Narrow Rally Faces Rising Oil Prices

123jump.com Staff
30 Nov, -0001
New York City

The narrow rally in the morning appears to broaden across several sectors. Home builder stocks came under pressure as several analysts downgraded stocks. Energy and Retail stocks are in demand. Oil continues to trade close to all-time high. In the overnight trading Asian stocks clsoed mixed. Euro trades to a 13-month low against the U.S. dollar. Copper mine strike in Chile is causing jitters in the metals market and gold drops third day in a row.

U.S. MARKET AVERAGES

The morning rally is focused on energy and retails stocks. In the overnight trading oil closed near-tem high and that rally spilled over in the morning trading. Retail stocks were trading higher on the expectations of better-than expected sales figure for the month of June to be released this week.

Shares of EMC were in demand as several traders bid up the price in anticipation of the potential bid from Cisco.

INTERNATIONAL MARKETS

Japanese Prime Minister Junichiro Koizumi registered a slim victory when the lower house of the Parliament approved bills to privatize Japan’s postal system in spite of the revolt by the ruling party. Next the bill will be submitted to the upper house as their approval is needed for the legislation to be enacted.

Asian-Pacific markets ended mostly lower ahead of U.S. markets re-opening after the extended weekend break and crude-oil prices heading towards the $60 a barrel mark. The Nikkei lost 0.3%, Hong Kong’s Hang Seng slipped 0.4%, and South Korea’s Kospi fell 0.3%. In Tokyo the dollar rose against the yen to a new 10-month high of $112.13.

European shares were steady at mid-day standing on the flat line as investors waited on U.S. markets re-opening after a three-day weekend for the Independence Day holiday and as oil prices started rising again towards the $60 a barrel level. Germany’s DAX30 lost 0.1%, France’s CAC 40 fell 0.1%, and London’s FTSE declined 0.01%. The euro slid to $1.1869 in early European trading.

OIL, METALS AND CURRENCIES

The euro slid to a 13 and-a-half-month low against the dollar on expectations of a positive U.S. economic outlook. The euro fell to $1.1869 in early European trading and at mid-day it recovered to $1.1879. The greenback rose against the yen, too, reaching a new 10-month high of $111.97. The British pound slid to $1.7530 from $1.7590 ahead of a Bank of England meeting.

U.S. oil prices gained 55 cents to $59.30 as crude-oil prices hovered over $59 a barrel on approaching hurricane season and supply concerns. U.S. crude-oil companies are close to their highest levels for six years. Last week OPEC suspended talk of increasing production by a further 500,000 bpd.

U.S. gold futures slipped to a 3 and-a-half-week low in early trading falling below $425 an ounce as the strong dollar gave way to speculative selling in the metals after the long holiday weekend. On the NYME August delivery traded down $3.10 at $ 425.70 an ounce.


EARNINGS AND CORPORATE NEWS

Wal-Mart, retailer, lifted its outlook for June same-store sales to 4.5% up from previous forecast of 2% to 4% growth citing demand for seasonal and general merchandise.

Pixar Animation Studios said it will miss its 2Q earnings forecast because of higher-than- expected returns by retailers. The company sees earnings of 10 cents per share against previously announced 15 cents a share.

ConAgra Foods posted 4Q earnings decline to 20 cents per share fron 32 cents a year ago on weak profit from packaged meats. Analysts had expected income of 26 cents per share.

Oracles, software company, reported 4Q profit increase of 20 cents a share vs. 19 cents last year . This-quarter results include acquisition expenses and other charges. The company expects total restructuring costs of $546 million related to pre-merger operations, down from earlier forecast of $611 million.

Lufthansa AG is allowed to proceed with its $374.7 million takeover of Swiss International Air Lines after being given clearance from the European Union. EU approval followed the U.S. antitrust regulators’ clearance to the deal given over the weekend. The company officials expect the deal to be finished by 2006 the earliest.