OPEC to Cut, Nasdaq Up 1%

123jump.com Staff
14 Dec, 2001
New York City

Market averages closed higher on better than expected earnings from companies, improved forecast from Advanced Micro. Tech sector heavy Nasdaq rose 1% on sharp gains in semi conductor stocks. AMD gained 13% on improved sales forecast. Lehman Bros and Bear Stearns reported better than expected earnings matching similar gains at Goldman Sachs. Bear Stearns rose 2.6% but Lehman fell on the report. Costco reported 51 cents in earings and Ciena reported its first quarterly profit in five years.

[R]4:00PM NY – 10:00PM Frankfurt – 2:30AM Mumbai[/R]
OPEC proposed oil production cut, rising earnings from Costco, Lehman Bros, Bear Stearns and improved forecast from Advanced Micro lifted tech stocks.[/R]

Yield on 10-year U.S. bond closed at 4.597% and the 30-year bond closed at 4.717%.

Gold lost $3.10 to close at $629.30 a troy ounce, silver advanced 0.5 cents to end at $13.920 a troy ounce and copper increased 2.70 cents to close at 306.000 cents per pound.

Oil advanced $1.140 to close at $62.510 a barrel and heating oil gained 4.35 cents to finish at 177.550 cents a gallon. Gasoline was up 4.76 cents to end at 166.500 cents a gallon. Natural gas declined 12.7 cents to close at $7.546 per mBtu. OPEC members approved 1.9% production cut or 500,000 barrels a day as of Feb 1st, 2007. The member group also approved Angola as its new member, first in 31 years.

Asian markets closed higher led by South Korea with a gain of 2.54%, followed by India with an advance of 2.32% and Australia with an increase of 1.45%. The decliners were Malaysia with a decrease of 0.38%, Thailand with a loss of 0.35% and Philippines with a decline of 0.09%. China reached a record high on intensified trade talks with U.S., and Australian stocks advanced in the wake of Qantas acceptance of an improved takeover bid.

European markets finished higher led by Norway with an advance of 1.83%, Switzerland with a gain of 1.13% and Netherlands with an increase of 1.05%. There were no decliners. European stocks gained on banking and mining sector. Russian market closed up 0.6%.

Latin American and Canadian Markets ended higher led by Brazil with an increase of 1.09%, Canada with an advance of 0.85% and Mexico with a gain of 0.67%. There were no decliners. Latin America markets gained as domestic and global funds built blue-chip portfolios.


[R]1:00PM European markets closed on mining and banking stocks.[/R]
European stocks closed in the positive territory Thursday, lifted by strength in the mining sector and gains in the financial sector. HBOS shares rose 1.6% in London after the group said it expects underlying 2006 profit to beat market expectations. It also said the growth in lending is at the upper end of its anticipated range, while cost growth is expected to meet estimates. Again in the banking sector, shares of BNP Paribas rose 1.3% after the French bank said it''s in exclusive discussions to buy Dexia''s private-banking operations in France. Miners such as Xstrata, Rio Tinto, BHP Billiton sharply rose on higher metals prices. Online-gambling operator PartyGaming rose 2.7% after it said gross daily poker sales improved from declines reached after the firm barred U.S. players. In deal news, shares in Nestle rose 2.1% after the Swiss food group agreed to acquire the medical-nutrition business of Novartis. Novartis shares rose 1.5% in Switzerland. The U.K. FTSE 100 index closed up 0.6%. The Germany''s DAX 30 rose 0.5%. The French CAC-40 also climbed 0.6%.

Crude oil prices rose above $62 after OPEC decided on production cuts by 500,000 barrels daily, starting from February 1. Crude oil January contract gained $1.20 to $62.57 a barrel. The U.S. dollar extended gains against its major currency rivals. The euro was quoted at $1.3151, down from $1.3204. The dollar bought 117.78 yen, up from 116.52. The British pound was quoted at $1.9600, down from $1.9660. European gold prices declined. In London, gold traded at $628.38 per troy ounce, down from $629.75. In Zurich, the precious metal traded at $626.60 per ounce, down from $627.10. Silver closed at $13.83, up from $13.78.


