Archive for July, 2009

Earnings give world markets another positive boost (AP)

Thursday, July 30th, 2009 | Finance News

LONDON – Global stock markets rose Thursday after another batch of better than expected corporate earnings and amid further signs that Japan, the world's second-largest economy, is on the road to recovery.

In Europe, the FTSE 100 index of leading British shares was up 44.02 points, or 1 percent, at 4,591.55 while Germany's DAX rose 41.19 points, or 0.8 percent, to 5,311.51. The CAC-40 in France was 27.96 points, or 0.8 percent, higher at 3,393.58.

Earlier in Asia, Hong Kong's Hang Seng edged up 98.58, or 0.5 percent, to 20,234.08, while Japan's Nikkei 225 stock average rose 51.97, or 0.5 percent, to 10,165.21.

Corporate earnings out of Asia and Europe have generally echoed the theme that came out of the U.S. over the previous two to three weeks — that businesses around the world have weathered the economic recession better than anticipated. It's that hope that the worst of the recession is over that fueled the stock market rally around the world this month.

In Japan, major carmakers like Nissan Motor Co. and Honda Motor Co. jumped 11.1 percent and 8.2 percent respectively on stronger-than-expected earnings.

Meanwhile, on a bumper results day in Europe, British telecommunications company BT Group PLC and its French peer Alcatel-Lucent SA were heavily in demand after they also unveiled better than expected second-quarter earnings.

BT was the biggest riser on the FTSE, up 12.7 percent, while Alcatel rose 7.7 percent, making it the second-biggest riser on the CAC, behind Cap Gemini SA, Europe's largest computer consultancy, which spiked nearly 8 percent after indicating that activity was stabilizing.

Rolls-Royce PLC, the aircraft engine manufacturer, also saw its share price surge 8 percent after it said it was on track to meet full-year targets after posting a 9 percent increase in first-half pretax profit.

It wasn't all good news though. Anglo-Dutch publishing group Reed Elsevier PLC slumped 14.4 percent after surprisingly announcing that it was issuing just under 10 percent of share capital to pay down its $8.4 billion debt burden.

German chemical company BASF SE saw its share price slide 4.8 percent, making it the biggest faller on the DAX, after it warned of a significant drop in sales and earnings this year even after it reported a 74 percent slump in second-quarter net profit.

And earnings from carmaker Renault SA did not excite as much as those from rival SA Peugeot-Citroen in the previous day. It was the biggest faller on the CAC, falling by 3.6 percent.

Elsewhere in Asia, Shanghai's benchmark added 1.7 percent to 3,321.56 after China's central bank promised to maintain a "relaxed monetary policy" and to use market tools rather than administrative controls to regulate credit growth. On Wednesday, Chinese stocks slid 5 percent as investors panicked that the monetary authorities were looking at reining in bank lending.

China and other developing markets have surged this year — China and India are up nearly 80 percent and 60 percent, respectively — on hopes they can help buoy the world economy at a time when Western countries are reeling from recession.

But much of their advance has been driven by liquidity brought on by easier monetary controls and government stimulus, something analysts worry can camouflage lingering problems in the economy.

Neil Mackinnon, chief economist at ECU Group, warned that there are "certainly bubble-type" elements to the behavior of the Chinese market and that poses challenges for policy-makers.

"Global investors will be monitoring this carefully....the Chinese equity market has tended to lead developments in global equity markets," he said.

The region was also buoyed by news that industrial production in Japan rose 2.4 percent in June from the month before. The fourth straight rise raised hopes that the world's second largest economy could soon be growing again as global trade picks up.

"Signs that we may be coming to the end of the recession came back to us again last night as Japan's industrial production numbers showed an improvement," said Jimmy Yates, head of equities at CMC Markets.

Elsewhere in Asia, South Korea's Kospi gained 0.7 percent, Australia's index advanced 1.2 percent and Singapore's market was up 0.5 percent.

U.S. stocks were expected to open modestly higher later. Dow futures were up 58 points, or 0.6 percent, at 9,105 while the broader Standard & Poor's 500 futures rose 7.2 points, or 0.7 percent, at 982.10.

Oil prices traded in a narrow range after sliding around 6 percent Wednesday on news of bigger than anticipated U.S. stock levels. Benchmark crude for September delivery was down 3 cents at $63.32 a barrel.

The dollar was down 0.1 percent at 94.98 yen while the euro rose 0.3 percent to $1.4072.


AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.


Asian shares gain, Shanghai see-saws (Reuters)

Thursday, July 30th, 2009 | Finance News

TOKYO (Reuters) –
Chinese stocks see-sawed in skittish trade on Thursday, as the central bank reaffirmed loose monetary policy, while other Asian markets regained enough poise after the previous day's shakeout to edge back to 2009 highs.

In Europe, Germany's Dax (.GDAXI), Britain's (.FTSE) and France's CAC-40 (.FCHI) were set to rise about 1 percent with a raft of earnings due.

