Orient-Express Gains on Bid Speculation

Elena
22 Mar, 2007
New York City

U.S. market ailed to extend the strong rally of the previous session, as lingering worries about the subprime mortgage market and rising oil prices weighed. Shares of Orient-Express Hotels climbed 5.5%, hitting a new 52-week high after a news report that the operator of hotels, restaurants, tourist trains may be bought in a deal worth more than $3 billion.

[R]11:30AM U.S. stocks traded lower on worries about the subprime mortgage business.[/R]
U.S. market ailed to extend the strong rally of the previous session, as lingering worries about the subprime mortgage market and rising oil prices weighed. Concerns about the subprime lending market and how it might affect the broader housing market were being addressed Thursday at a Senate committee hearing. The Dow Jones Industrial Average which rallied 159 points on Wednesday was dragged down by notable losses for Home Depot ((HD)), down 1.1% and Microsoft Corp. ((MSFT)), down 1.1%. Financial stocks American Express ((AXP)), Citigroup ((C)), and J.P.Morgan Chase ((JPM)) also contributed to the downside.

Among companies in focus, Orient-Express Hotels ((OEH)) climbed 5.5%, hitting a new 52-week high after a news report that the operator of hotels, restaurants, tourist trains may be bought in a deal worth more than $3 billion. Investors were also digesting earnings reports and profit outlooks. On the earnings news front, KB Home ((KBH)) lost 1% after the homebuilder said its Q1 profit fell 84% but came in above analyst expectations.

The tech sector came under pressure after warning by Motorola ((MOT)) that the cell phone maker will swing to a Q1 loss due to declining sales. Shares of the company slipped 5.6%. Further on the earnings news front, Barnes & Noble ((BKS)) fell 3% after it reported higher Q4 results, but but missed expectations. Borders Group ((BGP)) reported it swung to a Q4 loss and announced plans to close nearly half its Waldenbooks stores. Company's shares dropped 2.1%.

In brokerage raing news, Nookia ((NOK)), Motorola's main rival, rose 1% after Credit Suisse raised its rating on the stock. Procter & Gamble ((PG)) rose 1.3% after Bear Stearns upgraded the stock to outperform, citing valuation. On the side of the losers, RF Micro Devices ((RFMD)), a supplier to Motorola, was downgraded by CIBC World Markets, sending its stock down 4.6%. In late morning trading, the Dow Jones industrial average fell 25.15, or 0.20%, at 12,422.37. The Nasdaq composite index declined 10.62, or 0.43%, to 2,445.30. The Standard & Poor's 500 index lost 3.91, or 0.27%, to 1,431.13.

[R]Leading indicators index fell 0.5%.[/R]
The Conference Board released its report on leading economic indicators in the month of February on Thursday, showing that its leading indicators index fell more than economists had been expecting. The report showed that the leading indicators index fell 0.5 percent in February following a revised 0.3 percent decrease in January. Economists had expected the index to fall 0.3 percent compared to the 0.1 percent increase that was originally reported for the previous month. The decrease by the index was partly due to large negative contributions from initial claims for unemployment insurance, consumer expectations, and vendor performance. Positive contributions from manufacturers'' new orders, stock prices, and real money supply helped to offset the decline. The Conference Board also said that the coincident index increased 0.3 percent in February following a 0.1 percent decrease in January. The increase reflected a large positive contribution from industrial production. Additionally, the lagging index increased 0.2 percent in February after coming in unchanged in the previous month. Positive contributions from commercial and industrial loans outstanding and change in CPI for services contributed to the increase.


[R]10:30AM London equities were higher on Thursday on a rally in Next.[/R]
The U.K. market was higher on Thursday. The FTSE 100 was up 85 points in early trading, and was trading 40.5 points higher at 6,297.3 at mid-day.

Advancers

Next was the standout,gaining 4.4%, as its full-year figures were lifted by a strong performance from its directories catalogue business. Profits rose 7% to 478 million pounds, despite a decline in same-store sales

Hammerson also advanced 2% as takeover talk refused to die away. The property group has been linked with a bid from Unibail of France. Fellow bid target Whitbread advanced 1.4%

Standard Life added 0.7% as the life assurer posted better-than-expected annual results and announced it would cut down its headcount by a further 1,000 job. Media group Reuters was 1.8% higher as Morgan Stanley lifted its price target from and reiterated its overweight rating.

Decliners

Premier Oil in the mid-caps slipped 2.6% as investors took profits on the exploration group following a 75% rise in annual profit after tax. Premier shares had increased strongly in the run up to the figures, helped by renewed takeover talk. Rank Group continued to slide, a day after the gaming group announced new tax measures in the Budget would cut casino profits by 8 million. Rank fell 6%.


[R]10:00 AM Asia surges with Japan leading the advance in a broad rally.[/R]
Asian markets advanced on Thursday. The Nikkei 225 average in Tokyo ended 1.5% higher, rising 256 points to 17,419.20. Export-related stocks gained. Sony rose 1.5% and Canon was up 1.7%. Mitsui Fudosan Co led the property shares in a broad-based advance before the release later in the day of government land-price data. Shares of Mitsui Fudosan advanced 1.2%.

