Dollar, Oil Decline, Dell Rise

123jump.com Staff
22 Nov, 2006
New York City

General Motors stock dropped 4.7% on the news that Kirkorian controlled investment vehicle has cut its GM holding by 25%. The billionaire investor has sold 14 million shares and cut its holding down to 42 million shares, representing only 7.4% stake in GM. The U.S. dollar dropped on the job report showing more people filing for unemployment report. Initial jobless claims increased by 12,000 to 321,000.

[R]4:00PM NY – 10:00PM Germany[/R]
The U.S. dollar fell on U.S. job report and oil declined on higher than expected rise in crude oil inventory.

Yield on 10-year bond closed at 4.565% and the 30-year bond closed at 4.646%.

Gold increased 30 cents to close at $629.00 a troy ounce, silver declined 4.5 cents to end at $13.04 a troy ounce and copper lost 1.15 cents to close at 313.60 cents a lb.

Oil decreased $1.13 to close at $59.04 a barrel and heating oil declined 5.41 cents to finish at 167.90 cents a gallon. Gasoline was down 5.27 cents to end at 158 cents a gallon. Natural gas lost 22.9 cents to close at $7.759 per mBtu.

Asian markets closed higher with a leader Australia with a gain of 1.56%, followed by Hong Kong with an advance of 1.28% and Japan with an increase of 1.14%. There were no decliners. Japanese markets finished higher as investors sought Mitsubishi UFJ Financial Group, Softbank Inc. and other blue chips that were heavily sold earlier in the week.

European markets closed mixed with U.S. economic data countering gains in the airline sector on bid speculation. The advancers were led by Spain with a gain of 0.47%, Germany with an increase of 0.24% and Switzerland with an advance of 0.05%. The decliners were the U.K. with a loss of 0.68%, Belgium with a decline of 0.22% and France with a decrease of 0.13%. European markets were lifted by airlines and miners.

Latin America markets closed higher led by Argentina with a gain of 0.75%, Mexico with an advance of 0.28% and Brazil with an increase of 0.25%. The only decliner was Canada with a loss of 0.13% for a sharp decline in the price of oil.

[R]1:00PM European markets closed mixed.[/R]
European stock markets finished mixed as disappointing U.S. economic data offset gains in the airline sector. Unexpected decline in U.S. consumer sentiment generated negative sentiment both in the U.S. and European markets. Airlines showed strength on bid speculation. Qantas said it had been approached by two private-equity groups, coming on the heels of U.S. Airways Group launching a hostile bid for bankrupt U.S. carrier Delta Air Lines. Deutsche Lufthansa rose 1.9%, shares of British Airways rose 2.1%, and Air France-KLM shares gained 3.2%. Among European decliners were the French advertising group Havas and the U.K. building products group Wolseley. The German DAX 30 advanced 0.2%, supported by Techem which climbed 7.8% after the company backed an offer of 1.29 billion euros from BC Partners. Deutsche Boerse rose 6%, extending gains when speculation re-emerged over a possible offer for Spain''s Bolsas Y Mercados. The French CAC 40 edged down 0.1%, Shares of Euronext, up 5.3% and shares in aerospace company EADS, up 5% limited the decline. London FTSE 100 moved notably down 0.7%, with DSG International shares falling 7.3%.

Crude oil prices steeply dropped as U.S. inventory data showed a bigger-than-expected increase in crude oil supplies. Crude oil December contract slipped $1.45 to $58.72 a barrel. London Brent dropped $1.28 to $59.11. The U.S. dollar extended decline against its rival currencies. The euro was quoted at $1.2942, up from $1.2843. The dollar bought 116.56 yen, down from 117.87. The British pound was quoted at $1.9147, up from $1.9002. European gold prices further advanced. In London, gold traded at $628.40 per troy ounce, up from $627.80. In Zurich, the precious metal traded at $631.53 per ounce, up from $622.15. Silver closed at $13, up from $13.04.


[R]11:30AM Stocks erased early gains, turned lackluster.[/R]
U.S. stocks turned to a lackluster performance after weaker-than-expected consumer sentiment data offset upbeat Q3 earnings from computer giant Dell. The University of Michigan''s revised consumer sentiment index for November was unexpectedly revised down to 92.1 from the preliminary reading of 92.3. Economists had been expecting the index to be revised up to 93.0.