[R]11:30AM Market rallied on strong earnings from Costco, Ciena, Adobe.[/R]
U.S. stocks rallied in late morning trading, boosted by better-than-expected earnings results, improving the outlook for strong corporate growth. The Nasdaq jumped more than 1%, driven higher by Costco, Ciena, and Adobe. On Thursday, OPEC ministers agreed to hold oil production steady for now but said that it will cut production by half a million barrels a day in February. Oil surged $1.22 to $62.60 a barrel, lifting oil companies’ shares. Chevron Corp. ((CVX)) and ExxonMobil ((XOM)) rose almost 1% each, while ConocoPhillips ((COP)) jumped 2.3%. At the sanme time, airlines declined. Continental Airlines Inc. ((CAL)) fell 2.7%, Southwest Airlines fell 2%, and UAL Corp.((UAUA)) dropped 2.8%.

Costco shares contributed to the Nasdaq advance, rising 2.8%. Costco Wholesale Corp. ((COST)) posted earnings that beat analysts'' estimates, benefiting from a big increase in membership fees. Ciena Corp. ((CIEN)) jumped 8% after the communications equipment maker said it swung to a Q4 profit on sharply higher revenue, beating expectations. Several other telecom equipment makers also gained, with Qualcomm Inc, up 1.2%. Also contributing to Nasdaq''s rally were shares of Adobe Systems Inc. ((ADBE)), up 1.9%. Brokerage Jefferies & Co. lifted its rating on the design software maker to buy from hold.

In corporate news, Nestle SA, the world''s biggest food and drink company, agreed to buy the medical nutrition unit of pharmaceutical company Novartis for $2.5 billion. The IPO of about 27.9 million American depositary shares of Irish jet-leasing company Genesis Lease ((GLS)) priced at $23, the high end of the expected pricing range. In late morning trading, the Dow Jones industrial average rose 68.66, or 0.56%, to 12,386.16, after hitting a new intraday high of 12,394.25. The Standard & Poor''s 500 index was up 10.31, or 0.73%, at 1,423.52, and the Nasdaq composite index rose 25.97, or 1.07%, to 2,458.38. Bond prices fell, with the yield on the benchmark 10-year Treasury note rising to 4.59% from 4.58% late Wednesday.


[R]10:30AM The Sensex advanced on Thursday on strong performance in large-caps.[/R]
The Sensex on BSE soared 305.82 points, or 2.32%, to close at 13,487.16. The market-breadth was very strong as a lot of small-cap and mid-cap stocks surged. As 2,048 shares advanced on BSE, only 487 declined and 60 shares were unchanged. For every decliner there were four advancers. From the 30-issue Sensex group, 28 stocks advanced with only Tata Steel and Hero Honda declining. The turnover on BSE was Rs 4,355 crore, slightly lower than Rs 4,404 crore on Wednesday. On NSE, the turnover was Rs 8,086.76 crore, lower than Rs 9,635.82 crore on Wednesday.

Economic news

Investors will be closely observing advance tax payment by corporates for the third installment, due on December 15th, 2006. It is viewed as one of the indicators of corporate profitability.

Investors are also expecting the Central Bank to refrain from raising interest rates at its policy board meeting to be held on December 18th and 19th.

The World Bank on Thursday envisaged the Indian economy to growt at 8.7% this year but expects that the high growth would slow down in 2008 due to tighter financial and fiscal conditions.

International rating agency Standard & Poor''s announced on Thursday, that the credit rating of India may be lifted to investment grade if it kept on improving public finances.

Most-active stocks

BF Utilities was the most-active stock with a turnover of Rs 621 crore followed by Tata Steel Reliance Industries.

Advancers

ICICI Bank led the gainers, surging 5.62% to Rs 877, following its announcement that it expected an increase of 0.5% in its Benchmark Advance Rate (I-BAR) and its Floating Reference Rate (FRR) for consumer loans (including home loans) with effect from 18 December 2006.

Hindustan Lever gained 3.92% to Rs 228, NTPC soared 4.11% to Rs 145.65, Cipla added 4.20% to Rs 248 and Satyam Computers put up 4.32% to Rs 467. Reliance Communications advanced 3.5% to Rs 448.15 in the wake of reports of an interest shown by U.S. based private equity groups in Hutchison''s India operations.

