Morning Market Update
ValueWalk's Raul Panganiban with Maurits Pot, Founder and CEO of Dawn Global. Before this he was Partner at Kingsway Capital, a frontier market specialist with over 2 billion AUM. In the interview, we discuss his approach to investing and why investors should look into frontier and emerging markets. Q2 2021 hedge fund letters, conferences and Read More
* US: Dow Futures: 13160.00 (-0.30%), S&P 500 Futures: 1408.00 (-0.32%), NASDAQ Futures: 2766.00 (-0.29%)
* Europe: CAC: 3478.02 (-1.01%), DAX: 7016.50 (-1.04%), FTSE: 5786.27 (-1.23%).
* Asia-Pacific: Australia: 4376.00 (-0.17%), China: 2107.71 (-0.50%), Hong Kong: 19887.78 (-1.07%), India: 5412.85 (-0.15%), Japan: 9131.74 (-0.28%).
* Metals: Gold: 1645.60 (0.16%), Silver: 29.47 (0.14%), Copper: 3.45 (-0.14%)
* Energy: Crude Oil: 96.61 (-0.24%), Natural Gas: 2.83 (1.91%)
* Commodities: Corn: 8.37 (1.70%), Soya Bean: 17.27 (2.70%), Wheat: 9.16 (1.94%)
* Currency: EUR/USD: 1.2445 (-0.22%), GBP/USD: 1.5783 (-0.01%), USD/JPY: 79.2200 (-0.09%)
* 10 year US Treasury: 1.755% (-0.043)
Financial and Economic News Update
U.S. stock-index futures fall: U.S. stock-index futures are pointing to a lower open on Wednesday, as investors look forward to minutes of the last Federal Reserve meeting due later this afternoon. The Dow Jones industrial average, the S&P 500 and the NASDAQ were all trading marginally lower.
European markets trading in the red: European markets are lower in trade today, led by cyclical stocks, as investors await a meeting between Greek Prime Minister Antonis Samaras and euro zone head chief Jean-Claude Juncker. The German DAX (INDEXDB:DAX) was trading 1 percent lower at 7016.50, the FTSE 100 (INDEXFTSE:UKX) was down 1.2 percent at 5786.27, and the CAC 40 (INDEXEURO:PX1) declined 1 percent to 3478.02. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) was trading 1.1 percent lower.
Asian markets end lower: Asian markets closed lower on Wednesday after Japanese exports fell the most in six months in July. Japan’s NIKKEI 225 (INDEXNIKKEI:NI225) closed 0.3 percent lower at 9,131.74 points, helped by a weaker yen. The HANG SENG INDEX (INDEXHANGSENG:HSI) closed down 1.1 percent, to their lowest in almost three weeks, while the SSE Composite Index (SHA:000001) (Shanghai Composite Index) ended down 0.5 percent at 2,107.71. The S&P/ASX 200 (INDEXASX:XJO) index lost 7.4 points to 4,376.0. The benchmark Indian 30-share BSE SENSITIVE (INDEXBOM:SENSEX) index dipped 0.2 percent.
Company News Update
* Home builder Toll Brothers Inc (NYSE:TOL) reported third quarter earnings of 36 cents per share that easily beat market expectations of 18 cents. Revenue gained 41 percent to $554.3 million, also topping estimates of $510 million. Orders jumped 57 percent to 1,119 units, and the company raised its full-year home delivery guidance.
* Teen-apparel retailer American Eagle Outfitters (NYSE:AEO) said second-quarter net profit fell to $19.03 million or 9 cents per share, from $19.67 million or 10 cents per share a year earlier. Net sales rose 11 percent to $739.68 million, from $669.12 million in the year-ago quarter.
* Express, Inc. (NYSE:EXPR) reported second quarter profit of $15.8 million, or 18 cents a share, up from $12.6 million, or 14 cents, in the same period last year. Sales grew 2 percent to $454.9 million, but fell short of estimates of $467 million. Same-store sales rose 1 percent, against a gain of 6 percent in the year-ago quarter. The apparel retailer lowered its full-year earnings forecast.
* Women’s apparel retailer Chico’s FAS, Inc. (NYSE:CHS) reported quarterly profit of $53.4 million, or 32 cents per share, two cents above estimates. Revenue grew 16 percent to $641.7 million, also topping the average analysts’ estimate of $641.3 million. The company raised the lower end of its full-year revenue forecast.
* Activist investor Carl Icahn withdraws his $29 per share offer to buy the remaining shares of the oil refiner CVR Energy, Inc. (NYSE:CVI). Icahn currently owns about 82 percent of CVR Energy, Inc. (NYSE:CVI) outstanding shares.
* McLean-based Sunrise Senior Living, Inc. (NYSE:SRZ) has agreed to be acquired by Health Care REIT, Inc. (NYSE:HCN) for about $845 million, or $14.50 per share in cash, a 62 percent premium to yesterday’s closing price.
* Midwestern bank Fifth Third Bancorp (NASDAQ:FITB) said the Federal Reserve has approved its latest capital plan, which includes a dividend increase and an expanded stock repurchase program.
* MTS Systems Corporation (NASDAQ:MTSC) has raised its quarterly dividend by 20 percent to 30 cents a share, and said that its board has authorized a new $40 million share buy-back program.
* Chip gear maker Ultra Clean Holdings, Inc. (NASDAQ:UCTT) lowered its third quarter revenue forecast to between $96 million to $101 million, from its prior forecast of $107 million to $112 million, citing weak demand.
