Global Decline Leads Stock Futures Down

Elena
19 Apr, 2007
New York City

U.S. stock futures dropped Thursday, weighed down by Asian and European declines, amid concern that China will raise interest rates, prompted by data showing higher-than-expected economic growth and inflation. Another batch of earnings data was also in focus. Bank of America said Q1 net income climbed to $1.16 a share from $1.07 a share. Adjusted earnings were $1.17 a share, two cents ahead of estimates.

[R]9:00AM Wall Street to open lower on Asian and European decline.[/R]
U.S. stock futures dropped Thursday, weighed down by Asian and European declines, amid concern that China will raise interest rates, prompted by data showing higher-than-expected economic growth and inflation. Another batch of earnings data was also in focus. Bank of America ((BAC)) said Q1 net income climbed 5%, helped by growth in fee income. The bank earned $1.16 a share from $1.07 a share. Revenue grew 3% to $18.42 billion from $17.94 billion last year. Analysts estimated earnings of $1.15 per share on revenue of $18.45 billion.

Dow component Altria Group ((MO)) fell 1.4% in the pre-open after it said Q1 net income fell to $1.30 a share from $1.65 a share. On an adjusted continuing operations basis it earned $1.03 a share, compared with estimates of earnings of $1.05 a share. The company also raised its profit forecast from continuing operations for the year to a range of $4.20 to $4.25 a share. UnitedHealth Group ((UNH)) reported Q1 earnings, beating expectations on an adjusted basis, and raised its full-year earnings estimate to a range $3.42 to $3.46. However, revenue came in below forecasts, sending company's shares down 4.4%.

Among other pre-market earnings highlights, Merck & Co. Inc. ((MRK)) said its Q1 profit jumped 12%. The drug maker posted net income of $1.7 billion, or 78 cents per share, up from $1.52 billion, or 69 cents per share, in the first quarter of 2006. Sales beat expectations, totaling $5.77 billion, up nearly 7%from $5.41 billion a year earlier. Shering-Plough Corp. ((SGP)) reported a 52% rise in Q1 profit to $565 million, or 36 cents a share, topping estimates of earnings of 29 cents. S&P 500 futures lost 7.00 points to 1,473.30 and Nasdaq 100 futures fell 10.75 points to 1,837.50. Dow industrial futures gave up 58 points to 12,800.


[R]8:15AM Merrill Lynch posted 24% profit increase in Q1.[/R]
Merrill Lynch ((MER)) announced Thursday Q1 earnings increase of 24%, exceeding analyst expectations. The company said it earned $2.16 billion, or $2.26 a share, compared with $475 million, or 44 cents a share a year ago, topping estimates of $1.97 a share. In the year-ago Q1, Merrill said it had one-time compensation costs of $1.2 billion. Revenue at the firm rose 24%, to $9.85 billion from $7.97 billion.

Kraft Foods Inc. ((KFT)), the U.S. biggest food and beverage company, posted a 30% profit decline for the first quarter, its last under the control of Altria Group Inc. Net income for Q1 was $702 million, or 43 cents per share, down from $1 billion, or 61 cents per share a year ago. Excluding certain items, the company’s profit was 44 cents per share, 2 cents higher than the average analyst estimates. Revenue rose 5.7% to $8.6 billion, from $8.1 billion a year earlier, topping forecast of $8.41 billion.


[R]8:00AM NY-7:00PM Mumbai Sensex ends lower, banks, select large-caps advance.[/R]

The Sensex on BSE finished 52.49 points, or 0.38%, lower at 13,619.70.

The session was highly volatile as the index traded within a range of 235 points. The market-breadth was weak as 1,358 stocks declined, 1,151 advanced and 84 stocks were unchanged. Of the 30 stocks in the Sensex, 14 advanced, while the rest declined. The turnover on BSE was Rs 3,642 crore, lower than Rs 3,977.99 crore on Wednesday. On NSE, the turnover was Rs 8,194.26 crore, also lower than Rs 8,600.37 crore on Wednesday.

Economic news

Union Minister of Commerce & Industry Kamal Nath announced today that in the fiscal 2006 exports from India reached $125 billion. The Minister also said that merchandise exports had almost doubled in three years, from $63.84 billion in 2004 to $125 billion, representing an annual compounded growth of 25% compared to 12.73% in the previous three years.

The government also announced today the abolition of service tax on all exports. It extended duty concessions to special economic zones and set a target of $160 billion for merchandise exports during the fiscal 2007.

Trading highlights

New issue Advanta was the most-active stock with a turnover of Rs 503.35 crore followed by Reliance Industries and ICRA.

