Gold Down $21, Oil Down 4%

123jump.com Staff
03 Oct, 2001
New York City

Steep decline in oil and gold prices helped broader averages to rise. The expectations on better retail sales, due to be released tomorrow, also helped the Dow and Nasdaq. Oil fell 3.85% and gold dropped $21. Oil closed at seven-month low and gold at three-month low. General Motors Corp. Tuesday reported a 3.1% decline in September sales and lowered North American production targets again. Ford, U.S. sales rose 4.7% last month on strong. Dow closes at a record high after six years.

Yield on 10-year bond closed at 4.63% and the 30-year bond closed at 4.77%

Gold dropped $21.80 to $581.50 at close, silver lost 12 cents to close at $11.045, while copper dropped 14.7 cents to close at $3.2825.

Oil fell by $2.35 a barrel to close at $58.68 and natural gas dropped 10.5 cents to $5.54 per mBtu.

-Asian markets closed mostly lower led by a decline of 0.79% in the Philippines and a drop of 0.71% in India. Indonesia led the few advancers with an increase of 0.58%, followed by a gain of 0.36% in Hong Kong. Japan finished 0.08% lower on a 2.7% decline in Sony''s shares due to quality problems news.

-European markets finished mostly lower, weighed down oil-producing companies, as crude oil prices fell below $59 a barrel. Norway led the list of decliners with 2.17% followed by a decline of 0.45% in France and drop of 0.43% in Spain.

-Latin America markets closed mostly lower led by Argentina with a decline of 1.26% and a drop of 0.61% in Brazil. The only advancer was Mexico with an increase with 0.13%. Canada dropped by 1.63% on crude oil prices on local exporters.

[R]12:30PM European shares closed in the red.[/R]
European markets finished in the red, pressured by oil-producing companies, as crude oil prices dropped to a ten-moth low below $59 a barrel. Sales warning from chipmaker Marvell Technology further weighed on sentiment, dragging tech stocks lower. Marvell dropped 14% after cutting its sales outlook and saying it plans to restate past financial results due to accounting errors.

Infineon Technologies declined by 0.6%, helping the German DAX 30 close down 0.1%. Lower crude oil prices provided some support to the automotive sector, with Volkswagen, up 1.5% and BMW, up 0.7%. The French CAC 40 dropped 0.5%, hurt by losses for chipmaker STMicroelectronics and oil major Total. London FTSE 100 fell 0.4%. BP slid 2.4%, Total fell 1.4%, and Eni lost 1.6% after Societe Generale downgraded its stance on the three European oil producers.

Oil prices dropped to a ten-month low on strong fuel supplies. Light sweet crude November delivery lost $1.88 to $59.15. Heating oil dropped 5 cents to $1.6532 a gallon, while gasoline was down by 4 cents to $1.4725. Natural gas futures slipped nearly 11 cents to $5.538 per 1,000 cubic feet. London Brent November contract slipped $1.04 to $59.41. The U.S. dollar traded mixed versus major currencies. The euro traded at $1.2743, up from $1.2742. The dollar bought 117.79 yen, up from 117.60. The British pound stood at $1.8896, up from $1.8866. European gold pulled down. In London the precious metal traded at $581.81, down from $599.90 per ounce. In Zurich gold traded at $582.05, down from $599.95. Silver closed at $11, down from $11.60.


[R]11:30AM Market turned higher on weaker oil.[/R]
The U.S. stock markets rebounded from earlier weakness as a continued decrease by the oil price generated some positive sentiment. Crude oil futures dropped by another $2 to $59 a barrel, giving a boost to oil-sensitive airline stocks and retailer companies, too. At the same time oil giants like Exxon Mobil Corp. ((XOM)) and Chevron Corp. ((CVX)) dropped 1.6% and 1.6% respectively. ConocoPhillips ((COP)) fell nearly 3% after the company said it expects production for the third quarter to come in about 5% lower than the previous quarter. The company also said it expects worldwide refining margins to be significantly lower than Q2 levels. Semiconductors fell, hurt by a lowered sales outlook from Marvell Technology Group ((MRVL)) which dropped 14%. Internet, networkers, biotech and gold stocks also moved to the downside.

