Market Cautious as Oil Creeps Higher

Elena
30 Aug, 2005
New York City

U.S. averages trade generally down on volatile crude-oil. Monthly factory orders and consumer-confidence reports are expected later in the day. No important corporate news available. Engineered Support Systems expected to release earnings before the bell.

U.S. MARKET AVERAGES

U.S. stocks opened moderately lower Tuesday retreating from Monday gains as crude-oil prices declined on less-than-anticipated refinery damage caused by Hurricane Katrina. According to preliminary estimates it killed at least 55 people and caused insured losses of approximately $26 billion. Katrina remains a major market player, although oil fell to $68 a barrel.

There is hardly any important corporate news and investors’ attention is focused on economic data, due later in the day, concerning monthly factory orders and consumer-confidence reports. Economists expect 2.2% factory orders decrease for July, reflecting 4.9% decline of durable goods orders. As for consumer confidence for August, the forecast is of 101.0 reading, down from 103.2 reading in July.

There are very few noteworthy earnings releases scheduled for before the opening bell.

Engineered Support Systems is expected to report a quarterly profit of $50 cents per share, down slightly from last year's mark of $51 cents per share.

Zale,jewelry retailer, projected earnings decline of 8 cents per share for the quarter, compared to last year's 13 cents. per share.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished generally higher, boosted by easing oil prices and recovered U.S. markets with rallying steel, shipping and bank shares. The Nikkei rose 1.16% despite some disappointing economic news, lifted by exporter issues on the back of retreating oil prices to $67.97 a barrel. Among the other regional markets, Hong Kong’s Hang Seng advanced 0.6%, South Korea’s Kospi added 0.9%, while China stocks lost 0.7% on blue chips sell-off.

European markets traded in the positive territory at mid-day as crude-oil prices fell off record highs and as South African insurance company Old Mutual announced having bid talks with Swedish insurer Skandia Forsakring. Crude-oil stayed above $68 a barrel sending BP up 1%. Oil-sensitive airline companies and carmakers made gains. The German DAX 30 rose 0.3%, the French CAC 40 added 0.3%, and the U.K.’s FTSE 100 gained 0.5%.

ENERGY, METALS AND CURRENCIES MARKETS

Oil futures soared higher Tuesday, as the market expected damage reports from U.S. oil and gas refineries in the Gulf of Mexico due to hurricane Katrina. Light, sweet crude oil for October deliver was at $67.90 a barrel, up 70 cents, in electronic trading on the Nymex. Prices are 50 % higher than a year ago. On London's International Petroleum Exchange, October Brent jumped $1.38 from Friday's price to $66.25 a barrel. The IPE was closed Monday for a British banking holiday.


Gold declined in European trading to its lowest trading level in more than two weeks on concerns that speculators may sell their holdings. In London gold traded at $436.15 per ounce, down from $438.60. In Hong Kong the precious metal lost $3.40 to close at $436.35. Silver traded at $6.75, down from $6.78.


The dollar reached a three-week high against the yen on Tuesday prior to key U.S. consumer confidence data release. Earlier the dollar gained by more than 8 percent vs. the Indonesian rupiah, putting pressure on Asian currencies including the yen. The greenback was steady at $1.2228 a euro after briefly reaching a 12-day low against the euro on Monday on high crude oil prices. The dollar was up 0.4 percent at 111.12 yen.


EARNINGS NEWS

CNOOC, China's offshore oil producer, reported net profit in the first half of 2005 jumped 68.6 percent on year to 11.83 billion yuan ($1.46 billion), spurred by high oil prices. CNOOC's net production offshore China advanced 20.1 % to 383,583 barrels of oil equivalent. CNOOC is due to hold a teleconference later Tuesday give more information on its results.


CRH, Irish constructions material company, posted first-half profit advanced to 55.7 euro cents a share, up vs. 47.4 euro cents a share in the year-ago period on 13% sales growth and an operating profit rise of 20%. The group lifted its dividend for the period by 17% to 11.25 euro cents a share.


CORPORATE NEWS

Sprint Nextel, wireless company, is about to buy two of its small wireless affiliates for a total price of approximately $700 million. The third largest U.S. wireless company was near to a purchase agreement with IWO Holdings Inc, wireless operator with 237,000 subscribers, for about $400 million. It was also near a $288 million acquisition of Gulf Coast Wireless, a Louisiana-based company with some 93,000 subscribers.

Internet Gold, internet access service company, said that MSN-Israel, the subsidiary it possesses with Microsoft Corporation, has acquired 51% of the rights in getprice.co.il - one of Israel's most popular price comparison sites. Together with GetPrice, MSN-Israel intends to establish a new price comparison site called MSN-Compare. MSN-Compare will work in parallel to GetPrice, but will target users of other MSN-Israel services.

Starwin Media Holdings announced that they have reached an agreement to acquire majority control of Strategic Media International Limited, a Hong Kong corporation - parent company of three corporations traded on the Hong Kong Stock Exchange and the other publicly traded on the Shenzhen Stock Exchange. These four publicly traded corporations are the holding corporations of the premier leading media corporation in the Asia Pacific region.