Stocks Pull Back Sharply Amid Renewed Europe Worries - U.S. Commentary - RTT News Stocks Pull Back Sharply Amid Renewed Europe Worries - U.S. Commentary - RTT News

Thursday, May 31, 2012

Stocks Pull Back Sharply Amid Renewed Europe Worries - U.S. Commentary - RTT News

Stocks Pull Back Sharply Amid Renewed Europe Worries - U.S. Commentary - RTT News

5/30/2012 4:27 PM ET
(RTTNews) - After turning in a strong performance in the previous session, stocks showed a substantial move back to the downside during trading on Wednesday. Renewed concerns about the financial situation in Europe contributed to the sharp pullback by the markets.

The major averages posted steep losses on the day, offsetting Tuesday's gains. The Dow fell 160.83 points or 1.3 percent to 12,419.86, the Nasdaq dropped 33.63 points or 1.2 percent to 2,837.36 and the S&P 500 slid 19.10 points or 1.4 percent to 1,313.32.

The sell-off on Wall Street came as traders expressed concerns about the impact of rising Italian and Spanish bond yields and the possibility that the European debt crisis will continue to spread.

Additionally, a new poll out of Greece showing the anti-bailout Syriza party in the lead in next month's elections also led to renewed concerns about the outlook for the debt-plagued nation.

Disappointing U.S. economic data also contributed to the negative sentiment, as a report from the National Association of Realtors showed that pending home sales unexpectedly saw a notable decrease in the month of April.

NAR said its pending home sales index tumbled 5.5 percent to 95.5 in April after rising 3.8 percent to a downwardly revised 101.1 in March. The drop by the index surprised economists, who had expected pending home sales to edge up by 0.5 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Among individual stocks, Pep Boys (PBY) posted a substantial loss after the auto parts retailer announced the termination of its proposed merger with Gores Group. Shares of Pep Boys plummeted 19.8 percent.

BlackBerry maker Research in Motion also came under pressure after saying it now expects to report an operating loss for its first quarter. The company attributed the disappointing forecast to the competitive environment.

Meanwhile, shares of Sallie Mae (SLM) bucked the downtrend after the student lender said its board authorized the repurchase of an additional $400 million worth of stock.

Sector News

While significant weakness was visible in most major sectors, housing stocks posted particularly steep losses following the disappointing pending home sales data. The Philadelphia Housing Sector Index plunged 4.1 percent after closing higher in five out of the six previous sessions.

Oil service stocks also showed a substantial move to the downside amid a sharp drop by the price of crude oil. With crude for July delivery tumbling $2.94 to $87.82 a barrel, the Philadelphia Oil Service Index dove 3.9 percent.

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STOCKS NEWS SINGAPORE-Maybank Kim Eng cuts Midas target price - Reuters UK

Thu May 31, 2012 4:18am BST

Maybank Kim Eng lowered its target price on Singapore-listed Midas Holdings Ltd to S$0.32 from S$0.41 and kept its hold rating on the stock, citing concerns about its book value.

Shares of Midas fell 1.6 percent to S$0.30 and have lost 9 percent so far this year, compared to a 0.2 percent drop for the FT ST China Index.

The company, which supplies aluminum components to trains in China, posted a 75 percent fall in its first-quarter net profit to 15.3 million yuan ($2.41 million). Current book value is 49 cents a share, and is trading at 0.6 times the its price-to-book ratio.

"We believe there is no longer any earnings visibility for Midas," said Maybank in a report.

The broker expects Midas to post poor earnings as a slowdown in the supply chain casts uncertainty on the delivery schedule for its order book worth about 650 million yuan.

However, Midas' cash position of 671 million yuan should tide it till next year, even if no further bank credit is given, said Maybank.

For Midas' first-quarter results, click

($1 = 6.3577 Chinese yuan)

1042 (0242 GMT)

(Reporting by Leonard How in Singapore;


10:16 STOCKS NEWS SINGAPORE-CIMB cuts Yangzijiang target price

CIMB Research cut its target price for China's Yangzijiang Shipbuilding (Holdings) Ltd shares to S$1.30 from S$1.43 and kept its outperform rating, citing increased risk aversion triggered by the euro zone's debt woes.

Yangzijiang shares were 1.4 percent lower at S$1.025, and have gained about 12 percent so far this year, compared with the FT ST China Index's 0.3 percent gain in the same period.

CIMB said that the 13.6 percent plunge in Yangzijiang in May was unwarranted and the shares are oversold, trading at 1.2 times price-to-book value.

"With no news of order cancellations, we foresee a rapid recovery in its share price if and when euro zone concerns dissipate," CIMB said in a report.

Yangzijiang's entry into rig building could be easier than that of other Chinese shipbuilders such as COSCO Corp Singapore Ltd and JES International Holdings, due to its strong track record, the broker said.

0931 (0131 GMT)

(Reporting by Charmian Kok in Singapore;


8:43 STOCKS NEWS SINGAPORE-Index futures down 0.5 pct

Singapore index futures were down 0.5 percent, signalling a lower start for the benchmark Straits Times Index .

Asian shares, the euro and oil prices fell on Thursday as surging borrowing costs in troubled Spain heightened fears that more countries in the euro zone will be hit hard by the regions' debt crisis.

0846 (0046 GMT)

(Reporting by Charmian Kok in Singapore; ($1 = 6.3577 Chinese yuan)

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