Oil on the Rise

Elena
18 Aug, 2005
New York City

Worse-than expected weekly jobless report, Asian-Pacific benchmarks in the red, European markets lower at mid-day, oil futures up again, the U.S dollar on a two-week high against the euro and three-day rise against the yen.

U.S. MARKET AVERAGES

Investors are expecting a lower opening of Thursday morning session, awaiting 2Q earnings report from Gap Inc. and the weekly jobless claims numbers. The U.S. stock markets advanced on Wednesday on a drop of oil prices of nearly $3 and tech shares gains on the back of upbeat reports from Hewlett-Packard and Applied Materials.

Dow Jones futures were recently down 32 points, while Nasdaq futures were off 4.5 points and S&P futures were down 3.5 points.

Several major companies are expected to report today:

Gap is expected to report 2Q profit of 21 cents a share.

JDS Uniphase, world’s largest maker of fiber-optic parts, will report 4Q earnings. Analysts expect a wider loss of 2 cent a share vs. 1 cent a year ago.

Bebe Stores, retailer, is expected to post 4Q earnings of 19 cents a share.

Other companies to report today are Barnes & Nobles, Cost Plus

Three economic reports are supposed to affect the trading session.

The Labor Department reported that first-time filings for state unemployment benefits rose by 6,000 to a seasonally adjusted 316,000 last week, marking the highest level since the week ended July 9.
The increase was larger than expected. Economists were expecting claims to rise to about 310,000 from the initial estimate last week of 308,000.

The Conference Board is due to release the July index of leading indicators at 10 a.m. Economists are looking for 0.1% rise compared with 0.9% in June.

The Fed Reserve of Philadelphia is scheduled to release a manufacturing report at 12.00. The index is expected to show a reading of 12.0, up from 9.6 in July.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished the session mostly in the red with Hong Kong’s Hang Seng leading the losers. The index tumbled over 300 points to close down 1.95% on energy stocks and profit-taking. The Japanese Nikkei enjoyed high levels in early trading, helped by banking, auto and steel sectors which were given a boost by the recovering U.S. equities and the climbing dollar vs. the yen. South Korea’s Kospi was another sharp decliner, down 1.85%. In Tokyo the dollar traded at 110.28 yen, up 0.13 yen.

European markets declined in mid-day dealings on oil majors losses, caused by the sharp drop in crude-oil prices, higher close of the U.S. equity markets, several broker upgrades, and European deal news with the Royal Bank of Scotland in the focus as it said it is leading a consortium buying 10% stake in the Bank of China. Germany’s DAX 30 lost 0.55%, France’s CAC 40 declined 0.47, and London’s FTSE fell 0.37%.

ENERGY, METALS AND CURRENCIES MARKETS

Oil prices resumed the upward direction after falling nearly $3 in yesterday’s session, lifted by renewed supply concerns. Light, sweet crude for September delivery gained 37 cents to $63.62 a barrel in electronic trading on the NYMEX. Gasoline was slightly down at $1.8900 a gallon, while heating oil added 1.5 cents to $1.7970. London Brent October contract was up 47 cents to $63.03.

The U.S. dollar climbed against the yen for the third consecutive session and reached a two-week high against the euro ahead of manufacturing gauge report. The dollar bought 110.39 yen, up from 109.93. Against the euro it stood at $1.2222, up from $1.2271.


EARNINGS NEWS

JDS Uniphase, maker of broadband optical equipment, delayed the announcement of its 4Q results because it has to complete the year-end audit of its financial statements. The company expects to top analysts’ expectations on revenue growth by several millions.

C-Cor, communications equipment provider, posted a fiscal 4Q loss of 12 cents a share, down vs. a profit of 10 cents a share in the comparable period last year despite sales growth, missing analysts’ expectations of 7 cents a share. The latest results include charges from restructuring and amortization of intangible assets that amounted to 4 cents a share.

Stein Mart, apparels merchandiser, posted 2Q net income of 26 cents a share, up from 13 cents a share in the year-earlier period on net sales growth.

Stage Stores, retailer, posted a 2Q net income of 33 cents a share, a rise of 20.4% from the year-ago period. Sales for the period advanced 10.5%, with same-store sales up 7%.

ShopKo, retailer, announced that's agreed to be taken over by a private equity firm and posted a 2Q net profit increase of 38.6% to 38 cents a share despite a decline in revenue

Ciba, manufacturer of chemicals, announced 2Q net income excluding restructuring charges advanced 10%. Including the charges, net income amounted at SFr79 million, down from SFr99 million in the year-ago period but beating analyst estimate of SFr69 million.

Kirkland's, decorative home accessories company, reported a 2Q net loss of 29 cents per share, down from a net loss of 14 cents per share for the year-ago period despite better than last year’s comparable net sales growth.

Flowers Foods, producer and marketer of packaged bakery foods, posted 2Q earnings of 28 cents per share, up from 22 cents per share for the year-ago period on strong net income growth. Sales for the same period increased 12.4%.