Stock Futures Point Slightly Higher

Elena
22 Feb, 2007
New York City

U.S. stock futures pointed to modestly higher opening on Thursday. In pre-market highlights, Whole Foods jumped 7.5% after it agreed to buy smaller rival Wild Oats Markets for about $565 million. Shares of Wild Oats surged 17%. In the tech sector, Cisco Systems and Apple were in the spotlight as the two tech giants managed to settle the issue over Cisco''s iPhone trademark, agreeing to share the name. Apple shares rose 1.5% in pre-market trading, while Cisco gained 0.6%.

[R]9:00 AM Market futures pointed to modest gains at opening.[/R]
U.S. stock futures pointed to modestly higher opening on Thursday. In pre-market highlights, Whole Foods jumped 7.5% after it agreed to buy smaller rival Wild Oats Markets for about $565 million. Shares of Wild Oats surged 17%. In the tech sector, Cisco Systems ((CSCO)) and Apple ((AAPL)) were in the spotlight as the two tech giants managed to settle the issue over Cisco's iPhone trademark, agreeing to share the name. Apple shares rose 1.5% in pre-market trading, while Cisco gained 0.6%.

A number of retailers posted quarterly earnings ahead of market opening. Abercrombie & Fitch ((ANF)) announced its Q4 profit climbed 20% to $2.14 per share, up from $1.80 per share a year ago, boosted by strong sales. However, the retailer warned that results in the first half of the fiscal year would match or come below analyst estimates. The stock slipped 2.7% in the pre-open. Department store operator J.C. Penney Co. ((JCP)) fell 2% after it posted Q4 profit drop of 13% on higher tax expense and projected Q1 earnings below analyst forecast. Toll Brothers ((TOL)) said its Q1 net income fell 67% on 19% lower revenue. Company’s shares traded up 0.4%. S&P 500 futures rose 2.3 points at 1,462.70 and Nasdaq 100 futures added 6 points at 1,850.50. Dow industrial futures rose 22 points.

[R]Initial jobless claims dropped.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended February 17, showing that jobless claims fell by a little less than economists had been expecting. The report showed that jobless claims fell to 332,000 from the previous week's revised figure of 359,000. Economists had expected jobless claims to fall to 325,000 compared to the 357,000 originally reported for the previous week. Jobless claims showed a notable increase in the previous week due in part to colder weather in the Midwest and Northeast, marking the biggest increase in jobless claims since the week ended September 10, 2005, which reflected the impact of Hurricane Katrina. At the same time, the report showed that the 4-week moving average rose to 328,000 from the previous week's revised average of 326,750. The Labor Department also said that continuing claims in the week ended February 10 fell to 2.509 million from the preceding week's revised level of 2.554 million.


[R]8:30AM Asian markets ended higher Thursday with Japan at record close.[/R]
Asian markets finished mostly higher on Thursday. Japanese Nikkei Index finished 1.1% higher at 18,109. On Wednesday the Bank of Japan lifted interest rates a quarter of a percentage point, bringing its benchmark rate to 0.5%. Resona led the advancers, gaining 0.9% and Mitsubishi UFJ Financial Group advanced 0.7%. Shares of Sony edged up 0.3% while camera maker Nikon surged 4.2%. Canon Inc., the world biggest maker of digital cameras, added 1.7%.

Hong Kong Hang Seng Index added 0.8% to 20,809. In Hong Kong, shares of China Mobile advanced 2.9% to lead gains among Hong Kong large-caps. The telecom company, the largest by subscribers in China, announced on Wednesday it added 4.86 million subscribers in January, lifting its total subscriber base to 360.1 million.

Shares of Sung Hung Kai Properties, owners of the tallest skyscraper in the city, rose 1.7%, while real-estate group Cheung Kong Holdings surged 3%. Among large-cap decliners, HSBC Holdings shed 0.2%. Other indexes also advanced. South Korean Kospi Index advanced 1% to 1,465 and Australian S&P/ASX 200 increased 1.1% to close at 6,017.


[R]8:00 AM Toll Brothers posted 67% net income drop in Q1.[/R]
Luxury home builder Toll Brothers Inc. ((TOL)) posted Q1 net income drop of 67% to $54.3 million, or 33 cents a share, down from $163.9 million, or 98 cents last year. The quarterly earnings fell on 19% revenue decline and missed analyst estimate of 29 cents. Revenue fell to $1.09 billion from $1.34 billion. Excluding special charges, the earnings were 72 cents a share, down 27%. Net signed contracts fell 34% in the quarter to a value of $748.7 million. The first-quarter cancellation rate was 29.8%, lower than the 36.9% in the fourth quarter and the company''s historical average of 7%. For 2007, Toll Bros predicted profit of $1.46 to $1.85 a share on revenue of $4.2 billion to $4.96 billion, in line with expectations.


[R]7:45AM NY-6:45PM Mumbai Sensex declined on selling pressure in large-caps.[/R]
The Sensex on BSE finished 167.18 points, or 1.18%, lower at 14,021.31. The market-breadth was weak as 1,420 stocks declined on BSE, 675 advanced and 57 were unchanged. For every advancer there were at least two decliners. Of the 30 stocks in the Sensex, 25 stocks declined, while the rest advanced. The turnover on BSE was Rs 4,243.02 crore, compared to Rs 4,098 crore on Wednesday. On NSE, the turnover was Rs 1,1717.01, much higher than Rs 8,441.04 crore on Wednesday.

Economic and corporate news

Morgan Stanley, investment bank, will spend $425 million to leave its Indian securities partnership and set up an Indian platform on its own in investment banking market, taking cue from rivals Goldman Sachs and Merrill Lynch.

