Accredited Home Lenders up 20%

Elena
20 Mar, 2007
New York City

U.S. stock markets began trading in a mixed fashion on Tuesday, with investors cautious ahead of the Fed Reserve''s decision on interest rates, but relieved that the house construction increased. Housing starts rose 9% to a seasonally adjusted annual rate of 1.525 million in February from a revised 10-year low of 1.399 million in January, beating the expectations for an increase to 1.46 million.

[R]9:45AM Wall Street opened mixed ahead of Fed Reserve’s rate decision.[/R]
U.S. stock markets began trading in a mixed fashion on Tuesday, with investors cautious ahead of the Fed Reserve's decision on interest rates, but relieved that the house construction increased. Housing starts rose 9% to a seasonally adjusted annual rate of 1.525 million in February from a revised 10-year low of 1.399 million in January, beating the expectations for an increase to 1.46 million.

Among early movers, Accredited Home Lenders ((LEND)) climbed 20% after the mortgage company said it received a $200 million term loan from Farallon Capital Management. Shares of Barclays ((BCS)) rose 4% in early trade after it confirmed that it was in merger discussions with ABN Amro. Speculation that the two were considering a merger helped spur Monday's rally. In the tech sector, shars of Rambus ((RMBS)) rose 6.1%. founder Darwin Deason and private equity fund Cerberus Capital Management said Tuesday they have proposed to buy ACS for about $6 billion.

Technology stocks were driven higher by solid gains for Affiliated Computer Servicees ((ACS)). The stock jumped 18% after founder Darwin Deason and private equity fund Cerberus Capital Management said Tuesday they have proposed to buy ACS for about $6 billion. That price is about 16% higher than ACS's Monday closing price of $51.29. In the first hour of trading, the Dow Jones industrial average rose 8.50 or 0.07%, to 12,234.67. The Standard & Poor's 500 index was up 1.54, or 0.11%, at 1,403.60, and the Nasdaq composite index rose 3.34, or 0.14%, to 2,397.75. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.54% from 4.57% late Monday.

[R]Housing starts increased 9% in February.[/R]
Tuesday morning, the Department of Commerce released its report on housing starts and building permits in the month of February, showing that housing starts rose much more than economists had been expecting. The report showed that housing starts rose 9.0 percent to a seasonally adjusted annual rate of 1.525 million units in February from a revised 1.399 million unit rate in January. Economists had expected starts to rise to a 1.445 million unit rate. The increase in housing starts was due in large part to a notable increase in housing starts in the West, which rose 26.4 percent compared to the previous month.

Housing starts in the South rose 18.0 percent, while housing starts in the Northeast and Midwest fell 29.7 percent and 14.4 percent, respectively. The report also showed that single-family housing starts rose 10.3 percent to a 1.220 million unit rate in February, more than offsetting a 2.2 percent decline in the rate for units in buildings with five units or more. At the same time, the Commerce Department also said that building permits fell 2.5 percent to a seasonally adjusted annual rate of 1.532 million units in February from a 1.571 million unit rate in January. Building permits are seen as an indication of the outlook for housing demand.


[R]9:00AM NY-7:00PM Mumbai Sensex gains in volatile trade, Ranbaxy rallies.[/R]
The Sensex on BSE finished 60.95 points, or 0.48%, higher at 12,705.94. The market-breadth was positive although it weakened at the end of the session. For 1,367 stocks that advanced, 1,201 declined and 67 remained unchanged. Of the 30 stocks in the Sensex 17 advanced, while the rest declined. The turnover on BSE was Rs 2,910.12 crore, higher than Rs 2,675.95 crore on Friday, but unusually low for the second day in a row. The turnover on NSE was Rs 6,056.26 crore, also much lower than Rs 4,965.07 crore.

Economic news

Heavy capital inflows drove the Indian rupee to an 18-month high against the dollar on Tuesday. At noon, the rupee stood at 43.98/99 per dollar, having struck a high of 43.9225 per dollar, its strongest since late-September 2005.

The Prime Minister Dr Manmohan Singh will preside over a meeting of the Planning Commission to work out state-wise strategies for achieving the annual farm growth to beyond 4%.

The entertainment and media industry in India is likely to grow at 18% compound annual growth rate and reach a projected size of Rs 1,00,000 crore by 2011 from its present size of Rs 43,700 crore.

