- Markets quake as Japan faces nuclear crisis. Markets in Japan and across the world extended their losses on Tuesday as a third explosion hit the Fukushima Daiichi nuclear complex. The Nikkei 225 fell as much as 14% before closing -10.6% at 8,605.15 while the broader Topix index ended -9.5%. The falls came as The Tokyo Electric Power battled to avert a nuclear catastrophe at Fukushima, with "minute levels" of radiation detected as far away as Tokyo. In efforts to stabilize markets, the Bank of Japan added ¥20 trillion ($245B) of short-term liquidity to the record ¥15 trillion it pumped in yesterday. The yen was generally steady against the dollar despite some fluctuations but shares in several sectors suffered heavy losses, including in major vehicle manufacturers such as Toyota (NYSE:TM), Honda (NYSE:HMC), Nissan (OTCPK:NSANY), Mitsubishi and Isuzu, which halted production after the quake. Hong Kong's Hang Seng ended -3.8%, while the FTSE 100, the DAX and the CAC 40 fell in morning trading in Europe (see details below), and U.S. futures are down heavily too (benchmark S&P -2.7%). Oil fell as well, as did gold and other metals, although chip prices extended the large gains they made on Monday.
- GE sinks on Japan's nuclear crisis. After falling 2% yesterday, shares of General Electric (NYSE:GE) are down another 8.2% premarket (7:00 ET). The main concern is apparently GE's potential liability related to the explosions at Japan's nuclear power plant, as GE designed all six of the Fukushima Daiichi plant's reactors. However, Barclays believes "GE’s liability for the issues in Japan as a supplier are contractually zero,” and nuclear power represents just 3% of GE sales. Both of these factors prompted some analysts to call yesterday's more mild sell-off of GE 'excessive,' which potentially makes today's heavy drop a buying opportunity.
- Auditor, CFO jump ship from halted CCME. China MediaExpress (OTCPK:CCME), the advertising firm whose stock has been on a trading halt since early Friday, announced yesterday afternoon that its auditor, Deloitte Touche Tohmatsu, had severed ties with the company. CCME also said that CFO Jacky Lam had resigned and that the company will delay its annual statements. Shortly afterwards, Nasdaq said it was changing the company's halt status from "material news pending" to "additional information requested," and that the stock will remain halted until that request is satisfied. Prior to the halt, CCME's stock had lost 48% in six weeks, and the company has been the subject of allegations that it misled investors by inflating sales and profit figures. (More: Stocks to watch in the wake of the CCME scandal)
- Gaddafi gains momentum, Saudi Arabia intervenes in Bahrain. The Libyan airforce has attacked rebels in the town of Ajdabiya, just 100 miles from the opposition capital of Benghazi, as Muammar Gaddafi moves closer to regaining full control of the country. His forces have now recaptured the oil port of Ras Lanuf, the nearby town of Bin Jawad and the western city of Zawiyah. Elsewhere, Saudi Arabian troops moved into Bahrain after a request from the kingdom to help quell a popular uprising. In Oman, protesters are pressing for political and labor changes despite a string of concessions from Sultan Qaboos bin Said, who has ruled for 40 years. While the Japan earthquake is affecting oil prices, "the Middle Eastern events are still the most important thing for the crude market,” says an economist at National Australia Bank. Crude futures -2.8% to $98.38 (7:00 ET).
- Red-faced Renault admits espionage error. In an embarrassing end to Renault's (OTC:RNSDF) high-profile espionage drama, CEO Carlos Ghosn gave up his bonus and apologized to three senior managers the company had fired after wrongfully accusing them of espionage, and retracted the company's espionage claims. COO Patrick Pelata offered to resign over the scandal, but Ghosn refused the offer, saying he "didn't want to add a crisis to a crisis." Yesterday's apology followed comments from Paris' state prosecutor that the espionage allegations may have been fraudulent. In Paris, Renault -4.4% (6:45 ET).
- HP raises dividend for first time in 13 years In a move to assuage disgruntled investors, HP (NYSE:HPQ) is increasing its quarterly dividend by 50% to 12 cents, the first rise in 13 years. The company announced the move in an event about strategy yesterday, when CEO Leo Apotheker unveiled a cloud-computing service that will let developers create applications for consumers and businesses using HP tools and that run on HP servers. In addition, the company plans to put its WebOS mobile software onto a broader range of products, ramping up output to more than 100M devices a year. Premarket: HPQ -2.4% (7:00 ET).
