Metals Trade Near Peak

123jump.com Staff
22 Mar, 2006
New York City

Metals have enjoyed booming market on the back Chinese demand for copper and zinc and Indian and Middle Eastern demands for gold and silver. The price of silver crossed 22-year peak during yesterday trading on strong volume on the news of an approval of silver ETF by Barclays. Copper inventories are low but are rising and metal may face price correction that traders have been predicting for six months.

2:30PM Metals Shine, even though silver retreat for the day.
Metals market has enjoyed a steady interest but upward bias in volatile trading for the last two years. Copper, silver and gold have maintained prices near 20 years peak for weeks now. Silver crossed $10.58 per ounce, 2% rise, and reached 22-year high yesterday but failed to build on the gains today. The May contract is down 7 cents to $10.495 per ounce after reaching high of $10.60. The launch of silver future is causing speculative run at the metal in the hope that it can support another rise of 20% to $12 in the coming months. Gold has maintained similar rise since the launch of ETF named GLD. April Gold futures fell $1.50 to $551.70 per ounce on stronger dollar and higher interest rate talk. May copper rose 1.5 cent to $2.339 and dropped from a peak of $2.40 on yesterday on the news of violence in Indonesia and tight inventory. Traders have feared a collapse of the metals price since the beginning of the year but that has not been realized so far. Metals mining stocks in Canada and Australia and in New York had fractional gains.


12:30PM European markets gains at close.
Markets in Europe closed higher led by strong gains of 1.3% in Norway main index. France, the Netherlands, Germany and the U.K. closed up 0.9%, 0.42%, 0.35% and 0.31% respectively. In France Sanofi-Aventis rose 7% on the news that its partner Bristol Meyers and the company had agreed with Canadian firm Apotex to develop a generic drug for blood thinner Plavix using a royalty license but not to release the drug till 2011 in the U.S. market. Irish drug maker Elan fell 11% on the news that the U.S. FDA will take another 90 days to reviews its drug Tysabri in partnership with the U.S. based IDEC.

In Germany Siemens lost 1.3% on the news that the company replaced its Chief of Finance and Technology in a management shakeup. German retailer Metro Group lost 2% on lower profit of app. 30% on charges related to deferred-assets. Lufthansa reported a sharp drop in profit of 85% on higher fuel bill and slower growth in traffic. BMW rose 6% on the news that its research chief stated that sales for the first two months in the year were ‘superb’. The company sold 188,580 BMW, mini and Rolls Royce brands of cars in the first two month, rising 14% from a year ago. In Norway Norsk Hydro and Stat Oil jumped 3% and 1.5% on higher oil prices in Europe supporting a strong advance in the index.


10:30AM Stocks traded mixed.
Stocks were mixed Wednesday on strong earnings from Morgan Stanley and disappointing home sales data.In the first hour of trading, the Dow rose 48.98, or 0.44%. The Standard & Poor's 500 index rose 3.74, or 0.29%, and the Nasdaq composite index fell 1.16, or 0.05%. Bonds rose, with the yield on the 10-year Treasury note falling to 4.69% from 4.72% late Tuesday.

Oil and gasoline declined.Crude oil inventories recorded a decline in the latest week, according to government statistics released Wednesday. This halted a recent string of gains. Meanwhile, stocks of gasoline declined again. The Department of Energy''s Energy Information Administration revealed that crude oil inventories fell by 1.3 million barrels for the week ended March 10, falling to 338.6 million barrels from the prior week''s level of 339.9 million barrels. This followed a recent string of advances, including a gain of 4.8 million barrels in the previous week and an increase of 6.8 million barrels in the week before that. Oil inventories were 8.7% higher than their levels of the same time last year. In the preceding week, inventories showed a 10.4% improvement over the previous year. Gasoline inventories posted a week-over-week decline of 2.3 million barrels, the government said. This added to losses in the previous 2 weeks, with gasoline stocks sliding by 900,000 barrels in the prior period and 1.1 million barrels in the week before that. Gasoline stocks were 1.1% above their levels of last year. This was an improvement compared to the 0.6% year-over-year advance shown during the previous week. Inventories of distillate fuel oil declined again, falling by 800,000 barrels in the most recent week. In the previous period, distillate inventories fell by 3.9 million barrels.

