Global equities turned flat this afternoon as investors remain cautious and Italy's prime minister-designate, Mario Monti, races to assemble a new government in an attempt to speed up reforms and reverse a collapse in market confidence.
By 3.50pm (London time) the FTSE 100 reversed its early morning losses and was 0.11% higher at 5525.34. Across the pond, Wall Street was marginally lower, with the S&P 500 down 0.06% at 1250.98 and the Dow Jones 0.15% weaker at 12,061.46.
Super Mario wins support
This afternoon Mario Monti secured support from Silvio Berlusconi's centre-right party and is on track to form a new government. Once formed, its first formal test will be to pass a vote of confidence in parliament, scheduled for Friday, after which (if he wins the vote) Mr Monti will try and pass a new round of austerity measures aimed at preventing Italy from defaulting on its debt.
The news sent Italian ten-year government bond yields back under 7% after reaching a high of 7.07% today. The yield, however, still remains at an uncomfortable high of 6.97%, emphasising that investors are still sceptical over 'Super Mario' Monti's ability to stem the debt crisis in Italy.
US economic data cautiously positive
Retail sales rose more than expected in October as motor vehicle sales and building material dealers offset the drag from service stations. Total retail sales increased 0.5% after rising by an unrevised 1.1% in September. Economists had forecast retail sales climbing 0.3%. In the 12 months to October, retail sales were up 7.2%.
Core retail sales (which exclude autos, gasoline and building materials) rose 0.7% in October after advancing 0.5% the previous month.
Consumer spending, which accounts for more than two thirds of US economic activity, rose at its fastest pace in nearly a year in the third quarter, but financial spread betting markets are likely to remain cautious as Eurozone debt woes weigh on investor sentiment and weak income growth is likely to remain a constraint.
A separate report showed that prices paid to US wholesalers fell in October by the most in four months as the cost of energy and automobiles decreased. The producer price index declined more than projected, at 0.3%, after a 0.8% gain in September. The core measure (excluding food and energy) was unchanged.
The cooling inflation rate gives Federal Reserve policymakers more room to spur the recovery should the world's largest economy falter.
Wal-Mart profits, but less than forecast
Wal-Mart, the world's largest retailer, reported its quarterly profit this afternoon, missing analyst's growth expectations as the economy continues to weigh on customers. Wal-Mart earned $3.34 billion from continuing operations in the third quarter ending 31 October, compared with $3.44 billion a year earlier.
However sales at discount stores rose more than expected, reversing a string of nine quarterly declines. Net sales rose 8.2% to $109.5 billion.
The company said that every business segment is stronger today than it was a year ago, while sales momentum was exceedingly solid for the holidays.
For the fourth quarter, the company forecast earnings per share (EPS) of $1.42 to $1.48 from continuing operations, up from $1.41 a year earlier, which would lead to full-year EPS from continuing operations of $4.45 to $4.51, up from $4.18 last year.
Meanwhile Asda, the British arm of the US retailer, reported a pick-up in third-quarter sales growth, helped by revamped own-brand food ranges and a pledge to be cheaper than rivals. Shares in Wal-Mart were down 2.33% at $57.52 this afternoon.
Kingfisher Airlines faces turbulence
India's Kingfisher Airlines suffered substantial losses in the second quarter this year due to soaring operating costs, which sparked speculation that the cash-strapped carrier could be on the brink of collapse.
Net losses at India's second-largest carrier by market share doubled in the quarter that ended in September to Rs4.69 billion ($93 million), from a loss of Rs2.31 billion in the same period a year ago. The company said its fuel costs rose 71% in the three-month period.
The results come less than a week after the airline cancelled hundreds of flights to cut costs and after reports claimed that the company's leasing firms wanted their planes back. More recently, over 100 pilots and crew members went on sick leave after the carrier failed to pay their October salaries.
Over the weekend the airline sought government aid after having repeatedly failed to raise funds from the equity and debt markets to reduce the $1.4 billion debt that has accumulated on its balance sheet.
Analysts expect that Kingfisher would have to strike a deal with its banks soon if it hopes to survive, as the chances of the government intervening directly with a cash injection are slim. Shares in the cash-strapped airline plummeted over 2% to a low of 246.3p this afternoon.
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'Shares Spread Betting: Wal Mart Lower as Profits Miss Expectations', Article by IG Index, last update: 15-Nov-11
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