Oil and Autos Boost Europe

Elena
27 Dec, 2006
New York City

European stocks closed sharply higher on Wednesday, boosted by weaker oil prices and speculation over possible consolidation in the automotive sector. Lower oil prices along with confirmation that top Toyota and Ford executives met in recent days lifted auto shares such as DaimlerChrysler and Renault. The German DAX 30 climbed 1.6%, followed by the French CAC 40, also up 1.6%. London FTSE 100 rose 0.9%.

[R]1:00PM European markets closed notably higher on weaker oil and possible consolidation in the automotive sector.[/R]
European stocks closed sharply higher on Wednesday, boosted by weaker oil prices and speculation over possible consolidation in the automotive sector. Lower oil prices along with confirmation that top Toyota and Ford executives met in recent days lifted auto shares such as DaimlerChrysler and Renault. Each of them rose 3%. The French CAC 40 climbed 1.6%. The German DAX 30 climbed 1.6%, led by steelmaker ThyssenKrupp and carmakers DaimlerChrysler and BMW. Shares of KarstadtQuelle rose 0.9% after agreeing to buy the half it didn''t already own in travel agent Thomas Cook from Deutsche Lufthansa for 800 million euros. London FTSE 100 rose 0.9%, helped by various stocks. Brewers Diageo and SABMiller each rose at least 1.6% and cigarette maker British American Tobacco added 1.5%. InterContinental Hotels rose 2.9% in London on bid speculation. U.K. clothing retailer Moss Brothers soared 15% on takeover speculations, too.

Crude oil prices were flat ahead of oil inventories report, expected to show another decline in stockpiles. Crude oil January contract fell 10 cents to $61 a barrel. Heating oil fell to $1.6205 a gallon. Gasoline added to $1.60. Natural gas futures slipped 18 cents to $5.93 per 1,000 cubic feet. The U.S. dollar traded lower against its major currency rivals. The euro was quoted at $1.3131, up from $1.3111. The dollar bought 118.65 yen, down from 119.18. The British pound was quoted at $1.9559, up from $1.9534. European gold prices advanced. In London, gold traded at $627 per troy ounce, up from $623.70. In Zurich, the precious metal traded at $625.25 per ounce, up from $617.35. Silver closed at $12.72, up from $12.60.


[R]11:30AM Homebuilders advanced on strong home sales data.[/R]
The U.S. market averages have continued to perform well over the course of morning trading, benefiting from strong home sales data and retreating oil prices. The Commerce Department reported that sales of new homes rose 3.4% in November to a seasonally adjusted annual rate of 1.047 million, helped by solid sales increases in every region of the country but the South. Homebuilders Hovnanian Enterprises ((HOV)) and Toll Brothers ((TOL)) rose 1.7% and 2.3%, respectively. Other notable gainers included Ryland ((RYL)), up 2.7% and Lennar ((LEN)), rising 2.4%.

The biggest U.S. retail chains turned mixed after a report confirmed that sales were not as strong in the pre-Christmas holiday shopping period. Wal-Mart Stores Inc.((WMT)) rose 3 cents to $46.15, Federated Department Stores Inc. ((FD)) rose 1.4%, while Target Corp. ((TGT)) fell 0.2%. Notable gains by gold, brokerage, and internet stocks also contributed to the market strength. Oil service stocks posted some strength, despite the continued decline by the oil price.

In late morning trading, the Dow Jones industrial average rose 73.54, or 0.59%, to 12,481.17.The Standard & Poor''s 500 index was up 6.07, or 0.43%, at 1,422.97, and the Nasdaq composite index rose 10.72, or 0.44%, to 2,424.23. The two-day advance leaves major indexes heading toward double-digit gains for the year. The Dow is now up 16.5% this year, while the Nasdaq has risen almost 10% and the S&P 500 up 13.9%. Bonds were little changed, with the yield on the benchmark 10-year Treasury note rising to 4.61% from 4.60% late Tuesday.


[R]New home sales climbed 3.4% in November.[/R]
Wednesday morning, the Department of Commerce released its report on new home sales in the month of November, showing that sales rose more than economists had been expecting. The increase reflected strong sales growth in the Northeast, Midwest, and West. The report showed that new home sales rose 3.4 percent to a seasonally adjusted annual rate of 1.047 million units in November from a revised 1.013 million unit rate in October. Despite the increase, new home sales were down 15.3 percent year-over-year. Economists had been expecting new home sales to increase to a 1.015 million unit rate compared to the 1.004 million unit rate originally reported for the previous month. As mentioned above, the new home sales growth came as new home sales rose 22.5 percent in the Northeast, 22.4 percent in the Midwest, and 19.0 percent in the West. New home sales in the South bucked the uptrend, falling 9.3 percent. The report also showed that the median sales price of new houses sold in November was $251,700, while the average sales price was $294,900. The Commerce Department added that the seasonally adjusted estimate of new houses for sale at the end of November was 545,000, representing a supply of 6.3 months at the current sales rate.


