Durable Goods Demand Plunges 8.3%

Elena
28 Nov, 2006
New York City

U.S. stock market futures were sent lower by data, showing a larger-than-expected decline in demand for durable goods orders. As another sign of a slowing economy, the Commerce Department reported durable goods orders fell 8.3% to a seasonally adjusted $210 billion, reflecting a big drop in demand for commercial airplanes. The 8.3% drop was the largest one-month decline since a 14% plunge in July 2000.

[R]9:00AM Stocks futures were dragged down by a decline in durable goods orders.[/R]
U.S. stock market futures were sent lower by data, showing a larger-than-expected decline in demand for durable goods orders. As another sign of a slowing economy, the Commerce Department reported that orders for manufactured goods dropped in October by the largest amount in more than six years, following an 8.7% surge in September. Durable goods orders fell a larger-than-expected 8.3% to a seasonally adjusted $210 billion, reflecting a big drop in demand for commercial airplanes, a category that had soared in September. The 8.3% drop in orders for durable goods was the largest one-month decline since a 14% plunge in July 2000.

Among the companies in the spotlight, Palm Inc. ((PALM)) shares dropped 6% in pre-open trade after it slashed its earnings forecast on a delay in rolling out its Treo 750 handheld device in the US. Nokia ((NOK)) slipped 0.9% after it said it was cutting its operating margin forecast due to the merger of its network arm with that of Siemens ((SI)). Hilton Hotels ((HLT)) dropped 5% after it said it plans to create a joint venture in India with DLF Ltd. to develop and own up to 75 hotels and serviced apartments over the next 7 years.

The dollar advanced vs. the yen but fell against the U.K. pound and the euro. The pound was particularly strong after Spain's Iberdrola agreed to buy Scottish Power ((SPI)) for $22.5 billion in a deal that would create one of Europe's biggest utilities. Crude oil futures rose 36 cents to $60.66 a barrel, while gold futures slipped $1.70 an ounce to $638.90. Standard & Poor''s 500 futures were down 1.8 points, below fair value. Dow Jones industrial average futures were down 9 points, and Nasdaq 100 futures were down 6 points.


[R]8:00AM Air Berlin is planning to order 60 Boeing planes.[/R]
Air Berlin Plc announced on Tuesday it is planning to place an order of 60 planes with Boeing Co. The airline said it''s ordering 60 Boeing ((BA)) 737-800, with deliveries starting in November 2007. It will receive a total of 85 new Boeing planes worth $5.7 billion at list price between 2007 and 2011, including an earlier order for 25 jets. Joachim Hunold, CEO of the airline, said that the airline is ‘exploring alternatives’ for financing the order. A decision whether to bolster the Boeing order and exercise options for 40 Airbus A320s, will be taken the following year.

Europe''s third-largest budget airline also issued a detailed Q3 profit report, showing that earnings advanced 26%. Net income at the airline improved to 38.7 million euros ($50.8 million), up from 30.6 million euros a year earlier, but missed analysts'' expectations. Revenue rose 28% to 510 million euros.

Company’s shares fell 14.3% in Frankfurt midday trading on concerns over a vague outlook and the financing of the fleet expansion.


[R]7:30AM Asian markets decline sharply Tuesday following US markets fall.[/R]
Asian markets finished sharply lower on Tuesday. Tokyo''s Nikkei 225 Index pared sharp losses to end 0.19% lower at 15,855.26, as export shares such as Honda Motor and Matsushita Electric Industrial retreated on concerns that a stronger Japanese yen will have an impact on earnings derived from overseas. Honda Motor third largest automaker by sales in Japan, fell 1.7%, while Matsushita Electric Industrial Co. maker of the Panasonic brand of consumer electronics, fell 0.9%.

Australian S&P ASX/200 slipped 1.3% to 5,384.30, led lower by weakness in BHP Billiton and other natural-resources shares. Shares of BHP Billiton fell 1.6%, while fellow Australian miner Rio Tinto shed 2.2%. The Kospi in South Korea sank 1%. In Seoul, Samsung Electronics skidded 1.9% and Hynix Semiconductor fell 1.7%.

The Hang Seng Index plunged 564.48 points, or 2.9%, to 18,639.53. Hong Kong-listed Li & Fung Ltd fell 4.1%. Shares of China Shipping Container Lines Ltd plunged 8.6%. The China Enterprises Index, a gauge of China-incorporated stocks listed in Hong Kong, dipped 4.5%. Malaysia KLSE Composite was lower by 1%. Indonesia Jakarta Composite fell 2.2% and Thailand SET Index ended down 1%. Singapore Straits Times Index fell 1.9%.


[R]6:30AM European markets fell in early trading Tuesday on dollar-sensitive sectors.[/R]
European markets were lower in early trading on Tuesday. The U.K. FTSE 100 index lost 0.48% to 6,020.80, the German DAX Xetra 30 index declined 0.43% to 6,270.60, while the French CAC-40 index lost 0.64% to 5,274.64.

Decliners

The FTSE 100 traded lower weighed down by financials such as Barclays, down 1.5%, after a recent strong performance. Insurance group Old Mutual was losing 4.1% after its adjusted embedded value per share, a measure of the company asset value and the present value of future profits, eased 1.7% from the second quarter.

Scottish Power shares lost 0.9% after it agreed to a $22.5 billion cash-and-shares takeover bid from Iberdrola of Spain. Akzo Nobel shares dropped 1% in Amsterdam after its Organon unit and Pfizer ended their joint effort to develop asenapine, a new-drug candidate to treat schizophrenia and acute mania associated with bipolar I disorder.

DaimlerChrysler fell 2.8%, Peugeot shed 2.5% and Volkswagen closed 1.6% lower. Michelin, the tyremaker, fell 4% and Continental slipped 3.5%. Among other big dollar earners, Siemens fell 2.9%. Chip maker Infineon Technologies lost 0.7% in Germany.

Advancers

Music company EMI Group rose 7.4% in London after the Financial Times reported that the company is in talks with private-equity groups about a possible bid for the company. Pharmaceutical company Bayer rose 2% after it reported a forecast-beating rise in third-quarter operating profits, largely due to a strong showing from its healthcare division.

Oil and gold

Oil was steady above $60 a barrel on Tuesday after rising more than $1 the previous session, partly on forecasts of a cold spell in the U.S. Northeast. U.S. crude was down three cents at $60.29 a barrel by 0929. London Brent crude was up seven cents to $60.51.

Gold declined for the first day in eight in London after a rally earlier this month deterred jewelry buyers, the biggest consumers of the precious metal. Gold for immediate delivery in London fell $3.40, or 0.5%, to $637.20 an ounce at 9:45 a.m. local time.

Currencies

The euro held steady against the U.S. dollar on Tuesday ahead of U.S. economic data that could offer new direction to markets. The euro bought $1.3131 in morning European trading, marginally above the $1.3128 it bought in New York late Monday. The British pound rose to $1.9432 from $1.9371. The dollar rose to 116.30 Japanese yen from 116.08 yen.