Techs Support Europe

Elena
16 Aug, 2006
New York City

European markets finished in the positive, helped by weaker-than-expected U.S. consumer inflation data. Technology stocks led advancers, with mobile phone maker Nokia and software giant SAP rising 2.8% and 3.4% respectively. The German DAX 30 rose 0.6%, the French CAC 40 advanced 0.4%, while London FTSE 100 slipped 1.30 points to 5,896.

[R]12:30PM European markets advanced on U.S. inflation data.[/R]
European markets finished in the positive, helped by weaker-than-expected U.S. consumer inflation data which added to recent speculations that the Fed Reserve might pause interest-rate hikes in the short term. Technology stocks led advancers, with mobile phone maker Nokia and software giant SAP rising 2.8% and 3.4% respectively. Chip equipment maker ASML Holding gained 1.9% on positive comments from Applied Materials. Oil companies lost ground on lower crude oil prices, with shares of BP down 1.1%. The German DAX 30 rose 0.6%, the French CAC 40 advanced 0.4%, while London FTSE 100 slipped 1.30 points to 5,896 as companies trading without the rights to dividend payments and pressure from the oil sector took points off the index.

Oil price declined following oil inventory report. Light crude September delivery fell 60 cents to $72.45 a barrel. Gasoline inched up to $1.9925 a gallon, while heating oil added to $2.0250. Natural gas rose 16 cents to $7.020 peer 1,000 cubic feet. London Brent dropped 70 cents to $73. The dollar traded lower versus major currencies. The euro traded at $1.2847, up from $1.2782. The dollar bought 115.83 yen, down from 116.07. The British pound stood at $1.9000, up from $1.8931. European gold prices recovered. In London the precious metal traded at $628, up from $621.40 per ounce. In Zurich gold traded at $629.60, up from $622.70. Silver closed at $12.31, up from $11.98.


[R]11:30AM Tame inflation lifts stocks.[/R]
Stocks traded higher on tame inflation figures that added to speculations the Fed Reserve might not raise rates in the near future. The housing market showed more signs of slowing, with housing starts falling to an annualized rate of 1.795 million in July, down from 1.85 million in June. Among stocks in focus, Abercrombie & Fitch Co. ((ANF)) jumped 10% on 14% profit increase in Q2, Big Lots Inc. ((BLI)) added 1.2% after posting a Q2 profit from a year-ago loss, while Estee Lauder Cos. Inc. ((LE)) saw 3.7% decline after its Q4 profits slid 33%.In late morning trading, the Dow Jones industrial average rose 47.31, or 0.42%.The Standard & Poor''s 500 index added 5.40, or 0.42%, and the Nasdaq composite index gained 13.13, or 0.62%. Bonds gained on the good inflation news, with the yield on the benchmark falling to 4.88% from 4.93% late Tuesday.


[R]Oil inventories declined.[/R]
Crude oil inventories declined once again in the most recent week, according to government statistics released Wednesday. Gasoline stockpiles added to their recent losses as well. The Department of Energy''s Energy Information Administration said that crude oil inventories fell 1.6 million barrels in the week ended August 11. Specifically, the measure dropped to 331.0 million barrels from the previous week''s level of 332.6 million barrels. This followed a decline of 1.1 million barrels in the previous week. Oil inventories for the August 11 week were 4.4% higher than last year. Meanwhile, gasoline inventories showed a week-over-week decline of 2.3 million barrels. This followed a draw down of 3.2 million barrels in the previous week. The level of gasoline inventories was 1.1% above last year.

[R]Industrial output rose less than expected.[/R]
Industrial production rose less than expected in the month of July, according to a report from the Federal Reserve. The report also showed an increase in capacity utilization that came in below economist estimates. The Federal Reserve said that industrial production rose 0.4 percent in July following an unrevised 0.8 percent increase in June. Economists had been expecting industrial production to increase by about 0.6 percent. The relatively modest increase in production came as manufacturing output increased by a modest 0.1 percent in July after increasing by 0.8 percent in June. At the same time the pace of growth in utilities output accelerated to 2.0 percent in July from 0.9 percent in June. Production at mines rose 0.8 percent in July after rising 1.1 percent in June. The report also showed that the capacity utilization rate edged up 82.4 percent in July from a downwardly revised 82.3 percent in June. The capacity utilization rate had been expected to rise to 82.7 percent compared to the 82.4 percent originally reported for the previous month.


[R]10:30AM Sensex finished higher despite sell-off in the last hour.[/R]
Sensex advanced 135.32 points, or 1.2%, to end at 11,448.31. The turnover on BSE soared to Rs 3,439 crore higher than Monday Rs 2,848.28 crore. The market-breadth was strong as 1,759 shares rose and only 755 declined and 53 shares were unchanged.

