Robust Durable Goods Orders Lift Stock Futures

Elena
25 Apr, 2007
New York City

U.S. stock futures advanced on Wednesday, pushed by better-than-anticipated durable goods orders and strong earnings reports from major companies. The Commerce Department said that orders for durable goods rose 3.4% in March to a seasonally adjusted $214.85 billion. Further boost to the market sentiment was given by robust corporate profits released by Amazon, Boeing, and Pepsi Co. Amazon.com jumped 15% in pre-open after the Internet retailer posted doubled Q1 profit on 28% sales rise.

[R]9:00AM U.S. stock futures pointed higher on strong earnings and durable goods orders.[/R]
U.S. stock futures advanced on Wednesday, pushed by better-than-anticipated durable goods orders and strong earnings reports from major companies. The Commerce Department said that orders for durable goods rose 3.4% in March to a seasonally adjusted $214.85 billion. A report on new home sales is also due out today, with analysts predicting higher new homes were sold in March. Further boost to the market sentiment, and the Dow Jones in particular, was given by robust corporate profits released by Amazon, Boeing, and Pepsi Co. Amazon.com ((AMZN)) jumped over 15% in pre-open trading after the Internet retailer posted a doubled Q1 profit on 28% sales growth.

Among pre-market earnings highlights, Boeing Co. ((BA)) announced 27% increase in Q1 earnings, due to robust orders for commercial airplanes and strong defense business. The world's No. 2 commercial airplane maker earned $877 million, or $1.13 per share, up from $692 million, or 88 cents per share, a year earlier. Revenue climbed 8% to $15.4 billion. The quarterly results beat expectations of earnings per share of $1.01 on revenue of $15.02 billion.

PepsiCo Inc. ((PEP)) posted 16% profit rise in Q1, helped by strength of its international beverage and Frito-Lay snacks divisions. The world's second-largest soft drink maker reported earnings of $1.1 billion, or 65 cents per share, up from $947 million, or 56 cents per share a year earlier on 9% revenue growth to $7.35 billion. Quarterly results came in above estimates of earnings of 61 cents per share on revenue of $7.18 billion.

Corning ((GLW)) said it earned $327 million, or 20 cents a share in Q1, up from $257 million, or 16 cents a share last year. The company said that excluding special charges, it would have earned 28 cents a share, above the 26 cents predicted by analysts. Sales climbed to $1.31 billion from $1.26 billion. Dow futures expiring in June rose 29.00, or 0.22%, to 13,036. The Standard & Poor's 500 index futures rose 3.20, or 0.21%, to 1,491.70, and Nasdaq 100 futures rose 5.25, or 0.28%, to 1,875.50.


[R]8:15AM A consortium of banks is planning a $101 billion rival bid for ABN Amro.[/R]
A consortium of banks led by the Royal Bank of Scotland announced Wednesday it is planning to launch a rival bid to Barclays'''' offer for ABN Amro ((ABN)) on the condition that the sale of ABN’s unit LaSalle is halted. This move is likely to start one of the largest bidding wars in history, as earlier this week, ABN announced a deal with the U.K.''s Barclays ((BCS)), a management-approved offer that is contingent on its sale of LaSalle Bank to Bank of America going through.

The consortium, including Spain''''s Banco Santander and Fortis, offered a deal worth 39 euros a share, or around 74.5 billion euros ($101 billion), which is13% higher than the value of the all-share deal ABN Amro agreed with Barclays. The consortium''s bid would be approximately 70% in cash and 30% in RBS shares. The news sent shares in the Dutch bank up 5.4% in pre-market trading. Earlier this week, ABN announced a deal with Britain''s Barclays, a management-approved offer that is contingent on its sale of LaSalle Bank Corp. to Bank of America Corp. going through.


[R]8:00AM NY-7:00PM Mumbai Sensex ends higher Wednesday as Reliance Industries rallies.[/R]

The Sensex on BSE finished 81.05 points, or 0.57%, higher at 14,217.77.

The market-breadth was strong as there were three gainers for every two decliners. For 1,464 stocks which advanced, 1,058 declined and 77 stocks remained unchanged. Of the 30 stocks in the Sensex, 18 advanced, while the rest declined. The turnover on BSE was Rs 5,175 crore, lifted by two block deals of 12.50 lakh shares each, at an average Rs 1209 per share in early trade, in the TCS. In comparison, the turnover on Tuesday was Rs 5,115.51 crore. On NSE, the turnover was Rs 11,078.22 crore, compared with Rs 10,897.9 crore on Tuesday.

Economic news

The Indian rupee surged to a new nine-year high on Wednesday on continued capital inflows into the country, and on the RBI not intervening to limit the gains. In early trade, the rupee was at 41 per dollar, its strongest since May 1998. It had ended at 41.10 per dollar on Tuesday. IT companies were the worst hit by the appreciation of the rupee, as it directly impacts their revenue and profits, drawn from exports.

