Oil Up 5%, Averages Close Higher

123jump.com Staff
23 Jan, 2007
New York City

Market averages opened higher and closed near the high of the day. Crude-oil futures climbed almost 5% to close above $55 for the first time in two weeks following news that the U.S. plans to boost its emergency oil reserves. The U.S. plan to boost its reserve to 97 days of import from 55 days of import reserve helped oil to rebound. Sun Microsystems reported profit of 3 cents on 7% rise in revenue. Yahoo earning drops 61%. Bank of America earnings jump 47% and Wachovia earnings Up 10%.

[R]5:00PM NY - 11:00PM Frankfurt – 3:30AM Mumbai
Market averages closed higher on better than expected earnings reports. Oil rose 5%, on the U.S. government decision to double the strategic petroleum reserve to 97 days of imports.[/R]

Yield on 10-year bond closed at 4.8% and the 30-year bond closed at 4.893%.

Gold advanced $13.40 to close at $647.50 a troy ounce, silver gained 32 cents to end at $13.320 a troy ounce and copper increased 5.30 cents to close at 258.25 cents per pound.

Oil increased $2.260 to close at $54.840 a barrel and heating oil advanced 6.610 cents to finish at 146.350 cents a gallon. Natural gas gained 28.5 cents to close at $7.604 per MMBtu. Gasoline went up 6.91 cents to end at 144.450 cents a gallon.

Asian markets closed lower pressured by tech sector. The decliners were led by India with a decline of 1.18%, Thailand with a decrease of 0.67% and Indonesia with a loss of 0.49%. The advancers were Philippines with an increase of 1.85% and Taiwan with a gain of 0.13%. Australia gained 0.18%.

European markets ended lower hit by technology-sector weakness after disappointing guidance from telecom-equipment maker Alcatel-Lucent and IT services group LogicaCMG. A profit warning from sugar producer Tate & Lyle also weighed on the indexes. The decliners were led by Belgium with a decrease of 0.62%, Netherlands with a loss of 0.14% and Germany with a decline of 0.13%. The advancers were U.K with a gain of 0.15%, Spain with an increase of 0.06% and Switzerland with an advance of 0.04%.

Latin America markets finished higher in part on the back of rising oil prices. The advancers were led by Brazil with a gain of 1.43%, Mexico with an increase of 1.23% and Argentina with an advance of 0.57%. There were no decliners. Canada advanced 1.47%.

[R]1:00PM European markets closed mostly lower, dragged by the tech sector.[/R]
European stocks finished mostly lower on Tuesday, dragged down by weakness in the technology sector and a profit warning from sugar producer Tate & Lyle. Tech stocks were hurt by disappointing guidance from telecom-equipment maker Alcatel-Lucent and IT services group LogicaCMG. Shares of French-U.S. communications company Alcatel-Lucent dropped 8.5% as it failed to make a profit in the fourth quarter. LogicaCMG dropped 5.1% after the Anglo-Dutch IT services group said its organic revenue growth in IT services was just under 5% in 2006 on a pro-forma basis. In contrast, SAP shares advanced 2.1% after it was upgraded to overweight from equal-weight by Morgan Stanley. Outside the sector, Tate & Lyle tumbled 15.6% in London after the sugar company said that fiscal-year profit is likely to be lower than market expectations. Among other European movers, Swiss luxury-goods retailer Richemont declined 4.3% after recent gains. Van der Moolen was another decliner, falling 5% after it said that it will cut around 30% of its U.S. work force as the NYSE completes its move to its hybrid trading system. The German DAX 30 index closed down 0.1% at 6,678.93, the French CAC-40 slipped 0.1% at 5,575.07, while he U.K.''''s FTSE 100 index gained 0.2% to 6,227.60.

Crude oil prices rose above $53 amid forecasts of colder winter weather. Light, sweet crude March delivery rose 85 cents to $53.43 a barrel. Heating oil added 3 cents to $1.5362 a gallon, while gasoline gained 4 cents to $1.4135. Natural gas rose 13 cents to $7.455 per 1,000 cubic feet. London Brent rose 96 cents to $53.66. The U.S. dollar slipped against its major currency rivals. The euro was quoted at $1.3039, up from $1.2954. The dollar bought 121.32 yen, down from 121.64. The British pound was quoted at $1.9878, up from $1.9764. European gold prices were higher. In London, gold traded at $645.12 per troy ounce, up from $638.70. In Zurich, the precious metal traded at $643.55 per ounce, up from $637.10. Silver closed at $13.19, up from $13.05.