[R]10:30 AM The Sensex advanced on Wednesday in a broad-based rally.[/R]
The Sensex on BSE finished 151.35 points, or 1.10%, higher at 13,859.69. The market-breadth was strong as 1,358 shares advanced, 1,263 declined and 82 remained unchanged. From the Sensex stocks, 23 advanced, while the rest declined. The turnover on BSE was Rs 3,637 crore, higher than Rs 3,045 crore on Tuesday. The turnover on NSE was Rs 7,083.45 crore, compared to Rs 6,163.81 crore on Tuesday.

Economic news

Direct foreign investment in India is likely double to $11 billion in the fiscal year ending March 2007, Commerce Minister Kamal Nath said in a government statement. Previous year foreign investment inflows were $5.5 billion.

There are no signs that Indian economy is overheating. It is able to sustain the current 8% to 9% growth for a long period, as long as the supply side is run well and domestic savings grow, an Assocham survey has stated.

The Indian rupee hit its highest level in more than nine months. Banks and companies sold the dollar for a higher yield of the rupee as a cash shortage emerged in the domestic banking system.

In trade today

Indiabulls was the most active stock with a turnover of Rs 252 crore followed by TV 18 and Reliance Industries.

Advancers

Satyam Computers led the advancers, rising 3.24% to Rs 492. Sector leader, Infosys Technologies, gained 1.65% to Rs 2,256.05. The company is currently offering its software product Finacle to ten international banks and sees great potential in the software replacement market in the US and Europe.

Other advancers in IT sector included TCS adding 0.15% to Rs 1,192, Hexaware surging 4.64% to Rs 195, HCL Technologies rising 0.55% to Rs 621 and Wipro jumping 1.78% to Rs 608.

Index heavy Reliance Industries gained 1.43% to Rs 1,296 and State Bank of India also advanced 0.13% to Rs 1,247.50, following its announcement of prime lending rate to 11.5%.

Dr Reddy’s Laboratories edged 0.23% higher, at Rs 804, slipping from an intraday high of Rs 840 in early trade.

i-flex Solutions advanced 3.75% to Rs 2,017. The company announced that all shares tendered in the open offer, which finished on December 23, 2006, will be accepted.

Tata Motors advanced over 2.5% to Rs 907 and Bajaj Auto was up Rs 14 at Rs 2,656 in the auto sector.

Decliners

ONGC led the decliners, ending 1.59% lower at Rs 874, after going ex-dividend. The oil and gas leader had posted an interim dividend of Rs 18 per share.

Other major decliners included Hindustan Lever falling 0.82% to Rs 219, Maruti shedding 0.71% to Rs 924.10, Hero Honda down 0.54% to Rs 745.10 and L&T losing 0.49% to Rs 1,444.15.


[R]9:45AM Stock markets opened higher, helped by strong tech stocks.[/R]
Stock markets opened higher for a second day in a row, lifted by bargain hunting on a broad-market scale. The trading session is expected to be of thin volume, typical of the week at the end of year. Oil and natural gas prices continued to decline due to mild winter weather. Light sweet crude fell 23 cents to $60.87 a barrel on the Nymex. The New York Stock Exchange honored the late U.S. President Gerald Ford with two minutes of silence.

The tech-heavy Nasdaq advanced in early trading, supported by gains for Microsoft ((MSFT)), up 0.3%, Intel ((INTC)) higher by 1.1%, and Dell ((DELL)), rising 1.3%. However, shares of Apple Computer ((AAPL)) dropped 5% to $77.48 amid a news report, saying that company officials could have falsified past stock-option documents to maximize profits for executives. Auto stocks were also in the spotlight in opening hours. Ford Motor ((F)) gained 1.9% at $7.63 after Toyota Motor Co. ((TM)) confirmed that the two auto makers held talks in Japan last week. Toyota rose 1.4% to $133.50.

Merger-and-acquisition activity also generated positive mood. Cadmus Communications ((CDMS)) soared 16.6% after it agreed to be acquired by Cenveo ((CVO)) in a deal of about $235.1 million that will create the third-largest graphic services provider in North America. Cenveo rose 4.7%. In the first hour of trading, the Dow Jones industrial average rose 53.59, or 0.43%, to 12,461.22. The Standard & Poor''s 500 index was up 5.25, or 0.37%, at 1,422.15, and the Nasdaq composite index rose 12.55, or 0.52%, to 2,426.06.


[R]9:30 AM London benchmark index advanced Wednesday on miners, oil stocks.[/R]
The FTSE 100 in London started 0.8% higher at 6,239.6, an increase of about 50 points.

Advancers

London-listed oil leaders supported the FTSE 100 uptrend as crude prices recoverd from losses in the previous session to re-state themselves around $61 per barrel. BP gained 0.8% with Royal Dutch Shell advanced 0.5%.

Mining stocks were also in focus in line with stronger commodities markets, adding their weight to the overall advance. Vedanta Resources was 2.4% higher and Anglo American added 1.6%.

Pre-Christmas talk of bid interest in InterContinental Hotels supported its shares as trading resumed. The company gaine further 5.6% and kept its place at the top of the large-cap advancers.

Drinks company Diageo, brewer of Guinnes, Bailey’s and Johnnie Walker whiskey, advanced 2.3% on strong buying interest.

