U.S. Averages Trade Up

123jump.com Staff
30 Mar, 2001
New York City

In the morning trading market averages climbed higher led by oil and financial stocks. Commerce Department reported that personal income and spending in February rose 0.6%, higher than estimated by most economists. Oil climbed above $66 per barrel on continued tensions in the Middle East. NYMEX climbed at the opening on broker recommendation.

[R]10:15AM NY – After 30 minutes of trading New York maintains a positive bias. Oil climbs above $66 per barrel and USDA report showed that farmers plan to plant largest amount of corn production since the second World War.[/R]

Market averages made a steady climb in the first thirty minutes of trading in New York. Personal spending and income report for the month of February showed a rise of 0.6% in both but savings rate declined at 1.2% in the month.

Volatile oil price in the first hour of trading rose 55 cents to $66.57 per barrel as tensions between Iran and Britain continued in the Middle East. British government said that it will escalate the issue if sailors are not released and Iran wants a guarantee that Britain will not cross its borders again.

In trading tech stocks traded higher, slightly. Apple, Microsoft, IBM, Cisco and EMC had less than 0.4% gains. Dell dropped 2% on the news that the company has discovered evidence of accounting misconduct and errors and will delay annual report and 10K report filing. Red Hat said that it expects to earn between 67 cents and 72 cents in the current fiscal year, stock fell 1% after advancing at the opening.

Oil complex stocks rallied in the wake of higher price of oil. Valero, Exxon and Tesoro advanced better than 1%. Conoco Phillips and Marathon Oil declined a fraction.

Brokerage companies Goldman Sachs, Morgan Stanley, Merrill Lynch and Lehman Bros gained close to 1% after thirty minutes of trading.

Nymex ((NMX)) rose 79 cents to $136.46 on an upgrade from UBS on increased volatility in the oil trading.

[R]9:45AM NY – Personal Spending and income rose in February, market averages struggle at the opening.[/R]

The Commerce Department reported that personal spending in February rose 0.6% and so did personal income in the month. Economists were looking for a rise of less than 0.4%. After adjusting for price inflation in gasoline and other food products the personal spending rose only 0.2% in February after gaining 0.3% in January. In January, personal income rose at 1% and personal spending rose at 0.5%.

Stronger spending and income put asides fears of economic slow down in the morning trading, however, economists are still revising their estimates of economic growth for the year to less than 2.5%. Worries related to slow down in housing and lack of rebound in capital spending from businesses was cited as prime reasons for lowering estimates.

The report also noted that the measure of inflation index, core inflation, excluding food and energy prices, rose 0.3% in February and for the last twelve months rose at 2.4%, higher than the Fed’s preferred target range of less than 2%.

The report also said the personal savings rate remained unchanged and declined at a rate of 1.2% in February.

[R]9:30AM FTSE 100 trades lower Friday on weak Vodafone and Resolution.[/R]
The UK market was lower on Friday. By mid-morning, the FTSE extended its early losses to move 26.4 points, or 0.4% to 6,298.1.

Advancers

M&A activity provided some respite for the market. Home improvements retailer Kingfisher led the FTSE gainers, 2.5% higher on reports that Goldman Sachs private equity division was mulling a bid for the owner of B&Q. Scottish & Newcastle traded 0.6% higher following the 12% surge in the brewing giant share price on Thursday, due to by bid speculation.

Rentokil Initial advacned 2.5% as an offer from United Technologies Corporation for its Initial Electronic Security Group, is looming, valuing the unit at 595 million pounds. News of KKR and Pessina improved offer for Alliance Boots to 10.40 pound-per-share pushed its shares slightly higher, up 0.3%.

Man Group added 1.6% stronger after the UK-listed hedge fund group said it planned to demerge its US brokerage business and list it in New York.