[R]11:30AM Rising oil and strong earnings helped market rebound.[/R]
U.S. stocks reversed from early weakness, as strong results from Texas Instruments helped relieve investor worries about the tech sector and offset a profit warning from Alcatel-Lucent. The markets benefited from strength among resource, housing, defense, and semiconductor stocks. At the same time, airline stocks posted considerable weakness on rising oil prices.

TI ((TXN)) led chip makers higher with an advance of 3.9% on better-than-expected results and a job cuts announcement. United Technologies ((UTX)) was a notable gainer among tech stocks, rising 3.1%, due to strong quarterly earnings. The Dow was supported by Boeing ((BA)), up 2.4%, Alcoa ((AA)), up 1.9%, and Verizon ((VZ)), up 1.6%. Crude oil continued to climb, lifting energy shares. Valero Energy ((VLO)) and Exxon Mobil ((XOM)) were among the biggest gainers, rising 1.8% and 1.6%, respectively. Further in positive earnings news, Wachovia ((WB)) slightly advanced after reporting Q4 earnings rise of 34% to $1.20 a share, from $1.09 last year, beating estimates of $1.18 a share.

On the side of the losers, Alcatel-Lucent ((ALU)) raised worries for the tech sector, as the stock tumbled 8% after the company warned that it failed to make a profit in Q4. Dupont ((DD)) heavily weighed on the blue-chip average, falling 2.5% after meeting quarterly expectations. Similarly, Johnson & Johnson ((JNJ)) fell 1%, despite better-than-anticipated profit. In late morning trading, the Dow rose 35.98, or 0.29%, to 12,513.14. The Standard & Poor''''s 500 index was up 4.22, or 0.30%, at 1,427.17, and the Nasdaq composite index added 9.89, or 0.41%, to 2,440.96. Bond prices fell, with the yield on the benchmark 10-year Treasury note rising to 4.78% from 4.76% late Monday.


[R]10:30 AM NY-9:30PM Mumbai The Sensex declines on heavy losses in cement shares.[/R]

The Sensex on BSE ended 168 points, or 1.18%, lower at 14,041.24. The market-breadth was very weak as small-cap and mid-cap stocks were under pressure. For every advancer, there were two decliners. Against 1,723 shares that declined, only 913 advanced and 60 stocks were unchanged on BSE. Of the 30 stocks in the Sensex, only two advanced, while the rest declined. The turnover on BSE was Rs 4,040 crore, higher than Rs 3,719 crore on Monday. On NSE, the turnover was Rs 8,026.16 crore, compared to Rs 7,574.18 crore on Monday.

Economic news

The government decided on Monday to cut the import duty on items like stainless steel, cement, aluminum, zinc, copper, specified capital goods and project import to reduce the cost of manufacturing and infrastructure development. Rising prices of commodities have been contributing to price inflation in various sectors. With the lowering of duties, the government hopes that pressures on inflation will subside.

The revenues from the Indian Information Technology enabled services have grown ten times over the past decade and its contribution to the GDP has reached to 4.2% in the same period.

The government extended the freeze on all special economic zones project approval process in responding to protests against them from farmers. Congress Party report suggested that brewing local resentment may cost the party dearly in the coming elections.

Most-active stocks

Shree Ashtavinayak was the most-active stock with a turnover of Rs 144.30 crore followed by Tech Mahindra and Pyramid Saimira.

Trading highlights

Bharti Airtel Ltd topped the forecasts on Tuesday with quarterly net profit more than double. The company reported a net profit of Rs 1,043.69 crore for Q3 of 2006, higher than Rs 538.68 crore for the same period a year ago. Revenue increased to Rs 4,723.68 crore, compared to Rs 2,936.03 crore in the same period last year.

Advancers

Bharti Airtel led the advancers, up 1.60% to Rs 689.15, on a volume of 3.93 lakh shares. Hindalco was the other gainer from the large-caps, finishing up 0.30% at Rs 164.95. Geodesic Information Systems advanced 0.55% to Rs 245.35, after its board approved the merger of the Bangalore-based wholly-owned subsidiary, Picopeta Simputers, with the company. Torrent Cables soared 5.89% to Rs 167.20, reporting 65.6% growth in net profit for Q3 of 2006.

