Morning Market Update
Every morning we put out a report with the latest news in global stock markets, company news, and global economic news.
August 16th 2012 highlights below:
Seth Klarman: Investors Always Need A Strategy To Guide Them
"Many investors lack a strategy that equips them to deal with a rise in volatility and declining markets," Seth Klarman told his audience in a speech at MIT in 2012. Q3 2020 hedge fund letters, conferences and more Klarman was talking about the benefits of having a strategy, such as value investing, to provide a Read More
- US: Dow Futures: 13157.00 (0.17%), S&P 500 Futures: 1405.50 (0.14%), NASDAQ Futures: 2745.00 (0.24%)
- Europe: CAC: 3453.06 (0.11%), DAX: 6961.27 (0.21%), FTSE: 5825.46 (-0.13%).
- Asia-Pacific: Australia: 4330.20 (1.14%), China: 2112.20 (-0.32%), Hong Kong: 19962.95 (-0.45%), India: 5362.95 (-0.32%), Japan: 9092.76 (1.84%).
- Metals: Gold: 1610.40 (0.24%), Silver: 27.91 (0.35%), Copper: 3.36 (0.37%)
- Energy: Crude Oil: 94.82 (0.52%), Natural Gas: 2.77 (0.87%)
- Commodities: Corn: 8.08 (0.50%), Soya Bean: 16.38 (0.24%), Wheat: 8.83 (1.93%)
- Currency: EUR/USD: 1.2329 (0.32%), GBP/USD: 1.5731 (0.31%), USD/JPY: 79.1900 (0.25%)
- 10 year US Treasury: 1.793% (-0.021)
Financial and Economic News Update
U.S. stock-index futures rise: U.S. stock index are pointing to a higher open on Thursday despite weaker than expected jobless claims and housing starts data. Initial claims for state unemployment benefits rose 2,000 last week to a seasonally adjusted 366,000, in line with what economists were expecting. Housing starts unexpectedly dropped 1.1 percent in July, to a seasonally adjusted annual rate of 746,000 units, according to the Commerce Department. Economists had forecast a reading of 757,000 units. The Dow Jones industrial average, the S&P 500 and the NASDAQ futures were trading modestly higher
European markets trading mixed: European markets are mixed in trade today, with the German DAX (INDEXDB:DAX) trading 0.2 percent higher at 6961.27, the FTSE 100 (INDEXFTSE:UKX) down 0.1 percent at 5825.46, and the CAC 40 (INDEXEURO:PX1) gained 0.1 percent to 3453.06. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) was trading 0.2 percent higher.
Asian markets end mostly lower: Asian markets closed mostly lower on Thursday, with Japan’s NIKKEI 225 (INDEXNIKKEI:NI225) closing 1.9 percent higher at 9,092.76 points. The HANG SENG INDEX (INDEXHANGSENG:HSI) closed down 0.5 percent at 19,963, while the SSE Composite Index (SHA:000001) (Shanghai Composite Index) closed down 0.3 percent at 2,112.2, the lowest since August 2. The S&P/ASX 200 (INDEXASX:XJO) index rose 49 points to 4,330.2. The benchmark Indian 30-share BSE SENSITIVE (INDEXBOM:SENSEX) index closed down 0.4 percent.
Company News Update
- Wal-Mart Stores, Inc. (NYSE:WMT), world’s largest retailer, reported second quarter earnings excluding certain items of $1.18 per share, one cent above estimates, while revenue came in at $113.53 billion, slightly short of consensus estimate of $114.63 billion. Wal-Mart Stores, Inc. (NYSE:WMT) raised its full-year profit outlook.
- Ross Stores, Inc. (NASDAQ:ROST) reported a 23 percent rise in second quarter net earnings to $182.0 million, from $148.3 million a year earlier. Sales increased 12 percent to $2.34 billion from $2.09 billion in the same period last year. The retailer raised its full-year earnings forecast.
- Sears Holdings Corporation (NASDAQ:SHLD), controlled by billionaire hedge-fund manager Edward Lampert, reported second quarter loss excluding items of 86 cents a share, in line with the average analysts’ estimate. Sales declined 6.6 percent to $9.47 billion, trailing estimates of $9.63 billion.
- A U.S. bankruptcy judge has ruled that American Airlines parent AMR Corporation (PINK:AAMRQ) cannot scrap its existing pilots union contract and impose cost reductions, that industry watchers say was necessary for a successful restructuring.
- Coinstar, Inc. (NASDAQ:CSTR), the parent of movie-rental-kiosks company Redbox, is considering a potential sale to an undisclosed private-equity firm, the New York Post reported.
- Sporting goods and apparel retailer Finish Line Inc (NASDAQ:FINL) was added by analysts at Citi to its “Top Picks Live” list.
- Quick-service restaurants company AFC Enterprises, Inc. (NASDAQ:AFCE) reported second quarter adjusted earnings of 27 cents a share, one cent above estimates, and increased its full-year financial outlook
- Videogame maker Electronic Arts Inc. (NASDAQ:EA) jumped 10 percent in pre-market trading amid reports that it has been approached by private-equity firms KKR & Co. L.P. (NYSE:KKR) and Providence Equity Partners LLC about a possible sale.
- Barrick Gold Corporation (USA) (NYSE:ABX) (TSE:ABX), the world’s largest gold producer, said it is in preliminary talks with China National Gold Group Corporation to sell its 74 percent stake in London-listed unit African Barrick Gold PLC (LON:ABG).
- Denmark-based biotechnology company Novozymes A/S (CPH:NZYM-B) gained 3.5 percent after reporting second-quarter profit of 495 million kroner that exceeded analysts’ projections of 483 million kroner.
