Stock Futures Predict Flat Opening

Elena
09 Feb, 2007
New York City

U.S. stock futures traded near the flat line Friday, with investors digesting broker upgrades of the Big Three automakers and a jump by crude oil prices. Hedge fund operator Fortress Investment Group was also in focus, as the market awaited its first trading day after it priced its IPO late Thursday. General Motors rose 2.6% and Ford Motor climbed 4% after the car makers were upgraded by Deutsche Bank to buy from hold. DaimlerChrysler was upgraded to buy at Citigroup.

[R]9:00AM Market futures traded flat. The Big Three received a broker upgrade.[/R]
U.S. stock futures traded near the flat line Friday, with investors digesting broker upgrades of the Big Three automakers and a jump by crude oil prices. Hedge fund operator Fortress Investment Group was also in focus, as the market awaited its first trading day after it priced its initial public offering late Thursday. General Motors ((GM)) rose 2.6% and Ford Motor ((F)) climbed 4% after the car makers were upgraded by Deutsche Bank to buy from hold, on hopes for favorable healthcare negotiations. DaimlerChrysler ((DCX)) was upgraded to buy at Citigroup ahead of its restructuring plan for Chrysler. Fortress Investment Group ((FIG)) priced its initial public offering at $18.50 per Class A share, the top end of its indicated range. The hedge fund operator is due to kick off trading Friday.

In other broker moves, J.P. Morgan raised its rating of the U.S. semiconductor sector to bullish from cautious on expectations that several leading indicators will begin to improve in the second quarter. Leading chip maker and Dow member Intel ((INTC)) was up 0.3% in the pre-open. On the corporate news front, Alcatel-Lucent ((ALU)) said it would cut 12,500 jobs, over 3,000 more than it originally planned. It reported Q4 operating profit decline in line with expectations. The stock was down 0.7% ahead of the open. Among other pre-market highlights, Hasbro ((HAS)) reported better-than-expected Q4 earnings and revenue and lifted its quarterly cash dividend by 33%. Gateway Inc. ((GTW)) reported a 9% revenue decline. Quiksilver ((ZQK)), the sports apparel maker, cut its forecast. S&P 500 futures inched 0.20 of a point higher to 1,454.10 and Nasdaq 100 futures were unchanged at 1,821.75. Dow industrial futures were also unchanged.


[R]8:30AM Laidlaw International agreed to be bought by the U.K.’s First Group for $3.6 B.[/R]
Laidlaw International Inc. ((LI)) agreed to be acquired by the U.K.''s First Group Plc in a deal worth $3.6 billion, including the assumption of around $700 million of debt. First Group said it will pay $35.25 a share for Laidlaw, the biggest school and intercity bus operator in the U.S. The deal represents an 11% premium to Thursday''s closing price.

The U.K. group, which operates bus and rail services across Britain, said the deal will create a more robust business and should result in annual cost savings of around $70 million. But First Group said that Laidlaw''s Greyhound intercity bus service could be sold off after the deal as it may not fit with its own operations. Greyhound has around 11,000 staff and contributed to roughly 40% of the U.S. group''s $3.1 billion revenue in fiscal 2006.

Laidlaw agreed to pay First Group a fee of up to $78 million in certain circumstances if the deal does fails, while First Group would pay a break fee of $43.35 million. Shares in First Group gained 4.5% in London. Laidlaw shares jumped 8.8% in pre-market trading.


[R]6:30AM European equities rebound Friday on banking stocks.[/R]
European markets were higher on Friday. By mid morning, Frankfurt Xetra Dax added 0.7% to 6,923.16, the CAC 40 in Paris gained 0.7% to 5,703.12 and London FTSE 100 climbed 0.8% to 6,394.7.

Advancers

Banks were in favor this morning. ABN Amro target price was upgraded on Friday by Fox-Pitt Kelton and the Dutch bank shares gained 1.7%. SEB, the Swedish bank, gained 1.7% after posting better-than-expected Q4 operating profit on strong capital market trading gains. In the telecom sector, Alcatel-Lucent gained 2.9% in spite of reporting a Q4 loss, as it targeted pre-tax savings of 1.7 billion euros over the next three years, and cutting up to 12,500 jobs. DaimlerChrysler lifted the auto sector after Citigroup upgraded the German carmaker from hold to buy and Peugeot rebounded 1.3%, having fallen in the previous two sessions after posting a narrower operating margin in 2006.

Decliners

Sanofi-Aventis shares led the decline in Paris, trading down 2.7% after it said that it lost a patent infringement suit filed in a U.S. district court in California against Amphastar and Teva Pharmaceutical over the Lovenox drug.

Oil and gold

Crude oil declined as traders reassessed the impact of an oilfield shutdown in California that triggered prices rally above $60 a barrel for the first time in five weeks. Oil for March delivery dropped 22 cents to $59.49 a barrel on the New York Mercantile Exchange in early trade in London. Brent crude oil declined 35 cents to $58.68 a barrel on the ICE Futures exchange. Gold fell in London as a five-week rally to prices above $660 an ounce failed to attract new buyers. Gold for immediately delivery dropped $1.50, or 0.2%, to $658.95 an ounce.

Currencies

The dollar inched back slightly against the euro on Friday, after indications by the European Central Bank that it would increase its key interest rates next month. The 13-nation euro bought $1.3003 in early Friday trading, down slightly from $1.3038 in late New York trading. The British pound bought $1.9458, down from the $1.9580 it reached Thursday following a decision by the Bank of England to keep its rates unchanged at 5.25%. The dollar advanced slightly against the Japanese yen, to 121.45, up from 121.05 yen Thursday.