* Analysts at JMP Securities initiated coverage on shares of Zynga Inc (NASDAQ:ZNGA) with an “outperform” rating and a target price of $4.50.
* Stifel Nicolaus began coverage on shares of agricultural company Mosaic Co (NYSE:MOS) with a “buy” rating.
* Communications company Clearwire Corporation (NASDAQ:CLWR) was down 4.5 percent in pre-market trading after analysts at RBC Capital Markets downgraded the stock to “underperform” from “sector perform.”
* Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) fell 1 percent after federal authorities in the US started an investigation into Britain’s biggest taxpayer-owned lender for potentially violating U.S. sanctions against Iran.
* Dutch brewer Heineken N.V. (AMS:HEIA) reported a 30 percent rise in first half net profit to 783 million euros ($975 million), largely due to profit from the sale of a minority stake in a Dominican brewer, while sales increased 5 percent to 8.778 billion euros, trailing market expectations for 8.81 billion euros. First-half earnings before interest and taxes, excluding some items, were 1.27 billion euros that also missed estimates of 1.31 billion euro.
* Danish wind turbine maker Vestas Wind Systems A/S (CPH:VWS) is planning to cut another 1,400 jobs this year to lower costs by more than 250 million euros. The company reported a second quarter net loss of 8 million euros, on sales of 1.6 billion euros, and cut its full-year forecasts for the shipments of turbines.
* Package delivery company United Parcel Service, Inc. (NYSE:UPS) has extended the takeover offer for Dutch rival TNT Express NV (AMS:TNTE) by more than two months to November 9, as the companies await European Union antitrust decisions on the $6.4 billion takeover plan.
* Assicurazioni Generali SpA (BIT:G), Italy’s biggest insurer, is planning to sell the group’s U.S. life reinsurance business, Reuters reported.
* London-listed miners Kazakhmys plc (LON:KAZ) and Anglo American plc (LON:AAL) were downgraded by analysts at J.P. Morgan Cazenove to “underweight” from “neutral,” while Antofagasta plc (LON:ANTO) was upgraded to “overweight” from “neutral.”
* Pharmaceutical giant GlaxoSmithKline plc (ADR) (NYSE:GSK) (LON:GSK) was trading 1.7 percent lower in London after J.P. Morgan Cazenove downgraded the stock to “underweight” from “neutral.”
* Mining giant BHP Billiton Limited (ADR) (NYSE:BHP) (ASX:BHP) (LON:BLT) abandoned its planned $30 billion expansion of the Olympic Dam project in South Australia as it reported its first profit drop in three years, amid weaker commodity prices and a slowdown in China’s economic growth. The Melbourne-based diversified miner said full-year net profit came in at $15.4 billion, a 35 per cent drop from the year-ago profit of $23.6 billion.
* China Telecom Corporation Limited (ADR) (NYSE:CHA) (HKG:0728) reported an 8 percent drop in first half net profit to 8.81 billion yuan ($1.39 billion), but beat the average analysts’ estimate of 7.72 billion yuan. Sales increased 15 percent to 138.02 billion yuan, also beating estimates of 134.66 billion yuan.
* Woodside Petroleum Limited (ASX:WPL), Australia’s second-largest oil and gas producer by output said first half net profit fell 2 percent to $812 million, from $828 million in the same period a year earlier, due to one-off expenses associated with the starting up of its massive Pluto liquefied natural gas project in Western Australia. Underlying profit, which is closely watched by analysts, rose 4.5 percent to $865 million, missing estimates of $885 million.
* Chinese telecom equipment maker ZTE Corporation (SHE:000063) reported an 85 percent drop in first-half net profit to 244.88 million yuan ($39 million), from 769 million yuan a year earlier. Despite the big drop, profit came in better than market expectations of 223.6 million yuan.
* Australian clothing maker Pacific Brands Limited (ASX:PBG) ended 1.7 percent lower after reporting a wider than expected full-year net loss, and announcing the resignation of its chief executive officer.
* Fertilizer maker China BlueChemical Ltd. (HKG:3983) slumped 5.5 percent in Hong Kong trading after first half net income fell 12 percent from the year-ago period, to 908.5 million yuan ($143 million).
* China’s largest offshore oil and gas company, CNOOC Limited (ADR) (NYSE:CEO) (HKG:0883) slid percent after analysts at Deutsche Bank downgraded the stock from “buy” to “hold,” following the company’s weak first half numbers.
* FUJI MEDIA HOLDINGS, INC. (TYO:4676) and Dentsu Inc (TYO:4324) closed significantly lower in Tokyo after Bank of America Merrill Lynch downgraded both the stocks to “neutral” from “buy,” and slashed their price targets.
* Airlines stocks were down in trade today after Credit Suisse Group AG lowered the sector to “underweight,” citing rising fuel costs and weakening Asian currencies. Air China Ltd. (HKG:0753) (SHA:601111) slipped 2.5 percent in Hong Kong, and Qantas Airways Limited (ASX:QAN) fell 1.3 percent in Sydney.
Economic Calendar for Wednesday, August 22, 2012:
07:00 A.M. ET: MBA Purchase Applications (Week ending Friday, August 17, 2012)
10:00 A.M. ET: Existing Home Sales (MoM) (July)
10:00 A.M. ET: Existing Home Sales Change (July)
10:30 A.M. ET: EIA Petroleum Status Report (Week ending Friday, August 17, 2012)
02:00 P.M. ET: FOMC Minutes