Oil Up 1%, Dow and Nasdaq Down

123jump.com Staff
21 Sep, 2006
New York City

Market averages could not shake off the selling sentiment that gradually strengthened during the trading hours. At close Dow, Nasdaq and S&P 500 fell. HP fell close to 5% on the worries that CEO may have played bigger than anticipated role in a recent scandal involving board members. Wal-Mart launched a pilot program to offer generic drugs at a cheaper price for 300 drugs. Oil recovered 1.4%. Thailand dropped 4% at opening but closed 1.4% lower.

[R]4:10PM Volatile index of business activity fell as measured by Philadelphia branch of Fed, dragging major averages with it lower.[/R]

-Yield on 10-year bond closed at 4.66% and 30-year bond closed at 4.8%.

-Crude oil rose 85 cents to close at $61.59 and natural gas fell 10 cents to close at $4.81 per mBtu.

-Gold rose $2.10 to close at $582.90, silver gained 10 cents to close at $11.24 and copper gained 5 cents to $3.4315.

-Asian Markets closed higher across the region led by 1.9% rise in Indonesia, 1.8% in Philippines and 1.4% in India. Japan gained 0.74% and Hong Kong and Malaysia rose 0.65%. Thailand opened with a loss of 4% but managed to recover at close to a loss of 1.4%. Australian Retailing giant Coles Myer rose 3% on 82% jump in full year net income.

-European Markets closed fractionally higher led by 0.5% rise in the UK and 0.4% advance in Switzerland and Spain. France and the Netherlands rose 0.3%, Germany gained 0.13% but Norway fell 2.3%. Russia fell 1.25% but South Africa advanced 1.2%.

-Latin American Markets closed lower across the region led by a sharp decline of 1.63% in Mexico, 1.1% in Brazil, 0.7% loss in Argentina and 0.6% in Chile. Canada closed 0.2% higher.

[R]12:30PM European markets closed higher.[/R]
European markets finished higher as automakers and chemicals companies benefited from weaker oil prices. BMW and Volkswagen each rose more than 1%, and chemicals companies BASF and Akrema advanced 2%. Telecommunication stocks enjoyed a strong buying interest. Deutsche Telecom gained 2.3% on reports that private equity firm Blackstone wants the company''s CEO to step down. The travel sector also contributed to broad-market gains, with Carnival rising 5.6% due to a better-than-forecast 4% profit rise. In deal news, Serono closed 17.6% higher after German Merck agreed to buy the company for $13.3 billion. The German DAX 30 added 0.1%, the French CAC 40 advanced 0.3%, while London FTSE 100 rose 0.5%.

Oil prices hovered over $61 a barrel. Light sweet crude November delivery gained 37 cents to $61.10. Natural gas futures fell 3% to $4.78 per 1,000 cubic feet. The U.S. dollar extended losses versus major currencies. The euro traded at $1.2722, up from $1.2691. The dollar bought 116.78 yen, down from 117.46. The British pound stood at $1.8972, up from $1.8881. European gold was mixed. In London the precious metal traded at $579.20, up from $578.60 per ounce. In Zurich gold traded at $578.65, down from $580.10. Silver closed at $10.97, down from $11.10.

[R]11:30AM Market averages turned flat as energy stocks offset losses in the drug sector.[/R].
U.S. stocks turned flat, reversing from earlier gains. Market was dragged down by drug store shares after Wal-Mart Stores announced it was slashing prices of generic drugs in Florida, but an advance by energy stocks helped offset losses. Following Wal-Mart’s ((WMT)) decision to cut prices, shares of pharmacy chains such as Walgreen Co. ((WAG)) and CVS Corp.((CVS)) dropped 4.4% and 8% respectively. Rite Aid Corp. ((RAD)) fell 5.9%. At the same time, the energy sector moved higher as crude oil futures rose 1%, recovering from a six-month low on Wednesday. Exxon ((XOM)) shares rose 1.6%, while Chevron Corp.((CVX)) and ConocoPhillips ((COP)) added 2%. Boeing Co. ((BA)), the top gainer on the Dow, rose 1% after winning a contract to improve security along the U.S. borders with Mexico and Canada.