Market rally was led by oil refining stocks soaring in response to Prime Minister Manmohan Singh''''s Independence Day speech on Tuesday, suggesting a cut in subsidies on kerosene and LPG. HPCL jumped 11% to Rs 262, Indian Oil Corporation rose 7.7% to Rs 456.50 and BPCL gained 5% to Rs 343. Oil giant ONGC rose 2% to Rs 1,238 and gas transmission firm GAIL India gained 2.3% to Rs 257.

Private sector banks continued their recent advances. HDFC Bank surged 4.6% to Rs 844, State Bank of India gained 1.4% to Rs 884.90 and ICICI Bank rose 1.8% to Rs 588. Metal shares were also in focus. Hindustan Zinc jumped 4.4% to Rs 598.55, Hindalco gained 1.2% to Rs 168.65, Sterlite Industries added 2% to Rs 408.90 and National Aluminum Company gained 1.5% to Rs 202.60.

Construction stocks surged as well. L&T rose nearly 3% to Rs 2,374.90, Hindustan Construction gained 7% to Rs 112, Nagarjuna Construction advanced 4.5% to Rs 304 and Jaiprakash Associates rose 2.8% to Rs 443. Power equipment giant, BHEL surged 3.3% to Rs 2,250 on renewed buying on the back of strong order backlog. Index large-cap Reliance Industries rose 1.3% to Rs 1,043 as trading volume surged to 1.23 million shares.

The decline in crude prices helped auto stocks. Hero Honda gained 3% to Rs 703, Tata Motors rose 2% to Rs 817, Ashok Leyland rose 1.3% to Rs 38, and Maruti Udyog gained 0.7% to Rs 808. BSE Auto sector index rose nearly 1% to 4,842.29. Mahindra & Mahindra gained 2% to Rs 633 after the company said on Wednesday that it will invest Rs 550 crore to build a new auto plant in Maharashtra.

Decliners list was led by Infosys with 0.7% loss to Rs 1,743. The stock declined from the high of Rs 1,784 reached during the session. Sugar shares witnessed a broad-based drop. Balrampur Chini Mills lost 6% to Rs 100, Bajaj Hindustan shed 2.8% to Rs 345.50, Dhampur Sugar shed 3% to Rs 111.75, Triveni Engineering lost 4% to Rs 78.90, EID Parry shed 3.8% to Rs 194.55, and Ponni Sugars (Erode) shed 6% to Rs 59.85.


[R]9:45AM Stocks rallied at opening on easing rate concerns and earnings.[/R]
U.S. stocks pushed higher at opening as several closely watched economy reports boosted confidence that the Fed Reserve might not raise rates in the short term. The consumer price index rose 0.4% in July, while core consumer prices gained only 0.2%. The transportation sector led the advance, helped by a further moderation in oil prices. Trucking stocks also gained, with Landstar ((LSTR)) climbing about 2.9%.

Housing stocks showed gains, despite a report showing a decline in July new home construction. The pace of U.S. home building fell 2.5% in July to an annualized rate of 1.795 million units, from a downwardly revised 1.841 million. Technology also supported the early rally. However, Applied Materials Inc. ((AMAT)) fell 2% as the supplier of equipment for making microchips reported good profit growth but said rising chip inventories would hit demand for its products. The retail sector was supported by Abercrombie & Fitch ((ANF)), up 9% on strong earnings and Big Lots ((BLI)), up 5.3% on a surprising swing to profit in Q2 and lifted oitlook. In the first hour of trading, the Dow Jones industrial average rose 33.94, or 0.3%. The Standard & Poor''s 500 index added 3.33, or 0.26%, and the Nasdaq composite index gained 7.44, or 0.35%.


Estee Lauder, ((EL)), cosmetics maker, reported its Q4 net income fell 33% to 21 cents a share, from 30 cents a share in the year-ago period. If not for charges, the company earned 49 cents a share in Q4. The company said sales increased 5% to $1.6 billion. The company missed analysts forecasts for earnings of 48 cents a share. The company forecast Q1 net income of 15-20 cents a share.

Abercrombie & Fitch Co, ((ANF)), teen clothing retailer, reported its Q2 net earnings were 72 cents a share, vs. 63 cents a share in the same period last year. Revenue rose to $658.7 million from $571.6 million. Same store-sales were flat during Q2 compared with a 30% rise in Q2 of 2005. The company beat analyst forecast by a penny.

[R]Housing starts dropped 2.5%.[/R]
Wednesday morning, the Department of Commerce released its report on housing starts and building permits in the month of July. The report showed that housing starts fell more than economists had expected. The Commerce Department said housing starts fell 2.5 percent to a seasonally adjusted annual rate of 1.795 million units in July from a revised 1.841 million unit rate in June. Economists had expected starts to fall to a 1.800 million unit rate. With the decrease in July, the seasonally adjusted annual rate is 13.3 percent below the July 2005 rate of 2.070 million units. The drop in housing starts was due in part to a 7.0 percent drop in housing starts in the Northeast. Housing starts in the South and the West also fell, while starts in the Midwest edged up by 0.7 percent. The report also showed that building permits fell 6.5 percent to a seasonally adjusted annual rate of 1.747 million units in July from a revised June rate of 1.869 million units. The July rate is down 20.8 percent year-over-year.


