Citigroup to Slash 15,000 Jobs

Elena
26 Mar, 2007
New York City

U.S. stock markets opened mixed on Monday ahead of a report on new home sales. Analysts expect a rise to 995,000 from 937,000 in January. On Friday, the National Association announced better-than-expected jump in sales of existing homes. Market sentiment was supported by computer maker Dell which rose 2.8% on an upgrade at Goldman Sachs. Intel was trading flat after Goldman Sachs cut its profit estimates. Citigroup was in the focus on reports that the company will cut 15,000 jobs.

[R]9:45AM U.S. stocks opened mixed ahead of housing data.[/R]
U.S. stock markets opened mixed on Monday ahead of a report on new home sales. Analysts expect a rise to 995,000 from 937,000 in January. On Friday, the National Association announced better-than-expected jump in sales of existing homes. Market sentiment was supported by computer maker Dell ((DELL)) which rose 2.8% on an upgrade to buy from neutral at Goldman Sachs. Intel ((INTC)) was trading flat after Goldman Sachs cut its profit estimates. Citigroup ((C)) was in the focus on reports that the company will cut 15,000 jobs. In other corporate news, Merck ((MRK)) shares slipped 0.5% after the pharmaceutical firm said it was working with Schering-Plough on a new cholesterol lowering medicine. Schering-Plough rose 2.1%.

In merger-and-acquisition news, shares of Biosite ((BSTE)) surged 51% after Beckman Coulter ((BEC)) agreed to buy the biomedical-equipment firm for $1.55 billion, or $85 a share. Piper Jaffray downgraded Beckman to market perform, sending its shares down 7.7%. In other deal speculations, Saudi Basic Industries is considering a bid up to $12 billion for the plastics unit of General Electric ((GE)). In the first minutes of trading, the Dow Jones industrial average fell 4.17, or 0.03 %, to 12,476.84. The Dow secured its best week in four years last week, rising 370.60 points. The Standard & Poor's 500 index was up 0.33, or 0.02%, at 1,436.44, and the Nasdaq composite index rose 2.56, or 0.10%, 2,451.49.


[R]9:00AM Wall Street to open modestly higher, helped by Dell.[/R]
U.S. stock futures predicted a slightly higher opening on Monday, lifted by gains for tech giants United Technologies and computer maker Dell Inc. on the back of brokerage upgrades. An improved profit outlook from Kimberly Clark also generated positive mood.

Shares of Dell ((DELL)) rose 3% before the opening bell after brokerage Goldman Sachs lifted its rating on the stock. Dow component United technologies ((UTX)) added 0.5% after Credit Suisse upgraded the company to outperform from neutral on hopes for the company''s quality control program. Kimberly-Clark Corp. ((KMB)) said it expects its adjusted earnings to meet or exceed the high end of its prior outlook. In corporate news, Intel ((INTC)) said it will invest $2.5 billion to build a 300-millimeter wafer fabrication facility in China. Citigroup Inc. ((C)) advanced 0.6% in the pre-open amid reports that its restructuring plan is likely to involve around 15,000 job cuts from the global banking company''s 327,000 employees and a charge against earnings of more than $1 billion.

On the deal news front, General Electric ((GE)) edged up on speculations that Saudi Basic Industries Corp. may bid up to $12 billion for the plastics unit of the company. In European M&A, Germany''s utility company E.On ((EON)) increased its bid offer for Spain''s Endesa ((ELE)) to $56.4 billion (42.3 billion euros), or 40 euros a share, up from its last offer to 37.50 euros and an initial offer in February 2006 of 27.50 euros each. This is the third time it has raised its bid for the Spanish utility in a year, seeking to control the company ahead of a liberalization of European energy markets. Shares of Endesa ((ELE)) climbed 4% in Madrid. S&P 500 futures were up 0.9 point, a tad above fair value. Dow Jones industrial average futures were up 8 points, and Nasdaq 100 futures were up 5 points.


[R]8:00AM NY- 7:00PM Mumbai Sensex plunges on selling pressure, rupee surges.[/R]
The Sensex on BSE finished 161.61, or 1.22%, lower at 13,124.32. The market-breadth was weak as there were more than two decliners for each advancer. As 1,740 stocks declined, 843 advanced and 60 remained unchanged. Of the 30 stocks in the Sensex only four advanced, while the other 26 declined. The turnover on BSE was Rs 3,126 crore. On NSE, the turnover was Rs 6,753.15.

Economic news

The sugar industries received a boost as the government declared the creation of a buffer stock mechanism, as also export incentives for two years. There would be an export subsidy of Rs 1,350 per ton for coastal sugar mills and an export subsidy of Rs 1450 per ton for northern mills. There would be an incentive of Rs 440 per tonne for export of raw sugar.