Trading highlights

MindTree was the most-active stock with a turnover of Rs 157.70 crore followed by Reliance Communications and AMD Metplast.

Advancers

Ranbaxy led the advancers, soaring over 6% to Rs 336.4 as reports circulate that the company has withdrawn its bid for Merck generics business. The company exited the race on concerns that the acquisition would not add to earnings.

Reliance Energy surged 4.1% to Rs 476.1 and index heavy Reliance Industries gained 0.5% to, Rs 1,321.05 on market rumors it may sign a joint venture with US-based Dow Chemical Co. Bank shares added on short-covering in the derivatives segment. HDFC Bank gained 3% to Rs 954 and State Bank of India rose 2.6% to Rs 953.

Cement shares advanced on reports that the government may offer a five-year tax break to cement plants set up after April 1 2007. Grasim gained 4% to Rs 2,124, Gujarat Ambuja Cements gained 3.4% to Rs 110.9 and ACC was up 0.3% to Rs 742. Hindustan Lever added 2.1% to Rs 184 and Cipla gained 2.5% to Rs 230

Decliners

BHEL dropped 1.7% to Rs 2,044. Infosys slipped 1.5% to Rs 2,054. The increase of the rupee pushed down IT shares as their derive their revenue mostly in dollar terms. Wipro shed 1.4% to Rs 571.25 and TCS shed 0.6% to Rs 1252.3. TCS and Wipro gyrated between positive and negative territory during the day.

Tata Steel was down 1.3% to Rs 424 and Hero Honda lost 0.8% to Rs 635.30. Reportedly, Honda Motorcycle & Scooters India, a wholly-owned subsidiary of Japanese company Honda, proposes to entry-level 100-cc motorcycle segment and will be tough competition.


[R]8:00AM European shares were lower Tuesday despite gains in banking stocks.[/R]
European markets were lower on Tuesday. By mid morning, Frankfurt Xetra Dax fell 0.2% to 6,659.09, the CAC 40 in Paris was off 0.4% at 5,437.67 and London FTSE 100 edged 0.1% higher to 6,196.2.

Advancers

Dutch bank ABN Amro gained 3.5% after confirmation of the merger talks with Barclays. The two companies said they were in exclusive primary discussions over a merger that could value the combined bank at 80 billion or 117 billion euros. Shares in Barclays rose 4.4%.

German sports car maker Porsche gained 3.1% after upgrades from both Morgan Stanley and Lehman Brothers. Morgan Stanley raised its price target on Volkswagen after the company strong results, particularly from its Audi division. Shares in VW gained 1%. Among mining stocks, BHP Billiton was also generally stronger, up 1.4%, supporting the UK benchmark index.

Decliners

The energy sector pushed market lower, after crude fell below $57 a barrel. Royal Dutch Shell fell 1%, while France Total shed 0.9% and Italy’s Eni lost 1 %. Chemicals group Lanxess lost 1.4% after its sales dropped 2.9% to 6.94 billion euros in 2006. The company posted a profit in 2006 of 197 million euros.

Deutsche Post, the German mail and logistics group, fell 5.8% after forecasting a 7 % fall in operating profit for 2007. Friends Provident the U.K. provider of life insurance, pension products, and asset-management services, declined 5% after it reported that 2006 pretax profit fell 34% and underlying pretax profit fell 3%.

Oil and gold

Oil prices rose but were hovering just under $57 a barrel Tuesday as traders responded to a drop the day before and looked for market drivers. Crude oil for April delivery rose 37 cents to $56.96 a barrel in electronic trading on the New York Mercantile Exchange. The April contract, which expires Tuesday, fell 52 cents the day before amid expectations of rising crude stocks. On London ICE Futures exchange, May Brent crude gained 32 cents to $60.84 a barrel.

Gold prices rose. Gold traded in London at $654.40 per troy ounce, up from $653.50 late Monday. In Zurich, gold rose to $652.85, up from $651.80. Silver opened in London at $13.13 per troy ounce, down from $13.15.

Currencies

The U.S. dollar was mixed Tuesday against other major currencies in European trading. The euro traded at $1.3284, down from $1.3301 late Monday in New York. Other dollar rates compared with late rates Monday in New York included: 117.77 Japanese yen, up from 117.59; 1.2151 Swiss francs, up from 1.2124. The British pound traded at $1.9556, up from $1.9443.