Banks hurt on JPM writedowns announcement

European equities markets were lower Tuesday on concerns that banks will suffer further losses after JPMorgan (NYSE: JPM; TYO: 8634) said it will take $1.5 billion in writedowns this quarter, and after metals prices declined and sent shares in miners lower on the session.

In London, the FTSE 100 fell 0.13 percent to 5,534.5 while the FTSE 250 dropped 0.99 percent to 9,291.2.

Some UK homebuilders suffered declines after Dresdner Kleinwort issued negative comments in regards to the sector.

Bovis Homes (LSE: BVS), which added 9.65 percent yesterday, was down 4.74 percent and Persimmon (LSE: PSN), which gained 11.02 percent yesterday, was down 5.2 percent on the session today while Bellway (LSE: BWY) dropped 5.6 percent.

Most banks, miners and retailers were lower in London and while most oil shares dropped, BP (LSE: BP; NYSE: BP; TYO: 5051) and Royal Dutch Shell (LSE: RDSA, RDSB; NYSE: RDS.A, RDS.B) were higher.

The real estate sector also saw gains.

The FTSE Eurofirst 300 was 0.33 percent lower to 1,208.89 while the Dax fell 0.36 percent to 6,585.87, the IBEX was 0.43 percent lower to 11,996.1 and the CAC-40 dropped 0.44 percent to 4,518.48.

Banks, utilities, and the steel sector were all lower, while carmakers, the semiconductors sector and chemical groups saw gains.

Most equities markets in the Asia-Pacific region saw declines Tuesday after metals prices continued to fall, led by gold prices.

In Tokyo, markets were down on falling consumer confidence, which was at its lowest in at least 16 years, and on new data showing that producer prices grew by 7.1 percent in July over last year at the same time.

Investors fear that the higher inflation will cut into manufacturers’ profit margins.

The steel sector was down on concerns that exports from China, which were reported up 38 percent in July from the previous month, will erode prices for Japanese producers, but airlines saw gains while carmakers were up on a weaker yen and banks gained on rumors of merger talks in the sector.

The Nikkei 225 was down 0.95 percent to 13,303.6 while the Topix index fell 0.67 percent to 1,271.42 and the Mothers market dropped 0.7 percent to 472.93.

In wider Asian markets, the only major indexes to see gains were in Australia, where the Sydney Ordinaries added 0.41 percent to 5,090.3 and the S&P/ASX200 gained 0.55 percent to 5,053.6.

Elsewhere in the region, South Korea’s Kospi was down 0.25 percent to 1,577.12, the Straits Times Index fell 0.3 percent to 2,816.82, the Taiex was 0.43 percent lower to 7,293.8, the Shanghai Composite dropped 0.52 percent to 2,457.2, Hong Kong’s Hang Seng was down 1 percent to 21,640.89 and the Sensex dropped 1.88 percent to 15,212.13.

In China, airlines were down, including Air China (SEHK: 0753; LSE: AIRC; SSE: 601111), which was 8.2 percent lower on the session, but Hong Kong’s Cathay Pacific Airways (SEHK: 293; OTC: CPCAY) added 7.4 percent on the news that it will cut North American routes and add more services to Australia.

Telephone services providers were also lower in the region after brokers cut target share prices within the sector.

At just past 1 p.m. in New York, the Dow Jones Industrial Average was down 0.52 percent to 11,720.88 while the Nasdaq Composite had added a bare 0.03 percent to 2,440.58 and the S&P 500 was down 0.47 percent to 1,299.13.

The announcement of more write downs by JPMorgan hurt the banking sector, as did broker comments concerning the sector.

Morgan dropped 6.9 percent while Goldman Sachs (NYSE: GS) was down 4.3 percent after Deutsche Bank (FWB: DBK; NYSE: DB) cut its recommendation on Goldman from “buy” to “hold” and also reduced its target share price to $192.

Fast-food giant McDonald’s was 1.5 percent lower after UBS (NYSE: UBS; SWX: UBSN; TYO: 8657) downgraded its shares from “buy” to “neutral”, while insurers and utilities were also down.

Story link: Banks hurt on JPM writedowns announcement