Fed May Rest Tightening For a While

123jump.com Staff
30 Nov, -0001
New York City

Specualtion and Market enthusiasm for the Fed to rest current tightening is running wild as reflected in the averages. The latest data from ISM suggest that manufacturing is growing at a slower pace and that may convicne Fed to not tighten for now. Fed has raised interest rate by eight 25 basis points since June 2004. 10-year bond fell to 3.9%.

Crude oil prices in London and in NY traded higher. In NY oil traded above $53 at $53.10 per barrel up $1.13. The summer driving season, hospitalization of Saudi King, and unexpected fall in U.S. crude inventories have turned market very volatile in the lat three weeks. Crude price has jumped 10% from $47 in mid-May.

Terex reported 1Q profit of 59 cents per share compared to 34 cents a year ago on sales jump from $1.04 billion to $1.45 billion. The company raised full-year guidance to $3.77 from $3.50.

Hovnanian Enterprises, homebuilder, posted 2Q earnings jumped 51% net income jump to $1.62 from $1.06 on higher home sales exceeding analyst's' expectations of $1.61. The revenue rose 32% to $1.2 billion. The company raised its 2005 outlook. The stock fell $1.50 in the morning trading.

Navarre, publisher & software maker, announced 4Q and fiscal 2005 financial results postponed.

Nortel Networks, Canadian communication & networking equipment company, swung to $49 million loss, or a penny per share compared with net earnings of $59 million or a penny per share last year. The stock rallied 8%.

Semetech posted lower 1Q earnings of 14 cents a share from 19 cents a year ago on decline in revenue from $61.9 million to $54.2 million. The company expects 2Q earnings of 14 cents per share.

Westaff posted 2Q profit loss of $371,000 or 2 cents a share vs. earnings of $168,000 or a penny per share a year ago.

Daktronics, electronic displays maker, reported 4Q earnings drop of 27% reflecting decline in profit margin. Net income fell to 15 cents per share compared to 23 cents last year missing estimates of 23 cents.

Medical Action, medical supplier, announced 4Q 10% profit rise of 26 cents a share compared with 24 cents the prior-year period due to strong production growth and sales increase of 16%. Analysts had expected 27 cents a share.

Engineered Support, military electronic equipment maker, posted 2Q net earnings of 46 cents per diluted share vs. 44 cents a year ago on record increase in revenue of 25%, or $263.8 million. The company lowered its full-year guidance to a range of $2/2.03 from previously estimated $2.09/2.12.

Haemonetics, hospital equipment maker, backed its 2006 outlook with annual earnings expected to be $1.73/1.83 per share compared to $1.52 in 2005. The stocks rose 47% to $ 41.17 in morning trading on NYSE.

IDX systems, health care software maker, confirmed its 2005 earnings guidance of $1.25 to $1.31 per share, but cut its outlook for 2006 stating $1.50/1.60 per share down from previously targeted $1.65/1.75.


Markets in Asia closed mildly higher with averages in Tokyo up 0.47%, HK up 0.04%, Philippines up 1.81% and Singapore up 0.7%. Tokyo tech stocks were favored by investors in overnight trading with Yahoo Japan up 0.9% on the news that the company will work two local brokerage firms to provide online stock trading and other financial services.
Australian Dollar fell to 75.62 U.S. cents and is likely to fall even further in the coming months. The unexpected fall in retail sales and widening of current account deficit contributed to the negative sentiment for the dollar. The Aussie dollar’s drop in May of 3.4% was its biggest monthly drop since April 2004.

India’s federal budget deficit for the 1Q was at 4.1% GDP vs. target of 4.3%. The Central government is waiting for the deficit numbers at the state level which in the past have been at times as high as federal deficit. The fourth largest Asian economy is expected to surpass South Korean economy in the next two years.

April German retail sales dropped 3% compared to a year ago on highest unemployment since WW II and higher savings rate. U.K. retails sales for May declined but at lower rate than in April of this year according to the local industry trade group survey.

European markets at mid-day trading were higher on higher oil price, expected No vote in the Netherlands and Euro weakening further to a eight-month low. Market average in Norway led the rally and was up 1.4% followed by Switzerland up 0.8%, German 0.45%, France up 0.4%, and U.K. up 0.26%. Auto and Oil sectors rose across the region.

Airbus delivery of the A380, the latest aircraft for long-range passenger transport, will be delayed from 2 to 6 months. Quantas, Air France-KLM, and Singapore airlines will be affected. These airlines are considering to ask for compensation from Airbus for the delay.