Mittal and Arcelor Continue Deal Talk

Elena
20 Jun, 2006
New York City

The letter, published in the Financial Times, said the $16 billion agreed merger of Severstal and Arcelor would give Severstal-owner Alexei Mordashov control over the new company. Arcelor said it would cancel its deal with Severstal if shareholders representing 50% of the capital voted against the tie-up. Mittal rose 0.9% in Amsterdam, while Arcelor advanced 0.9% in Paris.

[R]11:30AM Stocks rose modestly.[/R]
Stocks moved slightly higher as consumer staples stocks got a boost from an upbeat sales forecast by retailer Target Corp. ((TGT)) and better-than-expected earnings by grocer Kroger Co. ((KR)). Shares of Target were up 0.7% to $49.43 on the Nymex. Kroger, the No. 1 U.S. grocery chain, reported quarterly results above analysts' estimates, pushing its shares up 5.8% to $20.58. Shares of Costco Wholesale Corp. ((COST)) rose 2.1% on upgrade by JP Morgan. Among other advancers, drug maker Merck & Co. ((MRK)) was up 1% to $34.79 and consumer goods maker Procter & Gamble Co. ((PG)) advanced 0.9% to $55.35. Shares of Altria Group Inc. ((MO)), food and tobacco group, were the top gainer on the Dow, up 1.1% to $72.11. Airline stocks continued to perform well over the course of morning trading, supported by JetBlue ((JBLU)), Continental ((CAL)) and Alaska Air ((ALK)), contributing to a 2.4% gain by the Amex Airline Index. The brokerage sector made a strong performance, helped by E*Trade ((ET)) and Charles Schwab ((SCHW)). Bargain hunting led the gold sector higher, as reflected by the 1.9% gain shown by the Amex Gold Index. The Standard & Poor's 500 index was up 7.18, or 0.58%, and the Nasdaq composite index climbed 10.25, or 0.49%. Bonds slipped, with the yield on the 10-year Treasury note edging up to 5.15% from 5.14% late Monday.


[R]10:30AM Indian Sensex fell in a volatile trading after three days of gains.[/R]
The Sensex in India declined 175.32 points, or 1.75%, to close at 9,822.52. The trading was highly volatile, as the benchmark moved in the range of 575 points. The turnover on BSE was Rs 3,093 crore, up from Monday’s Rs 2,707 crore. The market breadth was strong as 1,520 stocks advanced on BSE, 868 declined and only 58 stocks remained unchanged. Small-cap and mid-cap stocks surged, while large-cap stocks plunged. L&T plunged in late trading, losing 6% to Rs 1,929.50 on 2.05 lakh shares traded on BSE. The stock has lost 8.7% in the past two trading sessions. Metal shares witnessed high volatility. Hindalco shed 2% to Rs 157.05, moving between Rs 154.55 - 165.55 on 3.3 million shares trading volume. Nalco closed flat at Rs 219. The stock rebounded from the lower level after it had lost 4% to a low of Rs 210.10 at one point in afternoon trade on reports that the government has no plan to divest stake in the company.

Cement shares experienced a highly volatile session. ACC shed 1.5% to Rs 754, with the stock moving between a low of Rs 740 and a high of Rs 771. Grasim also dipped 1.3% to Rs 1,790, moving in the range of Rs 1,745 and Rs 1,852.70 and UltraTech Cement declined 1% to Rs 676.60, having traded between Rs 666 and Rs 698.50. Large-cap Reliance Industries was off 1.7% to Rs 917.05. The stock was trading between a low of Rs 916 and a high of Rs 937 on 1.7 million trading volume. Reliance Industries announced on Monday that it will approach Walt Disney Company and Time Warner Inc., to establish theme parks and family entertainment centres in Haryana and added that it plans to invest Rs 25,000 crore in a special economic zone also there. Recently more than fifty zones have been announced in three states. In a bid to catch up with China, Indian government and private sectors are working together to build special economic zones dedicated for needs of manufacturing industries.

