Upbeat Retail Sales Offset Oil Rebound

Elena
05 Oct, 2006
New York City

Stock market futures indicated a flat market opening, a day after the Dow Jones Industrials hit a record high. Strong retail September sales helped offset a rebound in crude-oil futures amid OPEC''s decision to reduce production. Wal-Mart said September sales rose at 1.3%, while total sales increased 12% to $31.21 billion. Target posted same-store sales increase of 6.7%, exceeding estimates of 5% growth.

[R]09:00AM Stock futures pointed to a flat start.[/R]
Stock market futures indicated a flat market opening, a day after the Dow Jones Industrials hit a record high. Strong retailers' September sales helped offset a rebound in crude-oil futures amid OPEC's decision to reduce production. On Thursday, OPEC decided to cut output by a million barrels a day, sending crude futures above the $60 a barrel to $60.52.

Overall, same-store sales advanced by 3.8%, or up 5.1% excluding Wal-Mart Store. Wal-Mart ((WMT)) said September sales rose at 1.3%, while total sales increased 12% to $31.21 billion. Target ((TGT)) posted same-store sales increase of 6.7%, exceeding estimates of 5% growth. Costco Wholesale ((COST)) reported a 4% same-store sales rise, slightly below analyst expectations. Starbucks ((SBUX)) posted a better-than-forecast 6%monthly sales increase. Starbucks shares rose 5.1% in pre-open trading, while Costco shares fell 1.2%.

In economic news, the U.S. Labor Department said initial claims for state unemployment insurance fell 17,000 to 302,000 during the week ending Sept. 30. S&P 500 futures slipped 0.50 of a point at 1,357.80, while Nasdaq 100 futures rose 0.50 of a point at 1,693.00 Dow industrial futures eased 4 points to 11,902.

[R]Initial jobless claims fell more steeply than expected.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended September 30. The report showed that jobless claims fell much more than economists had been expecting. The report showed that initial jobless claims fell to 302,000 from the previous week's revised figure of 319,000. Economists had expected jobless claims to edge down to 315,000 from the 316,000 originally reported for the previous week. The Labor Department also said that the less volatile 4-week moving average fell to 313,500 from the previous week's revised average of 316,250. The report also showed that continuing claims in the week ended September 23 rose to 2.448 million from the preceding week's revised level of 2.433 million.


[R]7:30AM Record close for the Nikkei in Japan boosts Asian markets.[/R]
Asian markets finished higher on Thursday. The Nikkei Average of 225 companies closed with a gain of 2.3% to 16,449.3. Shares of office-equipment and digital-camera maker Canon rose 4.4% after the Nihon Keizai business daily reported the group will lift its 2008 production goal for digital-camera shipments by 13% to 26 million units.

Shares of Toyota advanced 1.7%, while Sony Corp fell 0.3% as investors struggled to digest a recent spate of bad news regarding its electronics division. Toshiba Corp plunged 5.2% on concerns related to its financial burden in the acquisition of U.S. nuclear-utility manufacturer Westinghouse Electric Co.

Hang Seng Index in Hong Kong was up 1.3% to 17,854.5. HSBC rose 1.8% to HK$144.30, while Bank of China advanced 0.6% after earlier touching a fresh all-time high. Blue-chip property developer Hang Lung Properties rose 2.5%.

Taiwan leading share index climbed 1.8% to 6,997.2. Australia S&P/ASX 200 was up 1.3%. Singapore Straits Times Index advanced as much as 1%. Malaysia leading share index edged higher 0.3%, while New Zealand traded flat.

Advances in oil prices supported energy-related shares, with Woodside Petroleum of Australia advancing 3.6%. The largest crude-oil producer in China, PetroChina rose 1.1%.


[R]6:30AM European markets buoyed by M&A, oil, and mining stocks on Thursday.[/R]
European markets were higher by mid-morning on Thursday. London FTSE 100 climbed 0.6% to 6,002.8, Frankfurt Xetra Dax gained 0.6% to 6,083.73 and the CAC 40 in Paris added 0.6% to 5,289.72.

In focus

Steelmakers are among the stocks riding high on merger speculation after rumours that Tata Steel of India was approaching Corus, the Anglo-Dutch group with an offer.

Advancers

Oil companies were higher. OMV, the Austrian oil group, rose 3%, while Finnish refiner Neste Oil gained 2.7%. Total in France gained 1.2% and Britain’s BP added 1.4%.

Commodities were also on the increase. Corus shares jumped 10.4% in Amsterdam, while Thyssenkrupp in Germany added 3.1% and Salzgitter added 1.6%.

Decliners

British Airways shares were flat after Citigroup downgraded the carrier to hold from buy, citing lighter-than-expected September traffic and the firm reduced fiscal 2007 revenue guidance.

Oil and gold

Oil leapt more than 1 percent to above $60 a barrel on Thursday. U.S. crude oil jumped 67 cents to $60.08 a barrel. London Brent rose 56 cents to $59.78, having recovered from a low of $57.70, its weakest this year. Gold was trading at $567.20 an ounce, down $9.40 an ounce from Wednesday close of $576.60.

Currencies

The euro was barely changed against the U.S. dollar Thursday ahead of a meeting at which the European Central Bank was widely expected to raise its key interest rate. The euro bought $1.2711 in morning European trading, compared with $1.2713 in New York late Wednesday.

With the Bank of England also meeting Thursday, the British pound bought $1.8861, barely below Wednesday''s level of $1.8864. The dollar slipped to 117.66 Japanese yen from 117.89 yen.