Archive for November, 2008

Japan stocks rise on hopes for global economy (AP)

Thursday, November 27th, 2008 | Finance News

TOKYO – Optimism that a prolonged global economic downturn will be averted lifted Japanese stocks Thursday, following an aggressive interest rate cut in China and assurances by President-elect Barack Obama for a swift economic rescue plan.

The benchmark Nikkei 225 stock average added 160.17 points, or 2 percent, to 8,373.39 — its highest level in more than a week. The broader Topix index rose 1.5 percent to 829.03.

A 1.08 percentage point reduction in China's key one-year lending rate announced late Wednesday — its biggest rate cut since 1997 and the fourth in three months — helped boost marine transport, steel and machinery issues by alleviating fears of a slump in China's demand for raw materials.

Mitsui O.S.K. Lines Ltd., the world's biggest cargo shipper, jumped 7.4 percent to 478 yen, and construction machinery maker Komatsu Ltd. advanced 4.4 percent to 1,070 yen.

Overnight, U.S. markets reversed losses after Obama pledged he would have an economic plan on his first day in office. After filling more spots on his economic team, Obama declared: "help is on the way." The Dow Jones industrials rose 2.9 percent to 8,726.61.

Securities companies were among the day's biggest winners, with Nomura Holdings Inc. surging 5.3 percent to 680 yen and Daiwa Securities Group Inc. up 6.3 percent at 473 yen.

Still, investors were reluctant to drive stocks much higher amid ongoing concerns about the yen's strength and the latest terrorist attacks in India, said Mitsushige Akino, fund manager at Ichiyoshi Investment Management in Tokyo.

"The U.S. is spending money right now on measures to boost the economy," he said. "If geopolitical risks rise, like terrorism, then it will probably have to spend even more money in response. Then that will only further weaken the dollar."

Japanese exporters in particular have been hit hard this year by the stronger yen, which reduces profits earned abroad and makes their products more expensive in overseas markets.

Shares of Panasonic Corp. declined 4.7 percent to 1,284 yen on speculation that it planned to slash its profit outlook, which it announced after the market closed. Blaming the "rapid appreciation of the yen," the Osaka-based company now expects net profit of 30 billion yen from its previous forecast of 310 billion yen.

The dollar was trading at 95.15 yen from 95.54 late Wednesday. The euro stood at $1.2887 from $1.2889.

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BHP gloomy on short term, defends Rio decision (Reuters)

Wednesday, November 26th, 2008 | Finance News

MELBOURNE (Reuters) –
Global miner BHP Billiton painted a gloomy near-term outlook for metals demand on Thursday as it defended its decision to drop a $66 billion bid for rival Rio Tinto.

BHP, facing its shareholders for the first time since walking away from the Rio bid on Tuesday, told its Australian annual meeting that uncertainty in commodities markets would continue in the short term and it was ready to close loss-making operations.

"There is no doubt that these are very challenging times, uncertainty in the shorter-term outlook remains and we do not expect to be immune from the changes in the world economy," Chief Executive Marius Kloppers told shareholders in Melbourne.

"If we look at Chinese steel production, the subject of much public discussion recently, we see a decrease of 17 percent year-on-year and this will eventually flow through to all of us in the industry," Kloppers said, referring to current output compared with a year ago.

BHP and its former bid target, Rio Tinto, are the third and second largest producers respectively of iron ore, which is required in steel-making.

The scrapping of the proposed hostile takeover was warmly welcomed by steelmakers in Asia and Europe, who had feared the creation of a global giant that would hold the upper hand in annual price negotiations.

Kloppers said the company remains committed to pushing to link iron ore contract prices to spot market prices.

"Obviously we have to work with our customers in achieving that, and it can take some time," he said, adding that BHP would take part in annual contract talks with steelmakers as normal this year.

STRONG BALANCE SHEET

BHP said it retained a strong balance sheet, despite the market slump, and remained ready to pursue other acquisitions, especially firms weakened by the financial crisis.

"Our longstanding focus on strong balance-sheet capability and financial stability stand us in good stead in the current volatile environment ... in being able to take advantage of opportunities that may arise as others falter," Kloppers said.

He said the company would look at any top tier, long-life, low-cost assets that might be put up for sale by other miners, and was not ruling out any metals, except gold, as potential targets.

Mining analysts expect BHP to target rivals worth more than $1 billion and with assets still operating in the black.

