Futures Climb on Oil Decline

Elena
25 Sep, 2006
New York City

U.S. stock market futures recovered from Friday''s losses, boosted by retreating crude oil prices. Corporate news at Hewlett-Packard also contributed to the positive mood. The company is expected to be in the spotlight again after announcing late Friday that CEO Mark Hurd will take on Patricia Dunn''s role as chairman.

[R]09:00AM Retreating crude oil boosted stock market futures.[/R]
A sharp decline by crude oil futures boosted U.S. stock market futures Monday, helping them recover after Friday’s losses brought about economic slowdown concerns. Crude-oil futures dropped as low as $59.52 in electronic trading. Corporate news at Hewlett-Packard also contributed to the positive mood. Hewlett-Packard ((HPQ)) is expected to be in the spotlight again after announcing late Friday that CEO Mark Hurd will take on Patricia Dunn''s role as chairman. Company’s shares added 0.9% in Frankfurt. Citigroup downgraded household appliance manufacturer Whirlpool Corp.((WHR)) to sell from hold. In other broker news, Lam Research ((LRCX)) rose 2.5% in pre-open trading after CIBC World Markets upgraded the semiconductor equipment maker to sector outperformer from sector performer. SanDisk ((SNDK)) fell 2.4% before the bell as Merrill Lynch downgraded the memory card maker to neutral from buy, citing the risk of sharply lower memory prices. Warrior Energy Services ((WARR)) surged 65% in pre-open trading to $23.59 after agreeing to be bought by Superior Energy Services ((SPN)) for $175 million in cash and 5.3 million in shares. S&P 500 futures rose 3.25 points at 1,329.25 and Nasdaq 100 futures rose 6 points at 1,647.00. Dow industrial futures were up 31 points.


[R]8:00AM UCB agreed to buy Schwarz Pharma for $5.6 billion.[/R]
Belgium''s UCB agreed Monday to buy Germany''s Schwarz Pharma in a deal worth $5.6 billion, or 4.4 billion euros in cash and shares, a 20% premium to Friday''s close. The proposal values Schwarz Pharma at 91.1 euros using Friday''s closing prices.

The deal, which is the third multibillion-dollar takeover in the European pharmaceutical industry in the past five days, comes after bid offers by Germany''s Merck KGaA to buy Switzerland''s Serono for $13.3 billion, and Denmark''s Nycomed to buy the pharmaceutical operations of Germany''s Altana for $5.8 billion. Owing to these mergers, the price of Schwarz Pharma has risen, as UCB is offering 28% more than the German company''s value before those announcements.

The combined companies are expected to have annual revenue of more than 3.3 billion euros, global leadership in neurology and a more diversified product portfolio. They expect more than 300 million euros a year in synergies after three years, and hope the deal will lift adjusted earnings in the second year. Financial advisers for UCB were Braveheart Financial Services and Lazard, while Rothschild advised Schwarz Pharma.


[R]7:30AM Asian markets finish mixed on Monday, the Nikkei ends flat.[/R]
Asian markets finished mixed on Monday. Japan''s Nikkei 225 Average ended unchanged at 15,633.8. Shares of Toyota Motor gained 0.3% to 6,290 yen after the company said exports, including those of its related Daihatsu Motor and Hino Motors units, surged 47%. Honda Motor Co rebounded from negative territory to end unchanged after the company reported exports rose 31%. Mazda Motor Corp rose 1% after the auto maker said exports for the month rose 7.1%. Nissan Motor Co and Mitsubishi Motors Co. fell in August from a year earlier.

Shares of brokerage Nomura Holdings fell 1.5% on worries that a broader economic slowing could hinder trading volumes. Shares of NEC Corp. were down 0.3%, reflecting weakness in the export-dependent technology sector and shares of Sony Corp. shed 0.8%.

The Hang Seng Index in Hong Kong fell 0.2% to 17,568.7. Hong Kong-listed shares of Standard Chartered PLC fell 2.5%, giving back some of its 5% gain Friday. The China Enterprises Index, was up 0.3% at 7,123.8. Taiwan Weighted Index rose 0.4% at 6,911.21. Shares listed in Singapore and Malaysia traded flat. South Korea Kospi rose 0.5%, while New Zealand leading share index fell 0.3%.

[R]6:30AM European shares advance on Monday on oil prices and merger deals.[/R]
European markets were higher by mid-morning on Monday. The FTSE 100 in London added 0.4% to 5,844.7, while the Xetra Dax in Frankfurt was up 0.9% to 5,933.70 and the CAC-40 in Paris rose 0.7% to 5,179.89.

M&A Activity

Schwarz Pharma in Germany agreed to be bought by Belgian drug making rival UCB for around 4.4 billion euros in shares and cash. UCB shed 2.6% and Schwarz climbed 17.9%. UCB''s offer, using Friday''s closing price, is valued at 91.10 euros a share. UCB will issue new shares to fund the stock component of the deal.

Advancers

The fact oil prices have resumed their downward trend should at least offer some help to many stocks. Ryanair, the Irish airline, rose 3.1%. Crucell, rose 1.95 on speculation the Dutch biotech company may receive regulatory approval this week for its Quinvaxem vaccine for five childhood diseases. Union Fenosa rose 4.9% after ACS, the Spansih construction company, reportedly gave a buy order to bank Caja Madrid for 6% of the Spanish power company, aiming to take its stake to 40%. ACS was 1.1%.

Decliners

The oil sector was weak. BP fell 1.4% and Statoil dropped 4% and Norsk Hydro fell 3.6 %. Getronics, the Dutch IT services group, fell 2.9% after Deutsche Bank started the stock as a sell. The broker said challenges remained in the core business and working capital management must remain tight to avoid a future cash crunch.

Oil and gold

Oil prices fell below $60 a barrel for the first time in six months Monday. Light, sweet crude for November delivery fell 98 cents to $59.57 a barrel. November Brent crude on London''s ICE Futures exchange dropped $1.04 at $59.37 a barrel. Gold traded in London at $589.50, up from $586.00 late Friday.

Currencies

The U.S. dollar was mixed against other major currencies in European trading Monday morning. The euro bought $1.2772, down from $1.2787 late Friday in New York. The British pound traded at $1.9031, up from $1.9006. The dollar bought 116.57 Japanese yen, up from 116.45.