U.S. stocks Rise on Higer Oil, Alcoa Profit Up

123jump.com Staff
10 Apr, 2007
New York City

U.S. stocks rose after an increase in oil prices improved the earnings outlook for energy companies and analysts said Applied Materials revenue may beat forecasts, stock advanced 4.1%. International Council of Shopping Centers-UBS Retail Chain Store Sales Index increased by 0.9%. On the year, chain-store sales were up 4.0% in the week to April 7. Alcoa reported profit rise of 9% or 75 cents per share on 15% rise in Aluminum prices.

[R]4:30PM NY; 10:30PM Frankfurt; 2:00AM Mumbai - GLOBAL MARKETS[/R]

Yield on 10-year bond closed at 4.725% and the 30-year bond closed at 4.908%.

Gold advanced $4.600 to close at $681.500 a troy ounce, silver increased 12 cents to end at $13.930 a troy ounce and copper futures dropped 1.2%.


Oil gained 38 cents to close at $61.890 a barrel and heating oil advanced 4.040 cents to finish at 185.610 cents a gallon. Natural gas increased 32.3 cents to close at $7.869 per MMBtu. Gasoline went up 2.840 cents to end at 212.300 cents a gallon.

Asian markets closed mostly higher with profit-taking pushing Japan''s index lower, while Hong Kong finished higher as investors returned from a long holiday. The advancers were led by Hong Kong with an increase of 0.68%, Singapore with an advance of 0.67% and Indonesia with a gain of 0.61%. The decliners were Japan with a decrease of 0.45%, South Korea with a decline of 0.13% and Taiwan with a loss of 0.10%. Australia gained 1.20%.

European markets finished higher as M&A news returned to the fore, with DaimlerChrysler benefiting from an offer for its Chrysler Group and with Puma and Rodamco also gaining after takeover moves. The advancers were led by Italy with an increase of 1.01%, Germany with an advance of 0.94% and Belgium and Netherlands both with a gain of 0.92%. There were no decliners.

Latin America markets finished higher. The advancers were led by Argentina with an increase of 0.93%, Brazil with a gain of 0.74% and Mexico with an advance of 0.01%. There were no decliners. Canada lost 0.37% as banks lost ground on interest-rate concerns but telecommunications companies rose on renewed merger buzz.

[R]4:00PM NY – Rinker Group Ltd based in Australia agreed to be bought by Mexico based Cemex for $14.2 billion, revised offer by 22%.[/R]

Cemex ((CX)) shares soared 5.1% after Australia''s Rinker Group Ltd. ((RIN)) recommended its shareholders accept the Mexican firm''s $14 billion bid for the building materials company. Cemex described the offer as its """"best and final,"""" an attempt to end a five-month battle for Australia''s largest building materials maker. The offer closes on May 18.

The Cemex offer was 45% from the last traded price on Australian Stock Exchange on October 22, 2006 and 22% premium from the initial offer of $13.00 in the U.S. dollars. Including the debt the total enterprise value of Rinker is $15.3 billion. The final offer is in the U.S. dollar for $15.85 per share.

Cemex, third largest cement company, was built on series of acquisition over the last twenty years by its current CEO Lorenzo H. Zambrano. The company recently bought for $5.8 billion cash and debt U.K. based RCM Group PLC.

With this purchase the company pro forma revenue will be $23.2 billion with 67,000 employees in 50 countries.

The offer was unanimously approved by the board of directors and under the contract company signed Cemex has agreed to offer for the first 2,000 shares held by investors an option to purchase shares at fixed price of A$19.50 per share.

In New York trading at close Rinker Group ((RIN)) rose $3.25 to $78.55 and Cemex ((CX)) rose $1.99 to $35.32

[R]2:30PM NY, U.S. Market Movers[/R]

DivX Inc. ((DIVX)), video compression software maker, shares climbed 13.6% and investors are buying on a positive quarterly preannouncement. The company raised its first-quarter revenue and earnings outlook above Wall Street expectations.

Renovis Inc. ((RNVS)) said it extended its research agreement with Pfizer Inc. until 2008 for a class of compounds that affect cell signaling. Shares jumped 10.8%.

United Rentals ((URI)) shares surged 17.3% after the tool and equipment rental company said it is exploring a possible sale of itself. The Greenwich, Conn. equipment rental company said its chief executive officer, Wayland Hicks, will retire effective June 4. The company said Hicks will be succeeded by current chief operating officer Michael Kneeland as interim CEO.

