U.S. Jobless Claims and Durable Orders Fall

Arthi Gupta, Mayank Mehta and Sanjay Barot
24 Jun, 2010
New York City

U.S. stocks oscillate after weekly jobless claims fall by 19,000 and durable goods orders decline 1.1% in May. Total SA and Amyris partner to develop biomass-based fuels and chemicals. Pioneer signs $1.15 billion joint venture deal with India based Reliance Industries.

[R]9:55 AM New York – U.S. stocks oscillate after weekly jobless claims fall by 19,000 and durable goods orders decline 1.1% in May. Total SA and Amyris partner to develop biomass-based fuels and chemicals. Pioneer signs $1.15 billion joint venture deal with India based Reliance Industries.[/R]

U.S. stocks trade lower after the Federal Reserve maintained the target range for the federal funds rate between zero and 0.25%. Asian markets fell amid fresh concerns about sustaining global economic recovery but European markets gained after a better-than-expected U.S. economic data.

Seasonally adjusted weekly jobless claims decreased 19,000 to 457,000 from the revised previous week claims of 476,000. The preliminary insured unemployment rate in the week ending June 12 fell to 3.5% from the prior week''s unrevised rate of 3.6%.

The U.S. Commerce Department released a report today that durable goods orders fell in the month of May due largely to a drop in orders for transportation equipment.

The Commerce Department said that durable goods orders fell by 1.1% in May following an upwardly revised 3.0% increase in April. Excluding a 6.9% drop in orders for transportation equipment, however, orders for durable goods actually increased by 0.9% in May compared to a 0.8% decrease in April.

Total SA, the French oil and gas explorer and U.S. biotechnology firm Amyris Inc. announced on Wednesday a strategic partnership to develop new products and build biological pathways to produce and commercialize renewable fuels and chemicals. Under the terms of the deal, Total has agreed to acquire about 17% equity interest in Amyris, and gets the right to appoint a member to the Board of Directors.

The partnership combines Amyris'' industrial synthetic biology platform and emerging Brazilian production capacity with Total''s technological know-how, industrial scale-up capabilities and access to markets.

Amyris is building an integrated renewable products company applying industrial synthetic biology to genetically modify microorganisms to serve as living factories. Amyris designs these microorganisms to produce defined molecules for use as renewable chemicals and transportation fuels. In addition, Amyris is building fuels distribution capabilities in the United States through its subsidiary, Amyris Fuels LLC.

Pioneer Natural Resources Co. signed a joint venture agreement with a wholly-owned U.S. subsidiary of India-based Reliance Industries Limited to sell a 45% interest in around 212,000 net acres leased by Pioneer in the Eagle Ford Shale play for $1.15 billion.

Reliance will pay $266 million in cash to Pioneer at closing and will pay $879 million to carry Pioneer''s future drilling costs. Additionally, Reliance will partner with Pioneer in developing midstream assets in the Eagle Ford Shale as a 49.9% partner.

Reliance will acquire 95,300 net acres of leasehold held by Pioneer. Pioneer will retain an average 42% working interest in the acreage and Reliance will receive an average 41% working interest. Other working interest owners will continue to hold the remaining 17% working interest. Pioneer will continue as operator.

Resolution Ltd., the British buyout firm said that it has agreed to acquire the UK life business of French insurer AXA SA for £2.75 billion or $4.1 billion. The deal is expected to close in September, subject to certain conditions, including the approval of the UK Financial Services Authority or FSA. Resolution also announced a fully underwritten rights issue of approximately £2.1 billion to finance the deal.

In political developments across Australia, Julia Gillard has become the first female Prime Minister of Australia replacing Kevin Rudd. Rudd’s decision to impose new taxes on the nation''s key mining industry led to his ouster.

However, Gillard has a questionable record as an education minister especially after mishandling of the recent crisis related to international students and persistent problem with a number of universities and colleges that operate with improper certification.

Commodities, Currencies and Yields

Dollar increased against euro to $1.2287 and decreased against the Japanese yen to 89.50.

Crude oil decreased $0.06 to $76.29 a barrel for a front month contract, natural gas edged lower $0.02 cent to $4.79 per mBtu and gasoline increased 0.260 cents to 208.49 cents.

Gold increased $1.80 in New York trading to close at $1,236.60 per ounce, silver closed lower $0.009 to $18.49 per ounce and copper for the front month delivery increased 4.050 cents to $2.99 per pound.

Yields on 10-year U.S. bonds increased to 3.08% and on 30-year U.S. bonds traded at 4.03%.

Earnings Review

Bed Bath & Beyond Inc. ((BBBY)), the home furnishings retailer said first quarter sales rose 13.6% to $1.92 billion from $1.69 billion a year ago. Net income in the quarter rose 58% to $137.6 million or 52 cents per diluted share compared to net income of $87.2 million or 34 cents per share a year ago.

Darden Restaurants, Inc. ((DRI)), the restaurant said fourth quarter sales fell 6% to $1.86 billion from $1.98 billion a year ago. Net income in the quarter fell 6% to $115.6 million or 80 cents per diluted share compared to net income of $123.0 million or 87 cents per share a year ago.

NIKE, Inc. ((NKE)), the athletic shoe and clothing maker said fourth quarter revenues rose 8.3% to $5.1 billion from $4.71 billion a year ago. Net income in the quarter rose 53% to $521.9 million or $1.06 per diluted share compared to net income of $341.4 million or 70 cents per share a year ago.

Paychex, Inc. ((PAYX)), the payroll and personnel services provider said fourth quarter revenues was flat at $496.2 million a year ago. Net income in the quarter rose 1.5% to $115.5 million or 32 cents per diluted share compared to net income of $113.8 million or 32 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 4.64 or 0.05% to 9,928.34, Hang Seng index in Hong Kong decreased 123.12 or 0.59% to 20,733.49 and CSI 300 index in China lower 1.00 or 0.04% to 2,757.50. ASX 200 index in Australia decreased 6.40 or 0.14% to 4,479.70. The FTSE Bursa KL Composite index in Malaysia closed lower 3.83 or 0.29% to 1,325.87.

The Kospi Index in South Korea increased 14.05 or 0.81% to close at 1,739.87. SET index in Thailand closed lower 13.33 or 1.65% to 793.19 and JSE Index in Indonesia decreased 10.70 or 0.37% to 2,914.10. The Sensex index in India decreased 25.70 or 0.14% to 17,730.24.

Europe Markets Review

In London FTSE 100 Index closed lower 35.21 or 0.68% to 5,143.31, in Paris CAC 40 Index decreased 36.97 or 1.02% to 3,604.82 and in Frankfurt DAX index traded lower 36.48 or 0.59% to 6,168.04. In Zurich trading SMI decreased 26.57 or 0.42% to 6,355.28.