National Aluminium Company advanced 4.14% to Rs 221.50, on reporting 46% growth in net profit for Q3 of 2006, to Rs 572.60 crore, compared to Rs 393.03 crore in the same period the previous year.

Decliners

Cement shares led the decliners today. ACC plunged 6.97% to Rs 1,038, dipping to a low of Rs 1,031. Other cement shares also lost, including Gujarat Ambuja Cements plummeting 6.78% to Rs 136.80, Grasim off 2.93% to Rs 2,810, Mangalam Cement declining 8.93% to Rs 224.35, Mysore Cement sinking 6.97% to Rs 62, Birla Corporation sagging 7.83% to Rs 338 and Ultratech Cement shedding 4.65% to Rs 1,060.

Dr Reddy’s Lab declined 5.28% to Rs 767.10, after its results missed analyst expectations. Quarterly net profit advanced to Rs 188 crore from Rs 62.80 crore in Q3 of 2005, while revenue surged to Rs 1,540 crore from Rs 590 crore. Index heavy Reliance Industries shed 1.05% to Rs 1,359, on a volume of 3.65 lakh shares.

State Bank of India lost 4.53% to Rs 1,168.75 as its Q3 net profit was Rs 1,065 crore, down 4.5% from Rs 1,115.1 crore in the same period the previous year. Other banks also declined. UTI Bank was down 7.25% to Rs 505.60, Canara Bank lost 5.03% to Rs 249.20, Bank of India shed 4.11% to Rs 196 and Kotak Mahindra Bank plunged 4.54% to Rs 460. ICICI Bank declined 1% to Rs 965.

Auto shares also closed lower. Maruti shed 2% to Rs 919. Tata Motors lost 1.5% to Rs 950. Tata Steel and Reliance Communications also declined 1.5% each to, Rs 465 and Rs 441, respectively.


[R]9:45AM Market opened mixed on earnings reports.[/R]
U.S. stocks opened little changed on Tuesday, with investors eyeing mixed corporate earnings reports from major companies. A disappointing outlook from Lucent-Alcatel was countered by strong financial results at Bank of America and Johnson & Johnson. Networking stocks moved lower, led by Alcatel-Lucent ((ALU)), down 8.7% after issuing a Q4 warning.

Among companies, releasing upbeat results, Bank of America Corp. ((BAC)) posted Q4 earnings rise of 47%, reflecting both the addition of MBNA and growth in most of its customer segments. Net income at the nation''''s No. 2 bank climbed to $5.26 billion, or $1.16 per share, from $3.57 billion, or 88 cents per share, a year ago. Johnson & Johnson ((JNJ)) reported higher Q4 earnings to $2.17 billion, or 74 cents a share, compared with nearly $2.1 billion, or 70 cents a year earlier. The health-care giant''''s performance was contributed to solid growth in its pharmaceutical, medical-devices and personal-care products divisions.

Among other gainers, Exxon Mobil Corp. ((XOM)) rose 1.1% as oil prices climbed close to $54 a barrel. The increase by the price of oil contributed to some early weakness in oil-sensitive airline sector. UAL Corp. ((UAUA)) reported a narrower Q4 loss from a year ago, but wider compared to analyst estimates. The stock slumped 4.2%.

Further in the earnings news, D.R. Horton Inc. ((DHI)), the nation''''s largest home builder, posted Q1 net income drop of 65% to $109.7 million, or 35 cents a share, down from $310.1 million, or 98 cents last year, as the company took land charges and write-offs on options it plans not to pursue. Still, per-share earnings topped analyst estimates for profit of $112.3 million, or 33 cents a share. The stock rose 3.2% in early trading. Goldman Sachs upgraded its rating on the housing sector to neutral from sell. In the first minutes of trading, the Dow Jones industrial average rose 0.41, or just under 0.01%, to 12,477.57. The Standard & Poor''''s 500 index was up 0.05, or just under 0.01%, to 1,423.00, and the Nasdaq composite index fell 2.09, or 0.09%, to 2,428.98.


