US markets finished lower yesterday, as oil snapped a four day losing streak and concerns in the pharmaceutical and tech sectors cancelled out a better than expected earnings report from Bank of America.
The Dow Jones slipped 29.2 points to close at 11,467.3, the S&P 500 edged 0.7 points lower at 1,260. The Nasdaq fell 3.25 points to end at 2,279.53.
Merck and Schering-Plough both finished lower after a study of Vytorin, their joint cholesterol lowering drug, failed to show that it lowered the risk of heart valve problems or the need for surgery in a clinical trial. Merck fell 6% on the news, while Schering-Plough lost 11%. Both had been due to release results before the open, but delayed these until after the session so investors could digest the Vytorin report. When their respective results were released both had topped expectations, but shares continued to slide on concerns over the report.
Yahoo Inc helped lead the tech sector lower after the company announced that it had agreed to appoint activist investor Carl Icahn and two of his nominees to its board. Analysts believe this will make an immediate transaction with Microsoft less likely. Shares in the web portal company lost 3.5%.
Bank of America helped the financial sector to continue its recent rise. The company reported better than expected second quarter earnings to send shares up almost 4%. Elsewhere in the sector, American International Group jumped 5.8% after Bank of America raised its rating on the company to "buy" from "neutral", saying the risk to reward ratio has become very attractive.
In extended trading a number of companies reported results that disappointed investors, setting up a rocky open to today's session. American Express reported earnings of $0.56 a share against expectations of $0.82 a share, citing an economic environment that has "weakened significantly". Apple pleased investors with third quarter profit that jumped 31% to top expectations, however, its guidance for the coming quarter disappointed, sending shares 4.5% lower in extended trading.
US light crude oil for August delivery rose $2.16 to settle at $131.04 a barrel. The commodity snapped a four day losing streak as investors focused on a breakdown of negotiations with Iran, as well as Tropical Storm Dolly, which is making its way to the Gulf of Mexico.
COMEX gold for August delivery settled $5.70 higher at $963.70 an ounce.
Treasury prices rose, lowering the yield on the 10 year note to 4.06% from 4.08% late Friday.
The Nikkei rose 381.26 points to close at 13,184.96 this morning. Honda Motor Co advanced after Lehman Brothers lifted its target on Japan's second largest automaker. Itochu Corp, a trading company with a stake in Russia's Sakhalin oil projects, soared the most in four years, after oil prices rose for the first time in five days.
The Hang Seng is currently 14.16 points higher at 22,547.06. Semiconductor Manufacturing International Corp, China's biggest chip maker, surges the most in more than two months on a report saying it may sell a stake for 2 billion yen.
The London market held firm in positive territory yesterday for the third session running as soaring commodity prices and more cheer in the US banking sector boosted blue chips. The FTSE 100 Index closed 27.9 points higher at 5404.3 as better-than-expected earnings data from Bank of America kept bank stocks on the boil. Miners also littered the risers board on higher commodity prices, although it was another mixed session for the Footsie.
The leading share index saw a 40-point slump in early trading, with sentiment soured by news of a poor take-up by HBOS investors for the bank's £4bn rights issue, with just over 8% of new shares bought. And while the FTSE 100 reversed this into a gain of more than 50 points at one stage, a lacklustre start to trading on Wall Street subdued late session trading in London.
HBOS shares bucked otherwise strong gains in the sector. The scheme's underwriters, investment banks Morgan Stanley and Dresdner Kleinwort, said they had managed to sell a further 29.53% of the leftover "rump" shares from the rights issue. But they were still left picking up nearly two thirds - 62.18% - of shares worth around £2.6bn. The placing put HBOS shares under pressure, closing down 6%, or 17.5p at 264.5p, far below the placing price of 275p. In contrast Royal Bank of Scotland consolidated gains enjoyed at the end of last week, surging 3% ahead, or 5.4p to 203p. HSBC was also nearly 3% ahead, rising 20.5p to 814.5p, while Barclays was up 3.75p at 324p.
With crude clambering above the $130 a barrel mark, oil and gas services firm Wood Group was among the biggest risers, up 15.25p to 402p. A clutch of miners were also flying high with the likes of gold advancing. Lonmin was 121p ahead at 2531p and Kazakhmys was 62p up at 1414p.
Among the fallers, Norwich Union owner Aviva eased after reports in Europe said Abbey owner Santander was in talks to sell its insurance business. Seen as a possible buyer for the business, Aviva fell 14.5p to 524.5p. British Airways also slipped 3p to 239p on the firmer oil prices, with second-tier rival easyJet down 11.25p to 329p.
Elsewhere, Vodafone was down as investors digested reports that politicians in Ghana had vetoed the mobile giant's attempts to buy a 70% stake in state-owned Ghana Telecom. Vodafone shares were down 2.75p at 149.25p.