Weaker Oil and Peugeot Boost Europe

Elena
08 Sep, 2006
Frankfurt

European markets closed in the positive, helped by another decline by the oil price, corporate news from Peugeot, and early gains on Wall Street. Among gainers, BP ended up 1.2%, chemicals company BASF finished up 0.7% and airline Air France-KLM rose 1%. The German DAX 30 rose 0.4%, the French CAC 40 added 0.3%, and London FTSE 100 gained 0.4%.

[R]12:15PM European markets ended higher.[/R]
European markets closed in the positive, helped by another decline by the oil price, corporate news from Peugeot, and early gains on Wall Street. Crude futures hovered round $67 a barrel after BP said it might restore production in its Alaskan oil field sooner than expected. Among gainers, BP ended up 1.2%, chemicals company BASF finished up 0.7% and airline Air France-KLM rose 1%. Automaker Peugeot rose 1.9% in Paris on news that its CEO, Jean-Martin Folz, will retire in January, raising hopes of a new strategy. The German DAX 30 rose 0.4%, the French CAC 40 added 0.3%, and London FTSE 100 gained 0.4%.

Oil prices fell to a fresh five-month low on higher fuel stocks and news that BP might restore production in Alaskan oilfield sooner than expected. Light crude October delivery fell 56 cents to $66.76 a barrel. London Brent dropped 49 cents to $66.04. The U.S. dollar extended gains. The euro traded at $1.2673, down from $1.2728. The dollar bought 116.69 yen, up from 116.40. The British pound stood at $1.8659, down from $1.8748. European gold lost ground. In London the precious metal traded at $609, down from $636.90 per ounce. In Zurich gold traded at $609.10, down from $636.90. Silver closed at $12.08, down from $13.16.


[R]11:30AM Stocks remained in the positive.[/R]
U.S. stocks rebounded from recent declines to trade higher Friday. Buying interest remained subdued on lingering inflation concerns. Stock markets largely ignored news that Lennar Corp ((LEN)), home builder, lowered its profit outlook due to a weakening housing market. The stock dropped 1.76%. Cleveland Federal Reserve President Sandra Pianalto, a voting member of the Fed''s Open Market Committee, weighed in Friday on the debate over inflation. She said ‘elevated inflation numbers’ are still a concern. On the other hand, she spoke about signs that the overall pace of economic activity is moderating, with the housing sector in particular.

By sector, oil services stocks and the computer software sector were the most notable gainers. Airlines sharply dropped. Gold stocks and brokers were also under pressure. The health insurance sector turned in one of the market''s best performances, with Health Net ((HNT)) up 7.4% on Q4 earnings in line with analyst estimates. AirTran ((AAI)) was one of the most notable decliners among airline stocks. The regional airline dropped 13.7% after the company lowered its guidance for growth of Q3 revenue per available seat mile. In late morning trading, the Dow Jones industrial average rose 34.66, or 0.31%. The Standard & Poor''s 500 index was up 2.78, or 0.21%, and the Nasdaq composite index rose 6.37, or 0.30%. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.76% from 4.79% late Thursday.

[R]10:30AM The Sensex ends the week in positive territory on oil and upbeat Asia[/R]
The Sensex on BSE advanced 64.80 points, or 0.6% to end at 11,918.65. The benchmark index traded in a range of 116 points during the day. The market-breadth was strong with the advancers leading the decliers by 50%. On the BSE trading, 1,532 shares advanced, 1,004 declined and 83 stocks remained unchanged. From the Sensex stocks, 17 advanced and 13 declined. The turnover on BSE was Rs 3,484 crore, higher than Thursday’s Rs 3,312 crore. The turnover on NSE was Rs 7,273.14 crore.

The wholesale price index, for the week ending August 26, 2006 rose to 5.01%. The index climbed above 5% for the first time in eight weeks. Finance Minister P. Chidambaram said to the reporters that he is not ‘alarmed’ by the data. He aslo said that the governemet will do whatever it takes to bring down the inflation below 5%.

Reserve Bak of India has said earlier that it expects the wholesale inflation to stay between 5% and 5.50% for the year and expressed that inflation pressure may be sustained as state controlled energy prices in India have not kept up with price hikes in the global markets. India imports 70% of its energy needs.

Reliance Communications led the advancers, surging 5% to Rs 316.50. Maruti Udyog jumped 2.87% to Rs 939.30 on 8.48 lakh shares traded on BSE. Hindalco gained 1.74% to Rs 183.70 and Hero Honda spurted 3.66% to Rs 737. Bharti Airtel advanced 1.64%, to Rs 430, after reports that it added 1.31 million GSM users in August, lifting its customer base to 25.7 million.