[R]9:30 AM NY-2:30PM London FTSE 100 dips on Tate & Lyle plunge.[/R]
By mid-day, the FTSE 100 shed 19.2 points to 6,199.2.

Decliners

Tate & Lyle plummeted 15% on its warning of slower- than-expected sales of its zero-calorie sweetener product Splenda. The product constitutes about 25% of the profits of the company, forcing it to lower earnings guidance at the group level. Associated British Foods fell 1.6%, Premier Foods retreated 0.9% and Cadbury Schweppes shed 1.1 %.

Consumer products group Unilever was off 2.2% as Credit Suisse reduced its rating on the stock from neutral to underweight. InterContinental Hotels aslo declined 0.8 %, ending a strong run inspired by takeover speculation, as expectations for a deal faded.

Advancers

Shire advanced 1.1% as the pharmaceutical company announced it had given a license for a developmental anti-AIDS drug to Avexa. Smith & Nephew gained 1.6% as Goldman Sachs raised its price target on the stock.

Northern Rock added ahead of its figures on Wednesday. The mortgage bank advanced 1.5%, supported by predictions from JP Morgan of a strong showing.

Supermarket retailers advanced. Sainsbury added 1.1%, Tesco traded 0.6% higher and William Morrison was 0.8% stronger. Marks & Spencer gained 1.1% after it pledged to set a property trust to pay 500 million pounds into a scheme to address its 704 million pounds pension deficit.

In the mid-caps, WH Smith led the gainers, up 5.5%. The retailer announced it expected to increase profits as margins improved during its peak Christmas trading period.


[R]9:00AM Market futures were flat. Alcatel-Lucent weighed on the tech sector.[/R]
U.S. stock market futures were sitting near the unchanged mark, poised for a flat market opening on Tuesday, with a downbeat outlook from Alcatel-Lucent further weighing on the tech sector. Since the beginning of this earnings season, a number of major companies like Apple Inc. ((AAPL)), Intel Corp. ((INTC)) and International Business Machines Corp. ((IBM)) have released disappointing outlooks or results.

Shares in Alcatel-Lucent ((ALU)) dropped 11% in pre-open trading after the company warned that on an adjusted basis, it wouldn''''t make any operating profit at all in Q4. The company blamed short-term uncertainty from customers due to its merger, a shift in spending from some large North American customers and heightened competition in the global wireless market.

Cell phone chip maker Texas Instruments Inc. ((TXN)) rose 3.4% in pre-open, following an upgrade of its stock at Merrill Lynch. The company posted a stronger-than-expected quarterly profit on stronger demand for its products. TI also said it would cut about 500 jobs. More tech companies are expected to report today, including Advanced Micro Devices Inc. ((AMD)), Sun Microsystems Inc. ((SUNW)) and Yahoo Inc. ((YHOO)).

Dow component DuPont ((DD)) fell 1.9% in pre-open trading after the chemicals giant reported higher Q4 earnings in-line with analyst forecasts. Positive results at United Technologies ((UTX)) and Johnson & Johnson ((JNJ)) provided some help, with both companies reporting earnings that improved over last year, exceeding expectations. Shares in United Technologies rose 1.4%. Standard & Poor''''s 500 futures were down 1.90 points, but were even with fair value. Dow Jones industrial average futures were down 22 points, and Nasdaq 100 futures were down 3.75 points.


[R]8:00AM Texas Instruments reported 2% profit growth in Q4.[/R]
Texas Instruments Inc. ((TXN)), the world''''s largest maker of chips for mobile phones, said Q4 earnings advanced 2% from a year earlier, due to stronger demand for the company''''s semiconductor and calculator products. The chip maker earned $668 million, or 45 cents per share, compared with $655 million, or 40 cents per share last year. Revenue rose by 4% to $3.46 billion from $3.32 billion in the same period a year earlier. The quarterly results exceeded analyst estimates for earnings of 38 cents a share on revenue of $3.43 billion. Excluding a 5-cent-per-share tax benefit from a federal research and development bill passed into law late last year, quarterly earnings would have come in at 40 cents per share.