Dow component General Motors Corp. ((GM)) weighed on the blue-chip index, down 2.6%, extending this-week losses on speculation its biggest shareholder is moving capital to other investments and on concerns the giant automaker headed toward a tough round of contract talks with its biggest union. Biotechnology stocks moved to the downside, with PDL BioPharma ((PDLI)), Celgene ((CELG)), and Gilead Sciences ((GILD)) posting notable losses.

Computer hardware stocks traded in the positive, supported by Dell (DELL) which turned into the sector''s best performance with an advance of 10% after reporting better-than-expected Q3 earnings. The gold sector continued to post strength as the price of the precious rose $5.80 to $634.50 an ounce. Tech stocks were boosted as well by news that International Business Machines Corp. ((IBM)) and Cray Inc. ((CRAY)) will receive contract extensions worth more than $200 million from the Defense Department to develop a new supercomputer. Cray jumped 28% to $12.70, and IBM rose 26 cents to $93.34.

IAC/InterActiveCorp ((IACI)) rose 4.2% on Nasdaq, shares of Questar ((STR)) were up 1.2% on the NYSE, and DirecTV ((DTV)) gained 2.6% after Standard & Poor''s said the stocks would be added to its S&P 500 index. In late morning trading, the Dow Jones industrial average was down 1.85, or 0.02%, at 12,319.66, after reaching a new trading high of 12,361.00 earlier. The Standard & Poor''s 500 index was up 1.33, or 0.09%, at 1,404.14, and the technology-heavy Nasdaq composite index rose 6.90, or 0.28%, at 2,461.74.


[R]10:30AM The Sensex finished up for a third day in a row on buoyant funds[/R]
The Sensex on BSE closed 89.76 points, or 0.66% higher, at 13,706.53, which is an all-time high. The session was volatile as the benchmark index traded within a range of 115 points. The market-breadth was positive, although the margin between advancers and decliners was not big. As 1,299 shares advanced on BSE, 1,235 declined and 78 shares did not change. The turnover on BSE was Rs 5,151 crore as compared to Rs 4,595 crore on Tuesday. From the Sensex stocks 19 advanced while the rest declined. The turnover on NSE was Rs 10, 463.59 crore.

Economic news

During the first day of Chinese president visit in India, the first by a Chinese head of state in a decade, the two most populous nations in world pledged to double two-way trade to $40 billion by 2010 as well as to boost bilateral investment.

The Department of Telecom intends to roll out the optical fibre cable project in phases, which will free a part of the 45 Mhz of radio frequency being used by the armed forces presently. This will help cellular service providers, who are facing a severe spectrum crunch.

With economy on a buoyant note, India Inc today gave a thumbs up to the UPA government at mid-point of its tenure, while hoping that the pace of reforms would be accelerated for taking the GDP growth rate to double digits.

Advancers

Satyam Computers led the advancers, rising 5.96% to Rs 480.25, on 17.43 lakh shares. The stock traded in a broad range of Rs 482 – 455.05. Reliance Energy gained 3.50% to Rs 551. There are reports that subsidiary, Reliance Energy Transmission, had bid for establishing transmission lines for the Western Region System Strengthenin scheme by Power Grid Corporation of India. The financial bids were opened on 20 November 2006, and are currently under scrutiny.

Bharti Airtel firmed 2.32% to Rs 638 and Reliance Communications added 3.43% to Rs 430.15 for the second successive day on reports that the government will free up more frequencies for cellular telephony. Both had set new records earlier in the day.

Index heavy Reliance Industries advanced 0.39% to Rs 1,277.60, on a volume of 6.22 lakh shares. It traded between Rs 1,273- Rs 1,290. ICICI Bank gained 1.04% to Rs 880.40, due to reports that it will raise funds overseas to finance lending growth. State-run oil explorer ONGC advanced 1.40% to Rs 857, after global crude oil prices stabilized around $60 a barrel.

Leading zinc maker Hindustan Zinc surged 7.13% to Rs 932, supported by a rise in zinc prices on the LME, for the second day in a row. Zinc for delivery in three months closed at $4,295 a tonne, up 3% or $126 from the previous session.