Index heavy Reliance Industries gained 0.07%, to Rs 1,126.30 on 13.59 lakh shares. Reliance Industries was the most-active stock on BSE with a turnover of Rs 152.67 crore. Century Textiles with Rs 149.11 crore and Reliance Communications with Rs 102.14 crore came second and third respectively.

Auto stocks advanced supported by a steady decline in global crude oil price. Punjab Tractors gained 6.47% to Rs 250, Kinetic Engineering rose 1.41% to Rs 143.50 and Swaraj Mazda advanced 2.53% to Rs 235.25. Refinery shares also benefited from global crude oil prices, moving to higher ground. HPCL climbed 2% to Rs 304, Chennai Petroleum jumped 4.03% to Rs 227.10, MRPL was up 1.97% to Rs 43.90, and Indian Oil Corporation egded up 1.70% to Rs 515. BPCL gained 3.03%, to Rs 388 after reports that it plans to buy sugarcane fields in Brazil to secure imports of ethanol.

Tyre shares advanced as rubber price plunged to an eight-month low. Apollo Tyres rose 5.76% to Rs 333.10, JK Industries surged 8.87% to Rs 128.90, Goodyear India advanced 5% to Rs 118.65, CEAT also gained 5% to Rs 111.90, and Falcon Tyres moved up 2.26% to Rs 117.55. Hotels stocks gained on renewed buying. EIH Associated soared 6.48% to Rs 819, Royal Orchid Hotels notched up 1.31% to Rs 173.50, Indian Hotels rose 1.20% to Rs 1,318 and Viceroy Hotels added 1.81% to Rs 92.60.

HDFC and ICICI Bank led the decliners. HDFC was down 1.24% to Rs 1,336 and ICICI Bank declined 0.82% to Rs 602.10.

Jet Airways was in focus, with a turnover of Rs 149.11 crore. It witnessed a high degree of volatility today, trading in a wide-range. It ended 6% lower to Rs 625 on 22.58 lakh shares.


[R]09:45AM Stocks opened higher on sharply lower oil.[/R]
Stock markets advanced modestly at opening, lifted by a sharp decline by crude oil prices, helping to offset inflation worries. Investors were also digesting news that another home builder cut its profit outlook. Lennar ((LEN)) lowered its Q3 earnings guidance, joining Beazer Homes and Hovnanian Enterprises.In early trading, significant strength emerged in the health insurance sector, helped by Health Net ((HNT)), which advanced after forecasting earnings in line with analyst estimates. Significant weakness in the gold sector helped to limit the upside for the broader markets. In the first hour of trading, the Dow Jones industrial average rose 26.57, or 0.23%. The Standard & Poor''s 500 index was up 2.96, or 0.23%, and the Nasdaq composite index gained 5.53, or 0.26%.


[R]8:30AM Stock futures pointed to a rebound.[/R]
U.S. stock futures moved to the upside, pointing to a rebound after two straight sessions of sharp losses. Steadily falling oil prices helped lift sentiment. Oil fell under $67 after U.S. distillate supplies rose sharply and BP said it might be able to restore its Alaskan oil field sooner than expected. Meanwhile, another profit warning in the home building sector and a disappointing outlook from National Semiconductor tempered the outlook.

Lennar Corp. ((LEN)) shares fell 2.9% in pre-market trading as it became the latest home builder to warn of weakness in the U.S. housing market. The company lowered its Q3 earnings estimate, projecting profit in a range of $1.25 to $1.35 a share. The lowered guidance is sharply below the $1.81 consensus of analysts. Chip makers are likely to lose, as National Semiconductor Corp. ((NSM)) gave a disappointing outlook for the current quarter, sending its stock lower by 3%. Shares of Broadcom Corp. ((BRCM)) fell 3.5% before the bell after the microchip maker said it had found more irregularities in the dates of past stock option grants. S&P 500 futures were up 2.80 points, above fair value. Dow Jones industrial average futures were up 12 points, and Nasdaq 100 futures rose 1.5 points.

Lennar Corp, ((LEN)), home builder, cut its earnings estimates when it said it expects its Q3 earnings to be in a range of $1.25 to $1.35 a share on continuing deterioration of the U.S. housing market. The new guidance is sharply below the $1.81 analysts’ estimate. Lennar said increased sales incentives along with certain land adjustments were the main factors behind lowering its estimate.

