Exporters and Pharmas Boost Europe

Elena
29 Nov, 2006
New York City

European stock markets closed sharply higher, ending a five-session losing streak. The markets reversed from weakness after comments from Fed Reserve Chairman Ben Bernanke helped the U.S. dollar recover vs. the euro and the pound. The recovery of the greenback reflected strength in the shares of exporter stocks. BMW and DaimlerChrysler both gained 1%, while Voklswagen rose 4.3%. The French CAC 40 led regional gainers, rising 1.4%, followed by the German DAX 30, up 1.3%, and London FTSE rose 1%.

[R]1:00PM European markets closed steeply higher.[/R]
European stock markets closed sharply higher, ending a five-session losing streak. The markets reversed from weakness after comments from Fed Reserve Chairman Ben Bernanke helped the U.S. dollar recover vs. the euro and the pound. The European common currency dropped 0.4% to $1.3140. The recovery of the greenback reflected strength in the shares of exporter stocks. Automakers BMW and DaimlerChrysler both gained 1%, while Voklswagen rose 4.3% on brokerage upgrade. Pharmaceutical giants also contributed to the advance. AstraZeneca, GlaxoSmithKline, and Sanofi Aventis rose 3% each after Pfizer announced a plan to cut 20% sales force. The French CAC 40 led regional gainers, rising 1.4%, followed by the German DAX 30, up 1.3%, and London FTSE 100, up 1%.

Crude oil prices rose nearly $1 amid data, showing weaker fuel supplies. Crude oil January contract rose 96 cents to $61.95 a barrel. London Brent climbed 40 cents to $61.61. The U.S. dollar gained ground against its major currency rivals. The euro was quoted at $1.3153, down from $1.3189. The dollar bought 116.12 yen, up from 116.10. The British pound was quoted at $1.9490, down from $1.9509. European gold prices declined, as the dollar gained. In London, gold traded at $635.50 per troy ounce, down from $636. In Zurich, the precious metal traded at $637.08 per ounce, up from $637.05. Silver closed at $13.64, down from $13.46.


[R]11:30AM Stocks trade higher, despite weak home sales data. Oil majors gained.[/R]
Stocks continued to post gains Wednesday on the back of strong GDP growth in Q3, shrugging off weak home sales data. A report released by the Commerce Department showed 3.2% decline in new home sales, largely due to a steep drop in sales in the Northeast.

Oil companies moved higher, as crude oil prices gained nearly $1 after weekly petroleum data showed U.S. inventories fell more than expected. Exxon Mobil ((XOM)) rose 1% and ConocoPhillips ((COP)) rose 1.6%, leading the S&P 500 index higher. Significant strength also emerged in the pharmaceutical sector, with AstraZeneca ((AZN)) helping to lead the sector higher, as the drug maker rose 3.7%. Shares of GlaxoSmithKline ((GSK)) and Schering Plough ((SGP)) were other notable advancers, each rising 3%.

The markets also benefited from strength among airline, internet, and retail stocks. Tiffany ((TIF)) helped to lead the retail sector higher after the jewelry retailer said Q3 profit grew a stronger-than-expected 23% and raised its full-year guidance. The stock climbed 7%. Telecommunications stocks also posted strong gains, with Qwest ((Q)), up 3.6%, America Movil ((AMX)), up 3.2%, and BellSouth ((BLS)), up 3.6% turning in some of the sector''s best performances.

Among companies, driven by analyst comments, Shanda Interactive ((SNDA)), developer of online games, jumped 8.4% after J.P. Morgan upgraded its rating on the stock to overweight from underweight. Shire ((SHPGY)), specialty pharmaceutical company, rose 4% after HSBC Securities upgraded its rating on the company''s stock to overweight from neutral. On the other hand, shares of Patterson ((PDCO)), dental products distributor, dropped 2.6% after Credit Suisse downgraded the stock to neutral from outperform. In late morning trading, the Dow Jones industrial average rose 90.12, or 0.74%, to 12,226.57. The Standard & Poor''s 500 index was up 12.08, or 0.87%, at 1,398.80, and the Nasdaq composite index added 22.74, or 0.94%, to 2,435.35. Bonds were mostly flat, with the yield on the benchmark 10-year Treasury note edging lower to 4.51% from 4.50% late Tuesday.


