Reports

World stock markets news summary (US, UK, Europe, Asia) (November 20, 2009)

Contributed by Paddy Power Trader

By Paddy Power Trader

Britain has got to get a grip on its public finances, but so far there is little to choose between both main parties’ deficit-reduction plans, the head of the Confederation of British Industry said. (RTRS)

UK

UK new housing registrations rose to the highest level since July 2008 last month in a sign “the worst may be over” for construction companies, the National House Building Council said. (BBG)

Nationwide Building Society said that growth in unemployment throughout 2010 will inevitably exert downward pressure on house prices. (RTRS)

Britain is at growing risk of a “public debt spiral” unless the Government takes “drastic” action to cut the deficit, citing yesterday’s OECD report. (Telegraph)

US

T-notes were higher on Thursday as risk appetite decreased after mortgage delinquencies hit a record high. However, following the 2y, 5y and 7y refunding announcement treasuries pared some gains as equities moved off lows and traders repositioned ahead of next week’s supply. At the pit close t-notes finished up 7 ticks at 119.21. At 0630 GMT UST’s were trading up 4+ ticks to 119.25+.

Fed’s Plosser said that it is not quite time for the Fed to raise interest rates, adding that will have a much better sense of US economy’s path going into next year and middle of 2010. Plosser also said that he has grown more confident in economy’s recovery and is less concerned about a double-dip recession risk. (CNBC)

Fed’s Fisher said that it is some time before unemployment falls below 10% and Q3 GDP may be revised lower. Fisher also said that he doesn’t worry about the price of Gold. (BBG)

Federal Reserve officials are stepping up scrutiny of the biggest US banks to ensure the lenders can withstand a reversal of soaring global-asset prices, according to people with knowledge of the matter. (BBG)

Foreign central bank US debt holdings rise USD 17.174bln to USD 2.933trl in November 18 week, according to Fed. (RTRS)

Europe

ECB’s Bini Smaghi says data suggest economy gained pace in Q4, but pace of recovery likely to be gradual and uneven. (BBG)

Bini Smaghi says rising unemployment may weigh on consumer spending and that banking system is still under pressure. Says some banks remain reliant on ECB liquidity and that exit from measures doesn’t impact rate stance, but says late exit from measures could be damaging. Says rising commodity prices could slow recovery and that financial markets more optimistic than baseline scenario. Says ECB analysis shows absence of inflation pressures and must consider implications of negative real rates.

ECB’s Trichet says ECB will naturally and gradually embark on exit. (BBG)

Trichet also says Euro-area saw no deflation risk in crisis.

EU’s Almunia says exit should be outlined now but not implemented yet. (Sources)

Almunia says in terms of exit strategies, fiscal comes before monetary and is also worried economic growth potential falling after crisis.

EU leaders pick Belgian PM Van Rompuy as the first president. (RTRS)

Fitch says France’s special loan no threat to country’s AAA rating. (RTRS)

Asia

At 0630 GMT JGB’s were trading unchanged at 139.25 in a mixed session as the Nikkei pared losses heading into the close and the BoJ left interest rates on hold at 0.1%.

Japan’s government said for the first time since 2006 that the economy was back in deflation, warning of the risk that price falls may pressure a fragile economy barely out of its worst recession in decades. The announcement came as the Bank of Japan kept interest rates at 0.1% and upgraded its economic assessment. (RTRS)

China needs to maintain a certain spread between deposit and lending rates so that banks can support the economy, governor of the PBOC said. (RTRS)

Forex

US senators Charles Schumer and Lindsey Graham who authored legislation aimed at pressuring China to lift the value of CNY said yesterday they asked the Commerce Department to investigate alleged Chinese currency manipulation. (RTRS)

Treasury’s Geithner says does not know when China is likely to move to more flexible exchange rate.

Russia is considering measures such as a tax on cross-boarder currency transactions to discourage speculative traders from driving up the RUB exchange rate, according to a central bank official. (WSJ)

Commodities

Glut of bulls may spark a big sell off in crude oil. (WSJ)

Crude oil prices fell for the first time in four sessions and are vulnerable to a steeper price correction, analysts said. Analysts pointed to a large imbalance between long futures and options positions. Should crude’s recent rally run out of steam, it could spark a large sell off, they said.

