(IBTimes) - FROM MORRISON SECURITIES PTY. LTD:
U.S. STOCK MARKETS
The Dow industrials edged lower to cap their biggest weekly retreat of the year, as big trading losses at J.P. Morgan Chase weighed on sentiment. The Dow Jones Industrial Average fell 34.44 points, or 0.3%, to 12820.60, erasing earlier gains after reports of a Securities and Exchange Commission review tied to J.P. Morgan's trading loss.
The blue-chip index fell 1.7% on the week, its worst weekly performance since mid-December. The Standard & Poor's 500-stock index fell 4.6 points, or 0.3%, to 1353.39. The Nasdaq Composite rose 0.18 point, or less than 0.1%, to 2933.82.
Financial shares led the S&P 500 lower as J.P. Morgan Chase fell 9.3% to $36.96, its biggest percentage slide since August. The drop accounted for 83% of the Dow's decline.
The blue-chip bank said late Thursday that it had taken $2 billion in trading losses in the past six weeks, stemming from bad derivatives bets. The company said it could face an additional $1 billion in losses in the second quarter as a result of market volatility.
The news shaved $14.4 billion from J.P. Morgan's market value, as more than 216.2 million shares in the bank changed hands, the most in a single day since at least 1984, according to FactSet Research Systems.
Telecom shares advanced. Verizon Communications and AT&T both rose as Credit Suisse analysts recommended buying the shares, saying they will benefit from growing discipline around pricing and subsidies in the wireless industry.
Consumer sentiment improved in early May, according to a Thomson Reuters/University of Michigan index, bucking economists' expectations for a decline.
The Producer Price Index was down 0.2% in April, while economists surveyed by Dow Jones Newswires were expecting a decline of 0.1%. The core PPI, which excludes food and energy, matched expectations with a rise of 0.2%.
In corporate news, Nordstrom slumped 4.8% to 50.96 after the high-end department-store chain reported fiscal first-quarter earnings that missed analyst expectations, but it affirmed its full-year outlook. Arena Pharmaceuticals rallied 74% to 6.36 after a Food and Drug Administration panel recommended the approval of Arena's lorcaserin to treat obesity.
EUROPEAN STOCK MARKETS
European stocks ended a choppy session in positive territory Friday following upbeat data on U.S. consumer sentiment, while Spanish banks remained under pressure after the country's government unveiled its latest plan to clean up its troubled financial sector. The Stoxx
Europe 600 index rose 0.4% to close at 251.97 after dipping as low as 248.22. The index still saw a weekly loss of 0.4%. Heavy losses were trimmed after the University of Michigan-Thomson Reuters index of consumer sentiment rose to 77.8 in May from 76.4 in April. Shares of HSBC Holdings PLC lost 0.4% and BNP Paribas fell 1.3%.
The Spanish government said it would require banks to set aside EUR30 billion in provisions against real estate loans and ordered an independent analysis of banks' debt burdens. Spain's IBEX 35 index ended the day down 0.7% at 6,995.60 after falling as low as 6,790.40. Spanish bank BBVA SA trimmed losses but remained down 1.3%, while Banco Santander SA declined 1%.
The Athens General Index slid 4.5% to 611.96 amid concerns about whether a new government can be formed. If all attempts at forming a coalition fail, which some analysts see as likely, a new election will be called for June. National Bank of Greece SA fell 5.7% and Coca-Cola Hellenic Bottling Co. was down 5.6%.
The European Commission said Friday that the European Union economy is in a mild recession with a recovery forecast to occur in the second half of the year. Gross domestic product is expected to contract 0.3% in the euro zone for 2012 and rebound to 1% growth in 2013. But the European Commission said Spain's budget deficit would jump to 6.4% of GDP in 2012, well above the 5.3% target.
Shares of Telefonica SA declined 1.2% after it said first-quarter profit fell 54% from the year-earlier period amid weakness in its home market and Italy. The French CAC 40 index ended virtually unchanged at 3,129.77, with upside capped by losses for bank stocks and a 20% loss for Vallourec SA, which cut its 2012 sales-growth outlook to 5% from 10% previously.
London's FTSE 100 index turned higher, gaining 0.6% to 5,575.52. Retailer Marks & Spencer Group PLC gained 3.5% after Bank of America Merrill Lynch upgraded the shares to buy from neutral. The German DAX 30 index also reversed higher, rising 1% to 6,579.93. Auto maker BMW AG rose 2.1% and rival Daimler AG gained 2.3%.
ASIA-PACIFIC STOCK MARKETS
Asian markets fell, capping a week of losses across the region, after disappointing China economic data added to worries over a slowdown in the world's second-largest economy, while banking shares dropped after J.P. Morgan reported a $2 billion trading loss.
Japan's Nikkei fell 0.6% to 8953.31, Korea's Kospi fell 1.4% to 1917.13, and Hong Kong's Hang Seng Index dropped 1.3% to 19964.63, bringing to an end its worst week since September. The China Shanghai SE Composite fell 0.6% to 2394.98. In China, manufacturing-related firms led the day's declines.
Shanghai Zhenhua Port Machinery lost 2.5% to CNY4.77, China State Shipbuilding was down 3.7% at CNY35.11 and Baoding Tianwei Babian Electric dropped 1.4% to CNY10.22.
Property shares were also lower amid ongoing concern about government control of the sector. Poly Real Estate fell 1% to CNY12.66, Gemdale lost 1.1% to CNY6.42 and Shanghai Xinmei Real Estate fell 6.4% to CNY7.30.
In Hong Kong, index heavyweight HSBC fell 0.9% to HK$68.40 on concerns that the global economic slowdown could hurt bank earnings. Chinese lenders were also lower; ICBC fell 1.4% to HK$4.89, while Bank of China retreated 1.0% to HK$3.00. In Japan, shares of Sony slumped 6.4% to its lowest level since 1980, despite posting a smaller-than-expected loss for the year ending March 31, as some analysts questioned whether it can deliver strong growth in key markets like smartphones .
Base metals closed mostly lower on the London Metal Exchange Friday, although early losses were pared after encouraging data from the U.S. lifted market sentiment a tad.
At the close, LME three-month copper was 1.1% lower on the day at $8,013 a metric ton, well above the session's $7,966.25/ton low.
Crude-oil futures settled lower on a spate of negative news Friday, including word of ample crude supply, discouraging signs for economic growth and revelations of a $2 billon trading loss at J.P. Morgan Chase & Co.
An end-of-day barrage of selling sent light, sweet crude prices to $96.13 a barrel down 1%, or 95 cents, in the June contract on the New York Mercantile Exchange. The decline was the seventh out of the last eight sessions. June Brent crude futures fell 47 cents a barrel, or 0.4%, to $112.26 on the Intercontinental Exchange.
The International Energy Agency said oil production from the Organization of Petroleum Exporting Countries increased to 31.8 million barrels a day in April, even as oil stocks in developed countries were above the five-year average in March for the first time since May 2011.
The increased production and inventories blunt fears of an oil-supply crunch after Europe starts its embargo of Iran on July 1. Gold set a fresh 2012 low as investor demand for the dollar and mild U.S. inflation reduced interest in the precious metal as an alternative asset.
The most actively traded gold contract, for June delivery, fell $11.50, or 0.7%, to settle at $1,584 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest settlement since Dec. 30. Gold fell 3.7% on the week, and has retreated in eight of the last 10 trading sessions, as worries about Europe's debt crisis sent investors seeking safety into the U.S. dollar.
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