IT stocks fared no better. TCS shed nearly 4% to Rs 1,602, Satyam Computer lost 3.6% to Rs 646, Wipro plunged 3.4% to Rs 419 and Infosys declined 1.5% to Rs 2,828. Auto shares declined in volatile trade. Bajaj Auto lost 3% to Rs 2,635, Tata Motors lost 2.6% to Rs 748, Hero Honda declined 1.7% to Rs 730 and Maruti Udyog slipped 1.3% to Rs 745.50. Housing finance company HDFC slumped nearly 5% to Rs 1,001 and HDFC Bank lost almost 4% to Rs 708. Power equipment company BHEL shed 4% to Rs 1,848 on 80,823 shares trading volume. Reliance Communications was among the gainers rising 2.5% to Rs 234.65 on 3.4 million trading volume.

Second tier cement stocks advanced on strong guidance for cement prices and cement demand. Andhra Cement soared 12% to Rs 27, Mysore Cement advanced 6% to Rs 43, Birla Corporation jumped 5% to Rs 200, Chettinad Cement gained 5% to Rs 370.75, JK Lakshmi Cement added 4.6% to Rs 102.60, OCL India put up 3.3% to Rs 142 and Mangalam Cement rose 2.6% to Rs 144.30. Geometric Software surged nearly 10% to Rs 87 on reports that it will announce soon the acquisition of an engineering services company abroad for $25 million. Wanbury gained 1.5% to Rs 79.50 following the company statement on Tuesday that it had acquired bulk-drug maker Pharmaceutical Products of India, Mumbai, and was now considering acquisitions in Europe. Hotel Leelaventure advanced almost 7% to Rs 268. The stock gained for the second day after the company announced on Monday that its board will discuss a stock- split proposal on 25 June.

[R]9:45AM Stocks opened in the positive on housing data.[/R]
Stocks moved higher at opening, boosted by solid housing data. Stronger-than-expected jump in new-home construction raised optimism about the economic growth as the Commerce Department said May housing starts grew 5% to 1.96 million, topping estimates of 1.87 million. Commodities-related stocks moved higher in early trading, as an increase in the price of oil inspired traders to do some bargain hunting, following significant weakness in the previous session. Gold stocks also moved higher after closing sharply lower in the previous session. In the opening minutes, the Dow Jones industrial average gained 12.32, or 0.11%. In opening hors some strength was shown by the airline sector, supported by JetBlue ((JBLU)) which rose 2.4% after Morgan Stanley restarted coverage of the stock with an ‘overweight’ rating. The Amex Airline Index climbed 1.3%. The semiconductor sector posted weakness for a third consecutive session, with Taiwan Semiconductor Manufacturing ((TSM)) turning in one of the sector''s worst performances, with the chip maker currently down 4.3%. Marvell ((MRVL)) and Broadcom ((BRCM)) also posted notable losses. As a result the Philadelphia Semiconductor Index fell 0.8%. The Standard & Poor''s 500 index was up 0.87, or 0.07%, and the Nasdaq composite index rose 1.27, or 0.06%. Bonds slipped, with the yield on the 10-year Treasury note edging up to 5.15% from 5.14% late Monday.

[R]Housing starts rise 5.0%, exceeding expectations.[/R]
Tuesday morning, the Department of Commerce released its report on housing starts in the month of May. The report showed that housing starts rose more than economists had been expecting. The Commerce Department said that housing starts rose 5.0 percent to at a seasonally adjusted annual rate of 1.957 million units in May from a revised rate of 1.863 million units in April. Economists had expected housing starts to rise to a 1.870 million unit rate. The increase in housing starts reflected increases in the Northeast, the South, and the West, with the West seeing significant growth of 15.8 percent. At the same time, housing starts in the Midwest fell 15.8 percent. The report also showed that building permits fell 2.1 percent to a seasonally adjusted annual rate of 1.932 million units from an unrevised 1.973 million unit rate in April. Building permits are seen as an indicator of housing demand.

