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European and North American Markets Review - October 4th 2010

|Includes: Forward Industries, Inc. (FORD)
Stocks in Europe and U.S. kicked off the week in the red as DAX fell 77.13 points or 1.24% to 6,134.21, FTSE 100 slipped 36.93 points or 0.66% to 5,555.97, and the Dow Jones ended at 10,751.27 or 0.72%. Nasdaq Composite fell deeper by 1.11% to 2,344.52 and S&P 500 index stood at 1,137.03 or down 0.8%. The reasons behind the weak start of this week were ranging from the rather poor economic data in the US and Europe, concern over the tightening of banking rules in Switzerland, concerns over the 3Q results which would be announced starting on October 7th, and simply that investors booked profit from the recent positive runs.
US factory orders fell 0.5% in August, more than the expected fall of 0.4% and a reverse to prior month’s gains of 0.5%. Pending home sales rose 4.3%, beating the expectation of a rise by 2.8%, but still below the prior month’s reading. Year-on-year, pending home sales jumped 18.4% after it saw a year-on-year plunge of 20.7% in July.
Goldman Sachs cut Microsoft’s rating to NEUTRAL from BUY. Microsoft was also removed from GS’s favorite buy list. According to the analyst, Microsoft is facing new risks as tablet computing has become popular. Also, the company was advised to increase dividend further. Microsoft’s target is now $28 per share, down from $32. According to Register, Microsoft has been making secret acquisitions on 15 companies during the last 12 months. At the moment, Microsoft stood at $23.91 or down 1.93%.
Volkswagen fell further on Monday as the VDIK industry group reported a decline in German new car sales fell 18% in September. VW ended at €76.12, down 3.11%. Other German carmakers were also hammered, Daimler tumbled 3.8% to €43.78 and BMW shed 2.19% to end at €48.22.
GlaxoSmithKline added its stake in Convergence Pharmaceuticals Ltd. by as much as 18% with the total value of $4.7 million. The stakes were traded with new analgesic compounds and also certain equipment and services. GSK ended at 1,249 pence, down 0.28%.
American Express would fight government’s allegations regarding an antitrust law over card-acceptance rules which previously filed – and later settled – against Visa and Mastercard. The action taken by the company savaged the shares by sending it 6.53% lower to end at $39.05.
Apple has been started at BUY by Ticonderoga. The company was also reportedly about to pay about $208 million on patent infringement, sending the shares to finish the day at 1.37% decline to $278.64.
Ford jumped 4.73% to $12.84 as Morgan Stanley forecast the company’s earnings for full year 2011 at $2.8 per share The forecast was 40% higher than the consensus. Rating has been assigned as OVERWEIGHT and target has been set at $20.
Deutsche Bank advised to SELL Alcoa shares as the bank doubted the aluminum maker’s 3Q earnings set to be released later this week. Alcoa was under pressure on Monday and retreated to $11.92, or 2.53%. was rated BUY at Citigroup with price target raised to $190. Improving online traffic and spending trends were the reasons behind the upgrade.

On Tuesday, the ISM data for non-manufacturing companies will be released. The index is expected to show an improvement from 51.5 to 52.0 in September. Similarly, PMI for services will be released in Italy, France, Germany, and Eurozone as well as in UK. Germany and Eurozone PMI are seen stagnant at 54.6 and 53.8, respectively, while Italy, France, and UK are seen to slow for the period of September. Retail sales for Eurozone will also due, and the data are seen to show tiny increase from 0.1% rise in July to 0.2% rise in August (MoM). Year-on-year, retail sales are seen to show an improvement from 1.1% to 1.3%.  

Disclosure: No positions