Deals Drive Stocks Up; Treasury Sells Citi Stake

Darlington Musarurwa
26 Apr, 2010
New York City

U.S. and world stocks traded higher after positive earnings. The dollar advanced against the euro as investors fear Greek debt restructuring may be needed as early next year. U.S. Treasury plan to sell 1.5 billion shares in Citigroup. Dollar Thrifty agreed to be acquired by Hertz.

[R]10:15 AM New York – U.S. and world stocks traded higher after positive earnings. The dollar advanced against the euro as investors fear Greek debt restructuring may be needed as early next year. U.S. Treasury plan to sell 1.5 billion shares in Citigroup.[/R]

Stocks in New York traded higher in the early trading on positive earnings, strengthening dollar and the U.S. Treasury’s plan to sell its stake in the Citigroup. Two deals also supported the early momentum in stocks.

U.S. Treasury in a statement said it plans to sell as much as 1.5 billion shares of the 7.7 billion shares it holds in the troubled bank. The Treasury will sell its holding through Morgan Stanley, its selling agent under “discretionary authority.”

Treasury received preferred shares priced at $3.25 each in exchange of $25 billion of financial assistance. The current sale does not include the warrants or trust preferred securities which are expected to be sold off separately.

The euro declined against the dollar and the pound as investors worry that the financial assistance from the IMF and the EU will not be sufficient avoid Greek debt default or restructuring as early as next year.

Greece has 60 billion euros of interest payment due in the next five years and its debt load is nearly 115% of its GDP.

Canon Inc reported sharply higher earnings and lifted annual earnings estimate. Toyota Motor estimated full year operating profit compared to the previous outlook of a loss.

And in the Netherlands TomTom NV swung to a net profit in the first quarter of €3 million or €0.01 per diluted share compared to net loss of €37 million or €0.25 per share a year ago.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.3327 and increased against the Japanese yen to 94.20.

Crude oil increased $0.31 to $85.43 a barrel for a front month contract, natural gas edged higher $0.02 cent to $4.28 per mBtu and gasoline increased 0.490 cents to 235.80 cents.

Gold increased $3.40 in New York trading to close at $1,157.10 per ounce, silver closed higher $0.157 to $18.38 per ounce and copper for the front month delivery increased 2.050 cents to $3.10 per pound.

Yields on 10-year U.S. bonds increased to 3.80% and on 30-year U.S. bonds traded at 4.64%.

Stock Movers

CKE Restaurants, Inc. fell 3.5% after the restaurateur agreed to be acquired by Apollo Management for $12.55 per share in cash.

Dollar Thrifty Automotive Group, Inc. gained 5.8% after the car-rental company agreed to a cash-and-stock buyout by Hertz Global Holdings, valuing the company at $41 a share or $1.2 billion.

Fiserv, Inc. rose 2% after media speculation that the company sales are likely to increase on rising sales of cash machines and check processing equipment.

Whirlpool Corp surged more than 6% after the company lifted its 2010 net income per share outlook to between $8 and $8.50 a share.

Earnings Review

Capital One Financial Corporation ((COF)), the financial services company said first quarter revenues rose 49% to $4.29 billion from $2.88 billion a year ago. Net income in the quarter was $636.3 million or $1.40 per diluted share compared to net loss of $172.3 million or 44 cents per share a year ago.

The Chubb Corporation ((CB)), the insurance company said first quarter net premiums written rose 1% to $2.77 billion from $2.74 billion a year ago. Net income in the quarter rose 36% to $464 million or $1.39 per diluted share compared to net income of $341 or 95 cents per share a year ago.

The Cheesecake Factory ((CAKE)), the restaurateur said first quarter revenues rose 3.2% to $405.4 million from $392.8 million a year ago. Net income in the quarter rose 87% to $18.7 million or 31 cents per diluted share compared to net income of $10.0 million or 17 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 251.33 or 2.30% to 11,165.79, Hang Seng index in Hong Kong increased 342.57 or 1.61% to 21,587.06 and CSI 300 index in China lower 18.01or 0.56% to 3,172.00.The FTSE Bursa KL Composite index in Malaysia closed higher 3.29 or 0.25% to 1,340.07 and The markets of Australia were closed today.

The Kospi Index in South Korea increased 15.17 or 0.87% to close at 1,752.20. SET index in Thailand closed higher 9.76 or 1.29% to 764.34 and JSE Index in Indonesia increased 19.98 or 0.68% to 2,944.71. The Sensex index in India increased 51.08 or 0.29% to 17,745.28.

Europe Markets Review

In London FTSE 100 Index traded higher 38.87 or 0.68% to 5,762.52, in Paris CAC 40 Index increased 41.62 or 1.05% to 3,992.92 and in Frankfurt DAX index traded higher 56.85 or 0.91% to 6,316.38. In Zurich trading SMI increased 37.63 or 0.56% to 6,805.60.