Among stocks in focus, Pepsi Bottling Group ((PEP)), the largest bottler of PepsiCo Inc. drinks, tumbled 5.8% after the company reported Q3 earnings growth of $207 million, or 86 cents a share, up from $205 million, or 82 cents a year ago. The per-share results include a 4-cent cost of stock-based compensation and a 5-cent gain from income-tax law changes. In morning trading, the Dow Jones industrial average was up 5.76, or 0.05%, at 11,676.11. The Standard & Poor''s 500 index was down 2.36, or 0.18%, at 1,328.96, and the Nasdaq composite index fell 7.47, or 0.33%, to 2,230.13. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.60% from 4.61% late Monday.


[R]10:30AM The Sensex dips in a dull session, dragged down by selling pressure.[/R]
The Sensex on BSE finished 88.03 points, or 0.71% lower, to close at 12,366.39. The market-breadth, was positive, but had retreated as profit-taking seized smallcap and midcap stocks. For 1,407 shares that advanced, 1,047 declined and 65 remained unchanged. The turnover on BSE was to Rs 3,079 crore, lower than Friday’s Rs 3,705.68 crore. The turnover on NSE was Rs 5,990.72 crore. From the Sensex stocks, 21 declined while the rest advanced.

Indiabulls Fiancial Services Ltd. Has sold 4.5% to Dubai based and New Zealand brothers owned Sovereign Global Investment Ltd. The Dubai based fund will pay Rs. 302 crores or $66 million. The company share has risen 22-fold since its listing in Sept 2004.

Most active

Mahindra Gesco was the most active stock on BSE, with a turnover of Rs 81.89 crore followed by Tata Steel (Rs 73.51 crore) and Reliance Capital (Rs 72.66 crore).

Advancers

NTPC led the advancers, gaining 2.27% to Rs 133.15. Bajaj Auto rose 0.91% to Rs 3,025.50, Reliance Energy rose 0.61% to Rs 486.50, Tata Motors jumped up 0.57% to Rs 867 and Hindalco gained 0.29% to 171.85. Auto stocks gained on better than expected monthly sales.

Shares of TVS Motor Company rose 1.65%, to Rs 126.50, after it said on Tuesday its September two-wheeler sales advanced to 1,62,200 units from 1,21,108 units a year ago, an increase of 34%. Mahindra & Mahindra gained 0.81%, to Rs 686, after it said on Tuesday its vehicle sales rose 15%.

Metals gained on fresh buying in expectation of prices staying firm. Sesa Goa advanced 8.88% to Rs 1,059, Jindal Stainless gained 3.13% to Rs 111.90, Jindal Saw added 1.56% to Rs 325, Sterlite Industries rose 2% to Rs 445.35, Bhusan Steel surged 10% to Rs 303.60 and Shree Precoated Steel soaredup 10% to Rs 200.20.

Petron Engineering Construction added 5% to Rs 144.15, after securing a letter of intent from Madras Cements for a contract worth Rs 12.43 crore. Hindustan Zinc rose 1.58%, to Rs 603, after the company increased zinc price by Rs 2,000 per tonne, and lead price by Rs 1,100 per tonne.

Decliners

HDFC (down 3.73% to Rs 1,477), HLL (down 2.81% to Rs 249) and Cipla (down 2.33% to Rs 256.15) led the decliners. Index heavy Reliance Industres sagged 0.88%, to Rs 1,160.70, on 5.16 lakh shares. It traded in a range of Rs 1,188 and Rs 1,160.

Maruti Udyog shed 1.20% to Rs 969.45, on 3.47 lakh shares following its statement on Tuesday, that it had sold 59,420 vehicles in September, up 20.6% from 49,278 units in the same month last year. Tata Steel slipped 0.41% to Rs 533.45 after surging to a high of Rs 542.50.