In corporate news, Hewlett-Packard Co.((HPQ)), computer and printer maker, dragged down major averages on media reports that its CEO may have been more closely involved in a board-leak investigation than previously reported. Hewlett-Packard was the biggest drag on the Dow and the S&P 500, falling 3.6% to $35.44. HP said it will hold a news conference on the leak probe on Friday. In late morning trading, the Dow Jones industrial average rose 8.25, or 0.07%. The Standard & Poor''s 500 index rose 2.49, or 0.19% and the Nasdaq composite index rose 6.94, or 0.31% Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.71% from 4.73% late Wednesday.

[R]10:30AM The Sensex ends in positive territory buoyed by higher taxe collection.[/R]
The Sensex on BSE finished 165.13 points, or 1.36% higher, to end at 12,274.27. The trading was in a range of 118 points during the day. The market-breadth was strong, the advancer oupaced decliner by 20%. For 1,379 shares that advanced, 1,141 declined and 75 were unchanged. From the Sensex stocks 25 advanced while the rest declined. The turnover on BSE was Rs 3,434 crore, higher than Wednesday’s Rs 3,418 crore. The turnover on NSE was Rs 7,132.33 crore.

Most active

Indiabulls Financial Services was the most-traded stock on BSE, with a turnover of Rs 185.44 crore. Voltamp Transformers was second with Rs 104.36 crore, Reliance Industries with Rs 90.42 crore and Bombay Dyeing with Rs 64.44 crore followed.

Advancers

Bajaj Auto led the advancers, by 3.96%, to Rs 2,904 on 61,295 shares because of another cut in global crude oil price. Maruti Udyog gained 1.60%, to Rs 943. Engineering company BHEL advanced 3.10%, to Rs 2,321, on a volume of 1.84 lakh shares. HDFC was up 2.57% to Rs 1,405 and TCS rose 2.77% to Rs 1,056.. Hidustan Lever surged 3.20% to Rs 258.10 on 6.34 lakh shares on reports that it had hiked prices of key products since July 2006.

ONGC advanced 2.15%, to Rs 1,198, after its foreign joint venture acquired Colombian oil assets of US-based Omimex Resources. Pharma stocks experienced renewed buying interest. Ranbaxy Laboratories gained 0.96% to Rs 416.20 after it received the U.S. government approval to manufacture and market Furosemide tablets. Dr Reddy’s Laboratories advanced 0.43% to Rs 757.10, after it was reported that the lab has lined up seven new chemical entities in its drug discovery fold.

Cipla advanced 1.48% to Rs 260 on 4.11 lakh shares. Index heavy Reliance Industries rose 0.55%, to Rs 1,133.50, on a volume of 12.99 lakh shares. It traded in a range between Rs 1,143.50 - Rs 1,127.15.

IT stocks were in demand. TCS was up 2.77% to Rs 1,056, Infosys Technologies gained 0.31% to Rs 1,830, Wipro notched up 0.75% to Rs 521.50, and Satyam Computers gained 2.03% to Rs 861.

Metal stocks advanced as metal prices firmed up. SAIL was up 0.95% to Rs 74.30, Tata Steel rose 1.10% to Rs 502, Kalyani Steel jumped 2.45% to Rs 278.25, Uttam Galva Steel advanced 4.60% to Rs 34.15., Hindalco moved up 1.61% to Rs 170.55 and Sterlite Industries gained 1.10% to Rs 438.10.

Decliners

Reliance Communications sank 0.82% to Rs 342.80, Hero Honda dipped 1.04% to Rs 764.50 and L&T lost 0.49% to Rs 2,683.50 led the decliners.