The target of 250 million phones are achievable according to the government, ahead of the December deadline this year. The government has set a new objective, planning 500 million connections by 2010, besides nine million broadband lines by 2007-end.

Trading highlights

TCS was the most-active stock with a turnover of Rs 330 crore followed by Indiabulls Real Estate and Reliance Industries.

Advancers

Ranbaxy led the advancers, soaring nearly 6% to Rs 369. The company announced on Wednesday that it had been granted a 180-day market exclusivity in the US for the 80-mg dosage of the drug pravastatin sodium tablets, used to treat cardiac diseases. The 80-mg tablet had annual sales of $209 million, while the market for all dosages of the drug was $1.19 billion a year. Other pharma stocks also rallied including Cipla up 5.4% to Rs 252 and Dr Reddy’s, rising 0.9% to Rs 720.

Index heavy Reliance Industries advanced 1.1% to Rs 1,600, on a volume of 8.69 lakh shares, recovering from a low of Rs 1560, surging to a high of Rs 1,605.15. Auto stocks surged on fresh buying interest. Hero Honda added 4% to Rs 687 and Tata Motors rallied over 2% to Rs 759.

HDFC Bank advanced 1.62% to Rs 1,030, as it reported 30.5% growth in net profit for fourth-quarter March 2007. The bank also posted a net profit of Rs 343.57 crore in the same quarter, against Rs 263.21 crore for the same time a year earlier, while total income increased to Rs 2,384.19 crore compared with Rs 1,682.65 crore, the previous year.

Other advancers included ITC rallying 3.4% to Rs 162, and Hindustan Lever adding 2% to Rs 211. Cement stocks also gained. Grasim grose 2.6% at Rs 2,442. ACC added nearly 2% to Rs 833, and Gujarat Ambuja was up 1% at Rs 121. ONGC ended up 2.5% to Rs 973.

Decliners

IT stocks led the decliners tday as they came under selling pressure. Infosys Technologies slumped almost 2% to Rs 2,018 and Satyam slipped 1.8% to Rs 466. Tata Steel dipped 1.4% at Rs 571. Bharti Airtel was off 1% to Rs 863, while NTPC and Larsen & Toubro were also down around 1% each at Rs 157 and Rs 1,688, respectively.


[R]6:30AM European markets advanced Wednesday on merger deals.[/R]
European markets advanced on Wednesday. The U.K. FTSE 100 index rose 0.2% at 6,444.70, the German DAX Xetra 30 index increased 0.6% at 7,313.88 and the French CAC-40 index advanced 0.5% at 5,915.47. National benchmarks rose in 14 of the 17 western European markets that were open.

Advancers

Barclays advanced 2% after the consortium announcement and after ABN Amro also detailed how its agreed pact to sell its Chicago-based LaSalle operations to Bank of America for $21 billion can be broken.

German engineering company Siemens advanced 1.5% after it reported a 36% increase in quarterly net profit to 1.26 billion euros. Reportedly, the company is set to decide on the future of one of its top executives, Klaus Kleinfeld, on Wednesday.

LVMH Moet Hennessy gained 1.8% after posting first-quarter revenue rising 7% to 3.8 billion euros or rose 13% on a comparable basis.

Michelin shares rose 3.5% after the tire maker reported a 5.5% rise in first-quarter sales to 4.2 billion euros, after higher volumes and prices, and held to its fiscal year guidance.

Retailers were doing well as British supermarket chain J. Sainsbury was up 6.5% after a 250 million-share block trade spurred renewed takeover talk and as department store chain Marks & Spencer shares rose 2.3% after a management reshuffle.

Decliners

Shares for companies in the bidding consortium were down, with Royal Bank of Scotland dipping 1.1%, and Fortis down 2%. Spanish property companies kept losing ground, with Ibex-35 constituent Grupo Inmocaral down another 3.9% in Madrid as investors continued to worry about Spain property market bubble bursting.

Oil and precious metals

Crude oil rose after some U.S. refineries cut production while gasoline demand rose. Crude oil for June delivery rose 45 cents, or 0.7%, to $65.03 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for June gained 74 cents, or 1.1%, to $67.90 a barrel on London ICE Futures exchange.

Gold broke two days of declines on speculation that a weakening dollar will increase investor demand for the precious metal. Gold for immediate delivery gained $2.20, or 0.3%, to 685.85 an ounce. Platinum rose $2.50 to $1,306.50, silver fell 0.5 cent to $13.78 an ounce and palladium gained $1.50 to $378.

Currencies

The dollar was lower against other major currencies in late European trading Wednesday morning. The euro traded at $1.3645, up from $1.3626 late Tuesday in New York. The British pound traded at $2.0045, up from $2.0000. The dollar fetched 118.65 Japanese yen, down from 118.68.