"BHP's not going to get out of bed for just anybody," said James Wilson of DJ Carmichael & Co. "They'll only look at the big elephants."

Beyond acquisitions and expansion projects, BHP Chairman Don Argus said the group would consider spending its cash on buying back shares and remained committed to increasing its dividend. But he declined to predict how big a dividend it would pay this year.

Kloppers highlighted not only the heavy recent falls in metal prices, including copper, nickel and aluminum, in explaining the company's decision to scrap the Rio bid, but also the excessive financial risk of taking on Rio Tinto's $39 billion in net debt.

He said an acquisition would have left the combined group with gearing ratio of close to 48 percent.

"Your board believes that a heavily geared position, and reduced capacity to deal with that debt, creates unacceptable financial risks for BHP Billiton shareholders," Kloppers said.

BHP shares rose more than 5 percent to A$28.72 by 0455 GMT, outpacing gains in the wider market.

(Additional reporting by Simone Guiliani and James Regan; Writing by Mark Bendeich; Editing by Alex Richardson)

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Wall Street jumps on tech rebound, GM and energy (Reuters)

Wednesday, November 26th, 2008 | Finance News

NEW YORK (Reuters) –
Stocks climbed on Wednesday as investors snapped up tech stocks trading near their cheapest levels in five years, and renewed hopes of a General Motors bailout helped investors shrug off data depicting a worsening global economic downturn.

The Nasdaq rose 4.6 percent, led by Apple and Cisco, which rebounded from Tuesday's big sell-off on concerns about weakening demand.

The Dow has risen 15.6 percent in the last four days, the largest four-day percentage gain since 1932.

Wednesday's surge was fueled by energy stocks after oil rose more than 7 percent and General Motors shares soared over 35 percent.

Automakers' shares rose after Deutsche Bank said the beleaguered companies' prospects for a federal bailout have improved.

The U.S. government's recent move to prop up Citigroup may have helped investors overlook more economic data that continued to show a weakening economy, market participants said.

"For the last two days, it's been made very clear that the Fed and Treasury are opening up pocketbooks," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York.

"As a result, it has become less likely that a major financial institution will run into trouble and it's becoming more likely that the auto sector will receive some assistance."

The Dow Jones industrial average shot up 247.14 points, or 2.91 percent, to 8,726.61. The Standard & Poor's 500 Index gained 30.29 points, or 3.53 percent, to 887.68. The Nasdaq Composite Index jumped 67.37 points, or 4.60 percent, to 1,532.10.

S&P'S BEST STREAK SINCE MAY

The S&P's four-day advance is its best run since May.

U.S. investors did not react, traders said, to news reports of multiple attacks in India's financial capital Mumbai, in which at least 80 people were killed.

A 7.2 percent surge in the price of oil futures lifted energy shares, making Chevron and Exxon Mobil Corp the biggest contributors to the Dow's advance.

Chevron rose 4.4 percent to $79.93 and Exxon Mobil climbed nearly 4 percent to $80.89. U.S. front-month crude gained $3.67 to settle at $54.44 a barrel.

Dreary economic data included government reports that showed orders for costly manufactured goods such as refrigerators and washing machines, known as durable goods, plummeted in October, while consumers cut spending at the steepest rate in more than seven years.

Citigroup jumped nearly 16 percent to $7.05 on the NYSE after news late on Tuesday that a Mexican brokerage controlled by billionaire Carlos Slim recently bought $150 million worth of shares in the struggling U.S. bank.

APPLE SHINES BEFORE THANKSGIVING

Shares of Apple Inc climbed 4.6 percent to $95, making the iPod and iPhone maker the Nasdaq's top-weighted advancer.

Cisco Systems, a networking equipment maker, rose 6.3 percent to $16.39 on Nasdaq, a day after news of a five-day plant closure led a tech sell-off as it sparked jitters over faltering demand.

Volume was fairly healthy on the New York Stock Exchange, especially on the day before the Thanksgiving holiday, where about 1.42 billion shares changed hands, below last year's estimated daily average of 1.90 billion. On the Nasdaq, about 2.00 billion shares traded, slightly below last year's daily average of 2.17 billion.

During the holiday-shortened week, volume typically is lighter than average.

Advancers outnumbered decliners by a ratio of almost 6 to 1 on the NYSE, while on the Nasdaq, about 4 stocks rose for every one that fell.

(Editing by Jan Paschal)

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