ICI India soared 7.55% to Rs 374, on the assumption that it will make huge capital gains by disposing off subsidiary, Quest International. ICI India has decided to sell its wholly-owned subsidiary, Quest International India, to Givaudan of Switzerland.

Shares of textile firm Birla VXL surged 10% to Rs 53.10, for the second straight day, on hopes that the impending rights issue may be another step towards a possible turnaround.

Union Bank of India rose 1.2% to Rs 135 after allying with IL&FS for rendering services to foreign funds in India.

Decliners

HDFC Bank led the decliners, slipping 1.29% to Rs 1,077.10, on 1.39 lakh shares. Infosys sank 1.28% to Rs 2,223, as its ADR lost 3.3% on Tuesday, to close at $53.44.

Tata Steel dipped 0.84% to Rs 471.45. It announced on Wednesday it has signed a joint venture agreement with Tata Power Company for captive power plants in three states.

State-run oil refiners and marketing firms declined after crude oil touched $60 a barrel on Wednesday, its highest in two weeks. Indian Oil Corporation lost 2% to Rs 503.10, Hindustan Petroleum Corporation shed 3.03% to Rs 315, and Bharat Petroleum Corporation sagged 2.23% to Rs 371.25.

i-flex Solutions dropped 2.4% to Rs 1,550, after Oracle announced a revised schedule for the open offer, agreeing to pay interest for the period of delay.


[R]9:45AM Market opened slightly higher, led by tech stocks.[/R]
U.S. stocks opened slightly higher Wednesday as strong Q3 earnings from Dell gave an early boost to tech stocks. Dell ((DELL)) climbed 10% on better-than-expected profit rise of 12% in Q3. Dell beat market expectations thanks to strong laptop sales, a promising sign ahead of one of the biggest shopping days of the year. Brocade ((BRCD)) jumped 8% after it reported Q4 net income of 7 cents a share compared with breakeven in the year-earlier period. J Crew Group ((JCG)) rose 5% as Q3 earnings rose to $26 million from $3 million in the year-earlier period, helped by 23% revenue increase and comparable-store-sales growth of 19%. Alcoa ((AA)) gained 2% after the world''s biggest aluminum company unveiled a broad restructuring that will cut 5% of its workforce.


[R]9:30AM The FTSE 100 in London advanced in early trade on rally in ICI.[/R]
By mid-day, the FTSE 100 in London gained 9 points to 6,211.9.

Advancers

ICI led the advancers, gaining 9%, after it announced the sale of Quest, its flavours and fragrance business, to Givaudan of Switzerland for 1.2 billion pounds.

Miners were strong in early trading on the back of firm metal prices.Vedanta Resources rose 3.6% and Xstrata gained 2.2%. BHP Billiton was 2.5% stronger on speculation it could bid for US mine operator Freeport-McMoRan Copper & Gold.

Airline stocks were also upbeat following news that Macquarie Bank of Australia and Texas Pacific Group have made a buyout offer for Quantas Airways. British Airways rose 2.6%, EasyJet added 2% and Ryanair increased 0.9%.

Legal & General added 2% on several upbeat broker comments. HSBC raised its price target while Credit Suisse upgraded the stock from underperform to neutral.

Northern Foods firmed 5.1% after it announced the disposal of its speciality bread, chilled pastry, cakes and flour milling to Vision Capital for 160 million pounds.

Decliners

On the downside, DSG Internation, owner of Dixons slipped 4.4% after it reported mixed first-half numbers.

Several stocks were down as they began trading without the latest dividend rights. Scottish Power fell 1.5%, Vodafone lost 1.1% and Debenhams was 1.6% lower.

Kensington Group slumped 9.6% after the mortgage lender said it expected to lower levels of growth in profits in 2007.


[R]9:00AM U.S. stock futures advanced, boosted by Dell earnings.[/R]
U.S. stock futures moved to the upside Wednesday, boosted by better-than-expected Q3 results reported by Dell Inc. Trading is likely to be subdued ahead of the Thanksgiving holiday. In economic news, the Labor Department reported in early release that in the week ending November 18, initial claims advanced to 321,000, an increase of 12,000 from the previous week''s revised figure of 309,000. A final reading of consumer sentiment for November and weekly energy inventory data are also due out today.