Adolor Corp. ((ADLR)) suspended clinical studies and withdrew an application for a constipation-relief drug. Shares plunged 58.4%.

Gasco Energy Inc. ((GSX)) shares tumbled 18.7% after the oil and gas exploration and production company priced its public offering of 10 million shares of common stock, saying it expects gross proceeds of about $19.3 million.

Harris Interactive ((HPOL)), market research company, shares dropped 18.3% after it predicted lower-than-expected third-quarter revenue growth due to its reduced third-quarter sales bookings expectations. The company said quarterly sales bookings are seen at approximately $58 million, down from its prior outlook for $66 million in sales bookings. While Harris anticipates $4 million to $7 million in contracts to be decided in the fourth quarter, it said the delays will hurt its second-half revenue.

ImClone Systems Inc. ((IMCL)), biotech drug maker, and drug maker Bristol-Myers Squibb Co. said a late-stage clinical trial studying Erbitux with chemotherapy did not significantly prolong the survival of patients with advanced pancreatic cancer. Shares fell 7.3%.

Seagate Technology ((STX)) tumbled 8.1% after the company lowered its sales forecast for its third quarter. It expects to report sales of $2.8 billion, lower than its past target for revenue between $2.9 billion and $3 billion.

[R]1:00AM NY European stocks closed higher, helped by deal news and DaimlerChrysler.[/R]
European stock markets closed higher on Tuesday, boosted by merger-and-acquisition news and strength in the shares of DaimlerChrysler. The automaker rose 3.6% after investor Kirk Kerkorian offered $4.5 billion for the group''s struggling Chrysler unit last Thursday. Among other companies in focus, Germany''s Puma AG surged 9.4% as French luxury-goods group PPR offered to buy the sportswear group for about $7.1 billion. PPR bought 27.14% of Puma for 330 euros a share and is planning to bid the same price for the rest of the shares. Shares of PPR rose 3.2% in France. In other deal news, the Dutch Rodamco Europe jumped 8.7% after it agreed to be acquired by France''s Unibail Holding in a $15 billion, which will create Europe''s largest commercial real-estate company. Shares of Unibail slipped 4.8% in Paris. Resource stocks also provided support, as mining stocks benefited from a rise in metal prices. Among the biggest gainers, Vedanta Resources climbed 3.6% and Rio Tinto rose 2.5%. German DAX 30 index closed up 0.9% at 7,166.67, the U.K.''s FTSE 100 added 0.3% to 6,417.80, while the French CAC 40 gained 0.4% at 5,766.27.


[R]11:30AM U.S. markets were little changed. Oil and gold stocks gained, tech shares dropped.[/R]
U.S. stocks were little changed on Tuesday morning, as investors remained reluctant to buy stocks ahead of the first-quarter earnings season. Alcoa Inc. ((AA)), the first company to report Q1 earnings, lost 0.6%. The gold sector made one of the market''s best performances in morning trading, as the price of gold advanced $6.90 at $683.80 an ounce. Oil service stocks also showed some strength, helped by a rebound by the price of oil. Baker Hughes ((BHI)) and National Oilwell Varco ((NOV)) turned in two of the sector''s best performances, each rising 1.7%. Among other gainers in the sector, Exxon Mobil Corp. ((XOM)) added 0.7% and Chevron Corp. ((CVX)) rose 1%. Natural gas, biotechnology, and telecommunication sectors were also among the gainers.

However, computer hardware stocks moved to the downside, with shares of Seagate Technology showing a notable decline. Seagate ((STX)) dropped 9% after the hard disc drive manufacturer cut its Q3 revenue outlook, citing lower-than expected industry demand for 3.5-inch ATA disc drive. Homebuilders showed weakness, as D.R. Horton ((DHI))lost 1.8% after it said orders for new homes fell 37% last quarter. Mortgage lenders also moved notably down on concern about the health of housing. Impac Mortgage Holdings Inc. ((IMH)) dropped 9.4% and Novastar Financial Corp. ((NFI)) fell 3.1%. Some chemical stocks also came under pressure, as Dow Chemical ((DOW)) fell 2.5% after the company said that it has no interest in the reported $50 billion leveraged buyout.