[R]9:00AM Stock futures pointed to a higher start on CPI.[/R]
U.S. stock futures recovered from earlier weakness after government report on July consumer prices was released. The Labor Department said the Consumer Price Index for July rose 0.4% from a 0.2% increase in June, coming in inline with expectations. Core inflation slowed down with an increase of 0.2%, compared with a 0.3% increase in June. The CPI core rate was expected to rise 0.3%.

Of companies in focus, cosmetics firm Estee Lauder ((EL)) largely met expectations with a 33% profit decline on a 5% revenue rise, hurt by a recent stock price pullback in the wake of tighter security rules in U.S. and U.K. airports. Applied Materials ((AMAT)) reported a stronger-than-forecast 39% profit jump, benefiting from a wave of factories coming online and the proliferation of consumer electronic devices. Abercrombie & Fitch ((ANF)) posted a better-than-forecast 14% increase in the second quarter. After the close, Hewlett-Packard ((HP)) is due to report results. Standard & Poor''s 500 futures were up 5.30 points, above fair value. Dow Jones industrial average futures rose 42 points, and Nasdaq 100 futures were up 8.50 points.


[R]Consumer prices index rose 0.4%, core inflation gained 0.2%.[/R]
The Department of Labor released its report on consumer prices in the month of July on Wednesday, showing that consumer prices rose in line with economist estimates. At the same time, core consumer prices rose a little less than expected. The report showed that the consumer price index rose 0.4 percent in July following an unrevised 0.2 percent increase in June. Economists had been expecting prices to increase by about 0.4 percent. The increase in consumer prices was largely due to a rebound by energy prices, which rose 2.9 percent in July after falling 0.9 percent in June. Higher energy prices also contributed to a 1.6 percent increase in transportation costs. The core consumer price index, which excludes food and energy costs, rose 0.2 percent in July after rising 0.3 percent in each of the four previous months. The increase came in slightly below economist estimates of an increase of 0.3 percent. A significant decline in apparel costs helped to keep the price growth subdued, with apparel prices falling 1.2 percent in July after coming in unchanged in June. This marked the first drop in apparel prices since February.


[R]7:30AM Japanese and Hong Kong markets finished higher Wednesday.[/R]
Asian markets ended higher on Wednesday. The Nikkei 225 Index ended up 1.61% to 16,071.36. It had not finished above 16,000 since May 19. Electronics conglomerate Hitachi Ltd jumped 3.81% and top PC-maker NEC Corp advanced 4.75%. Nissan Motor led the carmaker gainers, advancing 2.59%. Toyota Motor and Honda Motor also advanced mre than 2%. Sonu was off 1.15%, after Dell Inc. Announced it was recalling more than 4 million laptops made by Sony.

Hong Kong''s Hang Seng Index advanced 1.02% to close 17,451.03, its best finish since September 2000. Property stocks led advancers, with New World Development and Hang Lung Properties making the largest gains on hopes a continued pause in U.S. interest rate hikes would help real-estate sales in Hong Kong''s dollar-pegged economy. South Korea''s Kospi index moved up 1.58%. Key exporters Samsung Electronics and Hyundai Motors gained both more than 2%. In Australia, the S&P/ASX 200 rose 0.52%. Leading insurer QBE Insurance Group advanced on strong first-half earnings and miner BHP Billiton gained despite an ongoing strike at its Escondida copper mine in Chile.


[R]6:30AM European markets can''t hold on to earlier gains.[/R]
Europe was lower by mid-morning. The U.K. FTSE 100 index lost 0.1% at 5,892, while the German Dax lost 5.3 points, or 0.1%, at 5,770.98 and the French CAC 40 was almost flat, 0.8 points lower at 5,114.18. European corporate movers included German chemicals group Lanxess advancing 1.4% after posting a forecast-beating second-quarter profit rise. On the downside, U.K. nuclear energy group British Energy lost 3.7% after posting sharply higher profit figures but lower output.

Also, Swiss medical device maker Synthes shed 2.1% following its statement that its half-year net profit increased 8.3% to $243.3 million, while sales rose 13.8% to $1.17 billion. Also Dutch bank ABN Amro advanced 0.8% after rival Dutch bank ING upgraded it to buy from hold, on expectations of more restructuring at its wholesale arm.

Light sweet crude oil for September delivery dropped 7 cents to $72.98 a barrel in electronic trading on the NYME. October Brent at London''s ICE Futures exchange, which moves to the front month from Thursday, lost 18 cents to $73.59 a barrel. The euro rose slightly against the U.S. dollar Wednesday, trading in a narrow range as market participants awaited U.S. consumer price data later in the day. The dollar advanced slightly against the British pound, which slipped to $1.8922 from $1.8936 the evening before, and fell against the Japanese yen, to 116.09 yen from 116.12 the day before.