Market Cautious Though Crude Retreats

albena
30 Nov, -0001
New York City

Futures were up in early trading, pointing to a slightly higher opening Tuesday after crude oil prices retreated from record highs. Ahead of weekly inventory data crude-oil futures still hover around $61 a barrel, down around 1%. Investors will also focus on the June personal income and factory-order reports due today and on another round of earnings reports.

U.S. AVERAGES

U.S. stocks started the first week of August with a mixed performance Monday, as investors were concerned about the surging oil and interest rates. Tuesday caution remains though crude retreated from record highs and managed to push futures slightly up.

Oil prices slid in early trading from $61.57 a barrel hit Monday, following the death of Saudi Arabian King Fahd. Overcoming the initial worries about the supply of oil, investors came to the conclusion that there shouldn’t be any disruptions in shipments from OPEC's largest oil exporter.

Conglomerate Tyco posted profit growth of 29% for the third quarter, but also issued a cautious forecast.

Among the most noteworthy companies reporting quarterly profits on Tuesday are Marsh & McLennan, Comcast Corp., TXU Corp., Emerson Electric, Coach, Sirius Satellite, Molson Coors Brewing, RealNetworks, Tenet Healthcare, and Time Warner Telecom.

A string of robust economic releases in recent weeks has bolstered estimates that the Federal Reserve will continue its steady rise in interest rates.

ECONOMIC NEWS

Economic releases scheduled for Tuesday include the latest reading on personal income and consumer spending, as well a separate report on factory orders.

Economists expect that personal income increased 0.8% in June after being unchanged in May. Spending is expected to have climbed 0.4%, aftetr a 0.2% jump in May.

Factory orders are seen up 1.0% in June, down versus a 2.9% rise in May.

INTERNATIONAL MARKET NEWS

Major Asian markets ended generally higher Tuesday, but Japan's Nikkei 225 bucked the trend, losing its early gains. The Nikkei Average ended down 0.1% to 11,940, after hitting 11,982.20, its highest intraday level for the year, shortly after the opening bell, beating the prior high for the year of 11,975.46 on March 7.

Elsewhere in the region, Hong Kong's Hang Seng index closed up 1.1% at 15,141, China's Shanghai Composite index closed 1.4% higher to 1,104, while Australia's All Ordinaries index gained 0.1% to 4,343. Singapore's Straits Times index added 0.5% to 2,276 and South Korea's Kospi index rose 0.2% to end at 1,118.

European markets were trading higher Tuesday, after the modest rally in U.S. markets overnight, and fueled by a few welcomed updates from German supermarket Metro and tire maker Continental.

Germany's DAX 30 index gained 0.2% to trade at 4,902.27, France's CAC 40 index rose 0.2% to 4,464.57, and the U.K.'s FTSE 100 index added 0.2% to 5,299.80.

ENERGY, METALS AND CURRENCIES MARKETS

Crude oil prices slightly declined but still hovered near record highs Tuesday as investors were concerned about future oil production from Iran after the country's latest nuclear standoff with the European Union and the United States.

The death of Saudi Arabia's King Fahd on Monday sent prices to a record close level of $61.57 a barrel after they climbed to a new intraday high of $62.30.

Light, sweet crude for September delivery dropped 61 cents to $60.96 a barrel on the New York Mercantile Exchange. Gasoline added almost half a cent to $1.7515 a gallon, while heating oil shed nearly 2 cents to $1.6980 a gallon.

September Brent futures on London's International Petroleum Exchange declined 77 cents to $59.67 a barrel.

The U.S. dollar was quoted mostly lower versus major currencies in European trading Tuesday. The euro traded at $1.2215, up versus $1.2205 late Monday in New York. The greenback bought 111.43 Japanese yen, down vs. 112.02. The British pound was quoted at $1.7715, up from $1.7702.

Gold recommended price in London on Tuesday was $431.85 bid per troy ounce at midmorning, up versus $431.00 on Monday. In Zurich the bid price was $431.60, up vs. $431.20. Gold climbed $0.40 in Hong Kong to end at $432.15.

EARNINGS NEWS

Anadys Pharma, biopharmaceutical company, reported 2Q narrower net loss of 31 cents a share, down from 50 cents a year ago on doubled sales of $581 million. The quarter was highlighted by the signing of collaboration with Novartis which improved the company’s outlook.

Genesee & Wyoming, freight railroad operator, posted 2Q net income rise of 41 cents a share vs. 39 cents last year on increased traffic and 25% revenue growth.

Tyco International posted 3Q profit increase of 56 cents per share, up from 43 cents last-year same period on 3.3% higher revenue, beating forecasts of 49 cents per share. The quarterly results included special items of 6 cents a share.

Del Monte Produce reported 2Q profit decrease of 80 cents a share compared with $1.01, earned last year, citing higher product and transport costs. The quarterly results failed to meet expectations of 83 cents a share.

Allied Defense, defense and security firm, projected full-year earnings of $1.48 a share after a very weak first-half results, but improving second-half results.

Ryanair Holdings, Irish low-cost airline, reported 1Q net income rise of 9.1 euro cents vs. 7 euro cents a year ago on 35% revenue growth and 30% higher passenger traffic.

Tower Semiconductor, independent chip company, posted 2Q net loss increased to 71 cents a share, down from 55 cents a share on revenue decline.

Alliance & Leicester, U.K. mortgage bank, announced first-half pre-tax profit was down to 42.1 pence a share, from 47.3 pence a share in the year-ago period. The bank said interim dividend was up to 16.8 pence a share.

Metro, retailer, posted 2Q pre-tax earnings were up to 43 euro cents a share in the same period last year on sales growth outside Germany.

Continental, tires and automotive parts maker, posted 2Q net profit rise vs. the same period last year and announced it expects to increase sales and operating profit.

Smiths Group, the British aerospace and medical products group, announced it should post in-line fiscal year earnings per share before exceptional charges and goodwill amortization, at around 54 pence on sales growth.

CORPORATE NEWS

CNOOC will officially drop its bid to buy Unocal ((UCL)). The Chinese oil company, majority owned by China’s government, has not been welcomed in the U.S. and the abandonment of its offer will open the way for Chevron ((CVX)) and Unocal to complete their merger deal.

Automakers will report July sales, with the traditional Big Three expected to report solid gains after offering all customers the chance to buy their vehicles at their employee discount price levels.

OTHER NEWS

Bank of Japan Governor Toshihiko Fukui told a government committee meeting Tuesday that the Japanese economy may emerge from deflation by the end of calendar 2005.