Volt Information Sciences Inc, ((VOL)), staffing and telecommunications services company, reported Q3 earnings rose to 53 cents a share, from 32 cents a share a year earlier on 8% revenue growth. The company said strong growth in its higher-margin staffing services business and lower workers compensation and payroll taxes, helped offset the negative effects of rising interest rates and higher professional fees. The company also said it implemented a 1.5 million share stock repurchase program.

AirTran Holdings Inc, ((AAI)), airways operator, lowered its revenue and costs estimates for Q3, citing a softening of demand in August was continuing into September. The company said in a regulatory filing late Thursday that it was also seeking to reduce its growth in 2007 and 2008 as a result, which it said was due to partly to the threat of recent terrorist events, Tropical Storm Ernesto and capacity additions on the East Coast. Q3 revenue per available seat mile will now be in the low single digits range, rather than an estimated 20%; non-fuel costs per available seat mile will improve, declining 3% to 5% in the third quarter; and fuel costs should be $2.28 to $2.33 a gallon.


[R]7:30AM Asian markets gain as Bank of Japan leaves rates unchanged.[/R]
Asian markets closed higher on Friday. The Nikkei 225 Average ended the day up 0.42% to 16,080.46 after paring earlier declines. Nissan Motor dropped about 1% after bouncing back from sharper morning losses. Canon Inc shed 0.34%. Toshiba Corp turned around from a morning drop to finish up 0.5%.

Japan Airlines gained 2.17%. The Nikkei daily reported Friday that the company, along with All Nippon Airways would start offering business class seats on smaller aircraft flying between Japan and China. All Nippon Airways shares advanced 1.93%. Nippon Steel added 1% after revising its profit outlook upward Thursday afternoon. Softbank Corp. rose 0.45%, recovering from an earlier decline of 3%.

Hong Kong Hang Seng Index finished up 0.29% to 17,145.76. The Hang Seng China Enterprises Index of Hong Kong-listed mainland shares shed 0.2%, weighted down by commodity stocks Jiangxi Copper and Sinopec. Container-terminal operator Cosco Pacific dropped 3.42% due to a larger-than-expected decline in first-half profit. Hang Lung Properties added 2.61% after losing more than 2% on Thursday.

The Kospi index in South Korea advanced 0.28%. Hyundai Motor fell 0.85% on concerns over a slowdown in the key U.S. market, but carrier Korean Air gained 2.41%. China Shanghai Composite index moved up 0.4% but Australia S&P/ASX 200 lost 0.2% as commodity stocks including BHP Billiton and Woodside Petroleum declined on weakness in metal and oil prices.


[R]AM 6:30AM European markets advance on banks and telecoms.[/R]
European markets were higher by mid-morning on Friday. The U.K. FTSE 100 index gained 0.4% at 5,878, the German DAX 30 index rose 0.2% at 5,785 and the French CAC 40 index added 0.3% at 5,074. Telecoms equipment maker Alcatel and its US rival Lucent Technologies are very close to merging after shareholders at both companies approved the French group’s $10.9bn all-share offer.

Deutsche Telekom advanced 1% after a report from the Financial Times Deutschland that the company is about to make further job cuts, in a bid to save 5 billion euros by 2010. Telecom Italia gained 1.4% in Milan and Vodafone Group added 1.1% in London.

Bank shares advanced in Europe. Capitalia, the Italian bank, advanced 0.9% after raising its 2007 earnings per share target, having said it would beat its 2006 forecast based on annualised data. Banca Monte dei Paschi di Siena reported a 28.9% rise in first half net profit. The shares gained 0.7%. German retailer Metro fell 3.1% after J.P. Morgan sold 17.5 million shares on behalf of the controlling Schmidt-Ruthenbeck family to other investors.

Oil extended a week of losses to strike a new five-month low under $67 on Friday after U.S. distillate supplies rose sharply and BP said it might be able to restore its Alaskan oilfield sooner than expected. Oil extended a week of losses to strike a new five-month low under $67 on Friday after U.S. distillate supplies rose sharply and BP said it might be able to restore its Alaskan oilfield sooner than expected. London Brent crude fell 49 cents to $66.04.

Gold opened Friday at a bid price of $617.10 a troy ounce, down from $635.50 on Thursday. The euro declined on Friday against the U.S. dollar on strong economic news from Washington and speculation that U.S. interest rates may rise higher. In morning European trading the euro bought $1.2714, down from $1.2728 late in New York the night before and nearly a cent weaker than the end of the day Wednesday. The British pound dropped to $1.8735 from $1.8748, while the dollar dropped slightly to purchase 116.40 Japanese yen from 116.18 the day before.