IT stocks were hit by selling pressure. Infosys (down 1.51% to Rs 1,820), TCS (down 1.04% to Rs 1,011) and Wipro (down 1.30% to Rs 518.25) led the decliners in the sector. Bank declined as well. Kotak Mahindra, Karnataka Bank, Oriental Bank, Union Bank and IOB closed lower. Pharma stocks also dipped. Glenmark, Ranbaxy Labs, Pfizer, Sterling Bio and Cipla ended down.

Other news

The publishers of Hindustan Times and The Times of India have signed an agreement to jointly publish a new newspaper in New Delhi and set up a joint venture corporation.

The Tata Group today said its technical alliance with Australian retail company Woolworths to start a specialised retail chain for consumer durables. The new venture, Infiniti Retail Limited, will be a 100% subsidiary of Tata Sons, and will offer more than 6,000 products across eight categories.

Maruti Udyog, largest car maker, reported doemstic sales rise of 22% in Septemeber to 56,606 units from a year ago. Sales rose 14.6% compared to sales in August 2006. The export in September rose to 2,814.

Three Australian companies have decided to move call center and loan collection to India. St George Bank, Westpac, ANZ, National Australian Bank and Quantas has recently annouced similar moves.


[R]9:45AM Market opened lower for a third session in a row.[/R]
Stock markets opened in the negative for a third session in a row on growing concerns about the state of domestic economy. Investors were looking for signs about the health of the economy, either in the form of economic numbers, or earnings forecasts. Expectations of weaker auto sales for September, due out later in the day, also generated negative sentiment.

The Nasdaq moved notably lower, reflecting weakness in the technology sector, with semiconductor stocks seeing significant weakness because of a profit warning from Marvell Technology Group Ltd. ((MRVL)). The chip maker opened 15% down after saying that Q3 revenue will fall about 10% from Q2 levels. Marvell also said it would have to restate past results because of stock-option accounting errors. Energy stocks also came under pressure in early trading, as the price of oil further declined. At the same time, the lower oil price contributed to some strength in the airline sector. ExpressJet ((XJT)) rose nearly 2% after the airline reported a 17.3% increase in passenger traffic in September.

Among other Tuesday''s movers, Quest Diagnostics Inc. ((DGX)), provider of diagnostic testing services, dropped 11.8% after losing a nationwide contract with health insurer UnitedHealthcare Inc. Pier 1 Imports Inc. ((PIR)) said it discontinued its dividend as it works to boost liquidity. The stock was down 8.3%.

In the first hour of trading, the Dow Jones industrial average was down 12.25, or 0.10%, at 11,658.10. The Standard & Poor''s 500 index was down 4.15, or 0.31%, at 1,327.17, and the Nasdaq composite index fell 13.22, or 0.59%, to 2,224.38. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.74% from 4.61% late Monday.


[R]09:00AM Stock futures declined ahead of auto sales release.[/R]
Stock futures slightly declined on concerns about economic slowdown and expectations of weaker auto sales. The Chrysler unit of DaimlerChrysler is expected to have the worst performance. Sales of General Motors and Ford Motor Co. are seen roughly flat in comparison with last year.

Elsewhere, Marvell Technology ((MRVL)) tumbled 17% in pre-open trading after saying that Q3 revenue will fall about 10% from Q2 levels. Marvell also said it would have to restate past results because of stock-option accounting errors. Shares of rival company Broadcom ((BRCM)) dropped 3.3%. Sepracor ((SEPR)), drug research and development company, slipped 3.2% after Goldman Sachs downgraded its stock to neutral from buy, and cut its 12-month price target to $55 from $63. Skyworks Solutions ((SWKS)) soared 38% after saying that it was planning to cut its workforce by 10% as part of a plan to save $70 million in annual costs.

There are no important economic reports due out on Tuesday. Dow Jones futures were recently down 10 points, S&P 500 futures declined 1.7 points and Nasdaq futures eased 3.5 points.


[R]8:30AM U.S. corporate layoffs surged by 54%.[/R]
U.S. corporate layoff announcements jumped 54% to 100,315 in September, marking the highest rise since January, and the second straight month of considerable increase. In July, job cuts totaled just 37,178. September''s total job cuts were 40% higher than the 71,836 layoffs recorded in September 2005. Job-reduction announcements rose 12% in Q3, reaching 202,771 from Q2’s 180,580. For the year to date, layoffs are down 18% to 739,229 from the first nine months of 2005.