Hong Kong Hang Seng Index finished 0.9% higher, adding 175.69 points to 19,690.25. China Mobile declined 1.8% after the company reported 2006 net income advanced 23%, boosted by rapid subscriber growth and higher revenue from value-added services. The Shanghai Composite Index in China ended at a record for the second straight day, adding 0.5% to 3,071.23.

Elsewhere in the region, Australian S&P/ASX 200 advanced 1.6% while Singapore Straits Times Index was up 2%. South Korean Kospi Index gained 0.4% and Taiwan Weighted Price Index rose 0.9%. In Malaysia, the KLSE Composite edged 1% higher. New Zealand NZX-50 index also ended 0.6% higher.


[R]9:45AM U.S. stocks opened lower.[/R]
Wall Street moved to the downside on Thursday, giving up some of the previous sessions''s buying interest. Investors awaited more economic data to see if market rally could extend or profit-taking will be the course of action. The Conference Board said that the index of leading economic indicators fell 0.5% in February, close to the 0.4% drop expected by economists, with four of the 10 indicators increasing.

A notable increase by the price of oil helped inspire traders to cash in on the recent gains. Crude, oil May delivery climbed $1.86 to $61.47 a barrel. The higher price led to significant weakness in the oil-sensitive airline sector, while energy stocks pushed notably higher, helping to limit the downside trend for the broader markets. Oil service stocks posted particularly strong gains.

Computer hardware stocks also came under pressure, with Palm ((PALM)) helping to lead the sector lower with a decline of 9.5%, following a profit warning from Motorola ((MOT)), which offset speculation that Motorola is considering a takeover of Palm. Shares of the cell phone maker dropped 5% after Motorola lowered its Q1 earnings and revenue guidance. In midmorning trading, the Dow Jones industrial average was down 4.08, or 0.03%, at 12,433.44, while the Nasdaq composite index fell 4.17, or 0.17%, to 2,451.75. The Standard & Poor''s 500 index fell 0.15, or 0.01%, to 1,434.89.

[R]Initial jobless claims dropped 4,000.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended March 17, showing that jobless claims unexpectedly fell compared to the previous week. The report showed that jobless claims fell to 316,000 from the previous week''s revised figure of 320,000. Economists had expected jobless claims to increase to 325,000 compared to the 318,000 originally reported for the previous week. This marked the third consecutive weekly drop in jobless claims, which fell to their lowest level in six weeks. The Labor Department also said that the less volatile 4-week moving average fell to 326,000 from the previous week''s revised average of 329,750. The report also showed that continuing claims for the week ended March 10 fell to 2.501 million from the preceding week''s revised level of 2.570 million.


[R]9:00AM Wall Street to open flat after Fed Reserve’s rate decision.[/R]
U.S. stock futures predicted a flat market opening, following a strong rally on Wednesday, inspired by the Fed Reserve’s decision to hold interest rates unchanged at 5.25%. Overseas markets gained on Thursday, with the Nikkei 225 up 1.5% and the German DAX 30 up 1.7%. Investors’ attention is expected to return to subprime mortgage lending, as the Senate Committee on Banking, Housing, and Urban Affairs convenes a hearing. The Labor Department reported that weekly figures on unemployment benefit claims dropped by 4,000 last week. The Conference Board’s index of leading indicators is due out today.

Among pre-market highlights, shares in Motorola ((MOT)) dropped 4.5% after the maker of mobile phones warned it will swing to a Q1 loss amid a further decline in sales. At the same time, Nokia ((NOK)), Motorola''s larger rival, climbed 1.9% in the pre-open. On the earnings news front, General Mills ((GIS)) posted a better-than-expected 9% profit rise in Q3 and lifted its forecast. Shares gained almost 1% in pre-market trading. Williams Sonoma ((WSM)) climbed 2.6% after reporting an above-forecast Q4 profit. It also raised its dividend by 15 and announced a 5 million share buyback. Earnings reports are expected from retailer Barnes & Noble ((BKS)), Nike ((NKE)), Palm ((PALM)), and Homebuilder KB Home ((KBH)).

Analyst comments affected several major companies ahead of market opening. Procter & Gamble ((PG)) rose 1% after it saw an upgrade to outperform by Bear Stearns. Alcatel-Lucent ((ALU)) dropped 2.3% as it was downgraded to neutral from buy at Goldman Sachs. Dow futures expiring in June rose 5 points, or 0.04 percent, to 12,528 on Thursday. Standard & Poor''s 500 index futures slipped 0.10 points, or 0.01 percent, to 1,444.90, while Nasdaq 100 index futures remained unchanged at 1,825.00.


[R]8:30AM NY-7:00PM Mumbai Sensex zooms over 300 points in a broad rally.[/R]
The Sensex on BSE finished 362.15 points, or 2.80%, higher at 13,308.03. The market-breadth was strong as there were almost two advancers for every decliner. For 1,658 stocks that advanced, 933 stocks declined and 84 remained unchanged. Of the 30 stocks in the Sensex, only Grasim declined, while the rest advanced. The turnover on BSE was Rs 3,571.80 crore, higher than Rs 2,730 crore, while on NSE, the turnover was Rs 7,865.08 crore, also higher than Rs 5,839.09 crore on Wednesday.

