Blue Chips Weigh Asia Lower

Ivaylo
26 Sep, 2006
New York City

Export-related stocks and techs shares pushed Asian markets down on Tuesday. The rebounding oil prices fueled worries that a slowdown in the U.S. would weigh on corporate profits. The Nikkei 225 Average dipped, ignoring a change in political leadership after incoming Prime Minister Shinzo Abe revealed the first details of his new Cabinet. Singapore and Australia bucked the downtrend and advanced.

[R]7:30AM Asian shares end lower on Tuesday pulled down by blue chips.[/R]
Asian markets ended lower on Tuesday. Nikkei 225 Average in Japan ended down 76.36 points, or 0.5%, at 15,557.5. Komatsu Ltd. ended down 0.6% after agreeing Monday to sell its outdoor power equipment business to Swedish garden equipment and tools group Husqvarna AB.

Fuji Electric Holdings Co gained 3.3% after broker Nikko Citigroup initiated coverage with a buy rating citing growth in core business areas of electric-machinery systems. Softbank Corp gained 3.8% after the Nikkei daily reported Tuesday the company plans to raise 1.45 trillion yen through the securitization of its Vodafone KK operations.

The Hang Seng Index in Hong Kong closed down 1.4% at 17,308.1. China Life Insurance Co lost 6.1% after nudging a life-time high Monday. China Mobile tumbled 3.8%. The slide accounting for 130 points of the Hang Seng 237-point slide Tuesday.

South Korea Kospi index fell 0.8% at 1,343.97, its lowest level in close to two weeks. South Korean shipbuilder Hyundai Heavy Industries Co. Ltd. rose 3.3% after winning a contract worth $1.6 billion to build offshore plant and equipment for natural gas production in Abu Dhabi.

Straits Times Index in Singapore added 0.1% at 2,526.0 and the Composite Index in Shanghai lost 0.6% at 1,712.6. Australia S&P/ASX 200 gained 0.1% at 4,989.6. BHP Billiton shares fell 1.4%, pacing a general pullback in industrial commodity prices.

[R]6:30AM Spanish utilities supported Europe higher on Tuesday.[/R]
European markets were higher by mid morning on Tuesday. London FTSE 100 gained 0.7% to 5,836.6, while Frankfurt Xetra Dax added 0.6% to 5,97.74 and the CAC 40 in Paris climbed 1% to 5,195.96.

M&A

The bid for Spain largest utility Endesa warmed up after Acciona, the Spanish conglomerate bought 10% of the company late on Monday, and said it may purchase more, potentially blocking the bid by Germany Eon.

Advancers

Acciona’s move however, sparked a flurry of activity in the Spanish utility sector, sending Iberdrola 3% higher. Metrovacesa continued its rally following recent bid hopes as major shareholders battled for control of the company. Metrovacesa’s shares rallied 5%.

Linde, the German industrial gases group, rose 3.7% on hopes the company would sell its forklift division for a high price. Vivendi, the French media and telecoms group, had offered to buy a 49% stake in Polish mobile operator PTC from Deutsche Telekom. Vivendi shares gained 0.6% and Deutsche rose 0.3%.

Oil stocks enjoyed a better day after crude prices rallied overnight. Statoil climbed 2.9%, and Austria OMV gained 2%.

Decliners

E.On, which is trying to buy Endesa, slid 2.2% and Ryanair Holdings shares declined 1.9% after it said that it has hedged its fuel requirements between January and March 2007 at a rate equivalent to $73 per barrel of Brent crude.

Oil and gold

Oil held above $61 on Tuesday after recovering from a six-month low as dealers focused on whether OPEC might trim output should prices fall further. U.S. crude sank four cents to $61.41 a barrel by mid morning, while London Brent slipped 12 cents at $60.68 a barrel. Gold advanced more than one percent on Tuesday tracking higher crude oil prices. Gold hit a high of $593.75 an ounce, its highest in nearly two weeks, and was quoted at $589.30/590.30.

Currencies

The euro fell against the U.S. dollar on Tuesday as fears of lower inflation data from the European Union undermined the common currency. In morning trading, the euro was down to $1.2743 from $1.2757 late Monday in New York. The British pound dropped to $1.8989 from $1.9014 late Monday. The dollar fell to 116.34 Japanese yen from 116.48 yen.

[R]5:00AM Gold and silver futures bounce back on oil rally.[/R]
December gold advanced 50 cents at $595.90 a troy ounce on the NYME after trading as low as $587.50. December silver gained 1.5 cents at $11.325 after a low of $11.13. October platinum finished down $14.90 to $1,133.20 an ounce, while January fell $13.40 to $1,144.20. December palladium settled $4.45 lower at $317.20 an ounce. December copper rose 0.40 cent at $3.4475 per pound.

The November crude oil contract gained 90 cents higher at $61.45 a barrel after trading in a wide range of $59.52-$62.15. The October gasoline contract added 2.89 cents at $1.5001 a gallon and October heating oil moved up 0.92 cent at $1.6564 a gallon. October natural gas settled down 15.2 cents at $4.485 a million British thermal units. On the New York Board of Trade, December Arabica coffee futures ended up 2.20 cents at $1.0665 a pound. Futures on raw sugar in foreign ports for October sank 0.71 cent at 9.75 cents a pound.