For all of 2006, the company earned $4.34 billion, or $2.78 per share, on revenue of $14.25 billion, up from earnings of $2.32 billion, or $1.39 per share, on sales of $13.39 billion in 2005. TI released lower-than-expected Q1 earnings forecast. The company sees Q1 earnings in the range from 28 cents to 34 cents per share on revenue of $3.01 billion to $3.28 billion, just below analysts'''' forecast of 35 cents a share. TI also said it would eliminate 500 jobs over the coming year by closing the Dallas chip plant as part of a cost-reducing plan. Before the financial results were released, the TI shares rose 20 cents to close at $28.59 on the NYSE. In after-hours trading they gained 81 cents, or 2.8%.


[R]7:30 AM Asian markets finish mixed Tuesday with Japan down and HK flat.[/R]
Asian markets closed mixed on Tuesday. The Nikkei 225 Index in Japan ended 0.09% lower at 17,408.57. Among the decliners were Advantest, which fell 0.81% and TDK, which shed 0.91%. Mitsubishi Estate slipped 0.88% and Nomura Holdings closed down 0.63%.

The Hong Kong Hang Seng Index edged 0.01% lower to 20,769.70. Real estate companies led the decline. Henderson Land Development fell 3.5% and Sun Hung Kai Properties dropped 2%. China Mobile, the second biggest large-cap by market capitalization, helped offset losses by rising 2.5%. Shanghai benchmark index advanced 0.5% to 2,949.14. Shanghai Pudong Development Bank soared 10%, the daily limit, China Minsheng Banking surged 10% and Hua Xia Bank also rose 10%.

The Korea Composite Stock Price Index, or Kospi, closed down 0.02% at 1,363.09. LG Electronics settled down 0.9% after jumping nearly 2% during the session, hurt by worse-than-expected Q4 earnings. Oil refiner SK Corp sank 3.4% after the company reported a weaker-than-expected fourth-quarter operating profit.


[R]6:30 AM European shares advanced on strong banks, miners and oil stocks.[/R]
European markets were higher Tuesday. In early trade, the FTSE 100 in London added 0.2% to 6,229.7, Frankfurt Xetra Dax was flat at 6,690.61, and the CAC 40 in Paris was fractionally higher at 5,583.53.

Advancers

Swatch, the biggest watchmaker in the world, continued the rally, up 1.7% after Credit Suisse reiterated its outperform rating and raised its price target. Oil groups made gains as crude prices held near the $53-a-barrel level. British BP added 0.6%, while Spanish Cepsa gained 0.7%.

Credit Suisse, the Swiss investment bank, gained 1% after it said on Monday it was to initiate a $6.4 billion share buyback program and ruled out any major acquisitions. Austrian banks benefited from the sentiment. Raiffeisen, upgraded by both Morgan Stanley and Fox-Pitt, Kelton on Monday, gained a further 1.2%. Erste Bank gained 1.2% after an upgrade from Czech brokerage Wood & Company.

SAP gained 1.7% after Morgan Stanley lifted its rating from equal weight to overweight and lifted its price target. L’Oreal climbed 1.6% after JPMorgan raised its recommendation from neutral to overweight.

Decliners

Alcatel-Lucent plunged 9.9% after warning of a decline in Q4 earnings. Adjusted proforma sales for Q4 of 2006 stood at around 4.42 billion euros, compared with 5.25 billion euros last year.

Sugar company Tate & Lyle shares declined 15.1% in London after it announced that a lower-than-expected contribution from its sucralose product, Splenda, means that its fiscal-year profit is likely to be lower than market expectations.

Luxury goods retailer Richemont shed 3% after recent gains. Van der Moolen dropped 0.7% after it announced that it will immediately reduce around 30% of its U.S. work force as the NYSE completes its move to its hybrid trading system.

Oil and gold

Crude oil rose on higher demand for heating oil in the U.S. and Europe amid colder weather. Crude oil for March delivery rose as much as 73 cents, or 1.4%, to $53.31 a barrel, in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for March gained as much as 70 cents, or 1.3%, to $53.40 a barrel in electronic trading on the ICE Futures exchange in London.

Gold traded in London at $637.50 per troy ounce, down from $638.70 late Monday. In Zurich, gold traded at $635.30, down from $637.10.

Currencies

The dollar fell against other major currencies in European trading Tuesday. The euro traded at $1.3012, up from $1.2954 late Monday. The British pound rose to $1.9858, up from $1.9764. The dollar bought 121.40 Japanese yen, down from 121.61.