[R]9:45AM U.S. markets opened flat.[/R]
Wall Street opened near the flat line Tuesday, with investors awaiting reports on how the companies performed during the first quarter. The earnings season kicks off with aluminum producer Alcoa ((AA)), which is expected to report profit of 75 cents a share. Among technology shares, chip equipment makers may get a boost. Tech stocks showed some strength, boosted by Applied Materials Inc. ((AMAT)). The company''s shares rose 2.4% following an upgrade to buy from neutral at Banc of America Securities. The btoker cited the company''s move to the solar power market. In contrast, hard-disk maker Seagate Technology ((STX)) fell 8% after warning that Q3 revenue will come in below an early forecast of $2.9 billion to $3 billion.

Dow Chemical ((DOW)) fell 2.3% after it announced it is not interested in the leveraged buyout. Citigroup ((C)) was also in focus as the bank is expected to announce that 26,000 jobs will be cut or reassigned. The stock rose 0.5%. Mexican stocks advanced, led by Cemex ((CX)) which rose 3.3% after it improved its bid for Australian building materials group Rinker ((RIN)) by 22% to $15.3 billion. In other deal news, Imperial Tobacco''s ((ITY)) made a second bid for Spanish-French cigarette maker Altadis. The new offer was valued at $16 billion but was rejected. In the early trading, the Dow Jones industrial average rose 9.02, or 0.07%, to 12,578.16. The Standard & Poor''s 500 index edged up 1.92, or 0.13%, to 1,446.53, and the Nasdaq composite index rose 4.71, or 0.19%, to 2,473.89. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.73% from 4.75% late Monday.


[R]9:30AM FTSE 100 was higher on Tuesday on strength in the mining sector.[/R]
The UK market is higher in mid-day trade on Tuesday. The FTSE 100 advanced 0.4%, or 25 points higher at 6,422.3.

Advancers

Mining stocks climbed, supported by stronger metals prices. Xstrata, which also came up with a bid offer for Gloucester Coal of Australia, rose 1.4%. Kazakhmys was 1.5% higher and Rio Tinto was 0.8% higher. BHP Billiton advanced 2.2%.

Imperial Tobacco overcame intraday losses to increase 0.2% in the wake of Altadis rejection of its latest, 47 euro a share bid for the Franco-Spanish company. Altadis announced the offer undervalued its growth prospects.

Decliners

J Sainsbury fell 4.2% on press reports that Lord Sainsbury of Turville and his family have blocked a higher, 582p per share offer from a trio of private equity bidders and have continued to indicate that they would be unhappy with less than 600p a share.

Crude prices dipped over the weekend, stabilising around $62 a barrel, weighing on shares in BP, which lost 0.6%, and Royal Dutch Shell, off 0.4%. Among mid-caps, Accident Exchange tumbled 41% after it issued a profit warning following slower-than-forecast growth in the third quarter.


[R]9:00AM U.S. stock futures pointed to a flat opening ahead of Q1 earnings season.[/R]
U.S. stock futures pointed to a flat opening on Tuesday, reflecting cautiousness ahead of the Q1 earnings season and broker upgrades for tech companies Oracle, Applied Materials and Advanced Micro Devices. Aluminum producer Alcoa ((AA)) will be in focus on the last trading session before it reveals its Q1 results, due after the close. Alcoa was the best performing Dow component during Q1 and is expected to post a profit of 75 cents per share. Dow Chemical ((DOW)), which surged Monday on speculations that it is the target of $50 billion leveraged buyout, is likely to decline after it said it''''s not interested in such offer. Citigroup ((C)) will also attract attention due to a report that the world''s top bank will cut or reassign 26,000 people.

Among companies driven by analyst comments, Applied Materials ((AMAT)) rose 1.9% in pre-open trade after Banc of America Securities upgraded the chip equipment maker to buy from neutral. Oracle Corp. ((ORCL)) rose 1.8% after Goldman Sachs upgraded the software maker to buy from neutral. As there are no major economic data due out today, investors will look to speeches by three Federal Reserve officials to get a better idea of the central bank''s views on interest rates. Oil prices rebounded after falling nearly $3 a barrel on Monday amid tensions with Iran and forecasts that U.S. energy inventory figures would continue to decline. S&P 500 futures eased 0.5 of a point at 1,454.00 and Nasdaq 100 futures rose a half point at 1,824.50. Dow industrial futures rose a point.