IPO

Advanta India ended higher at Rs 850.05. It listed on BSE at Rs 640, and had declined sharply to a low of Rs 591, before hitting a high of Rs 992.90. Advanta India is a subsidiary of United Phosphorus.

Advancers

SBI led the gainers today, advancing 1.7% to Rs 1,053 on a volume of 9.05 lakh shares. The biggest state-run lender had rallied sharply from a low of Rs 1,014, to a high of Rs 1,062.40. ICICI Bank ended 0.9% higher to Rs 905, rebounding from an initial 3% decline to Rs 870.10. Reportedly, the Reserve Bank of India will probably permit Temasek and the Government of Singapore Investment Corporation to increase their stakes in the private bank to 10% each. Temasek holds 7.41% stake in ICICI Bank and Government of Singapore Investment Corp 2.29%.

Cigarette large-cap ITC advanced 1.2% to Rs 159. Auto maker Hero Honda gained 1.1% to Rs 656 and Maruti Udyog added 0.9% to Rs 775. Larsen & Toubro was 0.4% higher to Rs 1,666, on news that the company had plans for facilities in China for machines, switchgear, valves, tyre-curing and pressing and coal gassification.

Index heavy Reliance Industries gained 0.4% to Rs 1,493. The stock had rebounded from a low of Rs 1,462, and surged to a high of Rs 1,499.50, a record high. Reliance has scheduled board of directors meeting on April 26 2007 and review unaudited financial results for the quarter and year ended in March 2007.

Decliners

ACC led the decliners, plunging 3.5% to Rs 788 despite posting a surge of 54.5% in the first quarter net profit. The cement company reported an advance in net profit ending in March to Rs 363.75 crore from Rs 235.42 crore from a year ago. Net sales grew 26.1% to Rs 1,674.83 crore from Rs 1,327.52 crore a year earlier. Satyam tumbled 3% to Rs 448.

HDFC lost 1.9% to Rs 1,564 ,Bajaj Auto dipped 2.2% to Rs 2,441, BHEL declined 2% to Rs 2,503 and ONGC slipped 1.% to Rs 895.

IT stocks declined on profit-taking. Infosys was down 1.8% to Rs 2,040, Wipro lost 0.4% to Rs 584, Satyam Computers dipped 2.6% to Rs 449.80 and TCS declined 0.2% to Rs 1,244.95.


[R]6:30AM European markets were lower Thursday on interest rate fears.[/R]
European markets declined Thursday. By mid morning, Frankfurt Xetra Dax shed 1.3% to 7,186.14, the CAC 40 in Paris lost 1.1% to 5,774.27 and London FTSE 100 slid 0.8% to 6,396.4. National benchmarks slid in all 17 western European markets that were open.

Advancers

Nokia, the biggest mobile phone maker in the world, gained 1.5% ahead of the Finnish company first-quarter results. Nokia market share is seen increasing to its highest level in 13 quarters, but slipping sales prices were expected to dent profits.

Schneider Electric SA advanced 1.5% after the maker of circuit breakers said first-quarter sales increased 22% to 3.89 billion euros, fueled by acquisitions and increased sales of electrical products. The company said Europe had an excellent start to the year.

Decliners

Among the London-listed miners, Antofagasta fell 2%, while Spanish oil group Repsol shed 1.9%.

German utility RWE dipped 4.6%, while Lufthansa fell 3.2%. Both stocks were trading without the rights to the latest dividend payment.

Logitech International SA dropped 8.2%. Fourth-quarter profit and revenue trailed analysts estimates after the maker of computer mice said sales of Web cameras fell.

Oil and precious metals

Crude oil recovered from early losses to trade for more than $63 a barrel in New York. Crude oil for May delivery rose 2 cents to $63.15 a barrel in after-hours electronic trading on the New York Mercantile Exchange in early trade in London.

Gold fell in London on speculation a rally that took the metal to the highest in eleven months was overdone. Silver also dropped. Gold for immediate delivery dropped $3, or 0.4%, to $687.05 an ounce. Silver for immediate delivery declined 6 cents, or 0.6%, to $13.895 an ounce. Among other precious metals for immediate delivery in London, platinum gained $7.50 to $1,302.50 an ounce, while palladium dropped $2 to $380.50 an ounce.

Currencies

The euro traded at around two-year highs Thursday, less than one U.S. cent off its record, after the European Central Bank reiterated that another interest rate increase for the euro zone by June was likely. The euro rose to $1.3616, a level not seen since December 2004, before falling back to $1.3576 in morning European trading.

The pound rose as high as $2.0092, then settled back to $2.0029, down slightly from the $2.0057 it fetched late Wednesday in New York. The dollar also fell against Japanese yen, dropping to 117.93 yen from 118.61 yen late Tuesday.