While you were sleeping: Goldman, Citigroup fall after earnings; oil climbs

Friday 16th October 2009

Goldman Sachs Group posted third-quarter earnings that more than tripled and Citigroup Inc. surprised investors by reporting a profit, adding to signs that lenders have shaken off the effects of recession.

Goldman’s profit jumped to US$3.19 billion, helped by trading and investments on its own account. It will hand out up to US$23 billion, or US$630,000 per employee, in year-end bonuses.

Citigroup, which is 34% owned by the US government, reported a profit of US$101 million, against expectations of a loss. It reported US$8 billion of credit losses.

Shares of Goldman fell 2% to US$188.36 and Citigroup dropped 5.8% to US$4.71 as the results disappointed some investors hoping for the same surge in profits managed by JPMorgan Chase this week. Lenders were among the biggest decliners on Wall Street.

The Dow Jones Industrial Average edged up 0.2% to 10,030.37, having climbed above 10,000 for the first time in a year the previous day. The Standard & Poor’s 500 rose 0.1% to 1093.50. The Nasdaq Composite dropped 0.1% to 2169.78.

Bank of America declined 3.2% to US$18 and JPMorgan fell 0.3% to US$47.04.

Technology shares fell after Nokia Oyj, the world’s biggest maker of mobile handsets, posted as loss, sending its US depository receipts lower. The receipts tumbled 11% to US$13.69. Motorola fell 3.8% to US$8.09.

Chevron climbed 1.8% to US$76.83 and Exxon Mobil gained 1.4% to US$72.87 as the price of oil advanced.

Weighing of shares, manufacturing in the Philadelphia region grew at a slower pace in October. The Federal Reserve Bank of Philadelphia’s general economic index declined to a lower-than-expected 11.5, from a reading in September of 14.1. Manufacturing also grew in New York. US inflation slowed in September, soothing concern that economic recovery will drive up prices.

Consumer prices rose 0.2% last month, slowing from a 0.4% pace in August, according to the Labor Department. That stokes the case for those Federal Reserve policymakers who have argued to keep interest rates near zero.

Americans filing for unemployment benefits for the first time fell to a nine-month low, a sign that companies are shedding fewer jobs.Applications for benefits fell by 10,000 to a lower-than-expected 514,000 last week, according to the Labor Department.

Crude oil rose to the highest level in a year after US Energy Department figures showed gasoline stockpiles declined, reflecting maintenance at refineries. Inventories of gasoline dropped by 5.23 million barrels last week, the biggest decline since September last year.

Crude oil for November delivery gained 2.3% to US$76.91 a barrel on the New York Mercantile Exchange. Futures reached US$77.39.

Gold recorded the biggest decline in three weeks, declining from a record as the US dollar strengthened, trimming demand for the precious metal as an alternative investment.

Gold futures for December delivery fell 1.3% to US$1,050.60 an ounce in New York.

The US dollar rose against the yen and was little changed against the euro.The yen weakened 1.2% to 90.57 and dropped to 135.3 per euro. The dollar traded at $1.4926 against the euro.

The British pound had the biggest gain in eight months after the Financial Times cited Bank of England Markets Director Paul Fisher as saying the central bank would prefer to pause in its purchases of assets rather than ending the programme. The pound rose 1.7% to 91.86 pence per euro and advanced 1.8% to $1.6269.

European stocks were mixed. The Dow Jones Stoxx 600 Index edged up 0.1% to 247.28. Retailer J Sainsbury Plc surged 10% after Royal Bank of Scotland analysts said it may be subject to a takeover offer from its largest shareholder, Qatar.

Swatch Group climbed 6.8% after the watchmaker’s Chinese partner forecast increased demand. Nokia slumped 11% after posting a loss.

Among national benchmarks, the UK’s FTSE 100 fell 0.6% to 5222.95, Germany’s DAX 30 dropped 0.4% to 5830.77 and France’s CAC 40 was little changed at 3883.83.

Anglo American Plc fell 4.1% after Xstrata Plc dropped a planned 30.4 billion pound hostile bid. Xstrata fell 2%.

Businesswire.co.nz

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