Market Updates

Stock Futures Resume Decline

Elena
07 Mar, 2007
New York City

    Following a sharp rebound in the previous session, U.S. stock futures pointed to the downside on Wednesday, reflecting a mixed performance in overseas markets and renewed strength in the Japanese currency against the dollar. In economic news, U.S. private sector employment added 57,000 in February, marking the weakest growth since July 2003. Investors also awaited news on the economy''s health with the Fed''s Beige Book release.

[R]9:00AM U.S. stock futures pointed lower on strengthening yen.[/R]
Following a sharp rebound in the previous session, U.S. stock futures pointed to the downside on Wednesday, reflecting a mixed performance in overseas markets and renewed strength in the Japanese currency against the dollar. In economic news, U.S. private sector employment added 57,000 in February, marking the weakest growth since July 2003. Investors also awaited news on the economy's health with the Fed's Beige Book release. Among pre-market highlights, American Eagle Outfiiter ((AEOS)) said February same-store sales rose 6% and projected Q1 earnings in the range of 31 to 33 cents a share. The stock dropped 5.4% in pre-market trading. Again in the retail sector, BJ Wholesale ((BJ)) reported Q4 earnings decline, with adjusted results missing analyst forecasts. The stock lost 1% in the pre-open.

Avalon Pharmaceuticals ((AVRX)) was a notable gainer with shares soaring 25% ahead of the open after the company said it entered into a collaboration agreement with Merck ((MRK)). Among companies driven by analyst comment, Google ((GOOG)) rose nearly 1% after the Internet search giant was upgraded by UBS to buy from neutral, due to valuation. Deere & Co. ((DE)) was also upgraded by Lehman Bros. to overweight from equal weight. Company's shares rose 1.3%. S&P 500 futures fell 2.00 points to 1,393.40 and Nasdaq 100 futures slid 4.50 points to 1,740.50. Dow industrial futures shed 25 points to 12,190.


[R]9:00AM Asian markets end mostly higher on Wednesday, Japan and HK dip.[/R]
Asian markets finished mostly higher on Wednesday. Japanese Nikkei 225 Stock Average fell 0.5% to 16,764.62. Sony fell 1.2%, Canon shed 2.4% and Hitachi slid 1.9%. Steel shares were volatile, with profit-taking erasing their strong gains in the morning session. Nippon Steel ended down 1%, while JFE Holdings sagged 1.2%.Nikko Cordial bucked the trend, rising 1.3% after Citigroup''s announcement Tuesday of its cash-offer price for the brokerage house.

The Hang Seng Index in Hong Kong also fell 0.7% to 18,918.64. The two biggest stocks in the Hang Seng Index fell. HSBC Holdings dropped 0.7% after rising 2.6% Tuesday, and China Mobile, the world largest wireless phone operator by subscribers, ended 2.6% lower after rebounding 2% in the previous session. Cathay Pacific Airways bucked the trend, advancing 1.8% after reporting a better-than-expected 24% rise in 2006 net profit.

In China, the Shanghai Composite Index, which tracks both Class A and Class B shares, ended up 2% at 2,896.59, while the Shenzhen Composite Index rose 2.6% to 750.25, following a 0.7% gain Tuesday. South Korean shares also rose for a second session. The Korea Composite Stock Price Index rose 0.6% to 1,410.95. Daewoo Engineering & Construction gained 5.6%, Posco, the world third-largest steelmaker, advanced for a second day, up 2.3% and Samsung Electronics rose 0.2%.

Other indexes around the region also gained. The Weighted Price Index of the Taiwan Stock Exchange rose 0.4% to close at 7,480.89 and Australian benchmark S&P/ASX 200 index rose 0.9% to 5,825.3.


[R]8:00AM U.S. Google and Deere & Co. gained in the pre-open on brokerage upgrades.[/R]
Google ((GOOG)) was upgraded to buy from neutral at UBS, citing valuation. According to analysts, returns in longer-term initiatives, including payments, mobile, video, and other forms of advertising, could take a long time to develop, whereas the company’s fundamentals as an online search engine provide good basis for a buy recommendation at current levels. The stock closed Tuesday up $16.61 at $457.55, but was still down 11% from its Jan. 16 high of $513. Google’s shares traded up 1% in the pre-open.

Deere & Co. ((DE)), agricultural and construction equipment maker, was upgraded to overweight from equal weight at Lehman Bros. The broker lifted its rating on the stock, due to increased confidence about the durability of higher agricultural prices and the company''s ability to leverage high end market demand. Shares of the company edged up 0.4% in pre-market trading. They have lost 8.1% since hitting an all-time high of $116.50 on Feb. 22, but are still up 13% since the end of 2006.

[R]6:30AM European markets were higher on Tuesday on M&A and retail stocks.[/R]
European stock markets were higher on Tuesday. By mid morning, Frankfurt Xetra Dax added 0.3% to 6,615.78, the CAC 40 in Paris climbed 0.3% to 5,455.81 and the FTSE 100 in London rose 0.2% to 6,148.0.

Advancers

Carrefour, the French retailer, was up 2.6% after two investment groups announced they had jointly acquired 9.1% of the company. Groupe Arnault and Colony Capital said the move was a long-term strategic and industrial investment.

The retail sector was boosted by the development and domestic rival Casino Guichard rose 3.4%, while Metro of Germany climbed 2.6%. Bid speculation lifted Dutch bank ABN Amro 1.5% as an increasing chorus of hedge fund investors suggested the bank would deliver better shareholder returns if it merged with another large group.

Volkswagen, the German carmaker, is a step closer to its hope of integrating the European truckmaking sector after it raised its stake in Sweden’s Scania to just over 20% of share capital and 35% of voting rights. Shares in Volkswagen gained 1.5 %, while Scania added 1% and MAN gained 2.7%.

Decliners

Vallourec, the French maker of steel tubes, fell 5.2% after its 2006 net profit fell shy of market expectations. A number of heavily-weighted British banks which went ex-dividend capped gains. Lloyds TSB fell 3.8%, Barclays lost 2% and Royal Bank of Scotland shed 2.2%.

Oil and gold

Crude oil advanced on speculation that greater gasoline demand in the U.S. will cause inventories to drop as the summer driving season approaches. Crude oil for April delivery rose as much as 33 cents, or 0.5%, to $61.02 a barrel on the New York Mercantile Exchange and was at $60.90 in early trade in London. Brent crude gained 55 cents, or 0.9%, to $61.94 a barrel on the ICE Futures exchange and traded at $61.79 in London. Gold traded in London at $646.35 per troy ounce, up from $641.60 late Tuesday.

Currencies

The U.S. dollar was lower against other major currencies in European trading Wednesday morning. The euro traded at $1.3125, up from $1.3121 late Tuesday in New York. The British pound traded at $1.9300, up from $1.9292. The dollar bought 116.44 Japanese yen, down from 116.67.

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