FTSE Declines on Rate Worries

Ivaylo
18 Apr, 2007
New York City

Further interest rate hikes, very likely after minutes released today from the Bank of England MPC meeting earlier this month, pulled down the FTSE on Wednesday. Real estate stocks and ex-dividend stocks led the decliners. Barcley

[R]9:30AM The UK benchmark index declines Wednesday on interest rate fears.[/R]
The UK market was lower on Wednesday. By mid-day, the FTSE 100 was down 30 points to 6,471.1.

Advancers

Barclays traded higher, rising 0.8%, as ABN Amro announced it would meet with rival suitors Royal Bank of Scotland, Banco Santander and Fortis to hear their proposal for a break-up bid.

Among the mid-caps, EMI Group advanced 6% as the world third largest record company stated it had suspended its dividend payments and was mulling a securitisation of its publishing assets. EMI has warned on profits twice this year.

Another mid-cap, WS Atkins, advanced 7.8% after the engineering consultancy announced that profit for the year to March would be significantly ahead of expectations. DS Smith also advanced 7.1% after an upbeat trading statement from the packaging group.

Decliners

Real estate stocks led the decliners, with Hammerson down 2.3% and Land Securities Group off 1.9%.

Ex-dividend stocks were also lower. British Land fell 2.2%, BAE Systems dropped 2.1%, Legal & General lost 2% and Slough Estates was off 2.1%.

[R]9:00AM Asian markets finished mixed Wednesday with Japan higher, HK lower.[/R]
Asian markets ended mixed on Wednesday. The 225-issue Nikkei Average ended up 0.8% to 17,667.33. Canon was 0.8% higher in Tokyo, while Toyota Motor added 1.1%. Medical-imaging equipment maker Fujifilm Holdings advanced 1.4% after reports that the company will report an 80% increase in group operating profit for the fiscal year ending March 2008.

Australian S&P ASX/200 gained 0.8% to end at 6,236.90. BHP Billiton added 1.3% and Rio Tinto was up 1.4% after copper prices reached their highest-ever level in New York trading on concerns over a potential supply disruption related to a labor dispute at Freeport-McMoRan Copper & Gold Grasberg mine in Indonesia.

Shanghai Composite Index ended nearly unchanged at 3,612.39 and Hong Kong Hang Seng Index closed 0.1% lower at 20,777.09. In China, investors took to the sidelines ahead of the release of the country first-quarter GDP data Thursday afternoon, which is believed to show Chinese economy continues to expand at a rapid pace. Shares of PICC Property & Casualty tumbled 6.1% in Hong Kong, after reporting 2006 net profit had more than doubled.

South Korean Kospi index ended up 0.4% at 1534.58. Hyundai Motor fell 0.7%, easing back from earlier gains. Taiwan Weighted Price Index rose 0.6% to close at 8,003.31 and Singapore Straits Times Index shed 0.4% to 3,400.41.

[R]8:00AM NY-7:00PM Mumbai Sensex closes with a slight gain, NTPC rallies.[/R]

The Sensex on BSE finished 65.15 points, or 0.48%, higher at 13,672.19.

The market-breadth was positive at close, but it weakened near the end of trading. For 1,341 stocks which advanced, 1,232 stocks declined, and only 88 were unchanged. Of the 30 stocks in the Sensex, 20 advanced, while the rest declined. The turnover on BSE was Rs 3,757 crore, lower than Rs 4,565.32 crore on Tuesday. On NSE, the turnover was Rs 8,600.37 crore, also lower than Rs 9,611.56 crore on Tuesday.

Economic news

The rupee again advanced against the U.S. dollar, after pausing briefly, and was quoted at 41.88 to a dollar in late morning deals supported by robust capital inflows and weaker dollar in world markets.

The Union government is open to changes in the 5,000 hectare land ceiling for special economic zones which was decided at the meeting of Empowered Group of Ministers.

Although the government still has reservations over allowing domestic pension funds in stock markets, retirement savings worth a billion dollars from American investors have already been injected into Indian stock markets and it is likely to increase further this year.

Trading highlights

ICRA was the most-active stock with a turnover of Rs 391.80 crore followed by Tata Steel and new issue Dish TV.

IPO

Dish TV was trading at Rs 102.55 on BSE today. The IPO of the company was listed at Rs 120 per share. Dish TV reached as low as Rs 100 but traded on heavy volume of 1.88 crore shares on BSE.

Advancers

NTPC led the gainers, soaring over 3% to Rs 162. The traded at intra-day record high of Rs 163.55. State banks extended gains, buoyed by data showing cooling of inflation for the week ended March 31 2007. SBI surged 2.6% to Rs 1,035, Andhra Bank rose 5% to Rs 82.75, Corporation Bank gained 3% to Rs 312, and Bank of India advanced 2.8% to Rs 188.25.

Wipro advanced over 2% to Rs 586. Telecom stocks gained on strong growth in new subscription additions in March 2007. Bharti Airtel rose 1.5% to Rs 813 and Reliance Communications gained 0.5% to Rs 435. ONGC, HDFC Bank and Cipla gained around 1.5% each to Rs 905, Rs 988 and Rs 233, respectively. Recently, ONGC had unveiled its expansion plans.

Index heavy Reliance Industries rose 0.6% to Rs 1,485, reaching an intra-day record high of Rs 1,495. The stock has rallied this month after Chairman Mukesh Ambani had stated on Monday that the petrochemicals cycle was yet to reach its peak.

Cement large-cap ACC surged around 1.3% to Rs 817, bucking the overall downtrend in cement stocks.