9:45AM The Dow Jones Index opened up. The Nasdaq index declined.
Stocks opened mixed Wednesday, reflecting decline in the tech sector, strong earnings from Morgan Stanley and FedEx, and economic report, showing a further slowdown in home sales. General Motors Corp. also advanced on agreement with Delphi Corp. to offer buyouts to hourly workers at the auto parts supplier. The Nasdaq decline was partly due to weakness in the biotechnology sector, down 1.5% with Cephalon ((CEPH)) and Biogen Idec ((BIIB)) standing out as the worst performares. Computer hardware stocks such as Gateway ((GTW)) also moved to the downside, dragging the whole sector down 1%. The weakness in the sector reflects concerns that a delay in the release of Microsoft''s ((MSFT)) operating system will negatively affect PC-demand. Drug stocks posted strength, supported by Bristol-Myers ((BMY)), up 10.9%. Airline stocks were also strong in the early going, benefiting from retreating oil. In the first hour of trading, the Dow rose 28.57, or 0.25%. The Standard & Poor''s 500 index rose 0.48, or 0.04%, and the Nasdaq composite index fell 8.90, or 0.39%. Bonds rose, with the yield on the 10-year Treasury note falling to 4.70% from 4.72% late Tuesday.


9:15AM Tech futures declined dragged by Microsoft.
U.S. technology futures pointed to a lower start as Microsoft Corp. ((MSFT)) announced decision to delay the release of its new operating system, sending memory chip and computer makers stocks down. Shares of the world''s largest software maker dropped 2% before the opening bell. S&P 500 and Dow industrials futures pointed to a flat to slightly higher start, supported by General Motors ((GM)) which rose 2.3% on report that the company was about to announce an early retirement deal for workers in connection with the UAW. In earnings news, Morgan Stanley ((MS)) reported a higher Q1 profit on record revenue, while FedEx Corp. ((FDX)) posted a higher quarterly profit and raised its full-year profit forecast.

Crude oil prices retreated ahead of petroleum report on expectations of strong U.S. oil inventories. Light sweet crude April delivery fell 18 cents to $62.16 a barrel. London Brent for April delivery lost 3 cents to $62.10 a barrel. European gold extended losses. In London gold declined to $548.50, down from $549.70. In Zurich the precious metal fell to $548.20 from $549.30. In Hong Kong gold fell 40 cents to $552.40. Silver traded at $10, down from 10.20. The U.S. dollar advanced against other major currencies. The euro traded at $1.2071, down from $1.2098. The dollar bought 117.16 yen, up from 117.10. The British pound was quoted at $1.7473, down from $1.7477.

Actuant Corp, ((ATU)), maker of tools and motion control systems, reported Q2 earnings of 63 cents a share, up from a profit of 52 cents a share a year-ago on 17% sales growth, ahead of analyst estimate for earnings of 62 cents a share.

FedEx Corp, ((FDX)), package delivery company, reported Q3 net income $1.38 a share, up from $1.03 a share in the same period last year on 9% revenue growth, beating analysts’ forecast of $1.30 a share.

Morgan Stanley, ((MS)), financial advisory services company, reported Q1 net income soared 17% to $1.54 a share a share, up from $1.35 a share a year ago, as its institutional securities, fixed income and hedge fund servicing businesses all produced 24% revenue growth, topping analysts’ estimate for earnings of $1.21 a share.

Nike, ((NKE)), apparel and shoe marketer, reported Q3 earnings of $1.24 a share, a 19% rise from the year-ago period on sales growth, topping analyst forecasts of $1.10 a share.