India, the second-biggest buyer of vegetable oil in the world after China, may reduce import taxes on the commodity for a second time in five weeks to give supplies a boost and put inflation under control. Finance Minister Palaniappan Chidambaram is likely to announce in his February 28 budget speech a reduction in import duties or a removal of the additional 4% levy. The Cabinet Committee on Prices, chaired by Prime Minister Manmohan Singh, reviewed prices and decided to take more steps like reductions in taxes and improving supply of essential commodities.

Wal-Mart Stores Inc. on Thursday announced that talks have been going on with Bharti Retail Pvt. Ltd. about possible retail business opportunities in India. The US company added that it wants to increase the amount of goods exported from India for its global operations. The statement came within days of an announcement by Bharti Retail Pvt. Ltd. of its investment of $2.5 billion over the next eight years to set up supermarkets, hypermarkets and small retail chains in India.

Hutchison Telecom, which agreed this month to sell its Indian mobile unit to Vodafone Group Plc for $11.1 billion, intends to pay a special dividend up to $4.1 billion following the deal.

Trading highlights

Firstsource was the most-active stock with a turnover of Rs 235.65 crore followed by Global Broadcast and HDFC Bank. Firstsource debuted on the BSE at Rs 75 as versus its issue price of Rs 64. Intense buying in the stock made it jump to a high of Rs 89 before settling with a premium of 25%, or Rs 16, at Rs 80 on its first trading day.

Advancers

Reliance Communications led the few advancers, up 0.9% to Rs 450.6. Other large-caps gainers included TCS, higher 0.71% to Rs 1,295.10, NTPC, rising 0.4% to Rs 143 and Tata Steel, adding 0.2% to Rs 456.1. Index heavy Reliance industries held firm and prevented the market from a worse decline in late trading. The stocks gained 0.5% to Rs 1,413.80.

Decliners

Cement shares were under selling pressure in late trade today. Grasim plunged 5% to Rs 2,415.8, ACC lost 4.4% to Rs 964 and Gujarat Ambuja Cements was down 3.3% to Rs 126.8. Cement stocks have plunged as the government is keeping a watch on rising cement prices.

Ranbaxy shed 3.8% to Rs 368.2. It dropped for the second straight day, as the market continued to worry about a possible equity dilution if Ranbaxy acquired Merck's generic drugs business. Dr Reddy’s Lab dipped 3.5% to Rs 704, and Cipla shed 2.6% to Rs 247.85. Software large-cap Infosys was down 1.6% to Rs 2,275 in volatile trade. Infosys may acquire Britain SmartStream Technologies for over 100 million pounds.

Banks also declined. State Bank of India was down 3% to Rs 1,073. Among private sector banks, HDFC Bank lost 3.7% to Rs 977 and ICICI Bank shed 1.5% to Rs 956. Auto shares slipped. Hero Honda was off 3.4% to Rs 714, Bajaj Auto declined 2.4% to Rs 2,906, Maruti Udyog shed 1.9% to Rs 883 and Tata Motors shed 1.6% to Rs 845.10.


[R]6:30AM European markets advanced on Thursday on strong insurers.[/R]
European markets were higher on Thursday. In early trade, Frankfurt Xetra Dax added 0.7% to 6,988.01, the CAC 40 in Paris gained 0.7% to 5,731.51 and London FTSE 100 climbed 0.6% to 6,394.1.

Advancers

BASF led advancers in early trade after the German chemicals group posted a 17.3% rise in Q4 core earnings, meeting expectations, thanks to demand growth and the performance of recent acquisitions.

Axa, the second-biggest insurer in Europe, gained 1.9% after posting a forecast-beating 18% rise in full-year net profit thanks to strong performances from global stock markets last year. Allianz, top insurance group in Europe, gained 1.6% after a 57% rise in fourth-quarter profit.

Banks were mostly higher, with National Bank of Greece leading following a better-than-forecast 36% gain in full-year net profit. Swiss food group Nestlé climbed 2.1% as strong growth in its food and beverages business helped it reach a record for annual net profit.

Decliners

Belgium KBC Group fell 2.6% after its 1.9% fall in underlying Q4 net profit did not match expectations on rising costs and loan impairment. The biggest banking group in Norway DnB Nor fell 2.7% despite beating expectations with Q4 earnings as net interest income and commission disappointed.

Oil and metals

Crude oil was virtually unchanged as traders said surge in prices yesterday were not justified because U.S. gasoline supplies may be sufficient to meet summer driving demand. Crude oil for April delivery fell 46 cents, or 0.8%, to $59.61 a barrel on the New York Mercantile Exchange and traded little changed in early trade in London. Brent oil for April settlement fell 48 cents, or 0.8%, to $58.87 a barrel on the ICE Futures exchange in London.

Gold declined in London on speculation that price swings in the metal will discourage demand from jewelers, the biggest buyers of the metal. Gold for immediate delivery declined $2.30, or 0.3%, to $676.55 an ounce. Silver dropped 2 cents to $14.205 an ounce. Palladium was little changed at $344.75 and platinum fell $3.50 to $1,224. Copper rose for a second day in London on speculation that demand from Chinese buyers is gaining. Copper for delivery in three months on the LME advanced $95, or 1.6%, to $5,885 a ton.

Currencies

The dollar advanced, touching its highest against the euro in more than a week, on speculation Federal Reserve members will reiterate the risk of inflation. The dollar rose to $1.3088 against the euro in early trade in London, from $1.3139 yesterday in New York. The dollar also traded at 121.30 yen from 120.93 yesterday, when it had the biggest gain since Dec. 8. The greenback was at $1.9495 against the U.K. pound, from $1.9540 yesterday.