Futures Recover on Weaker Oil

Elena
05 Sep, 2006
New York City

U.S. stock futures recovered from earlier declines to move slightly higher Tuesday as another drop by crude oil futures provided a boost to market sentiment. In corporate news, Viacom named insider Philippe P. Dauman, as president and CEO after Tom Freston resigned his positions with the company.

[R]9:00AM Stock futures recovered on oil weakness.[/R]
U.S. equity futures recovered from earlier declines to move slightly higher Tuesday as another drop by crude-oil futures provided a boost to market sentiment. Crude-oil futures fell 65 cents to $68.54 a barrel following the Labor Day holiday, which usually marks the end of driving season.

There is very little data on the economic agenda Tuesday, with the highlight being the Organization of Economic Cooperation and Development keeping its forecast for U.S. economic growth in 2006 unchanged, at 3.6%.

In merger-and-acquisition deals, Co. Generale de Geophysiqueshot agreed to pay $3.1 billion in cash and stock for Veritas DGC. Verita’s shares rose 4.4% in pre-market trading. In other M&A activity, Click Commerce surged ((CKCM)) jumped 26% to $22.51 in the pre-open after Illinois Tool Works ((ITW)) said it was buying the Chicago on-demand supply management services company for $292 million, or $22.75 a share.

On the corporate news front, Viacom ((VIA)) named insider Philippe P. Dauman, as president and CEO after Tom Freston resigned his positions with the company. Company's shares gained 1.7% in pre-market trading. Phelps Dodge ((PD)) said it was terminating its merger agreement with Inco LTD. As part of the termination, Inco paid Phelps Dodge $125 million, and will pay it an additional $350 million if it enters an alternative merger agreement before September. Aluminum giant Alcoa ((AA)) lost 1.3% in Germany after a broker downgraded the stock, citing concerns over demand. S&P 500 futures gained 1.40 points to 1,314.00 and Nasdaq 100 futures added 3.50 points to 1,594.00. Dow industrial futures rose 6 points to 11,478.

Procter & Gamble Co, ((PG)), consumer products company, reported its Q1 earnings and sales outlooks. The company continues to see earnings at 76 cents to 78 cents a share on sales growth of 23% to 27%. Analysts forecast earnings of 78 cents a share.

Admiral Group, ((UK:ADM)), motor insurance firm, reported that its first-half net profit advanced to 48.1 million pounds ($91.7 million) after net revenue jumped 23.8% to 151.8 million pounds. Admiral stated that the growth was driven by increased underwriting activity, with total motor insurance premiums up 10% to 294 million pounds, as well as a stronger contribution from its Confused.com Web site, where the number of quotes provided more than doubled to 3.8 million. Admiral also raised its interim dividend by 25% to 12.1 pence a share.

Republic Airways Holdings, ((RJET)), air carrier, reported that August load factor advanced to 73.5% from 66.9% a year earlier, as the pace of traffic growth increased more than capacity. Traffic for August rose 64% to 624.8 million revenue passenger miles from last year's 381.5 million. Capacity grew 49% to 850.5 million available seat miles from last year's 570.4 million.

Walgreen Co, ((WAG)), operator of retail drugstores reported August same-store sales rose 10.6%. Analysts expected it to post a same-store sales gain of 9.2%. Total sales for the month rose 17.2% to $4.18 billion.


[R]8:00AM Veritas DGC to acquire Co. Generale de Geophysique [/R]
Co. Generale de Geophysique ((GGY)), French provider of equipment and services to the oil and gas industry, agreed to acquire Veritas DGC ((VTS)), the Houston provider of geophysical information and services, in a deal worth $3.1 billion. The deal indicates a premium of 35% over the average closing price of Veritas for the 30 days ended on Aug. 29, which was $55.69. Holders can choose cash or stock, subject to a 51% stock, 49% cash split, the companies said. The deal is expected to close around the end of 2006, subject to regulatory clearances and other conditions. CGG was financially advised by Credit Suisse, while Veritas was advised by Goldman.

The combined company aims at creating ‘a strong global pure-play seismic company, offering a broad range’ of seismic services and geophysical equipment. The new company, to be called CGG-Veritas, will be controlled 65% by CCG''s shareholders. CGG expects the deal to add to profit in 2008. The companies estimate cost savings of $65 million a year. In Paris, CGG''s shares declined 2.6% following a half-day suspension.


[R]7:30AM Japan recovers on gains in steel sector, HK dips.[/R]
Asian markets traded mixed on Tuesday. The Nikkei 225 Average ended up 0.2% at 16,385.96, with advances countered by profit taking among leading blue chips after Monday''s sharp gains. Shares of Nippon Steel were up 2% after the business daily Nihon Keizai Shimbun reported the steelmaker is close to a deal with South Korea''s Posco. Shares of Toshiba Corp decreased 0.7%, and Sony Corp sank 0.8%.

Hong Kong''s Hang Seng Index ended down 0.4% to 17,438.80. Gains were focused among large mainland industrial and consumer shares. Mainland China electronics retailer Gome was up 2.3%, while cement maker Anhui Conch rose 1.9%. Shares of Bank of Communications dropped 0.2%. Oil refiner Sinopec added 0.2%. Lower oil prices are beneficial to Sinopec, which faces state-mandated price caps on what it can charge at the pump.

Australia S&P/ASX 200 index gained 0.4% at 5,150.60. Shares of mining company BHP Billiton advanced 1.3%, while shares of Rio Tinto ended up 1.7%. Shanghai Composite was up 0.4%, while New Zealand leading index ended 0.6% higher.


[R]6:30AM European markets are trading lower ahead of U.S. market starts again.[/R]
European markets were lower by mid-morning on Tuesday. The U.K. FTSE 100 index edged down 0.2% at 5,974, the German DAX Xetra 30 index declined 0.2% at 5,896 and the French CAC-40 index decreased 0.3% at 5,189. French car maker Peugeot declined 0.9% while peer Renault retreated 0.7%. Compagnie Generale de Geophysique, provider of equipment and services to the oil and gas industry agreed to pay $3.1 billion for Veritas DGC, provider of geophysical information and services.

London crude oil prices bounced back to around $68 a barrel on Tuesday after falling to a more than 10-week low the day before, with many dealers moving to the sidelines to await the next step in Iran''s atomic stand-off. Brent crude for October delivery traded up 29 cents at $68.00 a barrel by 0650 GMT, after dropping $1.44 on Monday.

The euro was down slightly Tuesday against the U.S. dollar after a light day of trading with markets in the United States closed for the Labor Day holiday. In morning trading the euro bought $1.2839, from $1.2863 the night before. The British pound fell to purchase $1.9036 from $1.9061 on Monday, while the dollar rose slightly to buy 115.94 Japanese yen from 115.89 the night before.