Retail Sales Drive Averages

123jump.com Staff
05 Oct, 2006
New York City

Oil rose 1%, gold gained $8 and retails sales stores reflcted changing consumer behavior. Market averages rose in the last hour of trading as traders rushed to buy retailers. Caterpillar advanced on upgrade and Marriott gained on earnings. Constellation Brands fell 8% on reporting earnings in line with estimates. Guitar Center fell 12% on lowered earnings and revenue outlook for Q3 and Q4. Starbucks raised store target to 40,000 from 30,000 and to open stores in India, Russia and Brazil.

[R]4:00PM Strong retail sales supported a mild rise in broader averages.[/R]

-Yield on 10-year bond closed at 4.56% and the 30-year bond closed at 4.72%.

-Oil rose 70 cents a barrel to sell at $60.11, while natural gas increased by 20 cents to $6.20 per mBtu.

-Gold closed up $8 to $575.80, silver rose 27 cents to close at $11.07 and copper gained 9 cents to close at $3.30.

-Asian markets finished higher led by an increase of 2.99% in Philippines, a rise of 2.28% in Japan and an advance of 1.58% in Taiwan. The only decliner was South Korea with 1.62%. Japan finished higher, leading a region-wide advance, as investors sought blue chips such as Toyota Motor Corp. and Canon Inc.
-European markets closed at a five-year high due to a rebound in commodity prices and interest-rate decisions. The leader was Norway with an increase of 1.55%, followed by a gain of 1.03% in Spain, while Switzerland finished 0.74% higher. Commodity-price related companies apologized for recent weakness as crude-oil futures went back over $60 a barrel and as metals prices also strengthened.
-Latin American Markets closed higher across the region led by 1% rise in Mexico and 0.8% rise in Argentina, Brazil and Chile. Canada closed 1.11% higher led by tech and bank stocks.
[R]12:30PM European shares closed at a five-year high.[/R]
European markets closed at a five-year high Thursday, boosted by takeover speculation, rebound in commodities prices, and interest-rate increases in line with expectations. The Bank of England kept rates unchanged, while the European Central Bank raised its key interest rate to 3.25%, as previously anticipated. London FTSE 100 closed up 0.6%, with Corus Group rising 16% amid hopes that it will enter into a deal with India''s Tata Steel. Other deal news came from Aer Lingus which jumped 15% on news Ryanair Holdings had offered to buy the firm for 1.48 billion euros. Among energy stocks, BG Group shares rose 3.4%, while miners Rio Tinto and BHP Billiton gained 3.6% and 4.1% respectively. The German DAX 30 rose 0.5% The French CAC 40 advanced 0.6%, helped by automakers. Renault gained 0.9% after the three-way alliance talks with Nissan Motors and General Motors failed.

Oil prices climbed back above $60 after the OPEC said it will cut production by one million barrels a day as soon as possible. Light sweet crude November delivery jumped $1.56 to $60.97. The U.S. dollar traded mixed versus major currencies. The euro traded at $1.2683, down from $1.2713. The dollar bought 117.74 yen, down from 117.89. The British pound stood at $1.8769, down from $1.8864. European gold prices recovered. In London the precious metal traded at $568.55, down from $561.60 per ounce. In Zurich gold traded at $569.20, up from $568.25. Silver closed at $10.90, up from $10.50.

[R]11:30AM Market turned in a lackluster performance.[/R]
Following two consecutive sessions of gains, with the Dow Jones hitting a record high, the U.S. stock markets turned in a lackluster performance in morning trading Thursday. Investors turned to profit taking, awaiting employment data in the month of September, due out Friday. A rebound in oil and metals prices boosted energy and commodities stocks. Meanwhile, retail shares declined, despite generally strong September same-store sales.

Among Thursday’s movers, shares in Marriott International ((MAR)) rose 3.6% after the hotel chain released an upbeat profit outlook. Pharmaceutical company Wyeth ((WYE)) raised its profit forecast for the year, citing strong performance of some of its key drugs. Nonetheless, the stock fell 0.4%. In morning trading, the Dow fell 13.93, or 0.12%, to 11,836.68. The S&P 500 index fell 0.65, or 0.05, to 1,349.57, and the Nasdaq composite index rose 2.98, or 0.13%, to 2,293.93. Bonds fell as stocks wavered, with the yield on the 10-year Treasury note at 4.61%, up from 4.56% Thursday.


[R]10:30AM The Sensex advances 1.52% in across-the-board rally on Thursday.[/R]
The Sensex on BSE gained 185.40 points, or 1.52%, to close at 12,389.41. The market-breadth was very strong. For 1,832 shares that advanced, 677 declined and 74 shares remained unchanged. From the 30-issue Sensex stocks, 26 advanced while the rest declined. The turnover on BSE was Rs 3,665 crore, higher than Rs 3,416 crore on Wednesday. The turnover on NSE was Rs 7,363.75 crore.

The rupee advanced on Thursday as the U.S. dollar slipped against other major currencies, and supported by higher Asian stock markets buoying the local currency. Robust capital inflows have given the rupee a 3% boost from a three-year low of 47.04 struck in July. Investors expect these inflows to continue as the central bank maintains a hawkish stance on rates and growth momentum continues.

In what would be the biggest ever acquisition by an Indian company, Tata Steel is reportedly in negotiations to acquire Anglo-Dutch steel company Corus for $10.5 billion.

NYSE may buy 26% stake in BSE, as BSE has already started a process to dilute equity stakes of its member brokers as part of the SEBI’s demutualization scheme, allowing for separate ownership from trading rights.

Most active

Mahindra Gesco Developers was the most-active stock on BSE, with a turnover of Rs 217.94 crore. Reliance Industries (Rs 134.02 crore), Atlanta (Rs 96.35 crore), and Gwalior Chemicals (Rs 76.54 crore) followed close.

