Market to Open Higher

Elena
14 Feb, 2007
New York City

U.S. stock futures traded higher ahead of Federal Reserve Chairman Ben Bernanke testimony in front of Congress. Among pre-market highlights, DaimlerChrysler rose 4.6% after it announced a recovery plan for its U.S. Chrysler group, including the reduction of its workforce by 13,000 employees. Beverage giant Coca-Cola added nearly 1% in the pre-open as Q4 earnings excluding charges beat analyst estimates.

[R]9:00 AM Market futures pointed higher. Coca-Cola and DaimlerChrysler provided support.[/R]
U.S. stock futures traded higher ahead of Federal Reserve Chairman testimony in front of Congress. Ben Bernanke is expected to deliver his report on monetary policy to the Senate Banking Committee beginning at 10:00 am on Wednesday. Among pre-market highlights, DaimlerChrysler ((DCX)) rose 4.6% after it announced a recovery plan for its U.S. Chrysler group, including reducing its workforce by 13,000 employees. The automaker also said its Q4 profit fell 40%, as revenue lost 2%. The company's Chrysler Group swung to a loss, while profits improved at its Mercedes Group. Beverage giant Coca-Cola ((KO)) added nearly 1% in the pre-open as Q4 earnings excluding charges beat analyst estimates. An early boost to the tech sector was given by chip equipment maker Applied Materials ((AMAT)) which rose 2.5% in the pre-open after reporting tripled quarterly profit as companies built chips for use in consumer electronics. In economic news, the U.S. Commerce Department said retail sales were flat in January, hurt by a big drop in auto purchases. Department stores posted strong sales during the month but they were offset by a 1.3% drop in sales of autos amid weak demand. It was the biggest one-month drop in auto sales since a 2.4 percent plunge last June. S&P 500 futures edged up 1.60 points to 1,451.00 and Nasdaq 100 futures rose 2.25 points to 1,798.25. Dow industrial futures gained 11 points to 12,697.

[R]January retail sales came in unchanged.[/R]
Wednesday morning, the Department of Commerce released its report on retail sales in the month of January, showing that sales unexpectedly came in unchanged compared to the previous month due to decrease in auto sales. The report showed that retail sales came in unchanged in January following an upwardly revised 1.2 percent increase in December. Economists had expected sales to increase by 0.3 percent compared to the 0.9 percent increase that was originally reported for the previous month. Despite the decrease in sales in January, retail sales were still up 2.3 percent compared to same month last year, although that marked a notable slowdown from the 5.7 percent year-over-year growth reported for December. The decrease in sales in January was partly due to a 1.3 percent drop in auto sales, which came after a 1.0 percent increase in December.

Excluding auto sales, retail sales rose 0.3 percent in January compared to economist estimates of a 0.4 percent increase. Strong growth in sales at department stores, furniture and home furnishings stores, and food and beverage stores contributed to the increase in ex-auto sales. At the same time, the report showed a notable decline in sales at electronics and appliance stores as well as a decrease in sales at gasoline stations. Sales at gas stations fell 0.7 percent in January after surging up 3.6 percent in December due to a decrease in gas prices. While the lack of growth in retail sales may raise some concerns about the strength of the U.S. economy, it may also help to ease recent worries that the Federal Reserve could resume raising interest rates.


[R]8:00 AM Coca-Cola posted Q4 profit decline, hurt by a charge.[/R]
Coca-Cola ((KO)) reported Q4 net income decline of 22% to $678 million, or 29 cents a share, due to a 23 cents a share charge on an impairment at Coca-Cola Enterprises ((CCE)). Revenue rose 7% to $5.93 billion. Excluding the charge, the company would have earned 52 cents a share, exceeding estimates for earnings of 50 cents a share on revenue of $5.78 billion. Coca-Cola is planning to buy back between $2.5 billion to $3 billion in stock in 2007 after repurchasing $2.5 billion of shares in 2006.