Other news

Reserve Bank of India issued a guideline and effectively raised interest rate on bank lending to promoters of Special Economic Zones. The Bank has perceived them as ‘riskier’ project and deemed tese projects equal to commercial projects. There are at least one hundred zones in various stages of development spread over ten states covering 27,000 hectare of land.

Essar Group has increased its holding in Essar Steel from 74.82% to 87.1%. In a similar move the group raised it holding in Essar Shipping to 76% and Essar Oil to 87%. Essar Global, the holding company is expected to consolidate its holding in preparation of international floation.

India''s annual four-month monsoon rains have entered a withdrawal phase from Thursday, nearly 20 days late compared to previous seasons, a top official at the weather department announced.

[R]9:45AM Stocks opened in the positive.[/R]
Stocks started trading higher Thursday, boosted by renewed confidence after the Fed Reserve left interest rates unchanged. In corporate news, Fedex ((FDX)) posted Q1 profit rose 40% amid strong demand for ground and international express shipments. The company said costs from a proposed new contract with its pilots'' union would cut Q2 earnings. Shares of the company fell 1.4%. Dow component Hewlett-Packard ((HPQ)) fell 3.7% on reports that CEO Mark Hurd had a more direct role in an internal investigation than had been previously disclosed. Cisco Systems ((CSCO)) rose 0.5% after Piper Jaffray upgraded the networking giant to outperform from market perform. In early trading, the networking sector posted considerable strength, reaching a new three-month intraday high. Energy stocks also moved higher as a modest increase by the price of oil inspired traders to do some bargain hunting. Oil was up 16 cents at $60.90 in pre-opening trading on the Nymex. In the first hour of trading, the Dow Jones industrial average rose 1.69, or 0.01%. The Standard & Poor''s 500 index, which reached a five and a half year high Wednesday, was up 1.17, or 0.09% and the Nasdaq composite index advanced 3.63, or 0.16%. Bond prices rose, with the yield on the benchmark 10-year Treasury note falling to 4.72% from 4.73% late Wednesday.

[R]09:00AM Stock futures pointed to a positive start.[/R]
U.S. stock futures indicated a higher market opening, lifted by strong earnings, lower oil prices and unchanged key interest rates. On Wednesday market rallied as the Fed Reserve decided to leave its benchmark fed funds rate at 5.25%. Among companies in the spotlight, ConAgra Foods ((CAG)) reported higher-than-expected earnings, despite a profit drop in the quarter because of higher costs related to energy and ingredients. In addition, the company raised its full-year forecast. Transportation company FedEx Corp. ((FDX)) reported strong revenue and earnings growth. Shares in the company rose 0.4% before the bell. Standard & Poor''s 500 futures were up 2.90 points, above fair value. Dow Jones industrial average futures were up 18 points and Nasdaq 100 futures were up 8 points.

[R]Initial jobless claims advanced by 7,000.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended September 16, showing that jobless claims increased more than economists had been expecting. The report showed that jobless claims rose to 318,000 from the previous week''s revised figure of 311,000. Economists had expected jobless claims to edged up to 310,000 compared to the 308,000 originally reported for the previous week. The Department of Labor also said that the less volatile four-week moving average came in at 315,000, unchanged from the previous week''s revised average of 315,000. The moving average fell in the two previous weeks. Additionally, the report showed that continuing claims in the week ended September 9 fell to 2.461 million from the preceding week''s revised level of 2.490 million.

[R]8:00AM Cerman drug maker Merck agreed to Buy Serono for $13.3 billion.[/R]
Merck KGaA, German drug maker, announced Thursday it will acquire Europe''s largest biotechnology company, Serono, for $13.3 billion. Merck said it agreed to buy the Bertarelli family''s 64.5% stake in Serono for 1,100 Swiss francs ($879) a share and will launch a public offer for the outstanding shares at the same price. The offer is at a 20% premium to Wednesday''s closing price of 915 Swiss francs a share. Merck is planning to combine its Pharma Ethicals division with Serono to create Merck-Serono Biopharmaceuticals. Serono''s biggest product is its Rebif treatment for multiple sclerosis, accounting for 49% of its sales in 2005.

