JP Morgan's $2bn loss stuns investors

THERE WERE low volumes traded across yesterday although positive US statistics rallied European markets in the afternoon.

Traders said investors remained concerned about the euro situation and the announcement by JP Morgan of a $2 billion trading losses. Nevertheless, some Dublin stocks that fell on Thursday rose again yesterday.

DUBLIN

There was little by way of news on the Dublin market and volumes were slight for most stocks.

Kerry Group rose 4.3 per cent to close at €33.75, having fallen by €1.59 on Thursday. Volume was reasonable at 400,000. Traders said it was most likely a case of a share bouncing back from a previous day’s fall.

There were less than half a million CRH shares traded and the stock closed at €14.53, a rise of 0.59 per cent. Grafton, which had 3.5 million shares change hands on Thursday including a 2.2 million share sale to one investor, closed at €3.16, a fall of 0.32 per cent.

Bank of Ireland fell by 1.02 per cent during the day, to close at €0.097. Ryanair fell 0.23 per cent, to €4.37, with approximately 1.5 million shares changing ownership.

CC fell 2.64 per cent, to €3.57, but only 83,000 shares were traded.

LONDON

The ongoing euro zone crisis meant the FTSE 100 suffer a third straight session of losses. The top flight was down by another 80 points at one stage, but recovered late in the session to close 31.57 points lower at 5575.52.

The situation across Europe affected the euro as the pound strengthened to another three-year high against the single currency at 1.29.25. Gold and silver prices fell despite their status as safer haven investments, causing silver miner Fresnillo to drop 18p to 1,376p in the FTSE 100 Index.

Banks were also affected by the Spanish uncertainty, with Royal Bank of Scotland down 0.8p at 22.6p and Lloyds Banking Group off 1.1p to 29.9p.

The depressed market performance overlooked further resilient trading on the corporate front, with ITV, Sainsbury’s and easyJet all posting well-received updates.

Broadcaster ITV was one of the biggest risers after posting strong first quarter figures showing revenues up 15 per cent. It said the impact of the Euro 2012 football championships meant advertising revenues for next month were likely to be up by as much as 17 per cent.

The biggest FTSE 100 Index risers were Vedanta Resources up 30p at 1,089p, Burberry ahead 35p to 1,462p, Man Group up 1.95p at 84.4p and ITV ahead 1.75p at 82.5p.

EUROPE

European stocks declined for a second week after an inconclusive election in Greece left political parties struggling to form a government, increasing speculation that the nation might fail to implement austerity measures.

Mining companies led losses as Chinese industrial output cooled. Bankia SA slid 16 per cent as Spain took control of the lender. Vallourec SA, a French producer of steel pipes for the oil and gas industry, tumbled the most since 2008 after cutting its forecasts. Royal KPN NV rose 20 per cent after rejecting a €2.6 billion offer from Carlos Slim’s America Movil SAB for a bigger stake in the Dutch phone company.

The Stoxx Europe 600 Index retreated 0.4 per cent to 251.97 this week. The gauge has retreated 7.5 per cent since this year’s high on March 16th.

US

US stocks edged up after a strong outlook from chipmaker Nvidia and surprisingly robust consumer confidence offset a slide in bank shares after disclosures of huge trading losses at JPMorgan Chase Co.

JPMorgan said it lost at least $2 billion from a failed hedging strategy.

Nvidia rose 8.3 per cent to $13.45 after reporting adjusted first-quarter earnings that beat expectations. The stock boosted the Nasdaq and was the SP 500’s top percentage gainer.

US consumer sentiment rose to its highest in more than four years in early May as Americans remained upbeat about the job market. The survey was a welcome sign amid worries that the recovery may be slowing down.

JP Morgan’s news weighed on bank shares as investors feared a greater risk of more regulation and the potential for more such losses at other banks. JPMorgan has fallen 12.2 per cent this month.

However, the stocks were off their lows of the morning. Citigroup lost 3.2 per cent to $29.67 and the Financial Select Sector SPDR was off 0.4 per cent to $14.72. The SP financial sector fell 0.5 per cent, extending month-to-date losses to 3.4 per cent.

Shares of Arena Pharmaceuticals rose 64.5 per cent to $6.01 after a panel of experts recommended approval of the company’s obesity pill, a big step towards making it the first new diet drug on the US market in more than a decade. – (Additional reporting PA, Bloomberg, Reuters)