J.M. Smucker Co, ((SJM)), maker of jam, peanut butter and other packaged foods, reported that Q4 net income advanced to 62 cents a share, from 38 cents a year ago. Earnings from continuing operations rose to 62 cents a share from 45 cents. Sales advanced to $501.7 million from $491.5 million in last year''s Q4. The company beat analysts forecasts for earnings of 58 cents a share. The company affirmed its long-term sales growth goal of 8%. Long-term earnings should be in line with sales growth, the company added.

Apollo Group Inc., ((APOL)), higher education programs operator, reported Q3 net income dropped to $133.3 million, or 77 cents a share, from $141.8 million 77 cents a share in the year-ago period. Total consolidated revenue for the company advanced 5.6% to $653.6 million. The company topped analysts’ expectations for earnings of 74 cents a share.

Actuant Corp, ((ATU)), maker of industrial equipment, reported Q3 net income advanced 34% to 86 cents a share, from 66 cents a share in the year-earlier period. Q3 includes a benefit of 2 cents a share for a favorable tax reserve adjustment. Sales advanced 17%. The company beat analyst forecast for earnings of 78 cents a share

The Kroger Co., ((KR)), food retailor, reported Q1 net earnings of 42 cents per share, up from net earnings of 40 cents per share in the year-ago period. Total sales advanced 8.2% and same-store sales rose 7.2% with fuel and 5.6% without fuel. This represents Kroger''s eleventh consecutive quarter of positive identical supermarket sales, excluding fuel. During the quarter, the company advanced its reserves associated with legal proceedings arising from hiring practices at its Ralphs subsidiary during the 2003-2004 labor dispute. The current quarter charge reduced earnings by 3 cents per share. Current quarter results also include 2 cents per share for stock option expense to reflect the Company''s adoption of SFAS No. 123 (Revised 2004), Share-Based Payment.


[R]7:15AM Asian stocks decline on U.S. rate concerns.[/R]
Asian markets finished lower. Japan’s benchmark Nikkei 225 index dropped 211.94 points, or 1.4%, to close at 14648.41. Decliners included Tokyo Electron, which shed 1.4%, and NEC, which recorded a 2.2% fall. Internet services company Softbank dropped 1.8%. Hong Kong stocks closed lower for the second straight session, following weak regional markets. The benchmark Hang Seng Index dropped 159.89 points, or 1%, to 15608.97. China''s oil refiner Sinopec lost 3.7%. The company is said to be working on a deal with McDonald''s to open an unspecified number of drive-through restaurants in China. Other indexes across the region also fell. Taiwan''s Taiex index ended 3.3% lower at 6363.55. Singapore''s Straits Times Index finished 1.8% down at 2325.09, and South Korea''s Composite Index, or Kospi, settled 2.1% down at 1225.83.

[R]6:30AM European stocks drop slightly in mid morning trade.[/R]
European shares fell slightly in mid morning trade. The FTSE 100 in London lost 0.3% at 5,610.6, the Xetra Dax in Frankfurt was down 0.3% to 5,422.66 and the CAC-40 in Paris was off 0.3% to 4,715.06. On the corporate front, Deutsche Börse on Monday launched a new effort to take Euronext away from a deal with the NYSE Group, making key concessions on operations that would give its Paris-based rival more power than the Germans had been prepared to give away. The French government delayed till September the full privatisation of Gaz de France. Its plans to merge Gaz de France and Suez to create the world’s second-largest energy group overcame at least one political hurdle on Monday as the French government put a timetable on crucial legislation to privatise the gas group. Veolia Environnement advanced 2.4% as the French utility, which abandoned its plan for a merger with French construction and concessions grup Vinci, was upgraded to “neutral” by UBS. The Swiss broker reduced its target price, but noted the shares had fallen 15% during the past week and were now fairly valued.

Light, sweet crude oil for July delivery was unchanged at $68.98 a barrel. July Brent crude futures on the ICE Futures exchange shed 5 cents to $68.06 a barrel. Gold edged down at $569.0 an ounce on Tuesday, down $3.0 an ounce from Monday''s close of $572.0. The U.S. dollar was trading at 115.05 yen, down 0.32 yen from late Monday in New York. The euro advanced to US$1.2592, from US$1.2572. The British pound chnaged little was buying $1.84.