Decliners

Vodafone Group shed 3.5% after the mobile phone company trading update showed great-than-expected pressure on UK profit margins. Downgrades for earnings from the UK business this year were likely but as these operations only generate about 9% of group earnings, the share price reaction looked overdone.

Resolution lost 5% as it appears possible takeover talks had ended. The insurer announced it continued to assess possible acquisitions and business combinations that would not constitute an offer for the company.

FKI fell 3.4% after the engineering company stated trading in the second half of the year was in-line with expectations but unfavourable exchange rate movements would reduce full-year operating profits.


[R]9:00AM Asian markets mostly advanced Friday with Japan up on inflation data.[/R]
Asian markets ended moslty higher on Friday. In Tokyo, the Nikkei 225 closed 0.1% higher to 17,287.65. Mitsui Fudosan, up 2.4%, led gains among the interest-rate sensitive property stocks as data released Friday showed consumer price index in Japan dropped in February for the first time in 10 months.

Exporter such as Honda Motor also advanced as data showed that the U.S. economy grew faster than thought previously in the final quarter of 2006. Honda rose 1%, while Sony gained 0.2%. Shares of Mitsui Engineering & Shipbuilding added 2.5% higher after reports that the company is likely to report an 89% rise in profit for the current fiscal year.

Hong Kong Hang Seng Index dropped 0.1% to 19,800.93. China Shanghai Composite index also ended down 0.4% to 3183.98. PetroChina advanced, rising 1.8% and tracking the move higher in crude-oil prices tied to Persian Gulf tensions between the U.K. and Iran. CNOOC, the third-largest oil producer by output in China, advanced 0.3%. The oil large-cap reported late Thursday that net profit rose 22% last year.

Australian S&P/ASX 200 gained 0.6% to end at 5995.00, while South Korean Kospi index advanced 0.1% to finish at 1,452.55. Singapore Straits Times Index gained 0.3% to close at 3,231.24. Taiwan Weighted Price Index ended 0.5% higher at 7,884.41. Alinta in Sydney, gained 2.6% as the energy infrastructure company recommended a $6 billion offer from Babcock & Brown and Singapore Power.

[R]8:00AM NY-7:00PM Mumbai Sensex gains on auto, pharma stocks.[/R]
The Sensex on BSE finished 92.44 points, or 0.71%, higher at 13,072.10. The market-breadth was strong as there were two advancers for each decliner. As 1,676 stocks advanced, 864 declined, and 70 stocks remained unchanged. Of the 30 stocks in the Sensex, 23 advanced, while the rest declined. The turnover on BSE was Rs 2,974 crore, lower than Rs 3,692.27 crore on Thursday. On NSE, the turnover was Rs 7,517.79 crore, compared with Rs 10,009.89 crore on Thursday.

Economic news

The wholesale price index in India increased 6.46% in the 12 months to March 17, matching the increase in the previous week, data showed on Friday. The figure was slightly below a forecast of 6.50%.

The foreign investment regulator of India has delayed a decision on Vodafone plans to buy controlling stake of Hutchison Telecom in Hutchison Essar. After a meeting of the Foreign Investment Promotion Board, Finance Secretary Ashok Jha said that the board had asked for more details on the deal.

Trade Minister Kamal Nath admitted on Friday that Indian import duties on wines and spirits are high and added he expects the situation to be corrected. The European Union is escalating a dispute with India at the World Trade Organisation, over what it sees as unfair trade barriers for its wine and spirits.

Trading highlights

Indiabulls Real Estate was the most-active stock with a turnover of Rs 174.55 crore followed by Renuka Sugar and Reliance Industries.

Advancers

Dr.Reddy''''s rallied 3.1% to Rs 728 and the other pharma large-caps Ranbaxy Laboratories edged up 2.1% to Rs 353. NTPC surged 3% Rs 150, respectively and ITC soared 2.5% to Rs 150. NTPC announced it had signed an agreement with KFW, Germany, for a term-loan of $100 million. The loan agreement, which state-run NTPC signed, is an unsecured facility without sovereign guarantee bearing variable interest linked to LIBOR, and has a maturity of 10 years.