[R]8:30AM Asian markets finished mixed Tuesday with Japan lower and HK higher.[/R]
Asian markets finished mixed on Tuesday. The Nikkei 225 in Tokyo fell 79.07 points, or 0.5%, to 17664.69 following a 258.98-point rise Monday. Auto stocks ended the session mostly lower with Honda Motor down 2.1%, while Fuji Heavy Industries, which produce Subaru automobiles, dipped 5.3% after JP Morgan downgraded the stock to underweight after markets closed Monday. Exporters, which had fueled the recent recovery, were subjected to profit-taking, with IT stocks under selling pressure after U.S. chip maker Advanced Micro Devices announced it would reduce capital-expenditure plans for this year.

The Hang Seng Index in Hong Kong rose 138.16 points, or 0.68%, to 20,347.87. HSBC Holdings and China Petroleum & Chemical Corp., or Sinopec, led the market higher on investors interest, with HSBC benefiting from diminishing worries about the problems in the U.S. subprime mortgage market, and Sinopec given a boost by better-than-expected earnings. HSBC gained 1.2%, while Sinopec rose 3.5%.

Chinese stocks advanced for a seventh straight session. The benchmark Shanghai Composite Index gained 1.3% to 3,444.29 and the Shenzhen Composite Index rose 1.2% to 918.66 as strong earnings forecasts from large-cap companies are boosting overall sentiment. The Korea Composite Stock Price Index, or Kospi, in South Korea, closed down 1.9 points, or 0.1%, at 1,499.16. Doosan Heavy Industries & Construction and Doosan Infracore led the decliners, falling 2.8% and 1.2%, respectively.


[R]8:15AM Oracle shares gained on brokerage upgrade.[/R]
Oracle ((ORCL)) gained 1.24% in pre-market trading after it was upgraded to buy from neutral at Goldman Sachs, and added to firm''s Buy List, citing relative valuation and belief that the company''s applications and middleware businesses will gain market share. The brokerage also raised the stock''s 12-month price target to $22 from $20 due to a much strengthened product set across database, applications, middleware. The stock closed Monday down 10 cents at $18.57. Advanced Micro Devices ((AMD)) was upgraded to buy from neutral at UBS, citing belief that the chipmaker is poised for a rebound in the second half of 2007, as AMD improves its mix and launches Barcelona for servers


[R]8:00AM NY-7:00PM Mumbai Sensex ends higher as HDFC supports market.[/r]
The Sensex on BSE finished 11.80 points, or 0.09%, higher at 13,189.54. The market-breadth was positive as there were three gainers for every two decliners. For 1,576 stocks that advanced, there were 1,004 that declined and 69 stocks which remained unchanged. Of the 30 stocks in the Sensex, 18 advanced, while the rest declined. The turnover on BSE was Rs 4,185 crore, much higher than Rs 3,092.92 crore on Monday. The turnover on NSE was Rs 8,441.09 crore, also higher than Rs 6,286.86 crore on Monday.

Economic news

Arcelor Mittal has made a bid of around Rs 2,200 per share for 51% stake of Mitsui Corp in Sesa Goa, the biggest private exporter of iron ore in India. The bid of Arcelor Mittal is slightly higher than those from other contenders like the Aditya Birla group, believed to have bid around Rs 2,000 per share.

Finance Minister P Chidambaram on Tuesday is confident that the revised target of Rs 2,29,272 crore for the direct tax collections during 2006-07 fiscal would be achieved. The latest figures show, that Rs 2,23,797.1 crore was collected, comprising Rs 1,41,915.4 crore of corporate tax, Rs 71,011.4 crore of personal income tax, Rs 5,331.7 crore of fringe benefit tax, Rs 4,729.5 crore of securities transaction tax and Rs 505.4 crore of banking cash transaction tax.

The slowdown in the US economy together with domestic factors such as service tax on leased and rented premises and imposition of minimum alternate tax may weigh on revenues and earning growth rates of all major IT companies of India, including Infosys, Satyam, TCS and Wipro.

Trading highlights

Indiabulls was the most-active stock with a turnover of Rs 479.55 crore followed by Indiabulls Real Estate and Tata Steel.

Advancers

Housing finance company HDFC led the advancers, up 3.% to Rs 1608, on a volume of 1.15 lakh shares. Tata Motors advanced 2.5% to Rs 721. Four block deals of 2.53 lakh shares were traded in the stock for an average Rs 708.37 per share. Tata Motors had signed an agreement with Iveco in February, and is planning to distribute its trucks through the worldwide distribution network of the Italian company. Reciprocally, Tata Motors will sell select Iveco models, especially their light commercial vehicles in India.

