Markets & Finance

Asia Closes Higher


European stock markets were mixed Thursday. In London, the Financial Times Stock Exchange 100 gained 0.80 points, 0.2%. to close at 4790.20, but breadth was negative flat after first-quarter U.S. GDP data showed the slowest rate of growth in two years, sending Wall Street into the red. Mining stocks dragged averages lower after copper prices fell yesterday: BHP Billiton, Rio Tinto, and XStrata fell 3.41%, 2.57%, and 2.52%, respectively. Pharma companies remained among the top gainers after GlaxoSmithKline reported a 17% rise in first-quarter earnings per share, ahead of forecasts. The group also said it expects to begin re-supplying the U.S. with two key drugs, Paxil CR and Avandamet, mid-year after reaching agreement with the FDA over its Cidra manufacturing site. Peer AstraZeneca also topped expectations with a 34% rise in first-quarter earnings per share and said it is on track to deliver fiscal year targets. Shell announced first-quarter earnings up 28% to $5.548 billion, vs ING's forecast of $5.049 billion. On the M&A front, drinks firm Allied Domecq has been approached by a consortium led by the U.S.'s Constellation Brands to discuss a potential counter-offer.

Germany's Dax lost 10.92 points, or 0.26%, to close at 4178.10 in jittery trading after Wall Street remained under pressure following a weaker first-quarter preliminary GDP number (3.1% in April, vs. 3.5% forecast), the slowest rate in two years. Dealers are becoming increasingly worried that the U.S. economy is heading for recession, with investors seen shifting out of equities and into bonds. The key U.S. indices have lost as much as 3.7% this month on concerns economic growth is slowing faster than economists expect. Locally, HVB raced higher in the last hour of trading on rumours Munich Re was selling its stake in the retail bank to Italy's UniCredito, making a possible takeover more realistic. DaimlerChrysler pared initial gains after first-quarter operating profit was not as bad as consensus. Net income of 288 million euro was seen as good. Deutsche Bank was prompted into pre-releasing first-quarter numbers following a leak in today's Financial Times. Numbers showed profit rose 17% to 1.4 billion euro, ahead of forecast, after it took a smaller-than-forecast charge tied to job cuts. Full details will be released tomorrow. BASF succumbed to profit-taking after reporting first-quarter surged 65% to 861 million euro as it raised prices and increased oil and gas sales.

In France, the CAC 40 lost 16.23 points, or 0.41%, to close at 3911.45. Averages were hit by weaker performances on Wall Street and mixed newsflow at home. U.S. equities were stung by a lower-than-expected first-quarter GDP preliminary reading, the slowest growth rate in two years. At home, Alcatel knocked a good 5 points off the CAC40 on a mixed reading of the group's first-quarter report and news BT did not select it to supply DSL technology in a multi-billion-pound contract. Alcatel will nevertheless supply IP routers. AXA traded ex dividend. Pernod was another key faller as a rival bid emerged for Allied Domecq. But not all was doom and gloom. France Telecom posted an in-line set of first-quarter results and confirmed fiscal 2005 targets. Vivendi Universal gained as first-quarter beat estimates, while the group raised guidance. PPR eased after morning gain. The luxury group posted first-quarter like-for-like sales slightly ahead of consensus.

Asian markets were higher Thursday. In Japan, the Nikkei 225 gained 3.48 points, or 0.03%, to close at 11,008.90. Sony Corp, an electronics and entertainment conglomerate, fell 2.26% to 3,900 yen, after the firm's core electronics division reported 34.3 billion yen losses in the past business year as a result of declining prices of DVD recorders, TVs, and video cameras. Further, the company hinted at difficulty to achieve a 10% target of group operating margin in 2006/2007. Sanyo Electric lost 2.56% to 305 yen, after the firm reported a net loss of 137.14 billion yen for the business year ended March, and forecasted further losses of 92 billion yen in the current year. On the upside, Kyocera Corp added 2.54% to 7,660 yen, after Goldman Sachs upgraded the share to outperform from in line. On the economic front, Japan's industrial production output fell 0.3% month-on-month in March, below a median market forecast of a 0.2% increase.

In Hong Kong, the Hang Seng Index was up 69.78 points, or 0.50%, to close at 13,909.42. Yanzhou Coal climbed 0.96% to $10.55 (hong kong), after the company reported a 102.3% year-over-year surge in first-quarter net profit to 792.7 million yuan under PRC GAAP.

Canada's benchmark TSX/S&P lost 48.42 points, or 0.52%, to close at 9,275.10.


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