Tata Motors rose 1.8% to Rs 728. Tata Motors plans to set up one more automobile plant in the country within two years. Gujarat Ambuja, Tata Steel and Satyam rallied around 2% each to Rs 107, Rs 450 and Rs 470, respectively. Index heavyReliance Industries advanced 1.22% to Rs 1,372.60, as 5.66 lakh shares were traded on BSE. The stock hit a high of Rs 1,373.50.

Decliners

It stocks were heavily hit by the rise of the rupee this week. The rupee touched a seven-year high against the dollar. IT large-cap Wipro led the decliners, down 1.3% to Rs 558, on a volume of 2.16 lakh shares.

Other declineers included HDFC, down 1% to Rs 1,520, TCS, dipping 1.3% to Rs 1,231 and BHEL, losing 0.8% to Rs 2,261.

[R]6:30AM European stocks were lower on Friday on financials and telecom stocks.[/R]

European markets were lower on Friday. By mid morning, Frankfurt Xetra Dax was fractionally lower at 6,893.94, the CAC 40 in Paris fell 0.2% to 5,618.07 and London FTSE 100 shed 0.3% to 6,303.5.

Advancers

German financial stocks advnaced on takeover speculation on comments from Citigroup earlier in the week that hinted the US bank was looking possible targets in Germany. Commerzbank gained 2.8%, while Deutsche Bank added 1%, and Deutsche Postbank climbed 1.6%.

Decliners

Britain Vodafone led telecommunications stocks down as it warned of tough competition and regulatory pressures through to 2008. The stock fell 3.3%. Telekom Austria fell 1.9% after Bear Stearns lowered its target price. Shares in Telenor fell 1.4%.

Oil and gold

Oil prices kept rallying Friday as a standoff between Britain and Iran was taken to the United Nations and a nervous market worried that oil exports could be affected by the crisis. After settling at a six-month high a day earlier, crude oil futures rose another 45 cents to $66.48 a barrel on the New York Mercantile Exchange.

Gold opened Friday at a bid price of $662.90 a troy ounce, up from $658.70 late Thursday.

Currencies

The euro fell slightly against the dollar on Friday, a day after it gained on the U.S. currency following a dim growth report on the U.S. economy. The euro bought $1.3318, dropping marginally from $1.3335 in late New York trading on Thursday. The British pound also lost ground to the dollar, dropping to $1.9570 from $1.9619 in New York. The dollar edged up slightly on the Japanese yen, to 118 yen, from 117.9 the previous day.

[R]5:30AM Gold finishes lower, while copper and crude oil advance.[/R]

June gold shed $5.30 to end at $667.60 a troy ounce on the New York Mercantile Exchange, while May silver lost 11.5 cents to close at $13.34 an ounce. July platinum fell $10.20 to close at $1,247.60 an ounce, while June palladium was off $1.85 to settle at $356 an ounce. The most-active May copper contract gained 2.4 cents to settle at $3.0865 per pound.

The May crude oil futures contract gained $66.50 a barrel before finishing at $66.03 a barrel, up $1.95. April heating oil surged 4.98 cents to finish at $1.8772 a gallon. April gasoline soared 7.83 cents to $2.1355 a gallon. Front-month May natural gas futures, though, lost 6.3 cents to close at $7.609 a million British thermal units.

On the New York Board of Trade, Arabica coffee futures declined, reaching the lowest levels in a week an a half, on selling by funds and locals. May coffee finished 2.1 cents lower at $1.1060 a pound, and July coffee closed 2 cents weaker at $1.1350 a pound. Futures on raw sugar in foreign ports dipped to six-month lows as funds sold the front months. May sugar ended 0.27 cents lower at 9.85 cents a pound, while July sugar closed 0.24 cents weaker at 9.96 cents a pound.