Oil Market Drags Stocks

123jump.com Staff
25 Aug, 2006
New York City

Market averages are hugging the unchanged level with a negative bias. S&P 500 and Dow are down a fraction but Nasdaq is up. Ford Motor is up 4% on the restructuring news. Ford is reported to be in talks to sell its Jaguar and Land Rover division. H&R Block is down 9% on the news that the company has sent aside $100 million to cover potential losses from mortgage loans.

[R]9:55AM Market in the early hour faces headwind.[/R]
Market opened in the negative column with the firm price in oil pit and worries of economic growth and possible direction of interest rates. Chairman Bernanke is schedule deliver his speech at 10:00AM at the annual symposium organized by the Fed.

H&R Block ((HRB)) is trading $2.20 or 9.7% lower to $20.59. Late Thursday the company announced to set aside $102.1 million in reserves to cover potential losses in mortgage loans. Rising interest rates and declining home prices are affecting ability of many of customers at H&R. The company is providing mortgage loans to customers in the sub prime segement.

Toyota MotorsCorp ((TM)) stock is down $2.61 to $105.67 on news that the company has recalled a car model in China and may delay introduction of new models in the American market. The company said that it will recall 20,000 Crown Sedans in China to fix a weak adhesive that holds a rubber strip to the windshield. The fast growing joint venture in China with the local FAW Group sold 115,000 cars in China in the first-half of this year. The company forecats that its total sales including imports are likely to rise 50% to 250,000 or more.

Ford Motor Company ((F)) is trading up 29 cents or up 4% to $8.05.

[R]9:20AM Futures indicate higher opening.[/R]
Futures indicate higher opening at this time but market may face headwinds in the early trading.

Oil price in European trading is up 1.5% and on the last day of the week traders are generally reluctant to buy. Oil is back in focus after climbing to the highest price in the last six trading days. European market rose in the early trading but fell back into negative column at mid-day trading. Vodafon is in a deal to sell its stake in the Belgacom.

Ford Motor is in news again. Robert Rubin has resigned from Ford’s board to avoid potential conflict of interest during the company’s restructuring. Ford company is reported to be in talks to sell its Jaguar and Land Rover division to a group of investors led by Jacque Nassar, former CEO of Ford Motor Company according to a report on Bloomberg. The head of British construction-machinery group is also interested in acquiring the division, according to a report in Wall Street Journal.

Chico’s, a day after losing 25% of its value, continues to suffer from a series of downgrades. Bank of America downgraded the stock to a ‘neutral’ rating and several other regional borkerages have lowered their rating on the stock as well. UBS, lowered the rating on the stock after the earnings, the brokerage house had put a ‘buy’ rating on the company on August 8th.

[R]7:30AM Japanese stocks retreat on exporters, HK and Seoul advanced on Friday.[/R]
Asian markets ended mixed on Friday. The Nikkei 225 Average ended the day 0.14% lower at 15938.66, erasing earlier gains, and Taipei shed 0.37% to close at 6526.22. The benchmark Shanghai Composite Index finished flat at 1623.03. On the other hand, Hong Kong''s Hang Seng Index ended 0.43% higher at 16955.45, South Korea''s Kospi Index gained 1.04% to 1329.35, and Australia''s S&P/ASX 200 gained 0.72% to finish at 5023.60.

On the corporate front, Toyota Motor Corp lost 1% on reports the automaker is to delay model introductions and dampen its growth plans. Sony Corp shed 2% after a recall affecting 1.8 million batteries used in Apple laptop computers. South Korea’s Samsung Electronics advanced 1.4%, though shares of the company ended lower on the week in Seoul.

In Hong Kong, gains in some major companies offset a fall in Hutchison, which has fallen for two straight sessions on an uncertain 3G outlook. Hutchison fell 0.9%, after shedding 2.4% in the previous session. HSBC edged up 0.7%, while China Mobile closed 1.2% higher. China''s shares finished flat, as profit-taking in some banks erased gains in other large-capitalized companies that had been oversold recently. Shanghai-listed China United Telecommunications gained 0.9%, China Yangtze Power advanced 0.8%, and Daqin Railway increased 0.7%.

[R]6:30AM European banks advanced Friday on merger speculations.[/R]
[European markets were mostly flat by mid-morning on Friday. The FTSE 100 index in U.K. climbed 0.3% at 5,886 the French CAC 40 index added 0.3% at 5,128 and the German DAX 30 index rose 0.2% at 5,826. Italian banking mergers remained in focus after Credit Agricole, the largest shareholder in Italy’s Banca Intesa, gave its approval to the possible merger between Intesa and Sanpaolo IMI. The board members of both banks were scheduled to meet on Saturday to discuss the merger. Shares in Intesa were up 1.6%, while Sanpaolo gained 3.7%.

Vodafone Group and Belgacom both gained after they announced that Vodafone will sell its 25% stake in Proximus to the Belgian group, which already owns the other 75%. Shares in Vodafone rose 0.7% and Belgacom climbed 1.6%. Other European banks also advanced, with Commerzbank gaining 4% in Frankfurt and ABN Amro up 0.9% in Amsterdam.

Oil prices gained Friday as the market closely observed the Iran nuclear stand-off and the potential of tropical storms threatening the U.S. Gulf coast oil refineries. Light, sweet crude for October delivery rose 63 cents to $72.99 a barrel in electronic trading on the NYME. On London''s ICE Futures exchange, October Brent crude rose 46 cents to $73.14 a barrel.

Gold opened Friday at a bid price of $621.80 a troy ounce, down from $622.60 late Thursday. The euro was almost flat against the U.S. dollar Friday ahead of planned remarks on inflation by Federal Reserve Chairman Ben Bernanke. The euro bought $1.2761 in early European trading, marginally above its level of $1.2758 in New York late Thursday. The British pound slid to $1.8847 from $1.8874. The dollar strengthened against the Japanese currency, rising to 117.11 yen from 116.47 yen after Japanese consumer price inflation didn’t live up to expectations.

[R]5:30AM Gold futures fell Thursday due to stronger dollar.[/R]
December gold closed down $4.50 at $628.50 a troy ounce and September silver lost 20.5 cents to end at $12.31 an ounce. October platinum settled up $1.20 at $1,237.70 an ounce, while September palladium settled $2.40 lower at $344.45 an ounce. The September copper contract shed 3.65 cents to finish at $3.4285 per pound.

The front-month October light, sweet crude-oil contract finished up 60 cents at $72.36 a barrel. September gasoline rose 0.21 cent to $1.8615 a gallon and September heating oil gained 2.68 cents to $2.0294 a gallon. September natural gas moved up 20.4 cents at $7.079 a million British thermal units. On the New York Board of Trade, September Arabica coffee closed down 0.30 cent at $1.0705 a pound while December lost 0.20 cent to $1.1115. Futures on raw sugar in foreign ports for October closed down 0.11 cent at 12.30 cents a pound.