Stock Futures Indicate Weaker Start

Elena
11 Jan, 2007
New York City

U.S. stock futures traded slightly lower Thursday after a surprising rate hike by the Bank of England. The technology sector was in the spotlight after Cisco Systems filed a lawsuit against Apple Computer Inc. to resolve a trademark dispute over its new iPhone device. Genentech reported 75% profit jump in Q4 on strong demand for its cancer-fighting drugs. The company reported it earned 55 cents per share, higher than 31 cents per share last year, boosted by 38% increase in revenue.

[R]9:00AM Market futures pointed to a lower opening on Thursday.[/R]
U.S. stock futures traded slightly lower Thursday after a surprising rate hike by the Bank of England. The U.S. dollar and Treasury bonds came under pressure after the BoE raised its key interest rate to 5.25% from 5%, citing strength in the services sector and housing market, as well as inflation running at a 2.7% rate. As a result, The British pound jumped 0.8% vs. the dollar. An economic news report also weighed on bonds, as the Labor Department said initial claims for state unemployment benefits fell 26,000 to 299,000, much lower than the expected decline to 320,000.

The technology sector was in the spotlight after Cisco Systems ((CSCO)) filed a lawsuit against Apple Computer Inc. ((AAPL)) to resolve a trademark dispute over its new iPhone device. Shares of Apple fell 1.1% in pre-open trading. Among companies releasing financial results, Genentech ((DNA)) reported 75% profit jump in Q4 on strong demand for its cancer-fighting drugs. The company reported it earned 55 cents per share, higher than 31 cents per share last year, boosted by 38% increase in revenue. For 2006, the company reported earnings of $2.1 billion, a 65% increase over 2005. The biotechnology company expects 25% to 30% growth in 2007. Life insurance and annuity company MetLife ((MET)) advanced in pre-open trading after UBS upgraded its stock to buy from neutral. S&P 500 futures shed 2.20 points to 1422.20 and Nasdaq 100 futures slid 3.00 points to 1,831.50. Dow industrials futures lost 18 points to 12,490.

[R]Initial jobless claims dropped more than expected.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended January 6, showing that jobless claims fell by much more than economists had been expecting. The report showed that jobless claims fell to 299,000 from the previous week''s revised figure of 325,000. Economists had expected jobless claims to fall to 320,000 from the 329,000 originally reported for the previous week. With the decrease, initial jobless claims fell below 300,000 for the first time since the week ended July 22. The less volatile 4-week moving average also decreased, falling to 314,750 from the previous week''s revised average of 316,500. The Labor Department also said that continuing claims in the week ended December 30 fell to 2.428 million from the preceding week''s revised level of 2.431 million.


[R]8:00AM Cisco Systems Inc. sued Apple over its iPhone .[/R]
Cisco Systems Inc. ((CSCO)), the world''s largest networking equipment maker, sued Apple ((AAPL)) in San Francisco federal court on Wednesday, claiming that the maker of computers and media players doesn''t have permission to name its latest device the iPhone. It is a touch-screen-controlled cell phone device that plays music, surfs the Web and delivers voicemail and e-mail. The product hasn''t received FCC approval yet.

Cisco accuses Apple of violating a trademark which it has owned since 2000, as a result of buying InfoGear, which owned the trademark previously. Since December, Cisco''s wireless division, Linksys, has been shipping a family of cordless and wireless phones under the iPhone brand. Apple defends its rights, saying that it is entitled to use the name iPhone because the products are materially different.

Cisco Systems said Apple approached the company several years ago seeking to use the name. Since then, the two Silicon Valley tech giants have been negotiating, trying to reach a licensing agreement, but the talks broke down just hours before Apple''s CEO, Steve Jobs, appeared to introduce the multimedia device at the annual Macworld Conference and Expo on Tuesday.

Before the lawsuit was announced, Apple''s shares closed up $4.43 to $97. Apple shares fell 40 cents to $96.60 in after-hours trading. Cisco''s shares closed up 21 cents to $28.68 on the Nasdaq Stock Market. In after-hours trading, Cisco shares gained 9 cents to $28.77.


[R]7:30 AM Asian markets fell Thursday, Japan led the decline on rate fears.[/R]
Asian markets declined Thursday. Tokyo''s Nikkei 225 index ended down 0.6% at 16,838.17. Tokyo Electron rose 1.2% after the company said orders for chip-making equipment rose sharply in the July-to-September period. Matsushita Electric Industrial Co. gained 0.9% after unveiling a business strategy aimed at boosting profits. Toyota Motor Corp reversed early gains to end 0.4% lower. However, Honda Motor Corp rose 0.4%.

Hong Kong''s blue chip Hang Seng Index ended 0.9% lower at 19,385.37. The China Enterprises Index, following shares of mainland-incorporated companies listed in Hong Kong, shed 1.4% to 9,511.76. The Kospi in South Korea ended 0.70% higher at 1,365.31. Samsung Electronics advanced 1%. Samsung will reportedly supply semiconductors for the new iPhone of Apple.

Elsewhere in Asia, Australia S&P/ASX 200 gained 0.8% at 5,564.90, but China Shanghai Composite shed 2.1% to 2,765.40, Malaysia KLSE Composite dipped 0.6%, Taiwan Weighted Price Index gave up 0.6% and Indonesia JSX Composite lost 0.4%.


[R]6:30 AM European shares were higher on Thursday on techs, Metro.[/R]
European markets advanced in early trade on Thursday. The U.K. FTSE 100 advanced 0.5% at 6,188.60, the German DAX Xetra 30 index gained 0.6% at 6,606.09 and the French CAC-40 index rose 0.6% at 5,532.11.

Advancers

Of updates, shares in German retailer Metro Group rose 2.1% as its 2006 sales gained 7.5% to around 60 billion euros, helped by sales growth of 1.9% in Germany and international sales growth of 12.4%. Dutch bank ABN Amro advanced 2.6% after Merrill Lynch upgraded the company to buy. Deutsche Bank upgraded U.K. broadcaster ITV to buy from hold. ITV shares rose 2.6% in London. Spanish tobacco company Altadis advanced 1.6% on a report that Imperial Tobacco Group is considering a 10 billion-euro bid for its Franco-Spanish rival.

Miners BHP Billiton and Rio Tinto climbed more than 1.9%. Technology sector was higher with Nokia advancing 1.5% and Infineon Technologies up 1.6% on strength in the technology sector and Alcoa Inc. strong start to the fourth-quarter earnings season. Vodafone Group Plc, the world''s largest cellular-phone company, rose 0.5. Lehman Brothers Holdings Inc. raised its recommendation Vodafone shares to overweight from equal weight.

Decliners

U.K. supermarket chain J. Sainsbury declined 1.6% after it said that its third-quarter comparable sales increased 4.2%, or 5% excluding fuel.

Oil and gold

Crude oil declined and was below $54 a barrel, after U.S. demand for fuel dipped to its lowest in more than two years. Crude oil for February delivery fell $1.08, or 2%, to $52.94 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for February settlement shed $1.09, or 2%, to $52.60 a barrel in electronic trading on the ICE Futures exchange. Gold for immediate delivery lost $1.70, or 0.3%, to $609.60 an ounce.

Currencies

The euro advanced to 155.96 yen in early trade in London from 154.77 late yesterday in New York. It also was at $1.2964 against the dollar from $1.2938. The yen fell to 120.29 against the dollar, from 119.64.