Oil Gains at Opening

Elena
12 Jan, 2007
New York City

Wall Street opened Friday session little changed, as profit warnings from chip maker Advanced Micro Devices and business software provider SAP AG took a bite of the tech stocks strength that powered rally yesterday. Shares of AMD dropped 12.5% in early trading. Despite the unfavorable news, Dow components Microsoft and Hewlett-Packard traded 1% higher, while Google and Amazon gained 1% on the Nasdaq.

[R]9:45AM Market opened little changed. Techs advanced, despite warning from AMD.[/R]
Wall Street opened Friday session little changed, as profit warnings from chip maker Advanced Micro Devices and business software provider SAP AG took a bite of the tech stocks strength that powered rally yesterday. Shares of AMD ((AMD)) dropped 12.5% in early trading, while SAP ((SAP)) remained in the positive territory, up 2.8%. Despite the unfavorable news, Dow components Microsoft ((MSFT)) and Hewlett-Packard ((HPQ)) traded 1% higher, while Google and Amazon gained 1% on the Nasdaq. Investors also digested stronger-than-expected retail sales data which stirred interest-rate worries. The Commerce Department said that December retail sales rose to a five-month high of 0.9%. Crude oil prices gained some ground, rising to $52.11 a barrel, helping energy stocks recover. Exxon Mobil ((XOM)) advanced 1%. The Dow rose 4.88, or 0.04%, to 12,519.86. The Standard & Poor's 500 index rose 2.10, or 0.15%, to 1,425.92, and the Nasdaq composite rose 5.36, or 0.22%, to 2,490.21. The bond market was rattled after the Commerce Department report. The yield on the benchmark 10-year Treasury note rose to 4.77%, the highest since October, up from 4.74% late Thursday.


[R]9:30AM NY-2:30PM London The FTSE declines on real estate, oil, mining stocks.[/R]
The FTSE 100 lost 17 points, or 0.26%, at 6,214 in mid-afternoon on Friday.

Advancers

There were only a few gainers on the market. Hotel company, InterContinental Hotels, was advanced as bid talk resurfaced. Speculation has centered on a private equity bid from the likes of Permira, Starwood Capital or a consortium in the Middle East. InterContinental Hotels gained 1.85%.

Bear Stearns upgraded drug giant AstraZeneca to outperform from peer perform with a higher target arguing that the shares are now looking relatively cheap following the recent sell-off. AstraZeneca advanced 1.41%.

Decliners

The profit warning from EMI is the main company news though. Annual profits at its music business will miss expectations after a weak Christmas. Music boss Alain Levy is also leaving as part of a 110 million pounds cost-cutting exercise and will be replaced by executive chairman Eric Nicoli. EMI plunged 6.71%

Miners are firmly in negative territory with Antofagasta, Xstrata and Anglo American leading the decliners, despite a bullish note from Deutsche Bank which saw Kazakhmys upgraded to buy from hold. Antofagasta was down 1.79%, Xstrata shed 1.46%, Anglo American declined 1.58% and Kazakhmys lost 0.76%.

Oil stocks are under pressure again following the decline in crude oil prices to under $52 a barrel overnight. Cairn Energy was off 1.78% and Royal Dutch Shell fell 1.11% today.


[R]9:00AM Market futures pointed to a lower opening amid weakness in the tech sector.[/R]
U.S. stock market futures declined on Friday as weakness in the tech sector offset a bigger-than-expected increase in December retail sales. Techs moved lower after a profit warning from chip maker Advanced Micro Devices ((AMD)) sent the stock 7.3% lower in pre-market trading. Dow component Intel ((INTC)) lost 0.9%, while Apple ((AAPL)) slipped 1% on the Nasdaq. Disappointing sales data from software giant SAP AG also weighed on the sentiment. SAP ((SAP)) said late-Thursday that software-license sales rose 7% to 1.26 billion euros, missing expectations by about 100 million euros. In economic news, strong retail sales, as well as upbeat import and export data further dragged the futures down, signaling that the Fed reserve will be less likely to cut interest rates any time soon. The Commerce Department said that December retail sales rose to a five-month high of 0.9%, exceeding estimates of 0.7% increase. According to another report, import prices rose 1.1% in December, topping expectations of a 0.8% rise, while export prices rose 0.7%. S&P 500 futures slipped 2.50 of a point to 1,428.40 and Nasdaq 100 futures slid 2.75 points to 1,847.00. Dow industrial futures lost 17 points to 12,549.

