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Trade Balance, Export Data Spooks Investors, AIG Impresses

Nov 04,2014  Company News  Comment: 0

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New York City, New York – (StockNewsDesk) – 11/04/2014 — US markets opened in the red as a couple of economic indicators failed to impress the Street. Factors orders, though negative, came in line with expectations; the US trade balance was well below expectations. In corporate earnings, the nation’s largest insurance service provider, American International Group, Inc. (NYSE:AIG), impressed Wall Street after it posted better than expected numbers.

According to the Commerce Department, the trade gap rose more than 7.5% to $43.03 billion compared to expectations of $40.0 billion. The export figures declined to their lowest level in five months. It points towards a slower economic growth. There is a high chance that economic growth could decline owing to the winter and negative factory orders.

The factory order came in line with expectations and better than the reading in the earlier month, however, was still in negative on 0.6. Recently, the US Government has reported better than expected growth rate of 3.5%. The harsh winter could slash the growth rate by 0.3 percentage points. Trade figures, which came in negative, contributed as many 1.32 percentage points in the growth rate. Export figures of the largest economy in the world fell nearly 1.5% to $195.59 billion. This is the level last seen during April. The slow economy in China and the Euro zone is largely responsible for the weakness in export figures.

Trade Balance, Export Data Spooks Investors, AIG Impresses Them

Weak Export Figures Across Globe

Export figures of all the developed and few developing countries across the globe declined. Euro zone saw declination of exports by 6.5%, while Chinese exports dropped down 3.2%. Japan’s exports have dropped by a massive 14.7 %, while weakness in export growth was seen in Brazilian and Mexican economies too. Imports by the US stayed in line with expectations as crude oil prices hit the lowest level since 2009. Domestic increase of crude production in the US has helped to tame the widening of trade deficit balance.

AIG Impresses Wall Street

The largest insurance company in the US reported earnings that brought optimism in the stock. The third-quarter earnings of the company improved predominantly because of improving performance in the core insurance operations. The company declared a dividend of 12.5 cents a share in addition to the announcement that the company will buy-back shares worth $1.5 billion. The operating income after-tax increased more than 23% compared to earlier years.

Net income of AIG came in at $2.19 billion or $1.52 a share, compared to the earlier year’s figure of $2.17 billion or $1.46 a share. Under the property casualty’s head, premiums increased to $8.63 billion, while under the commercial underwriting head premiums increased to around $5.34 billion.

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