ITC rallied nearly 3% to Rs 160, and Hindustan Lever added 2.5% to Rs 209. Other gainers included HDFC Bank, Ranbaxy and Grasim which advanced around 2% each to Rs 992, Rs 358 and Rs 2,235, respectively. BHEL ended up 1.6% to Rs 2,463.

Decliners

IT stocks lost ahead of their March quarter results. Satyam dipped 3.5% to Rs 445 and was the leading decliner. Wipro shed 2.4% to Rs 548, and Infosys slid 2.2% to Rs 1,998. TCS dropped 1.6% to Rs 1,197. Infosys fiscal year 2008 guidance is the next major trigger for the market. The sharp advance of the rupee in late-March 2007 and early April 2007, and also uncertain US economic outlook, have created concerns that the fiscal year 2008 guidance by Infosys Technologies may turn out negative.

Index heavy Reliance Industries declined 0.13% to Rs 1,382, on 3.23 lakh shares traded on BSE. Dr.Reddy and Bajaj Auto were down 1% each to Rs 720 and Rs 2,270. NTPC and Larsen & Toubro also declined around 1% each to Rs 158 and Rs 1,582, respectively.


[R]6:30AM European equities were higher on Tuesday on merger activities.[/R]
European markets were higher in early trading on Tuesday. By mid morning, Frankfurt Xetra Dax added 0.5 % to 7,132.27. In Paris, the CAC 40 was 0.1 % higher at 5,748.12 and London FTSE 100 was 0.2 % higher at 6,410.5. National benchmarks rose in 16 of 18 markets in western Europe.

Advancers

PPR, the French fashion retailer, announced it would make a public tender offer for German sportswear maker Puma after agreeing to buy a 27% stake in the company from Mayfair, the largest shareholder of Puma. Puma welcomed the bid, which is valued at 330 euro a share adding it would recommend the deal to shareholders. Puma surged 9.6%, while PPR shares added 2.9%. Shares in the main rival of Puma, Adidas gained 2.5% on speculation it could also become involved in fashion sector consolidation

ABN Amro also advanced on the Dutch market, gaining 1.5% after press reports over the weekend, including that the Dutch regulator would mull a break up of the group and talk of other bidders still waiting if exclusive talks with Barclays should not succeed.

German carmaker DaimlerChrysler rose 3% after US billionaire Kirk Kerkorian offered $4.5 billion for the company Chrysler division. Mr Kerkorian, once the largest shareholder of Chrysler, asked the German company for 60 days exclusive rights to carry out due diligence.

Decliners

A report that a consortium led by CVC Capital has offered a 582 pence-a-share bid for J. Sainsbury proved not enough to boost shares in the supermarket operator after an earlier report that the controlling family will not consider a bid below 600 pence a share. Shares in Sainsbury slipped 1.3% in London.

Oil stocks were hurt by weaker oil prices. Shares in BP lost 0.7% and France Total also lost 0.7%. Tobacco company also Altadis lost 0.5% after it rejected Imperial Tobacco 12 billion euro offer. Imperial Tobacco shares dipped 0.8%.

Oil and gold

Crude oil advanced from a 12-day low in New York after Iran announced it has started to enrich uranium on an industrial scale, heightening tensions in the region. Crude oil for May delivery rose 48 cents, or 0.8%, to $61.99 a barrel in after-hours electronic trading on the New York Mercantile Exchange and was at $61.78 in early trade in London. Brent crude for May settlement increased 54 cents, or 0.8%, to $67.13 a barrel in electronic trading on the ICE Futures exchange.

Gold gained on speculation declines in the dollar will boost investor demand for the metal as an alternative to stocks and bonds. Silver also gained. Gold for immediate delivery gained $5.75, or 0.9%, to $676.50 an ounce in early trade in London. Silver advanced 8.99 cents, or 0.7%, to $13.835 an ounce. Palladium rose $3.50, or 1%, to $358.50 an ounce, after earlier advancing to $359.50, the highest since June 5. Platinum fell $2 to $1,249.50, erasing an earlier gain to $1,260, the highest since Nov. 21.

Currencies

The dollar declined against other major currencies in European trading Tuesday as markets reopened following the long Easter weekend. The euro traded at $1.3415, up from 1.3360. The British pound traded at $1.9712, up from $1.9610. The dollar bought 119.09 Japanese yen, down from 119.30.