ONGC gained 2.14% to Rs 806. Its joint venture with Mittal group, is accroding to reports, near signing and an agreement for an oil block in Turkmenistan. Maruti Udyog added 2.31% to Rs 906.24, on the news that the compay will raise prices of cars beginning January 2007.

Index heavy Reliance Industries gained 2.10% to Rs 1,264, on a volume of 9.24 lakh shares. It had soared to an intra-day high of Rs 1,272.80.

BF Utilities, wind power generation, was unexpectedly the most-active stock on BSE and accounted for Rs 620.89 crore of the total turnover. The stock was locked at the 5% upper circuit filter at Rs 3,253.65, on a volume of 19.10 lakh shares.

Cement shares were in focus on intense byuing expecting firm cement prices. Gujarat Ambuja Cement advanced 3.62% to Rs 139, UltraTech Cement surged 7.20% to Rs 990, and ACC gained 2.64% to Rs 1,034.

HCL Technologies rose 6.71% to Rs 626.65, following the news of the announcement that the software services firm stated a liberal 1-for-1 bonus issue. Britannia Industries surged 4.22% to Rs 1,141, on a signed up agreement for buying stake in a bakery business owned by a West Asian group.

Decliners

On a day of broad rally in large and mid cap stocks decliners were hard to find. Hero Honda and Tata Steel traded marginally lower.


[R]9:45AM Stocks opened higher on strong earnings reports.[/R]
Stock markets advanced at opening, lifted by record profits in the financial sector. Further boost to the market was given by news that the OPEC had decided to keep its oil production target stable for the time being.

Bear Stearns ((BSC)) reported record-high financial results in Q4, helped by robust capital markets and investment banking activity. The company posted 38% profit rise to $4 per share, up from $2.90 per share, a year earlier. Company''s shares rose nearly 1%. Lehman Brothers ((LEH)) said Q4 profit rose 22% to $1.72 per share, compared with profit of $1.38 per share a year ago, beating estimates. Lehman''s stock traded down nearly 1%. Among other companies in focus, Costco Wholesale Corp.((COST)) rose 2.7% after it said its Q1 profit rose 10%, but it would take Q2 charge related to stock option grants. In the first hour of trading, the Dow Jones industrial average rose 18.75, or 0.15%, to 12,336.25. The Standard & Poor''s 500 index was up 3.55, or 0.25%, at 1,416.76, and the Nasdaq composite index rose 13.19, or 0.54%, to 2,445.60. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.60% from 4.58% late Wednesday.

[R]Initial jobless claims dropped 20,000.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended December 9, showing that jobless claims fell much more than economists had been expecting. The report showed that jobless claims fell to 304,000 from the previous week''s unrevised figure of 324,000. Economists had been expecting a more modest decline, predicting that jobless claims would fall to 320,000. With the decrease, jobless claims fell to their lowest level since hitting 300,000 in the week ended October 14. The Labor Department also said that the less volatile four-week moving average fell to 327,250 from the previous week''s unrevised average of 328,750. The report also showed that continuing claims in the week ended December 2 fell to 2.477 million from the preceding week''s revised level of 2.510 million. Last week, a report from the Labor Department showed that the U.S. economy added 132,000 jobs in the month of November, exceeding economist estimates. At the same time, the unemployment rate edged up to 4.5 percent, as people resumed looking for jobs.


[R]Import and export prices rose in November.[/R]
The Department of Labor released its report on import and export prices in the month of November on Thursday, showing that both import and export prices increased after falling in the two previous months. The report showed that import prices edged up 0.2 percent in November after falling 2.3 percent in October and 2.2 percent in September. The increase came as petroleum import prices fell at a much slower pace than in the two previous months. While petroleum import prices fell 1.6 percent in November, the decrease was much slower than the 10.1 percent and 10.9 percent declines seen in October and September, respectively. Excluding petroleum imports, import prices rose 0.7 percent in November compared to a 0.5 percent decrease in October.

