Averages at Intra-day Low

123jump.com Staff
12 Aug, 2005
New York City

Oil, China, Japan and NAFTA form the bulk of trade deficit in June. The 11% jump in deficit is likely to be higher in the coming months as oil prices keep rising from the average price of $44 per barrel in June. Last trade surplus was recorded in the year 1976.

U.S. AVERAGES

The weakness in tech stocks, larger than anticipated U.S. trade deficit and rising oil prices led investors to sell stocks in the first hour of trading. The sell-off was also exacerbated by the fall in dollar against major currencies in Europe and Asia. Gold trades up 40 cents to $448.20 per ounce.

Latest read on consumer confidence showed declined from 96.5 in June, its best level, to 92.7 according to a survey from University of Michigan.

Last night Dell met 2Q earnings of 38 cents estimates but missed the revenue $13.4 billion fell short of estimates of $13.7 billion. The stocks at is trading 9%. Cree research reported 4Q profit of 27 cents vs. 28 cents a year ago on 9% rise in revenue.

Airlines shares continue to slide as oil trades near new peak. The shares of AMR Corp are down 20 cents and Delta Air are down 10 cents. Verizon shares are trading close to its 52-week low.

British Airways has halted all flights from London as some of its staff has joined a dispute between Gate Gourmet, its caterer and its workforce. Approximately 70,000 people reportedly have been stranded at the Heathrow Airport. The company expects the flight disorganization to continue for days even though more than half the striking staff has returned to work.


ECONOMIC REPORT

The unedited transcript of the U.S. trade deficit news report is provided below. The entire report can be read on the site www.doc.gov.


U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES

June 2005

Goods and Services

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total June exports of $106.8 billion and imports of $165.6 billion resulted in a goods and services deficit of $58.8 billion, $3.4 billion more than the $55.4 billion in May, revised. June exports were virtually unchanged from May, and June imports were $3.4 billion more than May imports of $162.2 billion.

In June, the goods deficit increased $3.3 billion from May to $64.0 billion, and the services surplus decreased $0.1 billion to $5.2 billion. Exports of goods were virtually unchanged at $74.5 billion, and imports of goods increased $3.2 billion to $138.5 billion. Exports of services increased $0.1 billion to $32.4 billion, and imports of services increased $0.2 billion to $27.1 billion.

In June, the goods and services deficit was up $3.9 billion from June 2004. Exports were up $12.6 billion, or 13.4 percent, and imports were up $16.5 billion, or 11.1 percent.

Goods

The May to June change in exports of goods reflected decreases in foods, feeds, and beverages ($0.4 billion); consumer goods ($0.2 billion); and industrial supplies and materials ($0.2 billion). Increases occurred in capital goods ($0.6 billion); other goods ($0.1 billion); and automotive vehicles, parts, and engines ($0.1 billion).

The May to June change in imports of goods reflected increases in industrial supplies and materials ($2.2 billion); capital goods ($1.2 billion); and consumer goods ($0.1 billion). Decreases occurred in automotive vehicles, parts, and engines ($0.2 billion) and other goods ($0.1 billion). Foods, feeds, and beverages were virtually unchanged.

The June 2004 to June 2005 change in exports of goods reflected increases in capital goods ($3.3 billion); industrial supplies and materials ($3.1 billion); consumer goods ($1.0 billion); automotive vehicles, parts, and engines ($0.6 billion); foods, feeds, and beverages ($0.5 billion); and other goods ($0.1 billion).

The June 2004 to June 2005 change in imports of goods reflected increases in industrial supplies and materials ($6.6 billion); capital goods ($3.3 billion); consumer goods ($2.9 billion); automotive vehicles, parts, and engines ($0.6billion); other goods ($0.4 billion); and foods, feeds, and beverages ($0.4 billion).

Services

Services exports increased $0.1 billion from May to June. The increase was more than accounted for by an increase in other private services (which includes items such as business, professional, and technical services, insurance services, and financial services). Changes in the other categories of services exports were small.

Services imports increased $0.2 billion from May to June. The increase was mostly accounted for by increases in other private services and travel. Changes in the other categories of services imports were small.

From June 2004 to June 2005, services exports increased $3.9 billion. The largest increases were in other private services ($1.2 billion), royalties and license fees ($0.9 billion), and travel ($0.8 billion).