- London-listed pharmaceutical company Hikma Pharmaceuticals Plc (LON:HIK) was trading 4 percent higher after reporting a 20 percent rise in first-half adjusted profit, with revenue increasing 35 percent to $532.3 million. The company reiterating its full-year revenue growth forecast.
- Danish healthcare company William Demant Holding A/S (CPH:WDH) fell the most in a year after reporting first-half earnings of 864 million kroner ($142 million) that fell short of analysts’ estimates of 935 million kroner.
- German media group Constantin Medien AG (ETR:EV4) (FRA:EV4) added 1.3 percent after posting a second-quarter profit and reiterated its full-year sales forecast of as much as 480 million euros.
- British oil and gas company BG Group plc (LON:BG) fell 1.3 percent after analysts at Morgan Stanley downgraded the stock to “equal weight” from “overweight.”
- Etihad Airways, the national airline of the United Arab Emirates, is interested in buying Ryanair Holdings plc (ADR) (NASDAQ:RYAAY) (LON:RYA)’s 30 percent stake in Irish flag carrier Aer Lingus Group Plc. (AERL), Bloomberg reported.
- Bernd Scheifele, Chairman of building materials company, HeidelbergCement AG (ETR:HEI) (FRA:HEI), wants to reduce the company’s debt by half to 7 billion euros, German daily Sueddeutsche Zeitung reported.
- Mediaset SpA (BIT:MS), the Italian broadcaster controlled by former Prime Minister Silvio Berlusconi, rose the most in more than three years amid market speculation that investors from the Middle East are buying the broadcaster’s shares.
- BHP Billiton Limited (NYSE:BHP) (LON:BHP) (ASX:BHP) has warned that jobs could go at its Australian coal mines, as the world’s biggest mining company continues to focus on reducing costs amid a softening of demand from China.
- China Mobile Ltd. (NYSE:CHL) (HKG:0941), the world’s biggest wireless carrier by subscribers, reported second quarter net profit of 34.4 billion yuan ($5.5 billion) that was slightly lower than the average analysts’ estimate of 35.2 billion yuan. Sales grew 5.4 percent to 139.1 billion yuan from 131.9 billion yuan a year earlier, also missing the consensus estimate of 140.5 billion yuan. Intense competition from rivals China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) (HKG:0762) and China Telecom Corporation Limited (ADR) (NYSE:CHA) (HKG:0728), and rising handsets subsidies, saw first-half operating profit dip 3.6 percent.
- Lenovo Group Limited (HKG:0992), the world’s second largest personal computer maker by sales, reported a 30 percent rise in first quarter net profit to $141.4 million from $108.8 million a year earlier, beating analysts’ estimates of a profit of $131.2 million. Revenue increased 35 percent to $8.01 billion from $5.92 billion in the year-ago quarter, slightly below market expectations of $8.13 billion.
- China Yurun Food Group Limited (HKG:1068), the country’s second-largest supplier of meat products, plunged 10 percent after posting a 93 percent drop in first-half net profit to 107 million Hong Kong dollars. Analysts at CLSA have downgraded the stock, while Citi and JP Morgan have slashed its share price targets.
- ASX Ltd. (ASX:ASX), operator of Asia’s fourth-largest bourse, reported a 9.3 percent fall in second-half net profit to 163.6 million Australian dollars ($171.9 million) from $180.3 million Australian dollars a year earlier, hurt by weak markets that has reduced the risk appetite of retail and institutional investors. Analysts had forecast a net profit of 171.3 million Australian dollars.
- Tencent Holdings Ltd (HKG:0700), China’s biggest Internet company, soared 6.4 percent after posting a 32 percent rise in second-quarter net profit to 3.1 billion yuan ($492 million) from 2.35 billion yuan a year earlier, on higher online advertising and game sales.
- Australian conglomerate Wesfarmers Limited (ASX:WES) closed at a 15-month high after reporting better than expected earnings at its Coles supermarkets and Kmart discount department stores.
- Tsingtao Brewery Company Limited (HKG:0168) (SHA:600600), China’s second-largest beer maker by volume, posted a 1.8 percent rise in first-half net profit to 1.01 billion yuan ($159 million) from 989.9 million yuan a year ago. Analysts had expected a net profit of 1.1 billion yuan. Tsingtao, in which Japan’s Asahi Group Holdings Ltd (TYO:2502) has a nearly 20 percent stake, said revenue for the period increased 11.2 percent to 13.41 billion yuan.
- Chinese Internet company Sina Corporation (NASDAQ:SINA) reported second quarter earnings excluding certain items of 5 cents a share that topped analysts’ estimates of a loss of one cent. Advertising revenue grew 12 percent year-on-year, while non-advertising revenue rose 5 percent.
Economic Calendar for Thursday, August 16, 2012:
08:30 A.M. ET: Housing Starts (MoM) (July)
08:30 A.M. ET: Building Permits (MoM) (July)
08:30 A.M. ET: Initial Jobless Claims (Week ending Saturday, August 11, 2012)
08:30 A.M. ET: Continuing Jobless Claims (Week ending Saturday, August 04, 2012)
09:45 A.M. ET: Bloomberg Consumer Comfort Index (Week ending Sunday, Aug 12)
10:00 A.M. ET: Philadelphia Fed Manufacturing Survey (August)
10:00 A.M. ET: E-Commerce Retail Sales (Q2)
10:30 A.M. ET: EIA Natural Gas Report (Week ending Friday, August 10, 2012)
04:30 P.M. ET: Fed Balance Sheet
04:30 P.M. ET: Money Supply