Economic Data Boost Stock Futures

Elena
15 Feb, 2007
New York City

U.S. stock futures advanced on Thursday, bolstered by bigger-than-expected rise in manufacturing activity in the New York area in February and a larger drop in January import prices. The U.S. Labor Department said that prices for imported goods fell 1.2%, vs. expectations of a 1.1% drop. It was also reported that initial jobless claims rose 44,000 during the week ending Feb. 10 to 357,000, the highest level seen since late November.

[R]9:00 AM Market futures pointed higher, boosted by economic data.[/R]
U.S. stock futures advanced on Thursday, bolstered by bigger-than-expected rise in manufacturing activity in the New York area in February and a larger drop in January import prices. The U.S. Labor Department said that prices for imported goods fell 1.2%, vs. expectations of a 1.1% drop. It was also reported that initial jobless claims rose 44,000 during the week ending Feb. 10 to 357,000, the highest level seen since late November. Among pre-market highlights, JetBlue Airways ((JBLU)) rallied 3.1% in pre-open trading after Goldman Sachs upgraded the air carrier to buy from neutral. Goldman also downgraded AMR Corp. ((AMR)) to neutral from buy, citing valuation concerns. The stock fell 1.5% in the pre-open.

Oil services company Baker Hughes Inc. ((BHI)) dropped 4.4% after reporting a slower-than-forecast rise in Q4 net income. Biogen Idec shares ((BIIB)), biotechnology company, reported earnings increase but missed expectations. The company earned 32 cents per share, up from a profit of 16 cents per share a year earlier. The stock lost 1.2%. In other corporate news, candy maker Hershey Co. ((HSY)) said it is going to cut 1,500 jobs over three years as part of a plan to scale back production lines and move some manufacturing to Mexico. S&P 500 futures inched 0.40 of a point higher to 1,459.00 and Nasdaq 100 futures slipped 0.25 of a point to 1,822.50. Dow industrial futures tacked on 15 points to 12,780.

[R]Import and export prices declined in January.[/R]
The Department of Labor released its report on import and export prices in the month of January on Thursday. While the report showed a notable decrease in import prices, it also showed a modest increase in export prices. The report showed that import prices fell 1.2 percent in January after a revised 1.1 percent increase in December. The decrease was largely due to a steep decline in prices for petroleum imports. Petroleum import prices fell 7.3 percent in January following a 4.6 percent increase in the previous month. Excluding petroleum imports, import prices came in unchanged after rising 0.5 percent in December. At the same time, the report also showed that export prices edged up 0.3 percent in January following a revised 0.7 percent increase in December. Higher prices for agricultural exports contributed to the increase in export prices. The Labor Department said that agricultural export prices rose 0.7 percent in January after rising 2.4 percent in the previous month. Nonetheless, export prices still rose 0.3 percent excluding agricultural exports.


[R]8:30AM Asian markets rallied on Thursday with Japan at seven-year high.[/R]
Asian markets finished higher on Thursday. Japanese Nikkei Index ended 0.8% higher at 17,897. Retailers led the gainers. Department store Takashimaya jumped 10%, while convenience-store operator Seven & I Holdings gained 4.7%. The Hong Kong Hang Seng Index jumped 1.6% to 20,538. In Hong Kong, large-caps ended higher after comments by U.S. Federal Reserve Chairman Ben Bernanke raised expectations for a U.S. interest-rate reduction later this year, sending the benchmark index higher. Sun Hung Kai Properties advanced 1.8%, Cheung Kong was up 1.2% and Hang Lung Properties closed 2.8% higher.

The Shanghai Composite Index surged 3% to 2,993. Large-capitalized Baoshan Iron & Steel added 3.3%, China Chemical & Petroleum rose 2.9% and Bank of China surged 4%. Australian S&P/ASX 200 advanced 0.5% to close at 5,993. Corporate earnings and strong overseas markets pushed the Australian share market to the 6,000-point level Thursday, hitting its fifth consecutive daily high. Telstra made the biggest contribution to strength in the market, advancing 3.9% after posting a smaller-than-expected fall in its first-half profit. Other markets around the region also rose. South Korean Kospi Index advanced 0.5% to 1,444 and Taipei ended 0.9% higher at 7,809.


[R]8:00 AM Baidu said its Q4 earnings rose fivefold.[/R]
China''s leading Internet search engine, Baidu.com Inc. ((BIDU)), said that its Q4 net income increased fivefold, as online marketing revenue more than doubled. Baidu reported earnings rise of 122.8 million yuan ($15.7 million), or 3.54 yuan (45 cents) per American Depositary Share, from 24.5 million yuan, or 0.71 yuan per ADS a year ago. The quarterly profit exceeded estimates for earnings of 32 cents per ADS. Baidu''s Q4 revenue more than doubled to 271.3 million yuan ($34.8 million), up from 114.9 million yuan last year. Online marketing revenue more than doubled to 269.9 million yuan ($34.6 million).

The company released first-quarter revenue forecast that fell short of analyst estimates. The company said it expects Q1 revenue between 265 million yuan ($34 million) and 275 million yuan ($35 million), while analysts project revenue of $38.9 million. Baidu, which holds more than 60% of the Chinese Internet search market, plans to spend $15 million in 2007 on its expansion into Japan.


[R]7:30AM NY-6:30PM Mumbai Sensex advances Thursday in a broad rally.[/R]
The Sensex on BSE finished 345.65 points, or 2.47%, higher at 14,355.55. The market-breadth was strong, for every stock that fell four stocks rose. On BSE 2,121 shares advanced, 525 declined and only 33 shares were unchanged. Of the 30 stocks in the Sensex, 24 advanced, while the rest declined. The turnover on BSE was Rs 4,266.54 crore, higher than Rs 3,998 crore on Wednesday. On NSE, the turnover was Rs 10,025.11 crore, much higher than Rs 8,878.7 crore on Wednesday.

