Nikkei Dips Ahead of Earnings

Ivaylo
25 Oct, 2006
New York City

Asian shares finished mixed Wednesday, with commodity markets advancing on higher oil prices, while the Nikkei Average in Japan retreated ahead of earnings results from some of the biggest companies Japan. Hong Kong ended nearly flat, as the its stocks are heavily dependent on U.S. stocks and look to the decision of the Fed. South Korea advanced due to strong gains in the construction sector. Australia also edged higher.

[R]7:30AM Asian markets finish mixed, Japan slips, HK closes flat.[/R]
Asian markets finished mixed on Wednesday. The Nikkei 225 Index fell 0.5% to finish at 16699.30. The benchmark index slipped, led by brokerage stocks, consumer lenders and electronics. Nomura Holdings reported a 2.5% fall and Aiful dropped 7.2%. Real-estate stocks also fell, with Mitsubishi Estate shedding 2.9%.

In Hong Kong, the Hang Seng Index closed flat, rising 0.02% to 18157.94. Rate-sensitive property companies, such as Cheung Kong and Hang Lung Properties, closed lower before the Fed interest-rate decision. Cheung Kong dropped 0.5%, while Hang Lung Properties lost 1.8% and Sun Hung Kai Properties fell 0.2%. China Mobile supported the index, rising 0.5%.

In Seoul, the Korea Composite Stock Price Index, or Kospi, gained 0.4% to 1371.43. Hyundai Engineering & Construction advanced 2.4% and GS Engineering & Construction moved higher 4.3%. Australia S&P/ASX 200 gained 0.7%. Singapore Straits Times Index advanced 0.9% and Taiwan Weighted Price Index swung from early gains to end 0.5% lower. Markets in Malaysia were closed for a public holiday.

[R]6:30AM European shares rise on Wednesday on strong earnings reports.[/R]
European markets advanced by mid morning on Wednesday. The FTSE 100 in London gained 0.3% to 6,199.8, Frankfurt Xetra Dax added 0.1% to 6,250.51, and the CAC 40 in Paris was 0.3% higher at 5,418.17.

Economic news

German business confidence has bounced back unexpectedly, with optimism about current conditions hitting a fresh 15-year high.The surge in the Munich-based Ifo business climate index, from 104.9 in September to 105.3 in October, coincided with an unexpected rise in French business confidence and followed three consecutive monthly falls.

Advancers

Michelin, the biggest tyremaker in the world, gained 2% after it announced a 4.9% rise in quarterly sales, matching expectations. Raw materials costs remained a concern, the company said and would be 23% higher in 2006 than the previous year, but it still expected an operating margin close to 8%.

Moller Maersk, the Danish shipping and oil company, advanced 3.1% after it was reported that the Tierra Negra oilfield in Columbia, in which Maersk owns a 40% stake, may contain much more oil than previously forecast.

Nordea Bank, financial services group, gained 1.9% following its report of a forecast-beating 46% growth in third-quarter operating profit on strong revenue growth and slower cost increases.

Decliners

STMicroelectronics, a chipmaker, fell 1% despite reporting a 133% rise in third-quarter profit, as concerns arose over the outlook of the company for the fourth quarter.

Infineon, shed 0.8% after it revealed the cost of the insolvency of mobile phone group BenQ, one of its biggest customers.

Metrovacesa, a construction group, fell a further 1.9% having lost more than 8% in the previous session as questions remained about its inclusion in the Ibex index.

Oil and gold

December light, crude oil rose 10 cents to $59.45 a barrel in after-hours electronic trading on the NYME at 10:44 a.m. in London. Brent crude for December settlement advanced 17 cents to $60.03 a barrel on the ICE Futures exchange in London.

Gold traded in London at $581.60 bid per troy ounce, up from $581.00 late Tuesday.

Currencies

The U.S. dollar was mostly lower against other major currencies in European trading Wednesday morning. The euro traded at $1.2571, up from $1.2566 late Tuesday in New York. The British pound was quoted at $1.8764, up from $1.8742. The dollar bought 119.11 Japanese yen, down from 119.27.

[R]5:00 AM Gold and silver futures rebounded Tuesday, on oil stocks recovery.[/R]
December gold futures advanced $4.70 to end at $587.60 a troy ounce on the NYME. December silver gained 18 cents to settle at $11.85 an ounce. January platinum fell $11.30 to $1,063.10 an ounce but bounced from a $1,053 low. December palladium rose $1.65 to $323 an ounce. December copper declined 3.30 cents to finish at $3.4180 per pound.

December crude oil gained 54 cents to close at $59.35 a barrel. November heating oil settled up 2.62 cents at $1.6952 a gallon. November unleaded gasoline moved higher 6.65 cents to emd at 1.5380 a gallon. November natural gas advanced 21.0 cents to settle at $7.091 a million British thermal units.

On the New York Board of Trade, December Arabica coffee closed 0.30 cent higher at $1.0715 a pound, with March up 0.40 cent at $1.1110. Futures on raw sugar in foreign ports for March edged down 0.11 cent to close at 11.69 cents a pound.