From June 2004 to June 2005, services imports increased $2.4 billion. The largest increases were in other private services ($1.0 billion), other transportation ($0.4 billion), which includes freight and port services, travel ($0.4 billion), and royalties and license fees ($0.4 billion).

Goods and Services Moving Average

For the three months ending in June, exports of goods and services averaged $106.8 billion, while imports of goods and services averaged $163.8 billion, resulting in an average trade deficit of $57.0 billion. For the three months ending in May, the average trade deficit was $55.3 billion, reflecting average exports of $105.6 billion and average imports of $160.9 billion.

Selected Not Seasonally Adjusted Goods Details

The June figures showed surpluses, in billion of dollars, with Hong Kong $0.7 (for May $0.7), Australia $0.7 ($0.7), Singapore $0.5 ($0.5), and Egypt $0.2 ($0.1). Deficits were recorded, in billions of dollars, with China $17.6 ($15.8), Europe $12.8 ($12.1), the European Union $10.8 ($10.5), OPEC $7.7 ($7.3), Japan $6.9 ($6.6), Canada $5.4 ($4.8), Mexico $4.8 ($4.5), Korea $1.3 ($1.5), Taiwan $1.2 ($0.9), and Brazil $0.8 ($0.7).

Advanced technology products (ATP) exports were $19.3 billion in June and imports were $22.9 billion, resulting in a deficit of $3.7 billion. June exports were $2.1 billion more than the $17.2 billion in May, while imports were $1.9 billion more than the $21.0 billion in May.

Revisions

Goods carry-over in June was $0.3 billion (0.4 percent) for exports and $1.0 billion (0.7 percent) for imports. For May, revised export carry-over was $0.1 billion (0.1 percent), revised down from $0.2 billion (0.3 percent). For May, revised import carry-over was $0.1 billion (0.1 percent), revised down from $0.9 billion (0.7 percent).

Services exports for May were revised down $0.1 billion to $32.3 billion; the revision was mostly accounted for by a downward revision in travel. Services imports for May were virtually unchanged at $27.0 billion.

U.S. IMPORT AND EXPORT PRICE INDEXES

Prices for U.S. imports rose 1.1 percent in July after a similar increase of 1.0 percent in June, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the second consecutive month, higher petroleum prices more than offset a decrease in non-petroleum prices.

The price index for U.S. exports advanced 0.1 percent in July following declines in May and June.

INTERNATIONAL MARKET NEWS

Asian-Pacific markets finished mixed with the Japanese Nikkei flat on disappointing quarterly economic growth of 0.3%, erasing early gains by stocks sensitive to domestic economy as well as by energy-related issues on the back of record-high oil prices. The regional markets gained mainly on energy and mining stocks. Hong Kong’s Hang Seng added 0.04%, South Korea’s Kospi rose 0.6%, while Shanghai Composite declined 1.3%.

European stocks fell across the region on oil prices surging to $67 a barrel, disappointing French GDP data, strike disruption at British Airways, and caution in the tech sector. The German DAX 30 lost 0.34%, the French CAC 40 declined 0.72%, and London's FTSE 100 fell 0.24%.

ENERGY, METALS AND CURRENCIES MARKETS

Oil prices surged to new record highs, reaching almost $67a barrel on capacity worries to refine and pump oil. Light crude advanced $1.05 to $66.85 after soaring to an all-time high of $66.95 and London Brent was $1.08 to $66.46.

Gold advanced for the third consecutive session on weakening dollar and soaring crude-oil prices. In London gold traded at $446.10 per ounce, up from $441.55. In Hong Kong gold climbed $10.20 to close at $448.55. Silver trade unchanged at $7.09 per ounce.

Copper for September delivery gained 2.2 cents to $1.669 a pound.

The U.S. dollar was mixed against other major currencies on U.S. trade data. In mid-day NY trading the euro was quoted at $1.2431. The dollar bought 109.46 yen. The pound was quoted at $1.8157.

EARNINGS NEWS

Movie Gallery ((MOVI)), retail home video provider, posted a loss of 39 cents a share, down vs. profit of 32 cents a share for the second quarter last year on strong revenue growth, missing analysts’ expectations of earnings of 51 cents a share.

