Market Gazer Hong Kong - Japan - Germany - UK - North America
market review : europe & u.s.
The National Bureau of Economic
Research declared that US recession had
ended in June 2009, but the current
recovery has been very slow and fragile
and that there is a 25% chance that the US
economy will fall back into recession. The
news did not stop the US shares from
starting the week on a strong footing
however, as Dow Jones Industrial Average
rallied 1.37% to 10,753.62. Nasdaq
Composite which has been strong
recently, ended at 2,355.83 or up 1.74%.
S&P 500 index gained 1.52% to end at
1,142.71. In Europe, FTSE 100 index
jumped 94.09 points or 1.71% to finish at
5,602.54, while DAX index closed at
6,294.58 or up 84.82 points.
Concerns over the financial health of
Ireland and Portugal have sent the yield
premium against German bunds higher to
above 400 basis points for Ireland and 393
basis points for Portugal. The market has
been worried over both countries after a
research report from Barclays last week
said that Ireland might be in need of IMF’s
help to fix its financial health. Ireland and
IMF denied the news, but the sentiment
has been damaged since.
Bundesbank said that
increased loan-loss
provisions at German lenders would
reduce earnings although currently the
economy is rather in a better shape. In its
monthly report, the bank said that the
new Basel banking rules will improve the
banking systems without hurting
20 September 2010
economic growth and that lenders would
be able to maintain their lending while at
the same time raise additional capital to
fulfill the new banking requirements.
Moody’s Investors Service maintained
UK’s credit rating at Aaa, adding that the
coalition’s efforts on the economy have
been so far in line with the rating. UK’s
ratings at Standard & Poor’s & Fitch
Ratings are also at AAA. At S&P however,
it has NEGATIVE outlook while at Fitch it
has STABLE outlook. At the same day,
Fitch Ratings also affirmed Germany’s
long-term foreign and local currency
issuer default ratings at AAA.
Deutsche Bank AG provided
more details on its plan to
raise more money to finance
its purchase of Deutsche
Postbank AG and to increase its reserves.
The bank will sell 308.6 million new shares
at the price of 33 euros per share worth a
total of 10.2 billion euros. While a part of
the cash is going to be used to raise DB’s
stake at Postbank to around 60%, the rest
of the funds will be used to fulfill the new
regulatory requirements recently set. At
MF Global, the Bank was downgraded to
SELL from HOLD. Deutsche Bank has been
hammered by the news lately, but it
rebounded on Monday and settled 1.49%
higher at €46.88.
BP Plc.’s Macondo well has been sealed
permanently. The well which suffered a
blast earlier this year and created a
massive oil spill was declared “dead” after
the company successfully done some
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 Market Gazer Hong Kong - Japan - Germany - UK - North America
pressure test on the cement seal on the
well. The news sent BP’s shares to end at
411.35 pence or 2.06% higher.
Commerzbank was raised to
NEUTRAL from SELL by UBS AG
and also raised its price target
to €6. Meanwhile, BMW’s price target
was raised to €61 by Barclays.
Commerzbank ended at €6.42, while
BMW settled the day at €49.12.
Bayer AG was upgraded to BUY from
HOLD by Collins Stewart. Bayer rose
2.47% to close at €52.32.
Apple Inc. was expected to
launch a version of its iPad
with smaller screen in order
to compete with the
recently released Samsung’s Galaxy Tab.
Galaxy Tab will be offered by AT&T,
Verizon Wireless, Sprint Nextel and T-
Mobile, and will use Android operating
system from Google. Analysis by Rodman
& Renshaw suggested that the new
version could be due in 1Q11. Elsewhere,
its rating at Kaufman Brothers has been
kept at BUY with target raised from $350
to $374. 4Q estimates were raised.
Revenue to be at $19.3 billion, up from
$18.0 billion, EPS at $4.12 from $3.74. For
fiscal year ending October with revenue
for the period at $64.1 billion, raised from
$62.9 billion or with EPS at $14.64 against
prior estimate of $14.25. Fiscal year 2011
is seen to show revenue of $80 billion
compared to prior estimate of $76.3
billion, EPS is seen at $18.00 rather than
$16.75. Apple’s shares jumped 2.85% as it
20 September 2010
flew to new heights, approaching
technical resistance at $284.30. Apple
settled at $283.23.
IBM planned to purchase Netezza Corp at
the price of $27 per share or a total worth
of $1.7 billion. Netezza integrates
hardware with applications to store and
analyze data. IBM will probably face rivals
such as HP, Dell and Cisco in its effort to
acquire the data-warehousing company.
IBM advanced 1.23% to $131.79.
Oracle and HP were
reportedly to have reached settlement
over the dispute involving HP’s former
CEO Mark Hurd. Earlier, HP sued Mark
Hurd when he joined Oracle after he left
HP. Oracle’s Larry Ellison said that HP’s
board action to push Hurd out was “the
worst personnel decision since the idiots
on the Apple board fired Steve Jobs.” As
the dispute ended, both companies now
have “reaffirmed” their strategic
partnership. On a downside note, Oracle
was downgraded to NEUTRAL from BUY
by Davenport. HP was at $39.39 (+0.64%)
while Oracle was at $27.49 (+0.04%) when
the market closed on Monday.
AT&T has been upgraded to
OUTPERFORM from NEUTRAL by Credit
Suisse, with price target set at $35. AT&T
advanced 1.31% to settle at $28.54.
Disclaimer: This report is provided for information purposes
only. It is not an offer to sell or to buy any securities. This
report has been prepared based on sources believed to be
reliable, but there is no assurance or guarantee regarding its
completeness & and accuracy. The author accepts no
responsibility or liability arising from any use of the report.
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