Economic news
Wholesale inflation hit a two-year high of 6.73 % in the week ended 3 February, from 6.58 % in the previous week, topping the forecast of the Reserve Bank of India for the sixth week in a row, as prices of edible oils, dairy products and vegetables rose. The rupee also advanced, following the stronger yen and gains in Indian ADRs. One dollar traded at Rs 44.08/09.

Commerce and Industry Minister Kamal Nath on Thursday announced that the government may liberalize imports to control the inflation. The government believes that higher inflation is due to the constraints on the supply side. Also, the government reduced the retail prices of gasoline and diesel by 4.5% and 3.2% respectively on Thursday to combat inflation.

Deutsche Börse has bought a 5% stake in Bombay Stock Exchange, and paid Rs 1.89 billion or $43 million, for the stake in the exchange, the chief executive, Rajnikant Patel, announced Wednesday in Mumbai.

Corporate news
Citigroup Inc., Blackstone Group Holdings LP and two Indian finance companies have signed an agreement to set up a $5 billion infrastructure fund. The aim of the fund will be to improve the country’s roads, ports and other facilities, the Indian finance ministry announced.

Trading highlights
Newly-listed Redington was the most-active stock with a turnover of Rs 407.30 crore followed by another new listing Pearl Fashion and Global Broadcast.

Advancers
L&T surged 4.8% to Rs 1,692.10, on bargain-hunting after a recent sell-off. The company has seen rising backlog of orders.

Telecoms were given a lift from the strong performance of IPO, Idea Cellular, which was subscribed almost 27 times. Reliance Communications and Bharti Airtel surged. Reliance Comm gained 3% to Rs 466 and Bharti Airtel was up 4.1% to Rs 791.75.

Auto stocks advanced after the government cut gasoline and diesel prices. Ashok Leyland surged 5.4% to Rs 46.20, M&M surged 5% to Rs 900, Maruti Udyog gained 4% to Rs 892 and Hero Honda gained 4.4% to Rs 744. Tata Motors gained 1.8% to Rs 866. Tata Motors and Fiat on Wednesday signed an $80 million agreement to build Tata pick-up trucks under the Fiat brand in Cordoba, Argentina at the Italian carmaker plant.

IT shares advanced on overnight gains in their ADRs listed in New York. Infosys gained 4% to Rs 2,374 after its ADR surged 3% on Wednesday. Satyam Computer advanced nearly 5% to Rs 485, its ADR rose nearly 4% and Wipro gained 3.9% to Rs 676 as its ADR advanced 1.2%. Index heavy Reliance Industries gained 2.3% to Rs 1,410.

Banks also rallied despite the increase in inflation. ICICI Bank gained nearly 4% to Rs 951 and HDFC Bank added 3% to Rs 1,048.

Decliners
Ranbaxy declined 5.1% to Rs 393.50 on reports that investigators for the U.S. Food & Drug Administration yesterday locked the headquarters of Ranbaxy USA.

NTPC slipped 1.3% to Rs 142 and Reliance Energy declined 0.8% to Rs 542.15. ACC lost 0.4% to Rs 1,018 and Gracim was nearly flat, shedding 0.1 to Rs 2,654.


[R]6:30AM European markets dipped on Thursday on weakness in the banking stocks.[/R]
European markets were lower on Thursday. . By mid morning, Frankfurt Xetra Dax added 0.1% to 6,964.2, the CAC 40 in Paris fell 0.1% to 5,722.8 and London FTSE 100 shed 0.2% to 6,409.1.

Advancers

DaimlerChrysler, German carmaker, advanced 5.3% after the board of the company on Wednesday proposed a restructuring of the ailing US Chrysler unit. The company also stated that all options were on the table, raising the possibility of a full or partial sale of the division, or a spin off.

Michelin, French tyre maker, added 6% as it targeted between 1.5 billion euros and 1.7 billion euros in cost reductions in the period to 2010 as it struggled with the violent impact of raw materials prices.

Reed Elsevier, Anglo-Dutch publishing group, said it about to sell its underperforming education arm after posting full-year pre-tax profit that missed expectations. The company announced that the sale would result in a more cohesive and predictable business that would generate earnings per share growth of around 10% a year. The shares gained 6%.

Luxury goods group LVMH gained 4.2 % after releasing record full year profits, despite the negative impact of a strong euro, and said it expected further growth in 2007 so long as foreign exchange conditions did not deteriorate. Christian Dior, which owns around 42% of LVMH, also reported strong 2006 results. Its shares gained 4.4%.

Swiss bank Credit Suisse gained 3.6% after posting record Q4 profits that easily topped market forecasts, thanks to a 130 % rise in trading revenues.

Decliners

Banks retreated on concerns over the French retail banking division of BNP Paribas. The bank tooped forecasts with its Q4 net profit, although operating profit was a little weaker than expected due to unforseen costs related to its takeover of Italy’s BNL last year. BNP Paribas fell 3.4%.

Société Générale, which declined in the previous session as similar concerns were raised after it posted full-year results, was down 1.8 %. Credit Agricole shed 2.6%.

Oil and gold

Oil inched above $58 a barrel on Thursday in volatile trade that has trapped prices in a narrow range. U.S. crude for March delivery was 29 cents higher at $58.29 a barrel in early trade in London. Brent crude for April was up 34 cents at $57.77. Gold for immediate delivery was little changed, up 52 cents, or 0.1% at $669.55 an ounce in early trading in London.

Currencies

The euro bought $1.3137 in morning European trading, up slightly from $1.3128 in New York late Wednesday. The British pound rose to $1.9663 from $1.9625. The dollar fell to 120.17 yen from 120.78 yen.