GM to Boost Stocks

Elena
03 Jul, 2006
New York City

Stock futures indicated a positive start of Monday trading session ahead of June manufacturing data and the Independence day holiday tomorrow. Positive news from Dow component General Motors Corp. is expected to give a further boost to stocks. Wal-Mart announced that June same-store sales rose 1.2%, the low end of its forecast.

[R]9:00AM Stock futures pointed to a higher opening.[/R]
U.S. stock futures pointed to a higher opening Monday ahead of June data on manufacturing. However, trading is expected to be light with an early close before Tuesday's Independence Day holiday. Positive news from Dow component General Motors Corp. ((GM)) may help give a boost to stocks as the board of French automaker Renault is set to meet to discuss opening up its partnership with Nissan to the U.S. carmaker. Data on U.S. domestic car and truck sales for June are also due on Monday. Wal-Mart Stores Inc. ((WMT)) is expected to decline after reporting that June same-store sales rose 1.2%, the low end of its forecast. Citigroup Inc. ((C)) may also be in the spotlight on Monday as its Chairman and CEO Charles Prince rejected the idea of breaking up the financial services giant. S&P 500 futures rose 3.3 points, above fair value. Dow Jones industrial average futures gained 12 points and Nasdaq 100 futures were up 4.5 points.

Calpine Corp, ((CPNLQ)), power company, reported a quarterly loss of $1.23 a share, wider than a loss of 38 cents a share a year-ago. In a Form 10-Q filed with the Securities and Exchange Commission, the company said revenue totaled $1.36 billion, down from $2.04 billion in the same period a year earlier.

Maximus Inc, ((MMS)), provider of consulting and IT services to state and local governments, reported it expects to record a $10 million charge after settling a lawsuit in Georgia. The lawsuit, which related to alleged fraudulent guarantees of computer equipment leases signed by two former employees, followed the settlement of a related lawsuit in Pennsylvania in September. The company added the $10 million charge was not included in its recent earnings estimate for fiscal 2006 of 57 cents to 67 cents a share.

Qiao Xing Universal Telephone Inc ((XING)), telecommunications products maker, reported it expects net sales to advance up to 30% in 2006 to $463 million. The company also forecast an average yearly rate of growth of 35% in net income from 2006 to 2010.


[R]8:00AM Intelsat Ltd. and PanAmSat Corp. are set to complete a $3.2 B merger deal.[/R]
After three years of intense deal making by outstanding private-equity companies on both sides of the Atlantic, Intelsat Ltd. and PanAmSat Corp. are ready to merge. The companies are scheduled to complete a $3.2 billion merger deal Monday, creating a closely held company. The combined company’s fleet will consist of more than 50 orbiting spacecraft, making it the largest and most diversified global satellite-services operator. The new company is planning to expand its business in India and Latin America. At the same time, it hopes to participate in the drive to turn cellular phones and other mobile devices into Internet connections and entertainment centers.

With offerings including direct-to-home television broadcasting and support for classified U.S.-government operations, the enlarged Intelsat promised to shrug off the industry''s staid image by exploiting burgeoning technologies. Investors who purchased some $3 billion in high-yield bonds from the two firms will demand significant synergies, little geographic overlap and streamlined management bent on reviving up growth in unconventional ways, if necessary. However, the combined company is likely to face major integration, personnel and marketing challenges to break out of the slow-growth pattern. The biggest immediate financial help is likely to come from a nearly 40% cut in the combined company''s work force. Total head count eventually will shrink to about 1,000 from 1,400 or so, with PanAmSat executives largely overseeing marketing efforts and Intelsat officials primarily in charge of technical and operating issues.

For Q1 PanAmSat posted revenue of $213.2 million, up 2.1%, while Intelsat reported a 4% drop in overall revenue to $280.4 million.


[R]7:15 AM Asia closes mostly higher.[/R]
Asian markets closed broadly higher. The Nikkei 225 finished the day at 15571.62, for a 0.43% gain. Retailers and banks led gainers. Clothing-chain operator Fast Retailing gained 2.3%. Seven & I Holdings, operator of 7-Eleven, gained 0.5%. Among the financials, Sumitomo Mitsui Financial Group advanced 1.7%, while Resona Holdings gained 4.4%. Exporters also registered gains, with Hitachi up 0.4%, and Nikon up 0.6%. Nissan Motor shares advanced 0.6%, buoyed by news the company is open to inviting General Motors into its alliance with Renault, a move that could create an automotive group eclipsing Toyota Motor. The benchmark Shanghai Composite Index advanced 1.5% to 1697.28, its highest close since it finished at 1715.14 on April 13, 2004. The Shenzhen Composite Index gained 1.6% to 440.13. Hong Kong shares ended higher, with Hang Seng Index advancing 59.04 points, or 0.4%, to 16326.66. On the Hong Kong stock exchange, offshore oil company Cnooc Ltd. gained 0.8%, while aluminum giant Chalco advanced 4.35%. Australia''s S&P/ASX 200 index climbed 0.36% and Taiwan''s Weighted index was up 0.14%. South Korea''s Kospi index was the only one to buck the trend edging down 0.04%.


[R]6:30 AM European shares advanced lifted by commodities and strong Asia.[/R]
European markets traded higher on Monday. The U.K. FTSE 100 index edged up 0.4% to trade at 5,854, the German DAX Xetra 30 index gained 0.2% at 5,694 and the French CAC-40 index increased 0.01% at 4,966. European movers included U.K. defense contractor BAE Systems which dropped 4.3% after it announced that an independent expert has valued its 20% stake in European plane manufacturer Airbus at 2.75 billion euros, below market expectations. EADS, which owns the rest of Airbus, edged down 0.5%. Oil companies were also in demand after British oil giant BP said that second-quarter production is expected to reach 4 million barrels of oil equivalent a day, or 3 million boepd excluding TNK-BP operations, primarily due to divestments. BP shares slipped 0.1% in London. British supermarket group WM Morrison advanced 1.7% in London after a report stated that the company is being targeted by a private-equity consortium consisting of Texas Pacific, CVC and Permina. Also, brewing company SABMiller increased 1.4% after it said that it has agreed to buy the Sparks and Steel Reserve brands and related and related trademarks from McKenzie River Corp. for $215 million.

Oil prices reached nearer $74 a barrel on Monday on concerns over the possibility of record demand for gasoline during the Independence Day holiday in the US. Nymex is closed for two days because of the Independence day holiday. Brent crude for August delivery rose 15 cents to $73.66 a barrel. Gold hit a high of $620.50 an ounce before easing to $619.35/620.35 by 0944 GMT. The U.S. dollar advanced against most other major currencies in European trading Monday. The euro traded at US$1.2760, down from US$1.2787 late Friday in New York. The dollar bought 114.76 Japanese yen, up from 114.38. The British pound traded at US$1.8432, down from US$1.8485.