World Market Update 17/03/2011

U.S. Markets

U.S. stocks declined to 2011 lows on Wednesday as worsening crisis at Japan nuclear reactor and weaker-than-expected housing data weighed on the sentiment.

The Dow Jones industrial average was down 242.12 points, or 2.04 percent, at 11,613.30. The Standard & Poor's 500 Index was down 24.99 points, or 1.95 percent, at 1,256.88. The Nasdaq Composite Index was down 50.51 points, or 1.89 percent, at 2,616.82.

Bid to drop water from a helicopter on a Japan nuclear reactor Wednesday failed due to high radiation while another attempt on Thursday morning proved partially successful, with two of four water drops over the site hitting their mark. Meanwhile, the top U.S. nuclear regulator warned that one reactor cooling pool for spent fuel rods may have run dry and another was leaking.

On the economic front, Wednesday’s housing data was terrible. February housing starts dropped to an annual rate of 479,000 units and building permits fell to an annual rate of 517,000 units. Also, new building permits, a measure of future construction, fell 8.2 percent to 517,000 in February against the revised figure of 563,000 in December.

Both figures measure the pace of US housing construction. Despite the overall US economic recovery, Wednesday’s data continue to confirm the persistent weakness in the real estate market.

On the corporate front, KB Home (NYSE:KBH) declined 3.79 percent and D.R Horton Inc. (NYSE:DHI) declined 12.26 percent following disappointing data on housing sector.

Shares of Apple Inc. (NASDAQ:AAPL) plunged 4.46 percent to $330.01 after the company stock was downgraded to “Market Perform” rating from “Outperform” rating at JMP Securities.

International Business Machines Corp. (NYSE:IBM) shares declined 3.79 percent to $153.00 after the company stock was downgraded to “Market Perform” rating from “Outperform” rating at Sanford Bernstein.

U.S. Futures

Futures on the S&P 500 are up 0.85 percent, futures on the Dow Jones Industrial Average are up 0.59 percent and Nasdaq100 futures are up 0.59 percent.

The euro advanced 0.91 percent to 1.4027 against the dollar and the yen gained 1.01 percent against the greenback. Crude oil futures advanced 1.4 percent to $99.37 a barrel and gold futures advanced 0.42 percent.

European Markets

European stock markets advanced in early trade on Thursday, led by gains from auto and basic resources companies stocks.

The Stoxx Europe 600 Index advanced 0.80 percent to 264.29. DAX30 gained 63.97 points or 0.98 percent to 6,577.81, CAC 40 advanced 38.85 points or 1.05 percent 3,735.41 and the FTSE 100 advanced 49.37 points or 0.88 percent to 5,647.60.

Heritage Oil Plc climbed 7.14 percent on news that the company turned down an informal 1.2 billion-pound ($1.9 billion) bid from an unidentified Abu Dhabi- based company.

Siemens AG gained 2.65 percent 88.61 euros after the company stock was upgraded to “buy” rating from “hold” rating at UniCredit.

Lufthansa AG gained 1.67 percent to 13.665 euros as the company swung to profit in 2010, helped by higer revenue. The company reported 2010 net income of 1.3 billion euros compared with a loss of 34 million in 2009. Revenue rose to 27.32 billion from 22.28 billion last year.

Asian Markets

Asian stock markets ended lower on Thursday on concerns about the economic impact of worsening nuclear crisis in Japan.

Tokyo shares ended lower for the third time this week, led by declines from exporters’ as yen surges to record 76.25 per dollar before pulling back. Benchmark Nikkei declined 1.44 percent or 131.05 points to 8,962.67.

Among the exporters, Canon Inc. declined 3.34 percent to 3,470 yen and Fanuc Corp. declined 3.97 percent to 11,370 yen, while Sony Corp. declined 0.5 percent.

Among auto makers, Toyota Motor declined 2.24 percent to 3,270 yen and Honda Motor declined 1.13 percent to 3,055 yen, while Nissan Motor declined 1.08 percent to 733 yen.

Shares of Tokyo Electric Power, Japan's biggest utility and operator of the Fukushima nuclear-power plant which suffered an explosion to its No. 3 reactor building after the earthquake, plunged 13.46 percent to 797 yen. The stocks has plummeted nearly 60 percent this week.

Hong Kong’s Hang Seng index declined 416.45 points or 1.83 percent to 22,284.43 and Chinese Shanghai composite fell 1.14 percent or 33.51 points to 2,897.30. Air China declined 3.7 percent to HK$6.76 and China Southern Airlines Co. plunged 5.3 percent to HK$3.20.

South Korean shares erased earlier losses and ended flat as gains from blue chips and rallies in crude refiners offset earlier losses. Seoul composite advanced 1.06 points or 0.05 percent to 1,959.03. SK Innovation gained 4.01 percent and GS Holdings advanced 2.35 percent, while Daejung Chemicals & Metals surged 9.58 percent.