- Mixed news for Boeing. Boeing (NYSE:BA) successfully completed a key test for the new passenger version of its 747, and the plane could make its first flight as soon as Sunday. Separately, sources said the company plans to deliver the first Dreamliner in late July, a date which is on the early side of Boeing's oft-revised delivery schedule. However, the earthquake in Japan may slow down those projections, as more than a third of the 787 Dreamliner is assembled in Japan. Boeing said there have been no major supply chain problems yet, and that it has enough parts on hand that any inventory issues wouldn't show up for several weeks, but the company will monitor the situation closely.
- Pfizer may shrink by selling units. Pfizer (NYSE:PFE), the world's largest drugmaker, is reviewing the sale or spinoff of four non-pharmaceutical businesses and other units as part of a strategy that may lead to its annual revenue falling to $35B-$40B from $67B. The news comes in a research note from Sanford C. Bernstein analyst Tim Anderson, who cited a meeting with Pfizer CEO Ian Read. Anderson added that the company may be remaking itself as a pharmaceutical 'pure-play' focused on designing new drugs. Premarket: PFE -4.6% (7:00 ET).
- Impax Parkinson drug meets key Phase III goal. While Pfizer may be set to shrink (see above), Impax Laboratories (NASDAQ:IPXL) could be set for significant growth after saying that a treatment for Parkinson's disease met key goals in a Phase III study. The company already has a licensing deal with GlaxoSmithKline (NYSE:GSK) for the drug, called IPX066, comprising an $11.5M upfront payment, potential milestone payments worth up to another $175M and royalty payments. Following the news, Impax jumped 13.3% to $25 in AH trading, although it's -2.6% premarket (7:00 ET). GSK -3.4% premarket.
- Shell and BG plan massive investments. Royal Dutch Shell (NYSE:RDS.A) is on track to deliver its strategic targets by 2012 and plans to invest $100B in new projects over the next four years. Fellow U.K. energy provider BG Group (OTCQX:BRGYY) will invest up to $30B in Brazil over the next decade and intends to bid for the rights to explore for oil in upcoming auctions in the country. This is part of the company's aim of producing 550,000 barrels of oil a day in Brazil by 2020.
- Fed likely to keep rates at 0.25% The Fed looks set to hold interest rates unchanged at 0.25% when the FOMC meets today against a background of increasing global economic uncertainty following the earthquake in Japan. In a statement due at 2:15 p.m. ET, policymakers are expected to note recent improvement in the economy while avoiding any suggestions about cutting short the $600B bond-buying program announced in November.
- Facebook looks to take on Groupon. Facebook plans to test a service that will provide local discounts to its more than 500M members, a move that will place the social network into competition with Groupon. While the move signals Facebook's plans for organic growth, the company is also looking to expand through acquisitions, hiring a leading member of Google's (NASDAQ:GOOG) corporate development team to lead its fledgling M&A efforts.
- Lawmakers to launch Dodd-Frank challenge. After months of trying to soften the Dodd-Frank reforms at an administrative level, Republican lawmakers will make their first direct challenge to the new financial regulation tomorrow. The lawmakers plan to introduce several bills that amend or overturn parts of the law, including sections dealing with corporate executives, ratings agencies, derivatives end-users and private-equity firms. However, it's unclear whether their efforts will be successful, as House approval is possible, Senate approval is somewhat less likely and any jointly-approved laws could still be vetoed by President Obama.
- In Asia, Japan -10.6% to 8605. Hong Kong -2.9% to 22678. China -1.4% to 2897. India -1.5% to 18168.
- In Europe, at midday, London -2.6%. Paris -3.4%. Frankfurt -4.7%.
- Futures at 7:00: Dow -2.2%. S&P -2.65%. Nasdaq -2.8%. Crude -3% to $98.17. Gold -1.3% to $1406.20.
Tuesday's Economic Calendar
7:45 ICSC Retail Store Sales
8:30 Empire State Mfg Survey
8:30 Import/Export Prices
8:55 Redbook Chain Store Sales
9:00 International Capital Flow
10:00 NAHB Housing Market Index
2:15 PM FOMC Announcement
- Notable earnings before Tuesday's open: WSM
The SA Currents team contributed to this post.
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