News & Analysis

World stock markets news summary (US, UK, Europe, Asia) (March 19, 2010)

Contributed by Paddy Power Trader

By Paddy Power Trader

The Federal Reserve may increase the discount rate, charged on direct loans to banks, before the next meeting of the Federal Open Market Committee on April 28, economists said. (BBG)

UK News

Alistair Darling will reduce expected borrowing by up to GBP 10bln thanks to higher-than-forecast tax receipts, according to sources. (FT FrontPage)

BOE’s Sentance says will need to reassess how much stimulus is needed (BBG) Sentance says stimulus exits are appropriate as confidence builds, but worry is that Asia growth may fuel asset prices. Says spending and investment should gradually rise and that export surveys are a significant boost. However, sees inflation risk if global growth pace sustained. He further said that there is some risk of a double-dip recession, however it is not the central forecast

US News

Former Fed’s Greenspan says higher bank capital more effective than new rules and says banks may need to raise reserve capital by 40%. (BBG)

European News

Germany sees no need for immediate action on Greece as it has not asked for aid, and in case the situation of Greece does get worse, Germany would be open for an IMF solution, according to a German source. (Times/WSJ) Germany’s shifting stance sets the stage for a potential confrontation with other European countries at a summit meeting as France and other members of the 16-nation Eurozone have vociferously opposed a financial role for the IMF in Greece.

EU’s Juncker says Greece turning to IMF for help isn’t ‘recommendable’. (BBG) Juncker says EU will help Greece in case of market speculation and says Europe must be ready for eventuality to provide aid. Says uncertain if EU leaders decide aid details next week.

ECB’s Draghi said Eurozone needs stronger budget rules, and clearly defined exit strategies for big budget deficits, adding that he doubts that European Monetary Fund (EMF) is a solution. (BBG)

Forex

CNY is destined to become a global reserve currency rivalling the USD and the EUR, as the nation’s economic power increases the currency’s allure, according to the chief economist of Goldman Sachs, Jim O’Neill. (BBG)

SNB’s Danthine says economy must prepare for end of FX interventions. (BBG) Danthine says exit doesn’t pose ‘any difficult conceptual’ problem, however SNB exit isn’t a question of ‘how, only of when’. Says households and companies must prepare for rate increase and says SNB will continue to counter excessive FX gains.

EUR/CHF falls below 1.44, first time since Oct. 2008. (BBG)

Commodities

US Secretary of State Clinton criticised Russia’s plans to start up a nuclear power station in Iran, describing them as premature given uncertainty about Tehran’s nuclear ambitions. (RTRS)

North Korea may return to the six-party talks aimed at dismantling its nuclear programme in June or earlier, according to Christina Ehler, head of the European Parliament’s delegation for relations with the Korean peninsula. (Voice of America)

Oil fell below USD 82 a barrel overnight, extending the previous day’s losses, as the USD strengthened against the EUR amid worries over Greece’s debt woes, and a rise in OPEC exports loomed. WTI crude futures were trading at USD 81.98, down USD 0.22, at 0608 GMT. (RTRS)

Company News

Equities finished mixed on Thursday as US economic data pointed to lower levels of inflation and also after Philadelphia manufacturing activity posted its seventh consecutive gain. However, stocks came under selling pressure as rumours that a discount rate hike by the Fed was imminent. The oil & gas, basic materials and financial sectors were the main underperformers in the S&P 500. In terms of individual performers, Broadcom (1.13%) saw decent gains after an upgrade at Goldman Sachs (+0.46%) and Nike (+5.32%) also finished higher after consensus beating earnings. At the close; the S&P 500 closed down 0.03% at 1165.83, the DJIA closed up 0.42% at 10779.17 and the NASDAQ 100 closed up 0.40% at 1943.94.

UK

Lloyds – Co. said trading has been strong in the first 10 weeks of 2010, and Lloyds Banking net interest margin is in line with guidance. (BBG/Sources)

Tullow Oil – Co. is close to agreeing the terms of a partnership with Cnooc and Total to develop oil assets in Uganda, according to unnamed people familiar with the deal. (WSJ)

Prudential – Co. hopes investors in Hong Kong and Asia to participate in its USD 20bln rights issue, according to a report. (Hong Kong Economic Journal)

Schroders – S&P revises co. outlook to stable from negative; A/A-1 ratings affirmed. (BBG)

Amec – Co. plans to expand in Africa to provide services to coal and iron-ore mining companies on the continent. (Business Day)

Companies paying Dividend: Barclays (GBP 0.0150)

US

Cintas – Q3 USD EPS USD 0.32 vs. Exp. USD 0.30, Q3 revenue USD 861.8mln vs. Exp. USD 853.3mln. Co. reaffirms forecast and sees Q4 EPS USD 0.30-34 vs. Exp. USD 0.33 and Q4 revenue USD 870-890mln vs. Exp. 877.2mln. (BBG)

Apple – Co. has sold hundreds of thousands of iPads on pre-order, however co. still working to get content for iPad ahead of April 3 release, but talks with media cos. have proven difficult. (WSJ)

Time Warner – Co. said to weigh USD 1.2-1.5bln bid for MGM Studio. (BBG)

Symantec – Co. is rumoured to be considering splitting itself into security and data storage businesses. (Sources)

Europe

GERMANY

Germany’s Christian Social Union allies in Chancellor Merkel’s ruling coalition, said not all lenders should have to contribute to a new bank crisis-prevention fund. (Handelsblatt)

Siemens – Co. will prepare SIS to be stand-alone business by October 1. (FTD)

Allianz – Co.’s CEO says confident that co. will produce solid results in 2010. In other news, co. said in its annual report that it sold one billion shares of Industrial and Commercial bank of China in February, which resulted in a capital gain of about EUR 400mln.(Sources)

FRANCE

EADS – Co. is studying the transfer of some production to Mexico to reduce the impact of unfavourable currency movements. (La Lettre de L’Expansion)

Air France – Co. has proposed delaying some cost cuts in a bid to avert a planned strike by flight attendants from March 28 through March 31, according to a statement from management distributed inside the co. (Les Echos)

Carrefour – Co. will not pass an increase in Spanish value-added tax on to consumers except on products with the lowest margin, according to the co.’s director for Spain. (ABC/BBG)