Barclays stated that its sale of FirstCaribbean to the Canadian Imperial Bank of Commerce generated $989 million in cash. Its shares gained 1.2%.

Decliners

There were no major decliners in an opening of strong index gains. Only drug developer Skypharma is flat following its statement that its Flutiform project is costing more than expected.


[R]9:00AM Stock market futures traded higher.[/R]
U.S. stock market futures traded higher on Wednesday, bolstered by speculations for a potential alliance between giant automakers Toyota Motor ((TM)) and Ford Motor ((F)). Toyota shares rose more than 2.5% to a record high in Tokyo. Shares of Ford were up 1.5% at $7.60 in early electronic trading. Investors were also awaiting key housing data, expected to provide clues on the health of the U.S. economy. In deal news, Cenveo Inc. ((CVO)) agreed to acquire Cadmus Communications Corp. ((CDMS)) for $24.75 per share in cash to become the third-largest graphic services provider in North America. Standard & Poor''s 500 futures were up 4.2 points, above fair value. Dow Jones industrial average futures were up 43 points, and Nasdaq 100 futures were up 8.75 points.


[R]7:30 AM Asian markets finished mostly higher Wednesday, Japan, HK rally.[/R]
Asian markets finished mostly higher on Wednesday. The Nikkei 225 Index in Japan gained 0.31% to close at 17,223.15, which is the highest closing level since May 8. Export-oriented stocks and buying in large-caps boosted the market pacing overnight gains on US markets in post-holiday trading. Toyota gained 1.9% after reports that an official at the company met last week in Tokyo with his counterpart from U.S. auto maker Ford. Other advancers included Honda, 0.99% higher and electronics maker Sony, up 0.54%.

The Hang Seng Index in Hong Kong advanced 2.1% to 19,725.73, supported by China Netcom which soared 31% on talks that it may buy assets from rival China Unicom, which surged nearly 8%. Chinese financial stocks also rallied tracking a surge on the domestic market and proposed tax policies on the mainland. Financial firm China Life gained 11.7%, Ping An rallied 17.2% and Industrial and Commercial Bank of China jumped 13.2%.

The Shanghai Composite Index in China added 2.3% to 2,536.39. The benchmark stock index settled above the 2,500 level for the first time, as securities funds were eager to push up large-capitalized companies. Singapore shares ended up after hitting a record high intraday on broad strength in large-caps. The Straits Times Index advanced 0.6% to 2,961.25.

In Australia, expectations of a strong month end fueled stocks to a record high. The S&P/ASX 200 Index edged 0.7% higher to a record high finish of 5,643.2. In New Zealand stocks touched a new all-time high in thin post-holiday trading. The NZX-50 Index gained 0.3% to 4,032.07. Taiwan closed marginally higher as the Weighted Price Index of the Taiwan Stock Exchange inched 0.1% higher to 7,733.18.


[R]6:30AM Europe advanced in early trade Wednesday on stronger euro, weaker oil.[/R]
European markets were higher on Wednesday. In early trading, the FTSE 100 in London was up 0.8%, Frankfurt DAX gained of 1.2%, and the French CAC 40 rose 0.9%.

Advancers

InterContinental Hotels led UK advancers, advancing more than 4% on bid talk. The company has turned down any comments in the past on such rumours.

Diageo and SABMiller, both beer makers, gained each around 1.5% and cigarette maker British American Tobacco edged 1.3% higher. Tobacco shares in Europe have advanced since Gallaher Group stated it was in takeover talks.

U.K. clothing retailer Moss Brothers rallied 10% after a report that it may get an 80-million-pound offer from Icelandic investment group Baugur

DaimlerChrysler AG, the fifth-largest carmaker in the world, and Arriva Plc, the biggest operator of buses in London, gained supported by lower energy costs. Daimler gained 1.2% and Arriva added 2%.

Decliners

UCB SA was the leading decliner, down 2.4%. Shares in the Belgian maker of the Zyrtec allergy drug plummeted after U.S. regulators wanted more information on its experimental Cimzia treatment for Crohn disease.

Oil and gold

Crude oil was near $61 a barrel on forecasts that mild weather in the U.S. will reduce demand for heating oil. Crude oil for February delivery dropped 1 cent to $61.09 a barrel in after-hours electronic trading on the New York Mercantile Exchange in early trade in London. Brent crude for February settlement rose 11 cents to $61.21 a barrel on the ICE Futures exchange in London.

Gold for immediate delivery rose $2.50, or 0.4%, to $627.20 an ounce in early trade in London. Prices rose $3.95 yesterday.

Currencies

The U.S. dollar was mostly down versus other major currencies in European trading Wednesday morning. The euro traded at $1.3157, up from $1.3111 late Tuesday in New York. The British pound is set for its biggest annual gain since 1990 as it became the third-most popular reserve currency in the world and the Bank of England raised interest rates to their highest in five years. Against the dollar, the pound traded at $1.9598 early trade in London, up from $1.9534.

The dollar has plunged this month against the yen on speculation a slowing economy will make the Federal Reserve lower interest rates next year. The dollar fell to 118.65 yen from 119.15 late yesterday in New York.