U.S. stocks posted modest losses Thursday after another major earthquake rattled Japan's northeastern coast, but retailers climbed following surprisingly strong March sales.
After dropping nearly 100 points immediately following reports of the 7.1-magnitude earthquake, the Dow Jones Industrial Average pared much of its losses after the danger from a tsunami dimmed. The index closed down 17.26 points, or 0.1%, at 12409.49. The Nasdaq Composite shed 3.68, or 0.1%, to 2796.14, its first drop in three days.
The Standard & Poor's 500-stock index fell 2.03, or 0.2%, to 1333.51. Indexes had dropped sharply after the 7.1-magnitude quake jolted Miyagi prefecture. Traders said news of the Japanese earthquake startled the market and raised fears that another natural disaster could further slow the country's recovery from last month's crises.
Still, stocks pared much of their losses after the tsunami warning was lifted and officials at the nuclear agency said no troubles were reported at the power stations impacted by the tremor.Stocks had drifted between positive and negative territory earlier in the session, as investors digested the latest round of jobs data and a crop of surprisingly strong same-store sales from retailers in March.
Consumers showed unexpected resilience in March, opening their pocketbooks despite a later Easter, poor weather and higher gasoline prices. Warehouse club Costco climbed 2.83, or 3.8%, to 77.82, after posting a 13% rise in same-store sales, beating estimates for a 7.4% gain.
Limited Brands, operator of Victoria's Secret, gained 57 cents, or 1.6%, to 35.80, after same store sales jumped 14%, well ahead of the 1.5% increase forecast from analysts. However, Gap reported weak same-store sales for March and said its fiscal first quarter earnings will miss Street estimates. The casual-apparel retailer said the recent natural disasters in Japan will hurt its profit in the period, sending shares down 34 cents, or 1.5%, to 22.72. Target shed 1.34, or 2.6%, to 49.62, after its March same-store sales fell 5.5%.
European equities gave up early gains to finish lower Thursday after Japan was shaken by another earthquake, though shares in Lisbon found support after Portugal sought financial aid. The Stoxx Europe 600 index declined 0.3% to close at 280.78, turning lower along with Wall Street after a 7.1-magnitude earthquake struck off Japan's ravaged northeast coast.
But bank stocks in Portugal managed to retain gains scored after the debt-laden country said it will join Greece and Ireland in requesting international financial assistance. Shares in Banco Espirito Santo SA closed 8.9% higher and Banco BPI SA rallied 5.1%. European banks with the most exposure to peripheral countries were also stronger, with Societe Generale posting a 0.9% gain in Paris.
The Portuguese PSI 20 index rose 1.2% to 7,909. Markets were largely unmoved by a well-signalled rate hike from the European Central Bank, which lifted its key interest rate to 1.25% from 1%. The Bank of England earlier said it would leave its key interest rate unchanged for another month. While rate hikes generally hurt stock prices in the short term, Isherwood said that in the medium term they are a more positive indicator because of the economic strength they signal.
The German DAX 30 index ended 0.5% lower at 7,178.78. Shares of Commerzbank AG fell 4.9%. Nomura cut its rating on the bank to reduce from neutral and said it expects the stock to be volatile in the near term. Shares of Hochtief AG slumped 7.9% after the construction group issued a profit warning. Greek banks also saw strong gains after Portugal said it would ask for aid, with National Bank of Greece up nearly 4%. The gains helped push the Greek ASE Composite up 1.5% to 1,552.20.
In Paris, the CAC 40 index fell 0.5% to close at 4,028.30. Financial stocks posted gains, with AXA SA rising 0.9%, however aerospace and defense group Thales SA fell 2.2% after it was downgraded to sell from neutral by Goldman Sachs. Mining stocks were lower in London, led by a 2.6% drop for Vedanta Resources PLC after further delays to its deal to acquire the Indian assets of Cairn Energy PLC. Cairn shares fell 2.3%. The U.K.'s FTSE 100 index ended 0.6% lower at 6,007.37.
South Korean stocks ended lower Thursday after technology major Samsung Electronics Co. provided weak earnings guidance, while Japanese shares inched up as exporters drew more support from the yen's recent weakness against the U.S. dollar. Many indexes hovered in a range around the previous day's closing session and trading volumes were light, signaling caution after recent advances in most regional markets. News of a 7.1 magnitude earthquake in northeastern Japan came after Asian markets had closed.
The Nikkei Stock Average gained 0.1% to 9590.93, off the day's high of 9687.18 points. The Bank of Japan earlier in the day downgraded its broad economic assessment in the wake of the March 11 earthquake and tsunami, while keeping interest rates unchanged at 0.1%, as expected. The bank also said it would establish a special lending facility for financial firms in areas hit by the quake. Among exporters, Mazda Motor Corp. rose 1.7% and Canon Inc. added 0.4%. Sony Corp. rose 0.2% after saying it has resumed some operations at several plants, while Toyota Motor Corp. gained 0.9% on news of partial production restarts.
China's Shanghai Composite index added 0.2% to 3007.91, Taiwan's Taiex rose 0.6% to 8901.72, the Philippines' main index rose 0.2% to 4219.43, India's Sensex rose 0.1% to 19591.18, Singapore's Straits Times index was largely unchanged at 3171.65, the Indonesian stock index rose 0.1% to 3730.58 and Thailand's SET rose 1.2% to 1089.21. The Kospi dropped 0.2% to 2122.14 in Seoul, pressured by a 1.5% drop in Samsung shares after the company said its first-quarter operating profit probably fell 34.2% on the year to 2.9 trillion Korean won ($2.67 billion), raising worries about the demand outlook for consumer electronics.
Base Metals & Oil
Base metals closed mostly higher on the London Metal Exchange Thursday, buoyed by bullish demand signals, though earlier gains were trimmed somewhat as news of another strong earthquake in Japan filtered into the market. Bullish demand forecasts by several top industry executives provided a tailwind for the base metals in early trade Thursday, and a much-anticipated quarter point interest rate hike by the European Central Bank was largely disregarded.
While still in positive territory, flagship three-month copper closed the day below the session's high of $9,753 a metric ton the metal's highest price for almost two weeks trading at $9,669/ton, up 0.7%, at the PM kerb close.
The main U.S. oil contract breached $110 a barrel for the first time in 2 1/2 years Thursday, lifted by fighting in Libya and signs of an economic recovery in the U.S. Light, sweet crude for May delivery settled up $1.47, or 1.4%, at $110.30 a barrel on the New York Mercantile Exchange, the highest settlement since September 2008. Brent crude on the ICE futures exchange settled up 37 cents, or 0.3%, to $122.67, the highest settlement since August 2008.
Gold futures reached a new record, but gains were incremental and may indicate investor fatigue with the pricy commodity. The most-actively traded gold contract, for June delivery, gained 80 cents to settle at a record $1,459.30 a troy ounce on the Comex division of the New York Mercantile Exchange. Nearby April gold also rose 80 cents, to a front month record of $1,458.50.
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