[R]December retail sales rose above expectations.[/R]
Friday morning, the Department of Commerce released its report on retail sales in the month of December, showing that sales rose by more than economists had expected. The sales growth reflected significant increases in gas station and electronics & appliance stores. The report showed that retail sales rose 0.9 percent in December following a downwardly revised 0.6 percent increase in November. Economists had expected sales to increase by 0.7 percent compared to the 1.0 percent increase that was originally reported for the previous month. The better than expected increase in sales reflected notable sales growth at gas station and electronics & appliance stores, which rose 3.0 percent and 3.8 percent, respectively. The Commerce Department also said that sales, excluding auto sales, rose 1.0 percent in December following a 0.7 percent increase in November. The increase came in well above economist estimates of a 0.5 percent increase.


[R]8:00AM Advanced Micro Devices warned of lower Q4 revenues.[/R]
Advanced Micro Devices Inc, ((AMD)), chip company, posted a profit warning late Thursday, saying that Q4 operating income, excluding ATI-related segments and acquisition-related charges, would be lower than in Q3, citing lower selling prices for microprocessors which largely offset a significant increase in unit sales. According to information provided by the company, Q4 revenues would be about $1.37 billion, coming in below the average estimates of $1.85 billion. Earlier the company said that it expects Q4 microprocessor sales to grow in the range of 7%-13% sequentially or 42%-50% over the prior year period. The lower revenues-and-profits warning appears to intensify the price war with Intel ((INTC)) for microprocessor chips. AMD has also been planning to generate higher-than-projected cost savings from its $5.4 billion acquisition of ATI. The chip maker will report fourth quarter results on January 23, 2007 after market close. The stock dropped 7.2% in pre-market trading.


[R]7:30 AM Asian markets closed higher on Friday on strong US close overnight.[/R]
Asian markets closed higher on Friday. The Nikkei 225 Index in Japan rose 1.3% to end at 17,057.01, after dropping during the past two sessions. The stronger dollar, which inflates exporters overseas earnings when brought back to the country, prompted investors to buy Kyocera, Sony and NEC. Shares of Kyocera jumped 3%, Sony added 2.4% and NEC advanced 4.1%. Other gainers included banks and brewery stocks, with Mitsubishi UFJ Financial rising 2.7% and Asahi Breweries adding 2.5%.

The Korea Composite Stock Market Index, or Kospi, rose 1.7% to 1,388.37. Samsung Electronics and Posco reported strong fourth quarter results. US rise and the European Central Bank decision to keep its rates unchanged also helped boost the market. Samsung Electronics, rose 3.6%, after the company said it earned 2.35 trillion Korean won in the fourth quarter, down from 2.56 trillion won a year earlier.

The Hang Seng Index gained 1.2% to 19,613.41. China Mobile led gains, rising 1.9%. HSBC also lent support, advancing 0.3%. And Swire Pacific added 1.8% after the company outlined its investment plans. Affiliate Cathay Pacific also surged 5.5% on a bullish outlook and declining fuel prices. The Shanghai Composite Index shed 3.7%, the sharpest single-day drop since July 13. China Petroleum & Chemical, the top refiner by capacity in Asia, plunged 7.3%. Shanghai International Port dipped 7.2%, Daqin Railway sank 6.4% and China Yangtze Power dropped 6%.

Australia S&P/ASX 200 Index advanced 1.3% to 5,638.80, while New Zealand NZSX-50 Index finished up 0.1% at 4,051.84. Taiwan Weighted Price Index rose 1.9% to 7,761.71 and Singapore Straits Times Index gained 1.3% to 3,009.09.


[R]6:30AM European markets decline on Friday on SAP and Carrefour weak results.[/R]
European markets were lower on Friday. In early trade, the U.K. FTSE 100 index lost 0.2% at 6,220.80, Germany Xetra Dax slipped 0.1%, at 6,684.11, while in France the CAC 40 was essentially flat, slightly lower at 5,609.19.

Decliners

SAP plunged heavily, down 7.7% as the German software company took investors by surprise with disappointing fourth quarter results. Carrefour shed 4.7% after slower than forecast sales growth from the French retailer in the fourth quarter thus prompting widespread broker downgrades and price target reductions.

Advancers

Sodexho Alliance was in favor, advancing 3.3% as traders continued to expect stronger-then-anticipated first quarter sales which the French contract food and services group posted on Wednesday.

Accor staged a strong performance for a second session, adding 2.8% after two leading brokers stated French hotels group could return significant cash to shareholders through further asset sales.

Oil and gold

Oil rebounded from a 19-month low under $52 a barrel on Friday. US crude oil was up 71 cents at $52.59 a barrel in early electronic trade in London. Brent crude was up 93 cents at $52.63. Gold opened Friday at a bid price of $613.25 a troy ounce, down from $614.60 late Thursday.

Currencies

The dollar traded at 120.43 yen in early trade in London, from 120.50 late yesterday in New York. Against the euro, it was at $1.2911, from $1.2892. The pound today strengthened to 66.20 against the euro, its highest since June 2005, from 66.36 pence yesterday. It was also at $1.9467.