Decliners

Tata Steel led decliners, plunging to a low of Rs 496, or 6% in the opening trades on concerns of equity dilution post the rights issue. The stock, managed to recover with a loss of 3% at Rs 511. Tata Steel announced on Tuesday it will raise Rs 3,655 crore, or $872 million, from a rights issue, to fund a $12-billion acquisition of Anglo-Dutch steelmaker Corus Group. Tata Steel will offer a rights share at Rs 300 each for every five shares held. The company also plans to raise Rs 4,350 crore from the rights issue of preference shares.

Cement large-caps dipped on profit-taking. Grasim shed over 1% to Rs 2,343 and Gujarat Ambuja Cements lost 0.7% to Rs 112.90. Cement stocks had rebounded from lower levels over the past few days on expectations of strong earnings season.

Auto stocks declined. Bajaj Auto lost 2% to Rs 2,497, having surged 4.2% in the past two trading sessions on reports that India will enjoy a healthy monsoon. Tata Motors shed 1.1% to Rs 722.

[R]6:30AM European markets were lower on Wednesday on weak auto and construction stocks.[/R]
European markets were lower on Wednesday. The German DAX Xetra 30 index lost 0.6% at 7,305.77, the French CAC-40 index declined 0.4% at 5,836.89 and the U.K. FTSE 100 index slipped 0.3% at 6,476.00. National benchmarks declined in all of the 17 western European markets that were open except Denmark, Switzerland and Portugal.

Advancers

ASML Holding, the largest micro-chip equipment maker in Europe, gained 2.9% as its first-quarter net profit nearly doubled to 153 million euros, or $208 million, from 80 million euros a year earlier.

Swiss drug maker Roche Holdings announced that its first-quarter sales rose 16% in Swiss francs to 11.4 billion francs and also upgraded its 2007 earnings-per-share outlook. Pharmaceutical division sales grew 18% in Swiss francs to 9.14 billion francs, with key oncology, virology, transplantation, osteoporosis and rheumatoid arthritis medicines contributing to strong growth. Roche upgraded its core earnings per share outlook to reflect expected growth above group sales growth. Shares advanced 2.2%.

Music company EMI Group gained 2.7% as it expects to report underlying earnings before interest, tax, depreciation and amortization for the year ended March 31 of around 174 million pounds, which it said is ahead of the market forecast.

Decliners

BMW and DaimlerChrysler lost more than 1% in morning trading as crude price rose 28 cents to $64.74 a barrel. Nokia and Atos Origin SA led technology-related shares lower. Nokia, which announced a partnership with Yahoo in January, dropped 1.1%. Atos, the official supplier of computer services for the Beijing Olympics, lost 1.3% after Citigroup Inc. lowered its recommendation to sell from hold.

Eiffage SA, the third-biggest construction company in France, sank 3.3%. Sacyr Vallehermoso, the largest shareholder company of the company, and Spanish investors walked out of the Eiffage shareholders meeting today. Eiffage asked to block the voting rights of the Spanish investors.

Oil and precious metals

Crude oil fell amid expectations supplies of crude will meet demand from refineries working to produce more fuel before the summer driving season. Crude oil for May delivery fell 65 cents, or 1 %, to $62.45 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract, which expires at the end of this week, traded at $62.65 this morning in London. The more actively traded June contract fell 60 cents to $63.86.

Brent crude oil for June settlement decreased 93 cents, or 1.4%, to $65 a barrel in electronic trading on the ICE Futures exchange and traded at $65.21 this morning in London.

Gold climbed to its highest since May in London after investors bought the commodity as a hedge against declines in the U.S. dollar, which dipped close to a two- year low against the euro. Silver and platinum also gained. Gold for immediate delivery in London rose as much as $4.60, or 0.7 %, to $691.15 an ounce, the highest since May 12. It traded at $689.75. Silver for immediate delivery gained rose 14 cents, or 1%, to $11.035. Platinum increased $11.50, or 0.9%, to $1,282.50 an ounce and palladium dropped $4, or 1.1%, to $372.50.

Currencies

The dollar closed in on an all-time low against the euro and fell further against the British pound European trading Wednesday morning. The euro traded at $1.3607, up from $1.3593 late Tuesday in New York. The British pound traded at $2.0110, up from $2.0066. The pound has reached its highest level since 1981. The dollar bought 118.68 Japanese yen, down from 118.95.

[R]5:00AM Copper gains on fund buying, while gold dips on profit-taking.[/R]
The May copper contract gained 13.75 cents to end at $3.6770 per pound on the New York Mercantile Exchange, while July gained 13.70 cents to finish at $3.6790 a pound. June gold fell $2 to $692.50 a troy ounce, and May silver shed 6 cents to $14.02 an ounce. July platinum fell $8.60 to $1,280.90 an ounce, but June palladium added $1.35 to finish at $380.35 an ounce.

Front-month May crude oil closed 51 cents lower at $63.10 a barrel, while June crude fell $1.21 to settle at $64.46 a barrel. May gasoline futures dipped 5.99 cents to close at $2.0558 a gallon. May heating oil lost 6.15 cents to settle at $1.7978 a gallon. Natural gas for May delivery ended 11.2 cents lower at $7.418 a million British thermal units.

Arabica coffee futures advanced. The May contract finished 1.15 cents higher at $1.0960 a pound. May corn settled 11 cents lower at $3.5325 per bushel, July corn declined 10.75 cents to $3.6525 a bushel, and December corn also fell 10.75 cents to $3.7950 a bushel.