[R]Crude oil inventories and gasoline stockpiles declined.[/R]
Crude oil inventories ticked down in the most recent week, according to government statistics released Wednesday. This broke a recent streak of gains. Meanwhile, gasoline stockpiles also experienced a draw down, resuming a decline after an advance posted in the previous week. The Department of Energy''s Energy Information Administration said that crude oil inventories slipped 300,000 barrels in the week ended November 24. Specifically, the measure dipped to 340.8 million barrels from the previous week''s level of 341.1 million barrels. This broke a recent streak of gains, including an advance of 5.1 million barrels in the previous week and a gain of 1.3 million barrels in the week before that. Oil inventories for the November 24 week were 5.7% higher than last year. Meanwhile, gasoline inventories showed a week-over-week decline of 600,000 barrels. This followed an advance of 1.4 million barrels in the previous week, which broke a streak of declines. The level of gasoline inventories was 1.6% below last year. Distillate fuel oil had an inventory decline during the week ended November 24. Stockpiles of these products, which include heating oil, fell by 1 million barrels. This added to a decline of 1.2 million barrels in the previous week.

[R]New home sales slumped 3.2% in October.[/R]
Wednesday morning, the Department of Commerce released its report on new home sales in the month of October, showing that sales fell after showing a notable increase in the previous month. The decrease was largely due to a steep drop in sales in the Northeast. The report showed that new home sales fell 3.2 percent to a seasonally adjusted annual rate of 1.004 million units in October from a downwardly revised September rate of 1.037 million units. Economists expected sales to fall to a 1.040 million unit rate from the 1.075 million unit rate originally reported for the previous month. With the downward revision to data from the previous months, new home sales rose 3.7 percent in September compared to the 5.3 percent increase that was reported last month.

As mentioned above, the decline in new home sales in October was due in large part to a steep drop in sales in the Northeast, which fell 39.0 percent compared to the previous month. New home sales in the Midwest fell 5.6 percent and sales in the South fell 1.7 percent, while sales in the West rose 3.2 percent. The report also showed that the median sales price of new houses sold in October of 2006 was $248,500, a 1.9 percent increase compared to October of 2005. The Commerce Department added that the seasonally adjusted estimate of new houses for sale at the end of October was 558,000, representing a supply of 7.0 months at the current sales rate.


[R]10:30AM The Sensex finishes higher boosted by small-caps and mid-caps.[/R]
The Sensex on BSE finished 14.78 points or 0.1% higher at 13,616.73. The market breadth was extremely positive as out of 2,623 stocks traded, 1,658 advanced, 890 declined and 73 were unchanged today. For every three advancers, there were two decliners. From the Sensex stocks 16 declined while the rest advanced. The turnover on BSE was Rs 4388 crore compared to Rs 4161 crore on Tuesday. The turnover on NSE was Rs 8,083.89 crore lower than Rs 8,257.71 crore on Tuesday.

Economic news

The government yesterday issued second tranche of special bonds worth Rs 5,000 crore to oil marketing companies to help them offset losses due to high international crude prices.

Most active

Lanco Infrastructure was the most-active stock with a turnover of Rs 294.50 crore followed by Info Edge, Unitech, Action Constructions and Reliance Communications.

Advancers

Cement shares continued their recent move upwards on firm cement prices. ACC gained 3.6% to Rs 1,140, Gujarat Ambuja Cements advanced 2.3% to Rs 146.55 and Grasim gained 2% to Rs 2,770. Cigarette large-cap ITC advanced 2.5% to Rs 184.40.

Recently listed Lanco Infratech jumped 14% to Rs 267. The stock rose on huge volume of 1.1 crore shares on BSE.

Auto shares gained after the government today announced a cut of Rs 2 per litre in price of petrol and rupee one per litre in diesel. Bajaj Auto rose 1.1% to Rs 2,670, Tata Motors added 0.8% to Rs 817 and Maruti Udyog moved 0.6% higher to Rs 920.

