Trade Deficit and Tech Stocks Dominate

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

April trade deficit at $57 billion, 12% higher than March, but a billion lower than the estimates led dollar higher in the morning trading in NY. Intel revised its Q2 revenue projection and raised gross margins, however tech market sold off. Ralph Lauren stock trades higher on earnings release. Auto sector trades higher on GM led rally.

The morning hours of trading are dominated by trade report and a new spike in oil price. April trade deficit was 12% up from March deficit due to rise in energy price. Oil import constitutes 1/3rd of the April deficit and 2/3rd of the U.S. oil consumption. At the current rate the annual deficit will reach $700 billion by the end of the year 2005.

Bond market yield reached 4% on the back of trade deficit number which market was expecting at $58 billion. The dollar rose and bond market fell on the news.

Commerce Department reported 12% jump in April trade deficit of $56.96 billion compared to deficit in March. The import rose 4.1% in April and export rose 3%. The year-to-date trade deficit is running ahead by 11% to the year 2004. The commerce department report is summarized below. The oil and energy related import rose to $19.6 billion roughly 33% of total deficit. Oil prices for the month of April were $44.76 per barrel.

Oil and metals markets diverged in different directions. Oil traders worried of the rain storm in the gulf coast and its impact on the refineries output. The oil is trading up 22 cents at $54.50 per barrel. Gold, copper, silver and platinum are trading fractionally lower.

Shares in the automotive sector are trading higher on the strength in GM stock. This morning GM is trading up by 10% to $35 lifting shares of Ford, Visteon, Delphi, Lear, and Johnson control.

Intel shares fell this morning by 63 cents. Last night Intel tightened its revenue forecast for the 2Q between $9.1 and $9.3 billion and raised gross margin expectations on the strength in demand for notebook computers. Intel shares have jumped 20% since mid-May.

President and COO of Nortel Networks resigned after citing differences with current CEO’s direction and management style.

Asian markets finished up on favorable news from the chip sector. Chip maker Intel boosted its second quarter guidance and National Semiconductor reported fourth quarter 40% income increase. This raised Japanese stocks by 1.3% South Korea index rose 0.3%, and in the Philippines advanced 2.05%. China failed to gain on the good news and fell 2.0%.

All European stocks advanced in mid-day trading led up by the chip sector companies Intel, which expects higher second quarter sales and National Semiconductor which posted strong quarterly results. Averages in France jumped up 0.95%, followed by Germany 0.73% and U.K. 0.62%.

Polo Ralph Lauren, apparel designer, posted strong 4Q earnings dropped to 22 cents vs. 75 cents per share a year ago on legal and restructuring charges missing estimates of 80 cents a share. Same-store sales were 4.2% down, but grew 4.1% after accounting for an extra selling week in the prior- year same quarter. The stock is up $1.95 to $42.51.

LSI Logic, chip maker, lifted its 2Q revenue outlook on strong storage component growth. According to the company’s forecast 2Q earnings will be in the range of 5 and 7 cents a share meeting analysts’ estimates of 7 cents a share. In the morning trading stock rose 3.3 % to $7.86.


APRIL TRADE REPROT

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total April exports of $106.4 billion and imports of $163.4 billion resulted in a goods and services deficit of $57.0 billion, $3.4 billion more than the $53.6 billion in March, revised. April exports were $3.1 billion more than March exports of $103.4 billion. April imports were $6.5 billion more than March imports of $156.9 billion.

In April, the goods deficit increased $3.3 billion from March to $62.2 billion, and the services surplus was virtually unchanged at $5.3 billion. Exports of goods increased $3.0 billion to $74.5 billion, and imports of goods increased $6.3 billion to $136.7 billion. Exports of services increased $0.1 billion to $31.9 billion, and imports of services increased $0.1 billion to $26.6 billion.

In April, the goods and services deficit was up $8.6 billion from April 2004. Exports were up $12.0 billion, or 12.7 percent, and imports were up $20.5 billion, or 14.4 percent.

The April (and March) figures showed surpluses, in billions of dollars, with Hong Kong $0.9 (for March $0.9), Australia $0.7 ($0.8), Singapore $0.3 ($0.9), and Egypt $0.1 ($0.1).

The April (and March) deficits were recorded, in billions of dollars, with China $14.7 ($12.9), Europe $11.8 ($10.9), the European Union $9.3 ($9.3), Japan $7.2 ($7.8), OPEC $7.1 ($6.6), Canada $5.4 ($5.0), Mexico $4.4 ($4.3), Korea $1.3 ($1.3), Brazil $0.8 ($0.7), and Taiwan $0.7 ($0.7).