The chief executive of the outplacement firm said that the job reductions are closely related to the slowdown in the U.S. economy. Cuts related to the housing slowdown are surfacing at companies such as Pulte Homes ((PHM)) and home improvement retailer Home Depot ((HD)). In addition, consumer-product companies announced 9,031 cuts in September.

In September, the auto industry announced plans to slash 33,745 jobs, the biggest number since January''s 36,299. So far in 2006, 111,642 job cuts have been announced by automakers and auto-parts manufacturers. The automotive cuts were dominated by suppliers, affected by lower production levels at Ford ((F)), General Motors Corp. ((GM)) and DaimlerChrysler ((DCX)).

The computer industry planned to cut 10,600, mostly at Intel ((INTC)). The telecommunications industry announced job reductions of 10,059.


[R]7:30AM A sharp drop in crude-oil prices brought stocks lower in Asia.[/R]
Asian markets finished lower on Tuesday. The Nikkei 225 Average in Japan finished the day 0.08% lower at 16242.09. Sony shed 2.7%, having sunk 5.3% since Thursday on a lot of unwelcome news involving faulty laptop batteries as well as reservations about its flagship games console. Oil stocks also dipped after oil futures slid Monday on U.S. markets. Oil explorer Inpex Holdings dropped 3.9%.

Hang Seng Index in Hong Kong gained 0.36% to close at 17606.53. Recently listed China Merchants Bank surged 6.7%, and China Mobile advanced 1.6%. The advances in the two Chinese firms came after the tightly-controlled yuan has moved up at an unprecedented pace in the past two weeks.

Taipei shed 0.06% to 6956.88 and S&P/ASX 200 in Australia closed 0.11% higher at 5184.30. In Australia, a favorable cocktail of domestic economic data spurred buying of stocks, resulting in the seventh consecutive daily rise by the market. Lower oil prices weighed down energy stocks, as Woodside Petroleum fell 2.9%, but helped airlines gained, as Qantas gained 1.5%.


[R]6:30AM Tech and enegry stocks weigh Europe down on Tuesday.[/R]
European markets were lower by mid morning on Tuesday. The FTSE 100 in London lost 0.5% to 5,927.5, while Frankfurt Xetra Dax fell 0.7% to 5,957.65 and in Paris, the CAC 40 shed 0.7% to 5,206.45.

Decliners

Infineon, the German chipmaker, fell 1.7% after Rabo Securities downgraded the stock. Franco-Italian chipmaker STMicroelectronics shed 1.5% and Dutch chip equipment maker ASML fell 1%.

Oil producers fell after crude prices sank overnight on speculation that US supplies will continue to build in spite of Opec production cuts. Finnish refiner Neste Oil fell 3.2%, while Statoil of Norway fell 2.9%. Total of France shed 1.1 % and Repsol in Spain lost 1.1%.

Spanish property group Metrovacesa gave back some its recent gains as its shares retreated 3.3% and Eon, the German utility, fell 0.8%.

Advancers

Shares of miner Xstrata rose 2.8% after it said that it''s issuing 2.9 billion pounds ($5.5 billion) in discounted shares, to help refinance a $7 billion temporary facility to buy the Canadian miner Falconbridge. Tesco advanced 0.7% after it said that its first-half net profit rose 23%, as revenue from continuing operations rose 20.8%.

Oil and gold

Crude oil for November delivery dropped 54 cents to $60.49 a barrel in electronic trading on the NYME at midday in Europe. November Brent crude at London ICE Futures exchange fell 69 cents to $59.76 a barrel.

Gold slipped as low as $591.70 an ounce and was quoted at $592.80/593.80 in early morning, down from $597.50/598.25 late in New York on Monday.

Currencies

The euro rose to $1.2758, up from $1.2742. The U.S. dollar traded at 117.66 yen, up from 117.60 yen from late Monday. The pound was at 67.59 pence in London, compared with 67.57 pence late yesterday.