The rupee surged sharply to near 20-month high of 43.4150/43.4250 against US dollar in late morning deals tracking sharp increase in forward dollar premia and as banks sold dollar holdings to relieve tight cash conditions in the banking system.

Arcelor Mittal announced on Sunday the company could build steel plants in two Indian states, rather than just one. Mittal signed an initial agreement with the administration of the eastern state of Jharkhand in 2005 to build a $9 billion steel plant there but progress has been slow on problems over securing an iron ore mine.

Trading highlights

Indiabulls Real Estate was the most-active stock with a turnover of Rs 261.70 crore followed by Reliance Communications and MindTree.

Advancers

IT large-cap Satyam Computers led the gainers, up 1.73% to Rs 472.2, on a volume of 5.15 lakh shares. ONGC added 1.2% to Rs 853.2 and Tata Steel advanced 0.7% to Rs 441.9. Reliance Comms gained slightly 0.2% to Rs 426.3. Reliance Communications is intending to set up an overseas initial public offering for its international communication subsidiary FLAG Telecom, and has short-listed four merchant bankers for the float.

Decliners

Tata Motors was the top-loser, down 4.51% to Rs 754, on 2.66 lakh shares traded on BSE, after dipping to a low of Rs 749.35. Maruti Udyog lost 2.48% to Rs 818.9, while Hero Honda lost 1.72% to Rs 667.9. HDFC Bank plunged 3.5% to Rs 976.

Bajaj Auto shed 0.34% to Rs 2,525. Reportedly, the company may build cars to ward off the prospective threat Rs 1 lakh car of Tata. Rs 1 lakh people car of Tata Motors will be on the roads in 2008, provided the firm gets the product right.

Other large-cap decliners included HDFC, off 2.03% to Rs 1,562 and Reliance Energy shedding 2.30% to Rs 475. Maruti and Wipro slipped 2.5% each to Rs 819 and Rs 586, respectively.

Index heavy Reliance Industries lost 0.74% to Rs 1,369, on a volume of 3.70 lakh shares. Reliance Industries informed BSE that a separate meeting of equity shareholders, secured creditors, including debenture-holders & unsecured creditors will be held on 21 April 2007, for approving the scheme of amalgamation of Indian Petrochemicals Corporation with itself.


[R]7:00AM European equities declined Monday on weak utilities, Iran tensions.[/R]
European stocks were lower on Monday morning. German Xetra Dax lost 15.2 points, or 0.2%, at 6,884.09 and in Paris, the French CAC 40 eased 16 points, or 0.2%, at 5,619.16, the U.K. FTSE 100 index declined 0.1% to 6,331.50.

Advancers

Porsche announced it planned a buyout offer fo VW. Porsche rose 3.1%. Porsche was forced to launch an offer after exercising an option to take its stake above 30%, to 31% from 27.3%.

OMV gained 2% after Citigroup boosted its price target for the refiner and reiterated a buy recommendation. UK homebuilders surged. Taylor Woodrow shares rose 15.6% while Wimpey shares increased 10.4%.

French information technology services company Atos Origin shares rose 3.3% as it said that its supervisory board has decided to explore strategic options following recent expressions of interest in the company.

Decliners

Volkswagen shed 3.4% after rival carmaker Porsche said it planned a buyout offer for VW shares. Eiffage lost 5.1% as some of the bid speculation which pushed the French construction company up by 40.3% last week faded.

E.On shares declined 0.8% as it raised its offer for Endesa of Spain. E.On said that it will exercise all legal options against Enel and Acciona, which on Friday said they were considering making a bid for Endesa.

Oil and gold

Crude oil surged to its highest in three months after Iran took 15 British servicemen captive and the United Nations imposed new sanctions on the country, heightening worries supplies from the Middle East will be disrupted. Crude oil for May delivery climbed 61 cents, or 1%, to $62.89 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since Dec. 26. It was at $62.77 in early trade in London. Brent crude oil for May settlement rose 73 cents, or 1.2%, to $63.91 a barrel in electronic trading on the ICE Futures exchange.

Gold gained in London, powered higher by investors buying the metal as a haven and hedge against inflation. Gold for immediate delivery in London rose $2.60, or 0.4%, to $660.00 an ounce today.

Currencies

The dollar traded at a one-week high against the euro on speculation a U.S. government report will show a rebound in new home sales in February. The dollar traded at $1.3263 per euro in early trade in London from $1.3283 in New York March 23. Against the euro, the pound was at 67.67 pence in London, from 67.72 on March 23. It also traded at $1.9598, from $1.9614. Against the Japanese currency, the dollar traded at 118.23 Japanese yen, up from 118.05.