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News : International Last Updated: May 3, 2011 - 9:27 AM


Markets News Friday: Microsoft undershoots Apple on earnings for first time since 1991; German average water bill €441 in 2010
By Finfacts Team
Apr 29, 2011 - 8:51 AM

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German retail sales turnover at constant prices

Microsoft undershoots Apple on quarterly earnings for first time since 1991: Microsoft on Thursday announced record third-quarter revenue of $16.43bn for the quarter ended Mar. 31, 2011, a 13% increase over the same period of the previous year. Net income was $5.23bn.

Last week, Apple reported a profit of $6bn in the first quarter of this year, up from $3.07bn a year earlier. Revenue surged 83% to $24.67bn with about half coming from iPhone sales.

It was the first quarter in 20 years when Microsoft reported lower earnings than Apple and worryingly for the software giant, it said while Windows 7 remains the fastest selling operating system in history with 350m licenses sold, revenue for the segment was down 4% in the third quarter, in line with the PC trends, excluding prior year launch impact.

Consumer PC shipments dipped 8% in the quarter, Microsoft chief financial officer Peter Klein said.

Netbooks, inexpensive laptops, tumbled 40%, partially because of purchases of tablet computers, he said.

Apple sold 4.6m iPads in the quarter.

Results detail

Apple overtook Microsoft in market capitalisation last May. It passed Microsoft in revenue in the third quarter of 2010.

SEE: Finfacts article; Apple overtakes Microsoft as the world's most valuable technology company

At close of business on Thursday, Apple's market cap was $321bn; Microsoft's market cap was $224bn.

Germany:  The German federal statistics office, Destatis, reported today that retail turnover in March 2011 in Germany decreased 2.0% in nominal terms and 3.5% in real terms compared with the corresponding month in the previous year.

When adjusted for calendar and seasonal variations, the March turnover was in nominal terms 1.8% and in real terms 2.1% smaller than that in February 2011.

Compared with the previous year, turnover in retail trade was in the first three months of 2011 in nominal terms 1.6% and in real terms 0.2% larger.

Destatis also reported that agreed monthly earnings of employees in Germany showed an average increase by 0.9% between January 2010 and January 2011, which was below the 2.0% rise of consumer prices. The cause of the comparably weak development of agreed earnings is the economic crisis, which still had an impact on the collective agreements of 2010.

In September 2010, the gross monthly earnings of full-time employees in agriculture amounted to an average €1,851. Earnings in the former territory of the Federal Republic (€2,049) exceeded those of the new Länder - -  East Germany (€1,772) by about 16%.

Destatis said the drinking water and waste water invoice of a model household consuming 80 cubic metres of water per year was €440.99 on a federal average in 2010. The statistics office also said in advance of the “Water Berlin International” trade fair to start on 2 May 2011 that this is €1.21 per day. Compared with 2009, the annual costs rose by €8.78 or 2%.

German Economy 'Not an Island': "The economy is not an island, it is going to be impacted by the performance or underperformance of its surrounding customer export target countries and so that's fed through to consumer demand," Moorad Choudhry, head of business treasury at RBS told CNBC after Germany posted lower than expected consumer spending figures:

Economic View: Irish commercial property values now down 61% from the peak; Goodbody chief economist, Dermot O’Leary comments - - "Whereas in the past we would have analysed commercial property trends from the perspective of possible loan losses in the Irish banks, the purchase by the Irish State, by way of NAMA, of a large portfolio of property assets, means that that the performance is important from a sovereign perspective too.

According to the latest update from IPD, commercial rents and capital values remained in a deflationary trend in the first quarter of the year. While the declines were smaller than that seen in Q4 2010 (-3.3% and -4.9%, respectively), capital values and rents still fell by 2.3% and 3.4% in Q1. The largest declines for both capital values and rents were witnessed in the retail sector (-2.7% and -4.9%, respectively), as this sector continues to struggle due to a weak consumer spending environment (yesterday’s data show core retail sales volumes fell 3.5% in the first quarter).

However, values and rents also continued to decline for offices (-2.0% and -3.6%) and industrial (-2.5% and -4.6%).

From the peak in late 2007, the IPD data shows that commercial property prices have fallen by 61%, with the price of retail premises falling by as much as 65%. From a competitiveness perspective, the 40% decline in rents from the peak at the end of 2008 is a positive development (some other rental indices suggest that the fall in rents has been closer to 50% from the peak).

In the recent stress test carried out by BlackRock for the Irish Central Bank, it was assumed in a base case that prices would stabilise at 60% below their peak level after a 2.5% fall this year. In the adverse scenario, a 22% fall in 2011 was assumed to take the peak-to-trough decline to 70%. Given the trends of the first quarter, the reality is likely to be somewhere between these two assumptions."

White House on GDP:

European consumer spending hit by higher energy prices in March: Davy economist, Conall Mac Coille, comments - - "Data released early this morning (April 29th) indicate that German retail sales fell by 2.1% in March, well below the 0.2% expansion that the market had hoped for. This leaves the annual growth of German retail sales 3.5% lower than in the corresponding month of 2010. As in other countries, higher energy prices have pushed down on real incomes and squeezed consumer spending. Today's weak German retail sales data follow yesterday's release of French consumer spending data for March, which indicated a contraction of 0.7% on the month (below expectations of a 0.2% expansion). Personal spending figures for March in the US are released later today, and the market expects a 0.5% rise. Given the weaker-than-expected European retail sales data, the negative impact from higher energy prices on the US consumer could be greater than anticipated.