The rebound was partly due to an increase in prices for imports of non-petroleum industrial supplies and materials, which reflected a sharp upturn in natural gas prices. The report showed that import prices rose by a more modest 0.1 percent excluding all fuels. The Labor Department also said that export prices rose 0.4 percent in November following a 0.3 percent decline in October and a 0.4 percent decline in September. A notable increase in prices for agricultural exports contributed to the rise in overall export prices. The report showed that prices for agricultural exports rose 4.4 percent in November after rising 1.1 percent in October. Excluding agricultural exports, export prices rose by a more modest 0.1 percent compared to a 0.5 percent decline in October.


[R]9:30AM The UK benchmark index advanced Thursday on strong banks, miners.[/R]
By late morning, the FTSE 100 advanced 12.6 points, or 0.2%, at 6,205.1.

Advancers

Mortgage bank HBOS was a leading advancer after it raised its full-year guidance. The stock rose 1.9% and boosted its peers. Bradford & Bingley was 0.7% higher and Northern Rock was 0.7% higher.

Miners also gained as Morgan Stanley boosted its price target on Xstrata from, sending its shares 3.6% higher. The rest of the sector also rose, with Antofagasta up 2.7% and Rio Tinto 2%.

BT advanced 0.3% after its retail unit set earnings growth targets for the 2006-07 financial year in the teens. It also forecast further growth to 2008.

British Airways, rose 1.7% as Qantas accepted a buyout led by Macquarie Bank Ltd. and Texas Pacific Group, in the biggest aviation takeover of the world.

Decliners

BP lost 1.3%. The second-biggest oil company in Europe said the U.S. Commodity Futures Trading Commission staff is recommending civil enforcement actions against it for improper trading of unleaded gasoline futures contracts in 2002.

Drax Group lost 1.6%, after Citigroup lowered its stock recommendation to sell from hold. EMI Group dropped 8%. The world third-largest music company stated that talks with a potential bidder have now stopped as it had not received an offer that reflects the value of the company.


[R]9:00AM Stocks futures traded mixed amid strong earnings and reduced oil output.[/R]
U.S. stock futures turned mixed Thursday as strong earnings from brokerage giants Bear Stearns and Lehman Brothers eased concerns over an expected cut in oil output by the OPEC. Light, sweet crude rose 77 cents to $62.14 a barrel. In economic news, a surprising rise in November import prices offset a decline in weekly jobless claims. The Labor Department said that import prices rose 0.2% in November, as prices for imported petroleum fell but prices for imported natural gas soared. According to another report, weekly jobless claims fell 20,000 to 304,000, the lowest level seen since mid-October. The data helped boost confidence in the U.S. dollar vs. the euro and yen.

On the corporate news front, Investment bank Lehman Brothers Holdings Inc. ((LEH)) said Q4 profit rose 22% on strong underwriting fees and improved performance in its capital markets business. The brokerage posted net income applicable to common shareholders of $987 million, or $1.72 per share, compared with profit of $807 million, or $1.38 per share a year ago. Fourth-quarter revenue rose 23% to $4.5 billion. Analysts had expected the company to earn $1.68 per share in Q4, on revenue of $4.41 billion.

Bear Stearns Cos. ((BSC)) reported record-high financial results in Q4, helped by robust capital markets and investment banking activity. The financial company said that profit attributable to common shareholders rose 38% to $557.6 million, or $4 per share, up from $401.5 million, or $2.90 per share, a year earlier. Revenue rose 28% to $2.4 billion. The results exceeded expectations for earnings of $3.36 per share on $2.2 billion in revenues.

Among other stocks in focus, Dow component United Technologies ((UTX)) confirmed its earnings outlook for 2006. For 2007, the diversified industrial conglomerate said it expects earnings of $4.05 to $4.20 a share on revenue of $51 billion. Again on the Dow, Procter & Gamble ((PG)) confirmed its Q2 earnings and sales targets. The company projected earnings of 81 cents to 83 cents a share on sales growth of 5% to 8%.Costco Wholesale ((COST)) reported Q1 profit of 51 cents a share, up from 45 cents, in the year-earlier period, beating estimates of 50 cents a share. Pier 1 Imports ((PIR)) reported a wider Q3 loss on 12% lower sales. Pier 1 reported the loss widened to 83 cents a share, from 8 cents last year.

