High oil prices continue to impact equity markets

London:

Equity markets were down on Wednesday in London. The FTSE 100 lost 0.9 percent to 5,369.7, while the FTSE 250 was down 1 percent to 7,849.1. Volume on the day, was 3.3 billion shares traded.

At least one analysts blamed the poor performance, the worst since the July 7 terrorist bombings in London, on weakness in US equities markets due to high oil prices and another interest rate hike by the US Federal Reserve.

The banking sector was mixed, with Royal Bank of Scotland down 1.3 percent to £15.76 on rumors that it might be thinking of intruding into the proposed merger between Germany’s HVB and Italy’s UniCredito. Elsewhere in the sector, however, Paragon gained 2.2 percent to 485½p and Northern Rock was up 0.4 percent to 810½p.

In the insurance sector, rumors that Prudential was thinking of acquiring Royal & Sun Alliance sent shares in both companies lower. RSA fell 0.3 percent to 95½p and Prudential was down by 1.2 percent to 500½p. Companies that rely heavily on oil products were down on the day as crude oil prices rose again. British Airways lost 1.8 percent to 288¾p, while cruise operator Carnival fell 2.7 percent to £28.85.

Eurofirst:

In Europe on Wednesday, the FTSE Eurofirst 300 fell 1.04 percent to 1,205.39. In Germany, the Xetra Dax was down even more, falling 1.77 percent to 4,875.22.

Among the reasons for the declines were worries about a new hurricane threatening the United States.

The banking sector was one of the biggest decliners on the day, falling after a downgrade of the sector from “overweight” to “neutral” by JP Morgan.

UBS was down 0.8 percent to SFr109.10, Credit Suisse Group lost 1.4 percent to SFr57.25, and Deutsche Bank declined 2.6 percent to €74.90.

The reinsurance sector was down on reports of the strengthening of Hurricane Rita on the heels of losses incurred by Katrina. Munich Re lost 1.9 percent to €90, while Swiss Re fell 1.5 percent to SFr81.80.

The semiconductor sector also saw declines on the day, as Infineon lost 1.1 percent to €7.90 on a report that it was getting ready to spin off its DRAM memory chip unit, which has been incurring losses.

Elsewhere in the sector, STMicroelectronics fell by 2.7 percent to €13.93 and Dutch chipmaking equipment company ASML declined 3.3 percent to €13.39 on reports that chip equipment sales and billing were both down globally.

Tokyo:

Tokyo equities markets were up on Wednesday, with the Nikkei 225 gaining 0.4 percent to reach another four-year high of 13,196.57. The Topix index also closed 0.4 percent higher at 1,357.71.

On the down side, shares in department stores fell when Deutsche Bank downgraded several companies from “buy” to “hold”. Among those seeing losses on the day were Isetan, which fell 0.6 percent to ¥1,753; Marui, which dropped 0.9 percent to ¥1,867; and Takashimaya, which lost 2.3 percent to ¥1,334. Sony was off another 0.5 percent to ¥4,030 ahead of Thursday’s announcement on how it will attempt to turn its fortunes around.

The financial sector, on the other hand, saw gains on the day. Mizuho gained 0.2 percent to ¥673,000, MTFG was up 1.6 percent to ¥1,240,000, and SMFG rose by 2 percent to ¥1,030,000.

The real estate sector was also up, with Mitsui Fudosan gaining 1.5 percent to ¥1,660 and Sumitomo Real Estate Sales rising by 6.7 percent to ¥5,880. Gains in real estate came on an announcement Tuesday by the land ministry that prices on both commercial and residential properties in Tokyo had gone up for the first time in 15 years.

New York:

The New York equities markets were down on Wednesday as crude oil prices rose yet again and as another hurricane threatens the US mainland before the business community has yet been able to assess the full impact of Hurricane Katrina. The Dow Jones Industrial Average lost 1 percent to close at 10,378.03, the Nasdaq composite fell 1.2 percent to 2,106.64, and the S&P 500 fell 0.9 percent to 1,210.20.

The oil sector defined the downward trend of the day. Chevron was up 0.4 percent to $64.27, ExxonMobil rose 0.7 percent to $64.97, Murphy Oil gained 2 percent to $50.92, and ConocoPhillips added 2.2 percent to $70.43.

Among refiners, Valero Energy gained 3.6 percent to $113.14, while Sunoco was up 4.5 percent to $78.10. Another notable gainer on the day was FedEx, which gained 8 percent to $83.15 on an upgraded earnings forecast for the year to May 2006.

Among losers was cosmetics company Avon Products, which fell 11.8 percent to $27 as it became the latest company to blame a cut it its forecast for earnings this year on higher oil costs.

Among department stores, Sears lost 3.7 percent to $115.15 and Wal-Mart dropped 1.7 percent to $42.49. At least part of this downtrend was due to a warning from the National Retail Federation that holiday sales growth in the US would be only 5 percent this year, compared to last year’s growth of 6.7 percent. This smaller growth forecast was blamed on falling consumer sentiment.

In the airlines sector, Continental Airlines fell 8.6 percent on the day to $9.91 as Houston, one of its hubs, prepared to evacuate ahead of Hurricane Rita.