the end of 2013 - by 3.6%. This is lower than the IMF forecast in the summer of this year (3.5 and 3.9%, respectively).

Market participants' attention focused on the quarterly report of aluminum producer Alcoa (AA), which will be presented today after the market close. Although the report can not be taken as Alcoa baromentr reports coming season, however, many analysts see it as an indicator of the situation in the industrial sector of the global economy.

As a whole, the expectations for the season reports are very pessimistic. Some analysts expect the last reporting quarter will be the worst for U.S. companies of the past 12 quarters.

If the financial performance of companies will come out better than expected, it will be a significant positive for the market and will be a catalyst for growth.

As a part of most of the components of the index DOW reduced in price. Maximum growth stocks show McDonald's (MCD, +0.88%). More than the others fell in the share price Intel (INTC, -2.75%), which rating was downgraded today by analysts Bernstein.

All of the major economic sectors are in the red zone. The maximum loss is the health sector (-1.4%).

At the close:

Dow 13,473.91 -109.74 -0.81%

Nasdaq 3,065.02 -47.33 -1.52%

S & P 500 1,441.49 -14.39 -0.99%

Market Focus

  • The eurozone started the third quarter on a solid footing, according to PMI survey data
  • Earnings Season in U.S.: Major Reports of the Week
  • German private sector output growth slowed for the second month running in July
  • ECB's Mersch says as conditions normalise, it is unlikely that uncoventional policies will remain necessary
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