In this context, yesterday's news that Irish retail sales rose by 0.1% on the month in March is not a bad outcome. Excluding motor trades, retail sales rose by 0.4% in Q1 over Q4. This suggests that some of the decline in consumer spending in Q4 reflected the bad weather conditions in December and that Irish GDP data for Q1 should benefit from a weather-related bounce-back. Of course, the fiscal adjustment, weak nominal pay growth and poor consumer confidence will continue to weigh down on Irish consumer spending going forward.

In the UK, markets are closed today for the royal wedding. Following a very poor week for UK economic data, specifically the poor GDP data and renewed decline in consumer confidence, there have been suggestions that the royal wedding could itself provide a stimulus to the UK economy in Q2. The Centre for Retail Research has predicted that the wedding will boost retail sales by around £530m, around 2% of monthly retail sales. However, any increase in spending by foreign visitors will be offset by those UK residents who have chosen to avoid the wedding celebrations and have taken the extra bank holiday as an opportunity to take a holiday abroad. Additional spending on wedding memorabilia could be offset by lower spending on other items. Indeed, UK retail sales volumes fell by 2.0% month-on-month at the time of Prince Charles' wedding to Diana Spencer. So it is not clear that there will be a large impact on UK consumer spending from today's wedding.

The largest impact will be the decrease in working hours because of the extra bank holiday (which reduces working days in the quarter by 1.5%). The experience of the Queen's golden jubilee celebrations (which also included an additional bank holiday) suggests that output in April is likely to fall significantly. The Federation of Small Businesses estimates that the royal wedding may cost the UK economy £6bn. Tracking the UK economy has been made harder given the volatility in the data as the impact of the bad weather in December unwound in Q1. So today's wedding celebrations will add an unwelcome element of volatility to the Q2 data, which will make assessing the underlying strength of UK economy all the more difficult over the coming months."

US Markets

In New York Thursday, the Dow rose 72 points or 0.57% to 12,763.

The S&P 500 added 0.36% and the Nasdaq advanced 0.09%.

Asia Markets

The MSCI Asia Pacific Index ex-Japan fell 0.7% Friday.

Japan's markets were closed for a holiday; China's Shanghai composite index rosel 0.85%; Australia's S&P/ASX 200 dipped 1.02% and the Bombay Stock Exchange's Sensex index dropped 0.31% in Mumbai.

Asia benchmarks

Finfacts Reports

China's manufacturing growth slows to nine-month low in April
Worldwide mobile phone market grew nearly 20% in the first quarter of 2011
Asia in 2011: Strong growth, with overheating pressures; Capital inflows lower than in previous cycles
Tens of thousands of immigrant entrepreneurs from India/ China in US seek greener pastures at home
Markets: An Post loses €25m in 2010; ExxonMobil makes Q1 profit of $11bn; Europe wins $11bn warplanes order from India
US GDP increased at an annualised 1.8% rate in first quarter 2011 after rising 3.1% in fourth quarter 2010
Quinn Insurance lost €706m in 2009 and €160m in 2010; €600m bailout from insurance fund due
Irish retail Sales volume dipped 1.7% in year to March 2011; Up 0.1% in month
Eurozone retail sales rose further in April

In Europe, the Dow Jones Stoxx 600 is down 0.05% in early trading Friday.

The ISEQ has risen 0.95% in Dublin.

CRH is up 1.73%; Elan has risen by 0.72%; ICON has gained 6.25%.

European Benchmarks

Irish Share Prices

Irish Stock Market Capitalisation by Company

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies 

The euro is trading at $1.4836 and at £0.8905.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

The BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index averaged 59% lower in 2009 than a year earlier.

On Thursday, July 15, 2010, the index  fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Friday July16th, the BDI rose 20 points or 1.12% to 1,700 to break the 35-session losing streak.

On Thursday this week, the BDI rose 10 points or 0.79% at 1,269.

The Financial Times reported earlier in January, that Australia’s flooding and fears of ship oversupply has pushed down a gauge of the cost of hiring ships to carry coal, iron ore and other dry bulk by nearly half since October to the lowest level since the aftermath of the financial crisis. The Baltic Dry index, the widely watched measure of dry bulk charter rates, fell to 1,453, nearly half the 2,784 peak reached on October 27, 2010.

Crude oil for June 2011 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $112.24 per barrel, down 44 cents from Thursday's close. In London, Brent for June delivery is trading on the International Commodities Exchange at $124.70. The North Sea benchmark accounts for two-thirds of the global market.

The margin between the US benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange and Brent is over $12.

The FT said in early February that a surge in oil inventories in Cushing, Oklahoma, where WTI is delivered into America’s pipeline system, has depressed the value of the benchmark against other yardsticks. The International Energy Agency said on Thursday that with “few relief valves” to cut the stock overhang in Cushing, the price dislocation “may persist for months [or years] to come”.

Gold spot price

The spot price of an oz of gold is trading in New York at $1,533.70, down $3.10 from Thursday's close.

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