GM Upgraded, Ford Downgraded

Elena
04 Oct, 2006
New York City

Ford Motors Corp. was downgraded to peer perform from outperform, with the broker saying that most of the near-term catalysts for the shares have unfolded. At the same time, Bear Stearns upgraded General Motors to peer perform from underperform, citing continuous beliefs of a potential alliance with Renault and Nissan.

[R]8:00AM Ford downgraded, General Motors upgraded[/R]
Bear Stearns downgraded Ford Motors Corp. ((F)) to peer perform from outperform, saying that most of the near-term catalysts for the shares, including declining gas prices and positive September auto sales, have unfolded. The firm added it is cautious about holding shares ahead weak third-and-fourth-quarter results.

At the same time, the broker upgraded General Motors ((GM)) to peer perform from underperform, citing continuous beliefs that there is too much optimism in the stock surrounding the benefits of an alliance with Renault and Nissan. It added that the desire of Kirk Kerkorian''s Tracinda Corp. to build its stake will support shares in the near-term.


[R]7:30AM Asian markets fell Wednesday on N. Korea nuclear test plans.[/R]
Asian stocks were mostly lower on Wednesday. The Nikkei 225 Index finished down 0.98% at 16082.55 after erasing morning gains. Sumitomo Metal Mining shed 5.29% and Mitsui & Co. sank 5.53%. Electronics shares also moved lower, with Sony slipping 3.26% following its announcement on Tuesday that its next-generation Blu-ray DVD recorders would be released later than those of rival Matsushita Electric Industrial, which markets electronic products under the Panasonic and Technics brand names.

Kospi in South Korea closed 1.6% lower at 1352.00 after dropping to a low of 1345.83 earlier in the afternoon. S&P/ASX 200 in Australia gave up 0.8% as slipping oil and metal prices took a toll on energy and mining stocks. Shares of Woodside Petroleum were off by 2.9 % and BHP Billiton declined 4.6%. Taiex index in Taiwan fell 1.2%. Chipmaker Taiwan Semiconductor Manufacturing dipped 2.5% amid a broad decline in tech shares.

Hang Seng Index in Hong Kong bucked the trend and advanced 0.13% to 17629.21. Airline stocks rose on lower oil prices. Cathay Pacific shares gained 1.3% and Air China rose 2.6%. But Hong Kong-listed mainland oil producer Cnooc shed 3.6%, also on the crude moves.


[R]6:30AM European stocks were mostly higher Wednesday on bank shares.[/R]
European markets were higher by mid-morning on Wednesday. The FTSE 100 in London gained 0.1% to 5,939.4, Frankfurt Xetra Dax added 0.3% to 6,010.55 and in Paris, the CAC 40 was 0.2% higher at 5,227.92.

In focus

Oil company British Petrolium declined in London after reporting expected lower margins while EADS announced late Tuesday that it will push back the already-delayed delivery schedule of A380 superjumbo jets by up to another year.

Advancers

Banks advanced after the US bank Citigroup was reported to be setting out on an acquisition course. Among those identified as targets, BNP Paribas of France gained 1.6%, Société Générale added 1.6% and BBVA of Spain gained 1.5%.

Companies that benefited from the decline in oil prices included British Airways with its shares up 2.4%, and cruise operator Carnival, which gained 1.4%. Chipmaker Infineon Technologies was also up 2.4% following an upgrade to buy from neutral from Goldman Sachs.

Decliners

EADS led the decliners. The aerospace group fell 6.7% after it announced further delays to its troubled Airbus A380 superjumbo, prompting top buyer Emirates to put its purchases under review.

DaimlerChrysler shares slipped 0.8%. The automaker last night also posted a narrower-than-expected 2.3% monthly drop in U.S. auto sales on strength from its Mercedes. Mining stocks moved lower on commodity exchanges. BHP Billiton lost 3.4% and Rio Tinto shed 3.3%.

Oil and gold

Oil prices fell for a third day Wednesday. Light sweet crude oil for November delivery fell 18 cents to $58.50 a barrel in electronic trading on the New York Mercantile Exchange. November Brent crude fell 41 cents to $58.02 at London''s ICE Futures exchange. Gold traded in London at $578.50, down from $581.80 late Monday.

Currencies

The U.S. dollar advanced against other major currencies in European trading Wednesday morning. The euro traded at $1.2696, down from $1.2727 late Tuesday in New York. The British pound traded at $1.8824, down from $1.8872. The dollar bought 118.05 Japanese yen, up from 117.89.