European and North American Markets Review – August 26th 2010

Europe Up, Spain Report Tripped The Street

German DAX and FTSE 100 ended higher at 5,912.58 and 5,155.84, respectively, after the US jobless claims fell to 473,000 in the week ending August 21st. Positive data from German and UK also provided some supports to the European bourses. GfK consumer confidence index was to inch higher in September to 4.1 against the prior figure of 3.9. The result was above the consensus of 4.0. From UK, CBI reported sales index climbed to 35, defying forecast of a fall to 18. In July, the sales index was reported at 33.

US shares were not so lucky as late news from Spain knocked the Street back to the red zone. Dow Jones index settled 74.25 points lower at 9,985.81, S&P 500 index fell 0.77% to 1,047.22, while Nasdaq Composite ended at 2,118.69 with 1.07% losses. It was reported by El Economista that a 5.1 billion euros worth of value-added tax collected could be voided by a Spanish court. The news renewed concerns over the impact on the Spain’s economy, especially when the European debt crisis remained a major concern today. The Spanish government denied the report, however.

Corporate news came from BP which got maintained at OUTPERFORM by Credit Suisse. Low valuation of BP shares was the reason behind the recommendation. BP shares was up 2.8% at 385.6 pence at the close.

Volkswagen also gained on Thursday after its importer in Turkey, Dogus Otomotiv Servis & Ticaret AS expected an increase in sales by 48% to more than 75,000 units this year. Low interest rates were cited as boosting sales. VW’s shares ended 2.1% higher at 79.21 euros.

Boeing was upgraded by Goldman Sachs. The EPS was upgraded to $1.15 per share from $1.12 per share. Profit margin from the company was expected to improve along with the declining research costs and improving volume. Boeing edged up 0.9% to $61.32.

Following up the rivalry between Dell and Hewlett-Packard for acquiring 3Par, HP has offered a new proposal to 3Par with the price bid up to $27 per share, from prior bid of $24 per share. Dell recently upped the bid to $24.30. According to analysts, the deal is more important for Dell than for HP as Dell could boost its product range while HP may gain less although it could pressure the Dell’s potential to improve in the high-end data center area. Also on Thursday, HP said it acquired Stratavia, a Denver-based database and application automation.

Today’s events include the speech from Federal Reserve Chairman Ben Bernanke at Jackson Hole, Wyoming. The markets will be eager to hear Bernanke’s new updates on the economy, if any. Finally, the economic data due today will be the GDP revision which has been expected to be at 1.4% in Q2. Prior estimate was at 2.4%.