Tyre shares rallied as natural rubber prices remained low. JK Industries gained nearly 5% to Rs 141.90, CEAT rose 4.4% to Rs 131.75, Apollo Tyres rose 4% to Rs 357 and MRF rose 2.7% to Rs 4612.

Torrent Power surged 20% to Rs 84.80. Distillation equipment maker Praj Industries gained 4% to Rs 195.20. BPO firm Tricom India soared 10% to Rs 123.60. On Monday, the company announced that it plans to build a new centre at Nashik with a recruitment of 400 freshers to its fold.

Decliners

Refinery shares declined on concerns that reduction in retail fuel prices would put further pressure on their marketing margins. HPCL shed 3.5% to Rs 291.50 and BPCL lost 1.7% to Rs 354.

Indian Oil Corporation dropped 4.7% to Rs 459.90 and Bongaigaon Refinery shed 5.5% to Rs 50.65. Indian Oil Corporation today recommended a swap ratio of four of its shares for every 37 shares held in Bongaigaon Refinery, for merger of Bongaigaon Refinery in Indian Oil Corporation.

Oil exploration large-cap ONCG shed 0.8% to Rs 859.80. ONGC has to sell crude at a discount to state-run refiners to help them reduce losses incurred due to state-set prices.

Bharti Airtel lost 1.3% to Rs 620 on profit taking. Communist Party of India said on Tuesday it was against the entry of Wal-Mart Stores Inc. in India, a day after Bharti Enterprises, a Bharti Airtel group company announced a tie-up with the world biggest retailer on Tuesday.

ICICI Bank declined 0.8% to Rs 855 and Reliance Industries dropped 0.1% to Rs 1,249. Software large-cap Infosys shed 0.7% to Rs 2,151 in volatile trade. On Tuesday, Infosys ADR advanced nearly 1%.

Tata Steel dropped 0.04% to Rs 475.60 in volatile trade after Anglo-Dutch steelmaker Corus Group said on Wednesday its third-quarter earnings rose 63% on the back of higher steel prices.


[R]9:45AM Stocks opened higher on GDP data.[/R]
U.S. stocks opened in the green, boosted by 2.2% upward revision of Q3 economic growth which helped reverse a slide in the dollar and pushed market averages higher. The report was also an encouraging sign that the housing slump hasn''t been a heavy drag on the economy. The Dow was supported by Pfizer ((PFE)) as the drugmaker rose 1.5% after news of its job cut plans in a major restructuring. The pharmaceutical sector moved higher, with AstraZeneca ((AZN)) and GlaxoSmithKline ((GSK)) turning in two of the sector''s best performances, both trading at 3%. Boeing ((BA)) also lent support to the blue-chip index, rising 0.3% after Prudential raised its price target on the stock to $99 from $94.

Among other stocks, contributing to the positive mood on Wall Street, jewelry retailer Tiffany & Co. ((TIF)) moved 5.6% higher after it reported Q3 profit ahead of projections. Apple Computer Inc. ((AAPL)) gained $1.24 to $93.05 on strong demand for its Macintosh computers and iPod music players. Some airline, brokerage, and telecommunications stocks also moved significantly higher. In the first hour of trading, the Dow Jones industrial average rose 35.17, or 0.29%, to 12,171.62. The Standard & Poor''s 500 index was up 5.12, or 0.37%, at 1,391.84, and the Nasdaq composite index added 15.29, or 0.63%, to 2,427.90.


[R]9:30 AM The FTSE 100 rebounds on strong financials and bid speculation.[/R]
The FTSE 100 rebounded 38.9 points, or 0.6%, to 6,065.3, after a fall of 2.9 % over the last six sessions.

Advancers

The leading large-cap was software company Sage, up 6.2%, after it reported a 14% rise in pre-tax profits and said it remained confident about prospects for continued growth. Legal & General jumped 3% amid rumours that Aegon, the Dutch insurer, was eyeing a takeover. Rival Prudential gained 2.1% on talk it could be a target for HSBC. Plumbing group Wolseley moved 3.8% higher despite first quarter profits rising only marginally.

Pharmaceutical stocks rose on reports that Swiss drugmaker Novartis may sell its baby food maker Gerber Products to food group Nestle. GlaxoSmithKline firmed up 3% while AstraZeneca gained 2.5%.