[R]7:30AM Asia finishes higher Wednesday with Australia leading the stocks higher.[/R]
Asian markets finished mostly higher on Wednesday. Sydney''s benchmark S&P/ASX 200 ended 0.4% higher at 5,960.50. BHP advanced 0.8%, while Rio Tinto added 2.3%. BHP and Rio Tinto were considering individual bids for Alcoa. Shares of Alumina gained 1.5%. In a statement to the Australian Stock Exchange, Alumina stated it does ot have any information about a possible takeover of its U.S.-based partner, Alcoa Inc. The Nikkei in Tokyo finished 0.74% higher at 17,752.64. Sony, Bridgestone and other large-caps gained, tracking gains on US markets on Tuesday. Shares of Sony advanced 3.8% while Bridgestone rallied 4.2% after guiding higher operating profit for the current fiscal year

South Korean benchmark Kospi index closed 1.3% higher at 1,436.10 as tensions over North Korea’s nuclear program subsided. Samsung Electronics rose 1.6% while LG Philips LCD declined 3% after the company said it was asked by the Korea Exchange to clarify speculation that Japanese consumer-electronics company Matsushita Electric Industrial may buy a stake in the company. Hong Kong Hang Seng Index closed 0.4% higher at 20,209.91. Shares of Hutchison Telecom advanced 1.5%. The telecom group plummeted 15% on Tuesday after confirming it had agreed to sell its 67% stake in Indian telecom-operator Hutchison Essar to Vodafone Group for $11.1 billion. Taiwan Weighted Price Index ended 0.9% higher at 7,809.45 and Singapore Straits Times index closed 1.1% higher at 3,182.21. Indonesian benchmark JSX Composite also closed up 1.4% at 1,750.98.


[R]6:30AM Europe trades higher on Wednesday on strength in software, services.[/R]
European markets were higher on Wednesday. The benchmark FTSE 100 Index in London increased 11.1, or 0.2%, to 6,392.90 in London in mid-morning trade, breaching the 6,400 level earlier. German Xetra Dax added 25.8 points, or 0.4%, to 6,921.18 and France’s CAC 40 gained 19.8 points, or 0.4%, at 5,702.44.

Advancers

Wolseley Plc surged 4.7% on a report Cinven Ltd. may make a 10 billion-pound, or $19 billion, bid for the company. Commerzbank rose 2.7 % after the second largest commercial lender in Germany reported record net profits for last year and raised its earnings targets for 2007. Adecco added 2.1% after Deutsche bank upgraded the Swiss employment group from hold to buy. Rio Tinto Group, up 2% and Xstrata Plc, 1.7% led gains by mining shares after copper and gold rose. Electrolux AB had the biggest rally in a decade, surging 18%, after the world second-largest household appliances maker returned to a profit. ASML Holding NV led technology stocks higher, up 2.2% as earnings surged at Applied Materials Inc. of the U.S. DaimlerChrysler AG, was up 1.5%, and led a rally by car companies after a newspaper reported it may sell its loss-making U.S. unit Chrysler.

Decliners

DSM fell heavily in early trade, retreating 8.6% after Q4 results from the Dutch chemical group fell short of forecasts. Societe Generale fell 2.3% after Q4 profits also missed market forecasts.

Oil and gold

Crude oil on the New York Mercantile Exchange rose $1.25, or 2.2%, to $59.06 a barrel. March gasoline gained 5.64 cents, or 3.6%, to $1.6091 a gallon. Gold climbed to a six-month high in London as the dollar extended declines against the euro, spurring demand for the precious metal as an alternative asset. Gold for immediate delivery gained $4.10, or 0.6%, to $668.35 an ounce in early trade in London.

Currencies

The euro advanced to the highest in almost six weeks against the dollar after European Central Bank Governing Council member Klaus Liebscher stated that ECB is concerned inflation will accelerate. The euro rose to $1.3097 in early trade in London from $1.3039 late yesterday in New York. Against the yen, it advanced to 158.56 from 157.98. The pound canceled out its decline against the euro and rose against the dollar after Bank of England policy makers announced inflation will fall to the 2% target by Q4 based on market forecasts for a second interest-rate increase this year. Against the euro, the pound was at 66.96 pence in London from 66.97 on Feb. 13, its weakest since Jan. 9. It was at 67.11 pence before the central bank released its quarterly inflation report. The U.K. currency was also at $1.9551 from $1.9525 before the report and $1.9469 late yesterday. Against the dollar, the yen traded at 121.29 in London from 121.16 late yesterday in New York.