BP’s Hayward said that US gasoline sales peaked in 2007 and it won’t return to the same levels because of greater use of bio-fuels and better engine efficiency. (WSJ)

Company News

UK

HSBC – The biggest foreign issuer of credit cards in the US, said defaults declined in October even as more consumers fell behind on payments. (BBG)

AstraZeneca – A study by co. found no significant link between co.’s antipsychotic drug Seroquel and the onset of diabetes according to an expert witness at a pre-trial hearing on law suits over the product. (BBG)

Rio Tinto – Co.’s Cloud Peak Energy coal unit raised USD 459mln in an IPO at USD 15 a share, below its forecast range. (BBG)

BHP Billiton – Co. improves wage offer to Spence Copper mine workers according to the union. (BBG)

Cadbury – Kraft Foods sought permission from Russian authorities to gain rights over the operations of 000 Dirol Cadbury, a Russian unit of co. (Vzglyad)

Companies paying Dividend: Intertek (GBP 0.0820), Smiths (GBP 0.2350)

US

Equities finished lower as the oil and gas and basic materials weighed on stocks after risk-averse investors flocked to the safe haven of the USD. The technology sector was dragged lower after Intel’s (-4.08%) ratings were slashed at Bank of America. Financials also underperformed following bearish comments from Meredith Whitney, however Master Card (+1.24%) bucked the trend after a Government Accountability Office (GAO) report concluded that profits are unlikely to be hit following lower card payment processing fees. At the closing bell, the S&P 500 closed -1.34% at 1094.90, the DJIA closed -0.9% at 10332.44, and the NASDAQ 100 closed -1.58% at 1773.19.

US Banks – Federal Reserve officials are stepping up scrutiny of the biggest US banks to ensure the lenders can withstand a reversal of soaring global-asset prices, according to people with knowledge of the matter. (BBG)

Dell – Q3 EPS USD 0.23 vs. Exp. USD 0.27, Q3 revenue USD 12.9bln vs. Exp. USD 13.14bln. Co. says expects Q4 revenue to improve over Q3. Co.’s shares were seen down 6.93% in after-market trade. Co. also says saw PC demand pick up “quite substantially” in October after Windows 7 launch. Co. says Dell Asia to return to positive revenue growth in the near future. Says “comfortable” with forecasts of about 10% unit shipment growth in 2010 and expects to continue to forgo share repurchase. (BBG/RTRS)

GAP – Q3 EPS USD 0.44 vs. Exp. USD 0.44, Q3 revenue USD 3.59bln vs. Exp. USD 3.56bln. Says Q3 comparable store sales were flat and sees full year capex of about USD 350mln. Co. says board authorised new USD 500mln share purchase program, effective immediately. (BBG/RTRS)

Intuit – Q1 EPS USD 0.10 loss per share vs. Exp. USD 0.15 loss per share, Q1 revenue USD 493mln vs. Exp. USD 487.7mln. Co. reaffirms forecast. (BBG/RTRS)

IBM – Co.’s mergers chief says will continue on pace of 80 deals in 5 years (BBG)

Microsoft – Co.’s Windows 7 reception ‘fantastic,’ according to CEO Ballmer. Says Windows 7 sales double any operating system in same time period. In other news, Dell says launch of co.’s Window 7 is being very well received by small and medium sized businesses and consumers. (briefing.com/RTRS)

P&G – Co. recalling 3 lots of Vicks Sinex spray in US, UK and Germany because of a finding of Bacteria B. Cepacia in some products at plant. (BBG)

3M – Co.’s CEO says demand from industrial and consumer customers continuing to show signs of improvement in current quarter. (RTRS)

Cisco – Co.’s senior VP Hooper says offer for Tandberg is final and will be successful. (BBG)

GE – Co. and Vivendi are between USD 1-2bln apart in their valuation of Vivendi’s stake in NBC Universal, possibly hurting chances of a rapid resolution to a stand-off that is holding up Comcast’s planned bid for a majority holding in NBC. (FT)

News Corp. – Co. doesn’t plan to raise its stake in Sky Deutschland. (S&P)

Kraft Foods – Co. sought permission from Russian authorities to gain rights over the operations of 000 Dirol Cadbury, a Russian unit of Cadbury. (Vzglyad)