The mining sector was given a boost by commodity price rises as gold, silver and copper all rallied. BHP Billiton rose 1.8% and Xstrata was higher by 2.1%.

Decliners

Many of the stocks trading to the downside were ex-dividends. National Grid gave up 0.6%, Associated British Foods lost 1.3% and SABMiller fell 0.8%.

Corus was down a touch despite third quarter figures showing a 133% rise in underlying earnings to 168 million pounds as higher prices for its products outweighed higher raw material prices.


[R]9:00AM Stocks futures pointed higher on 2.2% GDP growth in Q3.[/R]
U.S. stock market futures predicted a positive opening Wednesday as the heavy dollar sell-off subsided and the Commerce Department reported that the U.S. economy grew at a 2.2% annual pace in Q3. That higher than first estimate of 1.6% growth, and the revisions came from a higher building of inventories and lower imports than originally assumed. Drug companies also helped pre-market sentiment, moving higher after Pfizer announced 20% sales jobs cuts.

Pfizer ((PFE)), the world''s largest pharmaceutical maker, announced late Tuesday that it will cut 20% of its U.S. sales force as part of a cost-cutting program. Shares of the company rose 0.8%, sending shares of rivals GlaxoSmithKline and Sanofi Aventis also higher. Earnings at some retailers also contributed to the upward move. Tiffany & Co. ((TIF)) rose 3% after the luxury jeweler posted a nearly 23% increase in Q3 profit and said early holiday sales exceeded expectations. The company also raised its earnings forecast for the year. Shares of Restoration Hardware ((RSTO)) and Dress Barn ((DBRN)) rose 10% and 8% respectively, a day after reporting strong quarterly results.

Apple Computers ((AAPL)) extended recent gains in pre-open trading, rising 2.5%. In deal news, Pengrowth Energy Trust ((PGH)) agreed to buy Canadian oil and natural gas producing properties and undeveloped lands from ConocoPhillips ((COP)) for $1.04 billion. The price amounts to $15.77 per barrel of oil for proved plus probable reserves. It''s issuing 20 million trust units to fund the deal. Energy stocks were also in focus as crude oil prices advanced on Wednesday. S&P 500 futures rose 4.8 points at 1,393.40 and Nasdaq 100 futures added 8.5 points at 1,790.75. Dow industrial futures rose 37 points.

[R]Third-quarter GDP revised up 2.2%.[/R]
The Department of Commerce released its preliminary report on gross domestic product in the third quarter on Wednesday, showing that the annual rate of GDP growth was revised up more than economists had expected. The report showed that GDP growth was revised up to an annual rate of 2.2 percent compared to the advance reading of 1.6 percent. Economists had been expecting a more modest upward revision to 1.8 percent. The third quarter GDP growth reflected strength in consumer spending, exports, equipment and software spending, and state and local government spending. However, the growth was partly offset by weakness in residential fixed investment and an increase in imports.

Despite the upward revision, the third quarter GDP growth still came in below the 2.6 percent rate of growth seen in the second quarter. The deceleration compared to the second quarter primarily reflected an acceleration in imports and a larger decrease in residential fixed investment. The Commerce Department noted that motor vehicle output contributed 0.76 of percentage point to the third quarter growth after subtracting 0.31 of a percentage point from the second quarter growth. The report also showed a downward revision to the pace of price growth, as the increase by the closely watched index of consumer prices excluding food and energy was revised down to 2.2 percent from 2.3 percent. The index rose at a 2.7 percent rate in the second quarter.


[R]8:00AM Pfizer announced it will cut 20% of its work force.[/R]
Pfizer Inc. ((PFE)) announced it will cut its U.S. sales force by 20%, or 2,200 people by the end of the year, as part of a cost-cutting program. The cuts are most likely to affect sales representatives as well as management and support staff. The drug company has 11,000 sales representatives. In October, Pfizer said it would slash costs beyond the program announced last year, designed to cut $4 billion in expenses by 2008.

