Durable Goods Orders Lift Pre-Market Sentiment

Elena
26 Jan, 2007
New York City

U.S. stock futures indicated a mixed opening Friday, with traders digesting stronger-than-expected sales growth at Microsoft vs. somewhat disappointing results from Dow components Caterpillar and Honeywell. Microsoft added 1.9% in pre-open trading on better-than-forecast sales increase. Caterpillar reported higher quarterly earnings, missing expectations. The stock rose 2%. Larger-than-expected rise in durable goods orders in December helped lift sentiment.

[R]9:00AM Market futures were flat. Microsoft, Caterpillar, Cisco were in focus.[/R]
U.S. stock equity futures indicated a mixed performance at opening Friday, with traders digesting stronger-than-expected sales growth at Microsoft versus somewhat disappointing results from Dow components Caterpillar and Honeywell. Networking giant Cisco Systems was also in focus in pre-market trading, due to a brokerage downgrade. On the economic news front, the closely watched durable-goods orders report was seen as another leading factor in the session.

Shares of Dow component Microsoft ((MSFT)) added 1.9% in pre-open trading on better-than-forecast sales increase of 6% to $12.54 billion in Q2, helped by strong demand Xbox 360 video game player and by sales of server software. The company’s profit dropped 28% on the delay in shipping the Vista operating system and Office 2007. Again in the tech sector, Citigroup downgraded Cisco Systems ((CSCO)) to hold from buy, sending the stock down by 0.4%. At the same time, Citigroup upgraded Juniper Networks ((JNPR)) to buy from hold, citing expectations of continuous business improvement. Juniper’s shares gained 1.1% in pre-open.

Among other blue-chip stocks, Honeywell ((HON)) reported earnings that came in above the average analyst estimate, but revenue missed expectations. The stock moved slightly lower in pre-open trading. Caterpillar ((CAT)) reported higher quarterly earnings, but missed expectations. Revenue also increased, but fell shy of forecasts. The stock rose 2% in the pre-open. In corporate news, General Motors ((GM)) said late Thursday it will delay its Q4 and full-year earnings report, and again restate several years of financial results. Homebuilder KB Home ((KBH)) said the SEC was currently probing into its stock-option grants. S&P 500 futures inched 0.10 of a point lower to 1,429.70 while Nasdaq 100 futures slipped 2.75 points to 1,788.50. Dow industrial futures rose 15 points to 12,556.


[R]8:00AM Halliburton reported 40% profit decline in Q4.[/R]
Halliburton Co. ((HAL)), oil industry services provider, announced its Q4 profit fell 40% to $658 million, or 64 cents per share, compared with $1.1 billion, or $1.04 per share a year ago. Despite the huge decline, the company’s quarterly profit managed to exceed analyst estimates of 61 cents a share. The prior year''s results benefited from $540 million, or 51 cents per share, of income related to a reduction in a deferred tax asset valuation allowance. Quarterly revenue rose 8% to $6.02 billion on more activity in the company''s energy services group. However, it was partially offset by lower revenue from Halliburton''s engineering, construction and government-services arm KBR Inc., due to decreased activity on government services projects for the military. KBR sales declined to $2.5 billion from $2.7 billion. The oil industry services provider expects demand for its services to remain strong throughout 2007.


[R]7:30AM Asian markets closed lower on Friday on weak tech and banking shares.[/R]
Asian markets finished mostly lower on Friday. Japanese Nikkei 225 index dipped 0.21% to finish at 17,421.93. Department store Marui lost 1.77%.Kyocera fell 1.2% and Canon was off 0.5%. NEC Electronics shed 4.3% after the electronics large-cap posted a wider net quarterly loss. The Hang Seng Index in Hong Kong shed 1.9% to 20,281.13. China Construction Bank declined 2.5%, while Bank of China fell 1.5%. Guangzhou R&F Properties slipped 2.8%, Agile Property was off 3.3% and Shanghai Forte gave up 3.4%.

China bucked the downward trend, with the Shanghai Composite Index advancing 0.9% to close the day at 2,882.56. Banks surged as they are most likely to be favored by funds that subscribed to the IPO of Industrial Bank. China Minsheng Banking finished up by the daily limit of 10%, Hua Xia Bank soared 10% and Shanghai Pudong Development Bank settled 9.1% higher.

The Korea Composite Stock Price Index, or Kospi, fell 0.8% to 1,371.33. Samsung Electronics shed 2.7% and Hynix Semiconductor finished down 1.8%, on declining chip prices. Kia Motors gained 0.9%, in spite of reporting worse-than-expected Q4 results. The Weighted Price Index of the Taiwan Stock Exchange fell 1.29% to close at 7,821.32.


[R]6:30AM European stocks fell Friday on weaker chemical and industrial shares.[/R]
European markets were lower Friday. In morning trade, the U.K. FTSE 100 index retreated 0.6% at 6,231.10, German DAX Xetra 30 index dropped 0.8% at 6,667.01 and the French CAC-40 index slipped 1% at 5,554.11.

Decliners

Siemens shares declined 2% despite strong gains made Thursday after earnings while EADS lost 1.6% on reports that the U.K. government could review contracts if the company does not proceed with a planned 100 million pound investment.

Chemical company, Bayer, slipped 1.4%, and another chemical firm, Linde, lost 1.2% while Imperial Chemical Industries declined 1.1%.

Advancers

L''Oreal gained 3.9% in early Paris trading after the cosmetics company late Thursday reported that Q4 comparable sales grew 6.5%. Credit Suisse updated L''Oreal to outperform after the figures.

Carrefour shares added 0.3% after Citigroup upped the French supermarket chain to hold from sell, citing valuation. Chip maker STMicroelectronics shares advanced 0.6% after UBS upgraded the company to buy from reduce.

Oil and precious metals

Oil advanced on speculation colder U.S. weather will increase use of heating fuel. Crude oil for March delivery gained 62 cents, or 1.1%, to $54.85 a barrel in after-hours electronic trading on the New York Mercantile Exchange, and traded at $54.47 at 10:26 in early trade in London. Brent crude for March climbed 66 cents, or 1.2%, to $54.78 a barrel in electronic trading on the ICE Futures exchange, and last traded at $54.33 in London.

Gold declined for a second day in London on weakening demand from India. Gold for immediate delivery dropped 20 cents to $645.90 an ounce in early trade in London. Silver gained 3.5 cents to $13.35 an ounce, palladium added 50 cents to $348.50 an ounce and platinum advanced 50 cents to $1,173.50 an ounce.

Currencies

The dollar was mostly higher against other major currencies in European trading Friday morning. The euro was quoted at $1.2908, unchanged from late Thursday. The British pound traded at $1.9606, down from $1.9711. The dollar bought 121.42 Japanese yen, up from 120.87.