Merck''s bid comes after a failed attempt to buy fellow German drugmaker Schering AG earlier this year. Rival Bayer won the battle for taking control over Schering. But, as part of the deal, Bayer paid Merck $4.6 billion for its stake in Schering. Shares in German drugmaker Merck dropped 5.3% in morning European trading, while Serono shares advanced 18%.

[R]7:30AM Asian markets record modest gains on Thursday on exporters stocks.[/R]
Asian markets were mostly higher on Thursday. Japan''s Nikkei 225 Average strengthened in the afternoon to finish the day up 0.7% to 15834.2. Auto makers were among the largest gainers, with Toyota rising 1.8% and Honda and Nissan both gaining 1%. Tire maker Bridgestone was up 3.3% as worries subsided that the coup in Thailand would threaten rubber supplies. Hitachi was down 1.2%, extending its losses this week, while Japanese banks recovered in the afternoon from steep morning losses. Mitsubishi UFJ Financial Group, ended up 0.7%.

In Hong Kong, the Hang Seng Index rose 0.6% to end at a six-year-high of 17619.97. China Mobile led the advancers, extending gains after reporting a rise in subscribers Wednesday. The cellular-service provider finished up 2.6%. In South Korea, the Kospi Index ended flat as early-session gains were undone by a fall in dollar''s value against the won and some profit taking. Korea Electric Power rose 1.1% and Korea Gas gained 3.8%, as the companies would be able to import raw materials at cheaper prices due to the stronger Korean won.

Australia S&P/ASX 200 shed 0.1%. Retail company Coles Myer advanced 2.9% after reporting that full-year net income rose 82% and raising its estimates. China Shanghai Composite index gained 0.5% as banking shares benefited from a strengthening yuan. The currency hit its highest level against the dollar Thursday since being revalued last July. Thailand SET index was down 1.42% to close at 692.57. The Thai baht strengthened slightly to 37.6 to the dollar.

[R]6:30AM European shares advance on merger deals.[/R]
European marketswere higher by mid-morning on Thursday. The FTSE 100 was up 18.10 points, or 0.31% at 5,873.6, while the German Xetra Dax added 10.2 points, or 0.2 per cent, to 5,964.63 and the French CAC 40 gained 10.4 points, or 0.2 per cent, to 5,203.18. Merck has agreed to obtain a majority stake in Serono, creating a new European pharmaceutical giant. Merck fell 6% while Serono shares were suspended at a fixed price.

Metrovacesa rose 7% to a record high as hopes of a bidding war for control of the Spanish largest property group squeezed the share price higher. Cresa, the Spanish property company controlled by the Sanahuja family, has gained acceptances representing 145 of Metrovacesa’s shares after it launched a €78.1 per share bid for a 20% stake. In other news, EADS fell 1.85 after the aerospace company confirmed there will be new delays to deliveries of its A380 superjumbo.

Oil prices edged higher on Thursday after hitting six-month lows the previous session. U.S. light crude was trading 20 cents higher at $60.67 a barrel, while London Brent crude was up 26 cents at $61 by 0943 GMT. Gold opened Thursday at a bid price of $584.90 a troy ounce, up from $578.60 late Wednesday.

The euro rose against the dollar on Thursday after the U.S. Federal Reserve kept interest rates unchanged a day earlier. In morning trading, the euro rose to $1.2725, up from $1.2691 late Wednesday in New York. The British pound rose to $1.8942 from $1.8881 late Wednesday after the minutes of the Bank of England last Monetary Policy Committee meeting helped cement market expectations of an interest rate hike in November. The dollar slipped to 117.11 yen from 117.46 yen.