Philip Morris – Co. reports initiative to generate USD 0.750-1bln cash and sees 2009 EPS at high end of USD 3.20-3.25 vs. Exp. USD 3.27. Co. also sees currency neutral mid-long term EPS growth 10-12% and currency neutral mid-long term revenue growth 4-6%. (BBG)

Marathon Oil – Co. says it wants to keep competitive dividends. (BBG)

NRG – Co. says may postpone sale of nuclear stake to early next year. (BBG)

Alcoa – Co. to idle smelting operations in Italy while appealing EC ruling on energy tariff, expects to take a Q4 2009 charge of between USD 300-500mln, pre-tax. (RTRS)

Europe

GERMANY

Deutsche Bank - Moody’s reviews co.’s ratings for downgrade, (senior AA1). Moody’s also reviews three other non-DAX listed German financial institutions for downgrade and cites expectation some German banks will see increasing deterioration in asset quality over coming quarters. (BBG/RTRS) In other news, co.’s target to achieve pretax return on equity of 25% will become “more difficult” if capital requirements for lenders are raised, according to co. CEO Ackermann. (Sueddeutsche-Zeitung)

Deutsche Telekom – Co. is keen to expand in the US and is considering a possible partnership with AT&T or low-cost providers like MetroPCS Communications or Clearwire. (Handelsblatt)

Munich Re - Co.’s CFO says open to acquisitions but not very soon. Says is on track to hit 97% target 2009 combined ratio and on track to meet 15% return on risk adjusted cap. (Sources)

Man SE – Co. is each seeking to source more than half of revenue from emerging markets within the next six years. (FT)

Volkswagen – Co.’s supervisory board signed off on contracts drafted for a takeover of Porsche in stages. (BBG)

OTHER GERMAN COMPANIES

Infineon Technologies – Europe’s largest maker of semiconductors, will consider acquisitions as large as EUR 1bln next year, according to CEO Marco Schroeter. (Platow Brief)

Air Berlin – Co. does not currently plan to gain more cash from capital markets but nothing is ruled out. (Boersen-Zeitung)

FRANCE

Vivendi – Co. and GE are between USD 1-2bln apart in their valuation of co.’s stake in NBC Universal, possibly hurting chances of a rapid resolution to a stand-off that is holding up Comcast’s planned bid for a majority holding in NBC. (FT)

Suez Environnement – Co. and its partners have EUR 1.2bln of finance in place for their AquaSure desalination venture in Australia. (BBG)

Renault  - Co. is seeking to source more than half of revenue from emerging markets within the next six years. (FT)

Lagardere – Co.’s CFO says could make acquisitions in book publishing, travel retail, nothing in short term and policy is to keep gearing at about 50%. Co. would not sell 7.5% EADS stake at current price may sell its 20% stake in Canal Plus through a public share offering. Co. says 2010 likely to be better than 2009 and will allocate cash to sport activities in emerging markets. Sees further closures of press distribution units in coming years and says it is too early to talk about ad recovery. (RTRS/BBG)

CapGemini – Co. could use its strong cash position to make acquisitions or even pay an extra dividend. (RTRS)

Companies going Ex-dividend: ArcelorMittal (EUR 0.1875)

PAN-EUROPEAN

Telefonica – KPN and co.’s O2 may make a joint bid for a new auction of German mobile frequencies. (FD.nl)

Philips Electronics – Co. is seeking to source more than half of revenue from emerging markets within the next six years. (FT)

Repsol – Co. will propose an interim dividend of EUR 0.425 per share to be paid in December. (El Pais)

SWISS

Novartis - Co.’s Tasigna more effective than Gleevec in one-year study according to the American Society of Hematology. (BBG)

Roche – Co.’s Actemra meets study endpoint in juvenile idiopathic arthritis. (BBG)

Credit Suisse raises SMI 12-month target to 7,000 from 6,400. (RTRS)

Asia

Nikkei fell 0.5% and logged its first four-week losing streak in over a year, with Sony sliding after its new growth strategy failed to reassure investors. Helping to temper the Nikkei’s decline were gains in banking stocks, battered recently by concerns about fundraising after top lender Mitsubishi UFJ Financial Group announced a massive share sale this week. (RTRS)

Chinese Banks – China’s 11 largest publicly-traded banks may need to raise about USD 44bln by selling shares and Bonds to ensure they have adequate capital for credit growth, according to BNP Paribas. (BBG)