World Market Update 04/07/2011

U.S. Markets

U.S. stocks declined on Thursday after reports of another earthquake hitting Japan in less than a month, but markets were off their lows after a tsunami warning was lifted.

The S&P 500 Index declined 4.19 points, or 0.32 percent, to trade at 1,331.43 at 3:14 p.m. EDT. The Dow Jones Industrial Average declined 40.64 points, or 0.33 percent, to trade at 12,386.11. The Nasdaq Composite Index fell 0.18 percent.

Earlier Dow Jones Industrial Average declined nearly 100 points on news that another massive earthquake measuring 7.4 on Richter hit Japan at 11:32:41 pm in the night with the epicenter about 250 miles from Tokyo.

Stocks recovered from earlier losses after Japan’s NHK World TV reported that all tsunami alerts in the country have been lifted.

On the economic front, the applications for jobless benefits in the U.S. fell more than expected last week, recording a second consecutive weekly decline. Initial jobless claims in the US dropped by 10,000 to 382,000 compared with the revised figure of 392,000 in the previous week, while markets had expected the jobless claims to fall to 385,000 in the week.

Most of the U.S. retailers reported better than expected same-store sales results in March despite poor weather and higher gasoline prices. Costco Wholesale Corp. (NASDAQ:COST) shares gained 3.27 percent and Limited Brands Inc. (NYSE:LTD) gained 1.48 percent after reporting better than expected March sales.

Bed Bath & Beyond, Inc. (NASDAQ:BBBY) stock surged 9.76 percent as its fourth quarter earnings and revenue topped Street view.

The European Central Bank (ECB) raised the interest rates by 25 points to 1.25 percent, its first since July 2008 to check the rising consumer prices in the region. However, ECB president Trichet said at a news conference that ECB's rate hike on Thursday was not necessarily the first in a series.

European Markets

European stock markets pared early gains to end lower Thursday on news of a new 7.1 magnitude earthquake rocked Japan.

The Stoxx Europe 600 Index declined 0.28 percent to 280.78. DAX30 declined 36.33 points or 0.50 percent to 7,178.78 and FTSE 100 declined 33.76 points or 0.56 percent to 6,007.37, while CAC 40 fell 19.86 points or 0.49 percent 4,028.30.

The euro widened losses against the dollar after the European Central Bank’s (ECB) President Jean Claude Trichet said that eurozone’s monetary policy remains “very accommodative.

The single currency also came under pressure with renewed concerns over the euro zone’s sovereign debt crisis, as Portugal became the third country in the region to seek a bailout from the European Union (EU), which is expected to be around 80 billion euro ($114.4 billion).

Portuguese banks Banco Espirito Santo surged 4.18 percent and Banco Comercial Portugues SA gained 4.06 percent in wake of the aid request.

Among other financials, Deutsche Bank AG gained 1.32 percent to 42.52 euros and BNP Paribas gained 1.78 percent to 4.34 euros, while Societe Generale rose 0.93 percent to 47.01 euros.

BMW shares declined 1.44 percent to 59.20 euros after the company stock was downgraded to “equal weight” rating from “overweight” rating at Morgan Stanley.

On the economic front, German industrial production rose more-than-expected in February, mainly led by a strong increase in building industry output. Industrial output in the eurozone’s largest economy increased 1.6 percent compared with upwardly revised figure of 2 percent gain in January, while markets had expected the factory output to increase slightly by 0.5 percent in the month.

Asian Markets

Most Asian stock markets ended with slight gains on Thursday, while Seoul shares declined after Samsung Electronics unveiled weak earnings guidance.

Tokyo shares pared earlier gains in the afternoon session after the Bank of Japan lowered its assessment of the economy following the nation’s record earthquake. Benchmark Nikkei advanced 0.07 percent or 6.56 points to 9,590.93.

Bank shares gained after the central bank kept its key interest rate at zero to 0.1 percent and extended emergency loans to financial institutions affected by the earthquake and tsunami. Mitsubishi UFJ Financial Group gained 2.4 percent to 381 yen and Sumitomo Mitsui Financial Group advanced 0.2 percent to 2,500 yen.

Among the exporters, Sony Corp. advanced 0.15 percent and Canon Inc. rose 0.41 percent, while NEC Corp. gained 1.16 percent.

Among the automakers, Honda Motor advanced 1.1 percent to 2,927 yen and Nissan Motor gained 1.12 percent to 720 yen, while Toyota Motor advanced 0.91 percent to 3,295 yen.

South Korean shares ended lower, led by declines from Samsung Electronics as its first quarter earnings forecast fell short of expectations. Seoul composite declined 4.57 points or 0.21 percent to 2,122.14.

Samsung Electronics declined 1.51 percent after the company said its first quarter profit may fell 34.2 percent to its lowest in nearly two years due to weak demand for televisions and lower flat screen prices.

Hong Kong’s Hang Seng index declined 3.25 points or 0.01 percent to 24,281.80 and Chinese Shanghai composite advanced 0.22 percent or 6.71 points to 3,008.07.