Of companies in focus, Dell Inc. ((DELL)) shares jumped 8.5% in pre-open trading after it said its quarterly profit rose nearly 12%, coming in above analyst expectations. However, revenue disappointed. Following the news, Dell was upgraded to outperform by Bear Stearns. Comcast Corp. ((CMCSA)) said it had bought Walt Disney Co.''s 39.5% ownership stake in E Networks for $1.23 billion, and the two companies landed long-term distribution agreements for 10 ABC-owned television stations and other Disney networks. Brocade ((BRCD)) rose 4.9% in pre-market opening as the network equipment provider topped forecasts with quarterly profit and sales. J Crew Group ((JCG)) is expected to be actively traded as it raised its 2006 earnings outlook. Dow Jones futures were recently up 23 points, S&P 500 futures rose 2.7 points and Nasdaq futures increased 2.8 points.

[R]Initial jobless claims rose by 12,000.[/R]
Wednesday morning, the Department of Labor released its report on initial jobless claims in the week ended November 18, showing that jobless claims increased by much more than economists had been expecting. The report showed that jobless claims rose to 321,000 from the previous week''s revised figure of 309,000. Economists had expected jobless claims to increase to 310,000 compared to the 308,000 originally reported for the previous week. The Labor Department also said that the less volatile four-week moving average rose to 317,000 from the previous week''s revised average of 314,000. The report also showed that continuing claims in the week ended November 11 rose to 2.454 million from the preceding week''s revised level of 2.440 million.


[R]8:15AM Dell reported Q3 earnings above estimates. The stock jumped 9%.[/R]
Dell Inc. ((DELL)) reported late Tuesday 12% profit increase in Q3 quarter profit, beating analyst expectations. The computer giant said that net income rose to $677 million, or 30 cents a share, up from $606 million, or 25 cents in the year-ago quarter, exceeding estimates of 24 cents a share. Gross margins as a percentage of revenue climbed to 17% from 16.2% a year ago. Revenue rose 3.5% to $14.38 billion, up from $13.91 billion but slightly lower than the $14.44 billion expected by analysts. Dell didn''t give a forecast for its Q4 results.

The computer giant called the results preliminary and subject to change due to an ongoing probe by federal securities regulators into its accounting practices. Dell delayed its financial results almost a week because it said it had had to deal with an investigation by the Securities and Exchange Commission. Bear Stearns analyst upgraded Dell to outperform from peer perform, citing evidence of a turnaround and the company''s improved focus on profitability vs. growth. Dell shares jumped 9% to $27.05 in pre-open trading.


[R]7:30AM Asian stocks surged Wednesday, led by Japanese financials.[/R]
Asian markets finished higher on Wednesday. Tokyo''s 225-issue Nikkei Stock Average gained 180.09 points, or 1.1%, to 15,914.23. shares of Internet and telecom conglomerate Softbank jumped 8.4%, its first gain in six trading sessions. Shares of Mitsubishi UFJ , the largest bank in Japan by assets, rose 2.2% while lender Mizuho Financial Group advanced 2%. Department store group Mitsukoshi Ltd rose 3.4% while Fast Retailing operator of the Uniqlo retail chain, gained 1.5%.
The Hang Seng Index in Hong Kong rose 1.3% to end at 19,250.79. Hong Kong property developer Cheung Kong Holdings rose 2.9%. the China Enterprises Index, surged 3.4% to end 8,610.04, led by gains in property and banking shares. Mainland lender China Construction Bank rose 5.1% while China''s largest lending by assets Industrial & Commercial Bank of China.

Australia S&P/ASX 200 rose 1.6%, led higher by gains in BHP Billiton. The largest mining group in the world rose 2.9%, pacing gains in copper and petroleum prices. Elsewhere in Asia, Singapore Straits Times Index added 0.8%, Malaysia KLSE Composite rose 0.9%, and New Zealand NZX-50 Index closed 0.1% lower. Kospi in South Korea added 1.2% and Indonesia JSX Composite gained 1.1%. Shares listed in Shanghai wiped off earlier losses to trade higher in the afternoon, lifting the Shanghai Composite 0.2%.