S&P 500 futures were down 0.60 at 1,426.00, while Nasdaq 100 futures erased earlier losses to trade up 2.50 points at 1,809.50. Dow industrials futures dipped 13 points to 12,410. The economic data released in early morning pushed bond prices lower, and lifted the yield on the 10-year Treasury note to a 2 1/2-week high of 4.599%.


[R]7:30AM Asian markets advanced Thursday as Australia, China surge.[/R]
Asian markets advanced on Thursday. The Australian market ended at a record high, supported by M&A activity including an $8.73 billion private-equity takeover of Qantas Airways. The benchmark S&P/ASX 200 index finished up 1.55% at 5,573.1. Miners also closed higher, with BHP Billiton 1.9% higher and Rio Tinto rising 1.6%. Chinese stocks reached a new high, surpassing previous peak set in 2001 on renewed confidence in the expectations for a stronger local currency and a firmer market. The Shanghai Composite Index advanced 1.2% to close at 2,249.11.

In Japan, the benchmark Nikkei 225 stock index gained 0.82% to finish at 16,829.20. Toyota Motor advanced 0.96% and Kyocera added 1.12%. Other advancers included Canon Electronics, gaining 3.23% and Internet-services company Softbank, advancing 1.61%. Toshiba closed 0.13% lower after it reported the sale of its entire stake in Toshiba-EMI to EMI Group of Britain.

The Hang Seng Index in Hong Kong moved 1.1% higher to 18,919.40. Among the big advancers was China Communications Services, networks builder for phone operators. It gained 7.1% after U.S. telecommunications-equipment maker Cisco Systems announced it would pay $50 million for a stake in the Chinese company.

The Korea Composite Stock Price Index, or Kospi, surged 2.5% to close at 1418.38. Advances were across the board as Kookmin Bank gained 2.3% and Shinhan Financial Group advanced 3.1%. Samsung Electronics and Hynix Semiconductor added 2% and 2.7%, respectively. LG.Philips LCD soared 3.9% on profit-taking after four consecutive sessions of declines. Taiwan shares made a moderate rally that closed five consecutives sessions of declines. The Weighted Price Index of the Taiwan Stock Exchange gained 0.4% to close at 7480.41.


[R]6:30AM European markets gained Thursday on strong banks, upbeat miners.[/R]
European markets were higher on Thursday. By mid morning, FTSE 100 in London climbed 0.3% to 6,212.3, Frankfurt Xetra Dax gained 0.2% to 6,536.59, and the CAC 40 in Paris added 0.4% to 5,499.28.

Advancers

HBOS of Britain was the main advancer in the banking sector, higher after a strong trading update. Its shares added 1.8%. Resource stocks also gained as Morgan Stanley lifted its price target on Xstrata, raising its shares 3.4%. Rio Tinto, the world second-largest mining company by market value, climbed 2 percent. BHP Billiton rose 1.4%. Goldman Sachs upgraded Norsk Hydro, the Norwegian oil, gas and industrial metals group, from neutral to buy, lifting its shares 2.9%.

ABN Amro, the Dutch bank, subject of bid speculation on Wednesday, gained 1.3 %, as traders stated they expected the most likely offer would come from domestic rival ING. ING shares were up 1.5%. Porsche, the German sports car maker, gained 2.4% after HVB raised its price target, keeping its buy rating

Oil and gold

Crude oil advanced on speculation that OPEC will enforce compliance with an earlier production reduction in high inventories and mild weather in the U.S. Crude oil for January delivery gained as much as 37 cents, or 0.6%, to $61.74 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It traded at $61.67 a barrel in early trade in London. Brent crude oil gained 17 cents to $61.50 a barrel on the London-based ICE Futures exchange. Gold for immediate delivery was little changed at $628.85 an ounce in London.

Currencies

The euro gained against the U.S. dollar on Thursday, finding its feet having lost the previous day on upbeat economic news from the United States. The euro bought $1.3226 in early trading, up from $1.3204 in New York late Wednesday. The British pound strengthened to $1.9677 from $1.9660. The dollar fell to 117.33 Japanese yen from 117.52 yen.