Nvidia Corp. ((NVDA)), graphic and digital media processor company, reported 2Q net income of 41 cents a share vs. 3 cents a share, a year ago, beating analysts’ estimate of 34 cents. Revenue rose to $574.8 million vs. $456.1 million last year, while analysts had expected $585 million.

Cree Inc. ((CREE)) 4Q earnings remained flat despite a 9% rise in revenue. For 4Q the company posted earnings of 27 cents a share vs. 28 cents last year. Analysts were expecting earnings of 27 cents a share. The company also forecast earnings and revenue for 1Q below analysts' estimates.

U-Store-It Trust, self-storage facilities developer, posted 2Q net income of 6 cents a share on slightly lower-than expected growth in revenue, missing analyst estimate by a penny. Same-store revenue rose 6.8%.

Analog Devices Inc. ((ADI)) said its 3Q profit fell 28% as revenue dropped 19% on weaker sales of digital-signal processor products to wireless handset customers in Asia. The company earned 32 cents a share for 3Q vs. 43 cents a share a year ago. The company sees 4Q earnings at 32 - 34 cents a share, while analysts expect 33 cents a share.

Kohl's Corp. ((KSS)), general-merchandise retailer, posted a 2Q profit of 54 cents a share vs. 47 cents a year ago, as revenue climbed 16% to $2.89 billion. Analysts expected Kohl's to earn 52 cents a share.

Dell Inc. ((DELL)) posted a 2Q profit of 41 cents a share vs. 31 cents a share in the year-ago quarter. Excluding one-time items, Dell earned 38 cents a share, in line with estimate. Revenue rose to $13.43 billion vs. $11.7 billion, missing analysts' $13.7 billion forecast.

DreamWorks Animation SKG, producer of computer animated features, reported a 2Q net loss of 4 cents a share vs. a profit of $1.89 per share in the same period a year ago on revenue decline, beating analyst estimate of 7 cents a share.

CORPORATE NEWS

Mitsubishi Tokyo Financial Group and UFJ Holdings announced a three-month delay of the merger of their core commercial-banking units in order to ensure the successful integration of their computer systems. The merger will take place on January 1st, not Oct. 1st as originally scheduled.

Hewlett-Packard Co. ((HPQ)) said that it has signed an agreement to acquire substantially all of the assets of Scitex Vision for $230 million from Scitex Corporation Ltd. ((SCIX)). The transaction is subject to certain closing conditions and is due to be completed within approximately 90 days. Following completion, the business acquired from Scitex Vision will be fully integrated into HP's Imaging and Printing Group.

Polaris Industries Inc. ((PII)) said late Thursday it has completed its purchase of a 24.9% interest in Austrian motorcycle manufacturer KTM Power Sports AG through its Austrian subsidiary from an institutional investor. Polaris bought 24.9% of the outstanding capital stock of KTM Power Sports AG for about $75.5 million. Polaris said the purchase was financed from borrowings under its existing bank line of credit arrangement.

As part of its commitment to repurchase 10 million shares over the next 6-9 months, Knight Ridder ((KRI)) said late Thursday that it bought 5 million shares of its common stock from Goldman Sachs ((GS)) for $62.36 per share, or $312 million. The company said that it has repurchased 8.3 million shares for about $525 million during 2005, representing 11% of its outstanding stock.

Genworth Financial Inc. ((GNW)) announced that it has filed a shelf registration statement with the SEC yo cover any future sales of 243.2 million shares of its common stock held by General Electric ((GE)). Genworth said the statement was filed in response to GE's stated plan to reduce its 52% stake in Genworth in an orderly manner over the next two years. The company’s shares were up 1.5% to close at $31.32 on Thursday.

OTHER NEWS

Shortly before the Tokyo financial markets opened, the government announced that Japan's economy expanded 0.3% in real terms in the April-June period vs. the previous quarter. That was less than the private-sector economists' forecast of 0.5% growth.

GDP data from France showed that GDP slowed to 0.1% in the second quarter, from 0.4% in the first quarter, with year-on-year growth of 1.2%. Analysts had expected a 0.2% quarterly rise. The first quarter of 2005 was revised higher to 0.4% from 0.3%.