In a choppy trading day for Asia, the MSCI index of Asia-Pacific shares excluding Japan (.MIAPJ0000PUS) rose 0.4 percent, inching back toward 10-months highs after a sharp drop on Wednesday in the wake of a 5 percent sell-off in Shanghai.

Worries that China might be ready to hit the brakes on lending, a move that could curb demand and hinder a global economic recovery, had spooked Shanghai shares and sent commodity prices and energy and raw materials stocks down.

But on Thursday, China's central bank pledged to maintain loose monetary policy and use market tools, rather than quota controls, to ensure sustainable credit growth, in a statement analysts said aimed to calm volatile markets.

By 0630 GMT (2.30 a.m. ET), the Shanghai Composite Index (.SSEC) had bounced 0.7 percent but was still below Wednesday's 14-month high.

"There's a need for a correction in the short-term, but it's hard to say the long-term upward trend of the market has been reversed," said Huang Yan, a fund manager at Guotai Fund Management Co. "Valuations are already expensive but liquidity remains excessive, so it's a gamble."

Japanese and Australian shares were less volatile. Tokyo's Nikkei average (.N225) gained 0.5 percent to hit its highest close in nine months, lifted by a surge in Honda Motor (7267.T) and Nissan Motor (7201.T) on surprise quarterly profits.

Sony Corp (6758.T) rose 6.8 percent before posting a quarterly operating loss after the close.

Australian stocks (.AXJO) rose 1.2 percent to their highest finish in 8- months, powered by the top banks after a broker upgraded them. Lender National Australia Bank Ltd (NAB.AX) climbed 3 percent.

Miner BHP Billiton fell (BHP.AX), but less than traders had expected after the previous day's drop in oil and metals prices, and Rio Tinto (RIO.AX) rose.

Seoul shares (.KS11) also firmed 0.7 percent, with key blue chips including Samsung Electronics (005930.KS) and steel-maker POSCO (005490.KS) leading gains.

In New Zealand, the central bank threatened to cut interest rates further because the strong currency was putting economic recovery at risk. The New Zealand dollar, which has risen 30 percent since March, dropped a cent after the central bank news but firmed to $0.6520 later.

South Korea too reaffirmed it would maintain expansionary economic policy until the private sector revived and warned a premature shift in policy to tightening mode could cause problems.

Concern about China also made waves in the forex market, where the dollar had risen on Wednesday as investors took profits on currencies which have benefited from improving investor confidence that the global economy has hit bottom.

The greenback fell against a basket of currencies (.DXY) on Thursday after the comments from China's central bank eased market worries about the Asian giant's growth.

The yen, another currency that benefits when investors turn defensive, held steady at 95.02 yen per dollar but lost some of the previous day's gains against the euro and Australian dollar.

Gold steadied, holding above a two-week low hit on Wednesday, with spot gold changing hands at $930.30 an ounce.

Crude futures hovered at $63 a barrel, after a drop of 5.8 percent on Wednesday when data from the United States, the world's top oil consumer, showed an unexpectedly large build in crude oil stocks last week.

U.S. Treasury debt prices edged lower with investors cautious ahead of a $28 billion seven-year debt sale later in the day, after a second poor auction this week heightened supply concerns.

(Additional reporting by Elaine Lies, Satomi Noguchi and Chikako Mogi in Tokyo, Jungyoun Park in Seoul and Sonali Paul in Sydney; Editing by Neil Fullick)


Shell profit falls 70 percent but beats forecast (Reuters)

Thursday, July 30th, 2009 | Finance News

LONDON (Reuters) –
Royal Dutch Shell Plc (RDSa.L) posted a 70 percent fall in net profit in the second quarter, as oil prices and refining margins tumbled, but foreign exchange gains helped the oil major beat forecasts.

The world's second-largest non government-controlled oil company by market value said on Thursday second-quarter current cost of supply (CCS) net income, which strips out unrealized gains or losses related to changes in the value of fuel inventories, was $2.34 billion.

Excluding one-off items, the result was $3.15 billion, compared with an average forecast of $2.55 billion in a Reuters poll of eight analysts.

"Blow-out numbers considering the environment. This is a big positive," said Jason Kenney, oil analyst at ING.

Chief Executive Peter Voser, who took office earlier this month, gave a somber outlook for energy demand and prices, and promised to adapt to the tough environment by slashing costs.

"We are not banking on a quick recovery," Voser said in a statement.

Hague-based Shell said it achieved $700 million in cost savings in the first half of the year compared with the same period in 2008.

Since July 1, the company has cut 20 percent of senior management positions and said there would be "substantial further staff reductions."

The Anglo-Dutch oil major said its capital investment budget would fall 10 percent next year to $28 billion. It did not give a reason, although industry costs are falling, after doubling since 2004.

The main outperformance versus analysts' forecasts was in Shell's Corporate division, which benefited from foreign exchange gains of $379 million, compared with a gain of $27 million in the same period of 2008.

(Reporting by Tom Bergin, editing by Will Waterman)