Morning News Summary

8 Feb 2012

US Stocks Gain On Greek Progress

US stocks gained as Greece made progress on measures to secure aid. The German government opposed adding to the €130bn second bailout for Greece. At last glance, the S&P 500 had risen +0.2% while theDow Jones Industrial Averagehad added +0.2%. Earnings beat estimates for 68% of the 280 companies in the S&P 500 that reported quarterly results since January.

Coca-Cola added +1.2% after CEO Muhtar Kent announced expanding sales of beverages in Asia with global marketing campaigns and expansion of juice products. 4Q11 sales volume climbed +5.0% in Japan and +10.0% in China.Yum! Brands, owner of the KFC and Taco Bell fast-food chains climbed +2.5% after profits surged +30.0% and 4Q11 sales grew +21.0% in China.Becton Dickinson, a medical technology company lost -3.7% after cutting its profit forecast by 15cps. The largest US drugstore chainWalgreensunk -1.8% after analyst’s downgraded the stock.

Europe, UK Stocks Decline Amid Greek Talks

European stocks declined as Greece’s Prime Minister, Lucas Papademos, met with leaders of three supporting political parties to win their backing to cut spending. Greek policy makers have already agreed to make further cuts equal to 1.5% of GDP, but have yet to decide how to recapitalise banks and reduce wages to increase the economy’s competitiveness. The Stoxx 600 fell -0.3%. German industrial output unexpectedly dropped -2.9% from November, while economists had expected output to remain unchanged. Car makers fell, withBMW slipping -2.0% andRenault retreating -1.0%.Swatchdeclined -4.0% after reporting lower than expected operating profit.

The FTSE 100 was little changed, slipping less than -0.1%, led by commodity companies. A gauge of mining shares fell -1.9% as China’s copper production growth is expected to slow.Xstrata fell -4.9% asGlencore agreed to buy the coal exporter.Rio Tinto lost -1.9% andBHP Billiton fell -0.9%.Burberry declined -1.8% after UK retailers had their second-worst January on record. In Dublin,Aminexan Irish oil and gas explorer fell -37.0% as it decided whether to drill at an exploration well in Tanzania.

Japanese Stocks Rise Slightly As Tobacco, Shippers Advance

Japanese stocks rose after Japan Tobacco raised its forecast and shipping lines climbed as cargo rates rebounded. Gains were limited as Greece struggled to secure a bailout. The Topix Index rose +0.4%, reaching a five-month high while theNikkei 225 fell -0.1%. Japan Tobacco rose +5.5% as sales recovered faster than expected after last year’s earthquake. The Baltic Dry Index, a gauge of cargo rates rose +0.2%, withKawasaki Kisen,Nippon Yusen andMitsui OSK Linesadding +1.3%, +2.4% and +2.2% respectively.

ASX 200 Declines

The ASX 200closed down -0.5% as the Reserve Bank kept the cash rate at 4.25%, despite speculation for a 25bp cut. The RBA is still watching Europe closely but is not overly concerned about domestic conditions with Australian economic growth "close to trend", as markets are relatively stable as reporting season continues.

Crude And Gold Gain

Crude added +1.7% to $98.60, while gold increased 1.4% to $1,744.55.