Economic news

The rupee retreated from 19-month highs on Thursday as a cash squeeze in the money market was relieved, and traders settled short positions in the dollar on concerns of provoking Reserve Bank of India intervention. In morning trade, the rupee stood at 43.685/695 per dollar, dropping from Wednesday close of 44.4450/4550.

India has threatened to withdraw from the seven billion dollar Iran-Pakistan-India gas pipeline project if Islamabad did not reduce the fee it wants to charge for allowing flow of natural gas from Iran to India.

Crude oil imports plunged 3.5% to 8.7 million tons in February despite a 4% growth in consumption of petrochemical products.

Trading highlights

MindTree was the most-active stocks with a turnover of Rs 162.25 crore followed by SBI and Reliance Communications.

Advancers

BHEL led the Sensex advancers, up 6% to Rs 2,230. Bank shares extended their gains from Wednesday. HDFC Bank gained 5.9% to Rs 1,023 and ICICI Bank rose 3% to Rs 987. State banks also surged. State Bank of India rose 4.7% to Rs 1,029, Bank of India gained 11% to Rs 174, Canara Bank surged 7.5% to Rs 207 and Punjab National Bank added 7%, to Rs 485. Banks had rallied on Wednesday on value-buying, as well as on short-covering in the derivatives.

IT large-caps advanced on the rupeedip against the US dollar. Wipro gained 2.8% to Rs 598, Satyam Computer advanced nearly 3.4% to Rs 467, TCS added 3% to Rs 1,307 and Infosys rose 1.1% to Rs 2,117.

Oil large-cap ONGC surged nearly 4.9% to Rs 852. Auto shares also surged. Maruti Udyog gained almost 5% to Rs 831, Hero Honda advanced 4.7% to Rs 681, Tata Motors gained 3.8% to Rs 806, and Bajaj Auto rose 3% to Rs 2576. Mahindra & Mahindra rose 3.4% to Rs 781. Engineering & construction company L&T surged 4.7% to Rs 1,573. The company is sitting on a strong order-book.

Reliance Industries rallied nearly 3% to Rs 1,378. Reliance Industries announced on Thursday that Rohm and Haas Co, US, and itself were exploring joint construction of an acrylic-monomer plant in India. The plant in question will be in Jamnagar and will be able to produce 2 lakh tons of acrylic acid and its esters annually.

Decliners

Grasim was the only decliner in the Sensex stocks. Its shares dipped 1.2% to Rs 2,081. Reportedly, cement makers have declined a request by the government to cut prices. A meeting was held today between the finance minister and cement makers,


[R]8:00AM European markets were higher on Thursday on bid talk.[/R]
European markets were higher on Thursday. By midday, Frankfurt Xetra Dax rose 1.7% to 6,826.46, the CAC 40 added 1.4% to 5,576.27 and London FTSE 100 climbed 0.8% to 6,303.9.

Advancers

ING gained 2.4%, as the news that a cross-border deal in the financial services sector was in progress helped underpin broader gains for European equities. The news came as Barclays of the UK continued merger talks with Dutch peer ABN Amro. Although there were still no financial details, Barclays moved 2% higher and ABN gained 0.7%.

Eiffage added a further 13% to the previous session 7% gain. Sacyr Vallehermoso of Spain may sell its stake in oil company Repsol to help fund a purchase of Eiffage, in which it already owns 32.6%. In the other scenario, French rival Vinci might fend off approaches. Shares in Sacyr gained 1.7 %, while Vinci edged 0.2% higher.

In the banking sector, shares in Unicredit, the Italian bank, gained 1.9% after it reported a forecast-beating 61% rise in full-year net profit. Broker comment supported Dutch group Aegon, up 2.7%, France Axa, 3.5% stronger, Allianz of Germany, 3% higher and Zurich Financial, up 1.5%.

Decliners

Health-care companies were underperforming. Shares in AstraZeneca slipped 0.7%, while GlaxoSmithKline was almost flat, up 0.1%. Alcatel-Lucent shares lost 0.3%. The company was downgraded to neutral from buy at Goldman Sachs

Oil and gold

Oil advanced for a third day in New York on signs of increasing demand from U.S. refineries. Crude oil for May delivery rose as much as $1.20, or 2%, to $60.81 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for May settlement rose as much as $1.28, or 2.1 %, to $62.05 a barrel in electronic trading on the ICE Futures exchange.

Gold for immediate delivery was little changed at $664.25 an ounce in early trade in London. Silver gained 5 cents to $13.375 an ounce. Platinum rose $3 to $1,236.50 and palladium was unchanged at $353.50.

Currencies

The dollar rebounded from a two- year low versus the euro before speeches by Federal Reserve officials today. The dollar traded $1.3359 against the euro in early trade in London, rebounding from $1.3385 late yesterday in New York. The U.S. currency was at 117.60 yen, from 117.54. Against the dollar, the British pound was at $1.9710 in early trade in London, from $1.9678 late yesterday.