Market to Open Higher on Robust Jobs Data

Elena
09 Apr, 2007
New York City

Wall Street looked poised for higher reopening after the three-day Easter holiday. U.S. stock futures rallied, boosted by stronger-than-expected jobs data in March and a report that Dow Chemical Co. is the target of a $50 billion buyout offer. The Labor Department said Friday that nonfarm payrolls expanded by 180,000 in March, while the unemployment rate slipped to 4.4% from 4.5% in February. In corporate news, Citigroup said it was buying Taiwan''s Bank of Overseas Chinese for $426 million.

[R]9:00AM U.S. stock futures pointed to a higher opening, helped by jobs data.[/R]
Wall Street looked poised for higher reopening after the three-day Easter holiday. U.S. stock futures rallied, boosted by stronger-than-expected jobs data in March and a report that Dow Chemical Co. is the target of a $50 billion buyout offer. On Monday, investors had their first chance to react to a Labor Department report which said Friday that nonfarm payrolls expanded by 180,000 in March, while the unemployment rate slipped to 4.4% from 4.5% in February. Economists had been expecting jobs growth of 168,000 and a jobless rate of 4.5%, on average. The jobs data raised some hope that growth was stronger-than-expected during the quarter, soothing concerns of economic slowdown before the Q1 earnings season. On the other hand, the robust jobs data significantly reduced the odds of an interest rate cut in the near future.

Dow Chemical ((DOW)) was in focus on speculations that a consortium of Middle Eastern investors and American buyout firms will launch a $50 billion bid to acquire the company. Kohlberg Kravis Roberts & Co., one of the biggest U.S. private equity firms is said to be one of the bidders. The stock rose 8.4% in the pre-open trading. In corporate news, Citigroup ((C)) said it agreed to buy Taiwan's Bank of Overseas Chinese for $426 million. The deal is expected to complete in the second half of 2007. Company's stock gaine nearly 1% in the-open.

Among companies driven by analyst comments, American Home Mortgage ((AHM)) tumbled 19.3% after the company cut its earnings outlook by more than 25% and slashed its quarterly dividend by about 38%. Consequently, Lehman Bros. downgraded the stock to equal weight from overweight, and cut its price target to $20 from $45. Citigroup cut its rating to sell from hold and its price target to $19 from $26. Lehman Bros. downgraded Murphy Oil ((MUR)) to equal weight from overweight, citing valuation. Sanmina-SCI shares ((SANM)) dropped nearly 3% in pre-market trading after the electronics contract manufacturer warned the Q2 revenue would miss its previous estimate due to weak demand in the communications market. S&P 500 futures climbed 5.10 points to 1,457.80 and Nasdaq 100 futures hiked up 7.75 points to 1,836.00. Dow industrials futures ran up 40 points to 12,662.


[R]8:15AM Dow Chemical soars on bid speculations of $50 B.[/R]
Dow Chemical ((DOW)) jumped 10% in pre-market trading, driven by news that it could be target of the biggest leveraged buyout of all time. A consortium of Middle Eastern investors and American buyout companies is reportedly preparing a bid offer valued at $50 billion. Half of the capital is being provided by investors from Saudi Arabia, Kuwait, Bahrain, Qatar, UAE and Oman. A number of U.S. buyout firms including Kohlberg Kravis Roberts are responsible for contributing the rest of the financial resources. According to reports, a financing package has been put in place for a break-up bid of between $52 to $58 a share and an approach valuing the company at least $50 billion could come by the end of this week.


[R]8:00AM NY-7:PM Mumbai Sensex zooms more than 300 points on a broad rally.[/R]
The Sensex on BSE finished 321.66 points, or 2.50%, higher at 13,177.74. The market-breadth was very strong as there were more than three gainers for each decliner. For 1,915 stocks that advanced, 613 stocks declined, and only 71 stocks which remained unchanged. Of the 30 stocks in the Sensex, only one stock declined. The turnover on BSE was Rs 3,075 crore, slightly lower than Rs 3,182.14 crore on Thursday. On NSE, the turnover was Rs 6,286.86 crore, lower than Rs 6946.16 crore on Thursday.

Economic news

Prime Minister Manmohan Singh stated on Monday that Assam remains top priority for the UPA government and projects such as the gas cracker will bring development opportunities for the state. PM demanded that project be put on super fast track and a specific time-table be drawn for completing it, even before the its target of five years.

Trading highlights

Tata Steel was the most-active stock with a turnover of Rs 133.50 crore followed by MindTree and Indiabulls Real Estate.

Advancers

Steel stocks rose on reports that cold rolled steel makers are set to raise prices by Rs 4,200 - Rs 6,500 a ton, next week, over the ruling price of Rs 32000 - Rs 33000 a ton. Tata Steel led the advancers, soaring 6% to Rs 493. ITC surged 5% to Rs 155. Hindustan Lever gained 2% to Rs 204.

Banking shares edged higher under the reckoning that an increase in lending rates will protect their profit margins. State Bank of India added 4.3% to Rs 988.7, on lifting the benchmark prime lending rate by 50 basis points to 12.75% per annum with effect from Monday (9 April).

Maruti and Reliance Communications rallied around 4.5% each to Rs 790 and Rs 416, respectively. Last week, Maruti reported record monthly sales in March 2007. Reliance Communications advanced after adding 1.2 million new wireless subscribers in March 2007. Reliance Communications said its average revenue per user was expected to rise by 12%, as a result of the re-verification exercise, making it one of the top-three players in India in terms of average revenue per user.

Cement stocks advanced for the second day in a row today, as cement makers refused to reduce cement prices despite the government last week banning import duties on the product. Grasim gained 3.88% to Rs 2,195, ACC rose 2.4% to Rs 739.90 and Gujarat Ambuja Cements added 2.4% to Rs 108.50.

Hindalco, BHEL, ONGC gained nearly 3% each at Rs 136, Rs 2,425, respectively. Other included Reliance Industries, Bharti Airtel, TCS and Wipro surging 2% each to Rs 1,384, Rs 761, Rs 1,217 and Rs 562, respectively. Infosys rallied 2.5% to Rs 2,044.

Decliners

Bajaj Auto was the sole decliner among the index stocks today, off 0.5% at Rs 2,297.


[R]7:00AM Asian markets finished higher on Monday with Japan upbeat on exporters.[/R]
Asian markets finished higher on Monday. Japan''s benchmark Nikkei 225 index rose 258.98 points, or 1.48%, to finish at 17,743.76. Upbeat figures showing U.S. non-farm payroll on Friday cheered optimism about the U.S. economy, the biggest export market for Japan. The weakness of the yen also buoyed sentiment. Advancers included Advantest, climbing 4.17% and Toyota Motor rising 1.89%. Machinery stocks also advanced with Komatsu rising 4.26%.

The Korea Composite Stock Price Index in South Korea gained 16.91 points, or 1.1%, to 1,501.06, in the third record close in four sessions. Hyundai Engineering & Construction gained 3%, Doosan Heavy Industries & Construction rose 3.8% on rising order news and Doosan Infracore rallied 8.4% on increasing demand for excavators in China.

In China, banks bounced back, after declining Friday on the latest reserve requirement ratio increase, supporting the country key stock indexes to a record finish for the sixth straight session. The benchmark Shanghai Composite Index gained 2.3% to 3,398.95 and the Shenzhen Composite Index added 2.1% to 907.82.