Advancers

HDFC Bank led the advancers, up 3.98%, to Rs 928 on a volume of 97,778 shares. The stock experienced high volatility with intra-day high of Rs 975 and low at Rs 900.10. Index heavy Reliance Industries was up 0.58%, to Rs 1,156, on 11.57 lakh shares after reaching high of Rs 1,164.

IT leader Infosys Technologies surged 3.32% to Rs 1,863, on 2.09 lakh shares. It moved in a range of Rs 1,870 and Rs 1,818 for the day. Mahindra Gesco Developers soared 4.44% to Rs 849.50, on 25.77 lakh shares, after the company said it will raise Rs 480 crore by issuing 60 lakh shares at Rs 800 each, to institutional investors.

Reliance Communications advanced 2.55% to Rs 348.25, SBI was up 2.36% to Rs 1,038.90 and Tata Steel jumped 3.11% to Rs 539.65. Satyam Computer surged 1.76% to Rs 817, on expectations that the pharma industry contribution to revenue will grow from 7% to 10%, in the next two years.

Ahlcon Parenterals (up 20% to Rs 64.95), Moser Baer (up 18.89% to Rs 249.20), Petronet LNG (up 20% to Rs 57.90), D Link India (up 19.58% to Rs 102), Triveni Glass (up 14.76% to Rs 38.10) and Tube Investments (up 11.55% to Rs 92.70) also surged.

IT stocks were in high demand today on renewed buying interest, ahead of their second quarter results. Infotech Enterprises (up 2.43% to Rs 211.15), Wipro (up 2.18% to Rs 520.20), Polaris (up 6.37% to Rs 131), Patni Computers (up 1.85% to Rs 389) and TCS (up 0.80% to Rs 996) gained.

Tyre stocks rose despite the fall of price of rubber. Apollo Tyres (up 7.62% to Rs 344.75), JK Industries (up 10% to Rs 147.85), Goodyear India (up 5% to Rs 141.15), CEAT (up 5% to Rs 122.05), Falcon Tyres (up 7.53% to Rs 116.40), TVS Srichakra (up 5% to Rs 108.95) and MRF (up 5% to Rs 4066.05) advanced.

Decliners

Bharti Airtel led the decliners, slipping 0.52% to Rs 458.92, on a volume of 1.16 lakh shares. Simbhaoli Sugar edged down 0.26% to Rs 75.60. It has commissioned an ethanol plant at Chilwaria, UP, with an installed capacity of 60 KLPD. The project was finished in nine months at a cost of over Rs 25 crore.


[R]9:45AM Market opened mixed.[/R]
Stock markets opened lower as a rebound in oil prices inspired investors to do some profit taking, offsetting better-than-expected retail sales in September and lower unemployment claims last week.

Department store and teen retailers posted strong sales in September, buoyed by back-to-school purchases and some unfavorable weather conditions. Bebe Stores ((BEBE)), Children''s Place ((PLCE)), and American Eagle Outfitters ((AEOS)) were among the teen retailers posting notably higher sales. Of the department stores, Federated Department Stores ((FD)), J.C. Penney ((JCP)) and Nordstrom Inc. ((JWN)) posted same-store sales that exceeded estimates.

At the same time, discount retailers struggled in September. Wal-Mart Stores Inc. ((WMT)) said sales at stores open at least a year rose just 1.3%. Costco Wholesale ((COST)) posted a 4% same-store sales rise, below estimates. Target ((TGT)) sales exceeded expectations of a 5% growth, posting 6.7% rise.

Among other companies in focus, Apple Computer ((AAPL)) fell 1.4 % on corporate news related to company’s stock options. Hewlett-Packard ((HPQ)) lost 1% after California Attorney pressed criminal charges against former Chairwoman Patricia Dunn and four other officials connected with the company''s investigation into boardroom leaks. In the first hour of trading, the Dow fell 18.25, or 0.15% to 11,832.36. The S&P 500 index fell 1.37, or 0.10, to 1,348.85, and the Nasdaq composite index fell 3.34, or 0.15% to 2,287.61.


[R]9:30AM The FTSE 100 advanced by mid-day on likely merger deal.[/R]
The FTSE 100 in London advanced 31.2 points at 5,997,7 at mid-day after breaching the 6,000 level early in the trading. The performance of the benchmark index was also helped by sharp gains on U.S. markets overnight, where the Dow Jones Industrial Average struck a fresh all-time high.

Advancers

Corus shares led the gainers in London, up 15% on news that Tata Steel is considering a bid offer.

Oil stocks rallied, as OPEC announced a reduction in production of 1m barrel a day. BG Group rose 1.7% and BP advanced 1.4%.

Mining stocks were also in demand. BHP Billiton rose 2.3%, Rio Tinto put on 2.2% and Anglo American gained 1.7%.

Some minor stocks surged. Spirent Communications jumped 10.6% after the telecommunications group said its third quarter trading matched expectations. Viridian, the Irish water group, was up 6.5% on talk that an imminent bid was coming. Grainger Trust rose 3.6% on expectations that Vincent Tchenguiz, the property entrepreneur, could enter the running to buy the company.

Decliners

British Airways, a heavy fuel user, fell 1.9%. Xstrata lost 8.3%, as it went ex-rights following a recent share issue. Stanelco slipped a further 20.4% despite the packaging group statement that plans for a fund raising were still on track.

Other news

The Bank of England left interest rates unchanged at 4.75% on Thursday, but the investors expect another quarter point rise before the year is out.

The European Central Bank on Thursday increased eurozone interest rates by another quarter percentage point to 3.25% to combat worries over inflation.

[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 steeper-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.