Recently, Pfizer has lost patents on a number of drugs, including blockbuster antidepressant Zoloft. Other drugs, like blood pressure medicine Norvasc, are slated for generic competition in 2007. Pfizer said in October that sales would be flat for the next two years, down from an earlier forecast of moderately higher sales. Pfizer said its sales force cuts won''t effect its ability to market its major products including cholesterol-lowering drug Lipitor and new drugs such as cancer treatment Sutent.

On Thursday, Pfizer will highlight its pipeline of new drugs at an analyst meeting it is hosting. The cholesterol treatment Torcetrapib will be a major focus, although a recent study showed it raises blood pressure, raising fears about its future.


[R]7:30AM Asia finished higher boosted by Tokyo rally spurred by industrial data.[/R]
Asian markets finished broadly higher. The Nikkei 225 Average in Japan ended 1.4% higher at 16,076.20, marking its first close above the 16,000-point level in more than a week. Shares of Toyota gained 1.5% while tire maker Bridgestone rose 2.9%.

Camera and copier maker Canon Inc added 1.7% while electronics conglomerate Toshiba surged 3.1%. Sumco Corp moved 5.9%, higher, reversing early losses, after the business daily Nihon Keizai Shimbun reported the second biggest manufacturer of silicon wafers in the world plans to issue 60 billion yen of new shares in a bid to raise investment capital.

The Hang Seng Index in Hong Kong ended 0.8% higher at 18,780.93, rebounding from its biggest one-day plunge in more than five years in Tuesday session. The Hang Seng China Enterprises Index, which tracks 37 mainland-incorporated companies, rose 3.3% to 8,402.26. Property developer Cheung Kong Holdings gained 0.6% while Sun Hung Kai Properties, largest developer in Hong Kong by market capitalization, put up 0.8%.

Australian leading share index, the S&P ASX/200, was up 1.3%, to end 5,432.50. Shares of Australian energy firm Woodside Petroleum rose 1.2%. South Korea Kospi gained 0.8% to end at 1,422.55. LG.Philips LCD Co. rose 1.4%, as Japanese higher industrial production data eased worries of a slowing in global consumption. Singapore Straits Times Index rose 1.2%, and Malaysia''s KLSE Composite was up 0.7%. Taiwan Weighted Price Index added 0.4%.

[R]6:30AM European stocks advance in early session Wednesday on relieved worries.[/R]
European markets were higher in early trading on Wednesday. The U.K. FTSE 100 index rose 0.52% at 6,057.30, the German DAX Xetra 30 index rose 0.47% at 6,311.60, and the French CAC-40 index increased 0.54% at 6,554.67.

Advancers

GlaxoSmithKline traded 2.3% higher after U.S. rival Pfizer said that it would cut 20% of its U.S. salesforce as part of a cost-cutting drive. Exporters such as automakers Volkswagen and DaimlerChrysler each rose more than 0.5% while technology shares such as chip maker Infineon Technologies advanced 0.79%.

Shares in steelmaker Corus Group rose 0.3% after it said its third-quarter net profit almost tripled to 142 million pounds, from 50 million pounds a share, a year ago. shares in U.K. building materials company Wolseley rose 3.6% after declining more than 10% in the past month. Morgan Stanley upgraded Credit Suisse to overweight from equal-weight. Credit Suisse shares rose 1.5%

Decliners

Morgan Stanley downgraded several European banks including UBS and Northern Rock. UBS shares dipped 0.5%, Northern Rock shares lost the same amount.

Oil and gold

Oil rose to a one-month high as cold weather swept eastward across the U.S., the world biggest energy user, spurring demand for heating fuel. Crude oil for January delivery rose 54 cents to $61.53 a barrel in after-hours trading on the NYME. The contract traded at $61.43 in early trading in London. Brent crude oil for January rose 49 cents to $61.70 a barrel in electronic trading on the ICE Futures exchange in London. Gold traded in London at $638.25 per troy ounce, up from $636.00 late Tuesday.

Currencies

The U.S. dollar was higher against other major currencies in European trading Wednesday morning. The euro was quoted at $1.3160, down from $1.3189 late Tuesday. The British pound was at $1.9490, down from $1.9509. The dollar bought 116.19 Japanese yen, up from 116.10.