Sigma Designs Inc, ((SIGM)), maker of digital media processors for consumer appliances, reported Q4 net income was 2 cents a share, up from the same period last year when the company was breakeven on a per-share basis. The company added that quarterly revenue came to $10.5 million, up from $7.89 million in the same period a year ago.

Shuffle Master Inc, ((SHFL)), gambling equipment company, reported Q4 results, including a 31% rise in revenue. Shares were up 17% at $30.75 in morning trading, after soaring to $30.77 earlier in the session, its highest point in more than a year. Bear Stearns upgraded Shuffle Master’s rating to outperform.

GameStop Corp, ((GME)), video game and entertainment software retailer, reported Q4 net income of $1.10 a share, almost double than a year-ago profit of 64 cents a share. The company added that Q4 earnings include merger-related expenses of 2 cents a share. Sales surged to $1.67 billion from $708.7 million a year ago, owing in large part to the contribution in sales from its recently-acquired Electronics Boutique stores. Same-store sales for Q4 dropped 0.3%. The company beat analyst estimate for earnings of $1.08 a share.

Spectrum Control Inc, ((SPEC)), maker of electronic control products and systems, reported Q1 net earnings of 2 cents a share, down vs. 5 cents a share in the year-earlier period. Revenue at the company advanced to $25.6 million from $21.1 million. The company predicted Q2 earnings of more than 10 cents a share, on condition that it achieves expected sales of $30 million to $31 million.


9:00AM Sensex index in Mumbai lost 0.5% on general weakness in Asia.
India’s Sensex index dropped more than one point at mid-day but recovered to close at 63 points lower. Asian markets sharp sell-off cautioned foreign investors from more adding capital to the market. Sensex rose from 10,000 to 11,000 in 29 days and rose from 9,000 to 10,000 in 48 days of trading. The market’s rapid ascent has cautioned many domestic and international investors. However, domestic mutual funds industry has raised additional $4 billion in the last one month that has still not been put to the market. Reliance mutual funds raised more than $1.3 billion for a new group of funds.

Late surge in select stocks such as Tata Motors, Dr. Reddy’s, Hindustan Lever and Satyam Computer supported market recovery. Dr. Reddy’s jumped 10% on news that the company is in talks with Sanofi-Aventis and Bristol Meyers to settle drug patent disputes. Tata Motors gained 1.6% on recent restriction on maximum tonnage imposed by Supreme Court. Higher freight rates for road transportation and strong demand for trucks have raised hopes for better earnings. Hindustan Lever and Satyam Computers rose 1.7% and 1.4% respectively.


8:30 AM European averages lost ground at mid-day.
European markets traded mostly in the negative at mid-day dealings with market sentiment hurt by further worries that interest rate will be soon increased. However, strong pharmaceutical, media and auto stocks limited the downward trend. Automakers Volkswagen and BMW gained on lower euro and retreating oil. Sanofi-Aventis, Astra Zaneca and GlaxoSmithKline were among advancers. The German DAX 30 fell 0.2%, the French CAC 40 dropped 0.4%, while London FTSE 100 edged up 0.02%

8:00AM Interest-rate concerns dragged Asian markets down.
Asian-Pacific benchmarks finished Wednesday session with heavy losses, reflecting interest-rate concerns and weakness in the tech sector, following news that Microsoft will postpone the release of its Windows operating system until next year. The biggest loser was South Korea’s Kospi which plunged 2% on heavy sell-off among tech stocks, including Samsung Electronics and Hynix Semiconductor. The Nikkei dropped 0.8% to 16,495.48 with Nippon Steel limiting losses with an advance of 1.3% on expectations of higher steel demand. Hong Kong also posted a sharp decline, falling 1.8%, followed by Taiwan Weighted index, down 1%, while Australia’s All Ordinaries gained 0.4%.