Inflation Data Lead Market to Higher Opening

Elena
30 Apr, 2007
New York City

U.S. stock futures moved slightly higher, lifted by upbeat earnings reports and data which showed that core inflation declined. RadioShack posted Q1 earnings rise on lower costs. The electronics retailer said net income jumped to 31 cents per share, up from 6 cents a year earlier, beating estimates of a profit of 14 cents per share. In economic news, personal income rose 0.7% in March, higher that the 0.6% expected by analysts. Core inflation was flat in March.

[R]9:15AM U.S. stock futures turned higher on inflation data.[/R]
U.S. stock futures moved slightly higher, lifted by upbeat earnings reports and data which showed that core inflation declined. The Commerce Department said that U.S. consumer spending grew 0.3% in March while inflation pressures declined. Personal income rose 0.7% in March, higher that the 0.6% expected by analysts. Core inflation was flat in March.

Among pre-market highlights, RadioShack ((RSH)) jumped 8.2% after it posted Q1 earnings rise on lower costs. The electronics retailer said net income jumped to 31 cents per share, up from 6 cents a year earlier, beating estimates of a profit of 14 cents per share. Humana ((HUM)) posted a 15% drop in Q1 profit but beat analyst expectations. The health insurer also raised its full-year earnings forecast.

In other corporate news, Merrill Lynch ((MER)) said it would buy back $6 billion in shares. Yahoo ((YHOO)) agreed to buy the 80% it didn't already own of Right Media for $680 million in cash and stock. Yahoo shares were flat. S&P 500 futures rose 1.7 points at 1,503.60 while Nasdaq 100 futures were down a half point at 1,906.25. Dow industrial futures rose 3 points. Stock futures moved higher after the economic data was released.


[R]9:00AM Asian markets finished mixed with China and Australia rallying.[/R]

Asian markets ended mixed on Monday. The Shanghai Composite ended up 2.17% at 3,841.27.

Financial markets in Japan are closed Monday, Thursday and Friday for public holidays. Markets in China will be closed from Tuesday till the end of the week for a public holiday and will reopen on May 8.

In China, the central bank of China announced over the weekend it will raise bank reserve requirement ratio, the share of deposits banks must keep on reserve, by 0.50 percentage points beginning May 15. Aluminum Corp. of China, the mainland largest producer of the alloy, soared more than threefold in first-day trading on the Shanghai Stock Exchange.

Hong Hang Seng Index ended down 1.01% at 20,318.98. Among shares of mainland banks traded in Hong Kong, China Construction Bank dipped 1.5%, while Industrial & Commercial Bank of China shed 0.9%. China Mobile, the world largest cellular operator by revenue, fell 1.5% in Hong Kong.

In Australia, the S&P/ASX 200 edged 0.23% higher to close at 6,166.00. Paladin Resources declined 0.1% after the mining company announced development of its uranium projects could generate revenue of about $2.8 billion between now and 2012. Among resource shares, BHP Billiton gained 0.7%, while rival Rio Tinto added 0.3%.

In Seoul, the Kospi Index edged down 0.02% to close at 1,542.24. The index was weighed down as investors sold export-related shares such as Samsung Electronics amid data showed the U.S. economy expanded at a slower-than-expected pace in the first quarter. Shares of Samsung Electronics, South Korea's largest exporter, fell 1.4%.

Elsewhere around the region, Singapore Straits Times Index shed 1.08% to 3,361.89 and Taiwan Weighted Price Index lost 0.93% to close at 7,875.42.


[R]8:15AM Verizon Communications posted Q1 profit decrease.[/R]
Verizon Communications Inc. ((VZ)) posted Q1 earnings of $1.5 billion, or 51 cents a share, compared with a year-ago profit of $1.63 billion, or 56 cents a share. The latest results include an extraordinary loss of $131 million, or 5 cents a share, related to the Venezuelan government''s nationalization of telecommunication services. The company said its net income before special items came to $1.63 billion or 56 cents a share, down from profit of $1.75 billion, or 60 cents a share last year.

Operating revenue rose 6.4% to $22.58 billion from $21.23 billion a year ago. Analysts had been expecting a profit of 53 cents a share on revenue of $22.49 billion. The company said its Verizon Wireless operations helped increase the company''s total number of customers by 14.5% to 60.7 million. Verizon also said it expects strong demand for its FiOS TV offering, adding a net 141,000 new customers in the quarter. The stock added 1.2% in pre-market trading.


[R]8:00AM NY-7:00PM Mumbai Sensex ends slightly lower on a late recovery.[/R]

The Sensex on BSE finished 36.21 points, or 0.26%, lower at 13,872.37.

The market-breadth was positive as there were close to three gainers for every two decliners. As 1,403 stocks advanced, 1,071 declined and 75 stocks remained unchanged. Of the 30 stocks in the Sensex, 18 advanced, while the rest declined. The turnover on BSE was Rs 3,255 crore, lower than RS 3,770.65 crore on Friday. On NSE, the turnover was Rs 7571.21 crore, compared with Rs 8,222.24 crore on Friday.

Economic news

The government today announced that it was considering export of 15 lakh tons of the commodity though international prices are not favorable. Sugar production in 2006-07 was provisionally estimated to be over 250 lakh tons and there was a carry over surplus of last season of 44 lakh tons, while the estimated consumption stood at 190 lakh tons.

India will probably t issue a tender this week for the import of 1 million tons of wheat on account of low obtaining of domestic grain by government agencies.

Trading highlights

Reliance Communications was the most-active stock with a turnover of Rs 160.70 crore followed by IFCI and Reliance Industries.

Advancers

Reliance Communications soared nearly 4% to Rs 477, leading the advancers. Reliance Comms today posted a consolidated net profit of Rs 1,024.41 crore in the fourth-quarter of fiscal 2007. It did not give figures in the corresponding period last year. As per available data, Reliance Comms had a consolidated net profit of Rs 440 crore in the fourth-quarter of fiscal 2006.

IT firms advanced as the market awaited changes, regarding a proposal in the Union Budget 2007-08 for bringing employee stock options plans under the fringe benefit tax. TCS rallied 2.5% to Rs 1,266, Infosys advanced over 2% to Rs 2,049, and Satyam added 1% to Rs 473.

Reliance Industries added over 1% to Rs 1,560. Reliance had on Thursday posted stronger-than-expected 14% growth in net profit in the fourth-quarter of fiscal 2007. Maruti and HDFC Bank gained 1% each at Rs 803 and Rs 1,026, respectively. Hero Honda, Tata Steel moved up over 2% each to Rs 684 and Rs 550, respectively. ACC also added 2% to Rs 839 and Grasim gained 0.5% to Rs 2,435.

Decliners

ICICI Bank plunged to a low of Rs 844 on concern of equity dilution on the bank plan to raise Rs 20,000 crore through fresh issue from the domestic and overseas markets. The bank finally closed with a loss of over 7% at Rs 866.

Hindustan Lever lost nearly 5% to Rs 199. Hindustan Lever reported that net profit, excluding extraordinary gains, rose 13.6% to Rs 334 crore from Rs 294 crore. Cipla shed 3% to Rs 211 and oil company ONGC declined nearly 2% to Rs 912. Bharti Airtel and HDFC slid over 1.5% each to Rs 812 and Rs 1,660, respectively.


[R]6:30AM European stocks gain Monday on Telecom Italia and Telefonica deal.[/R]
European markets were higher in morning trade on Monday. The U.K. FTSE 100 index rose 0.8% at 6,471.50, the German DAX Xetra 30 index increased 0.4% at 7,405.80 and the French CAC-40 index advanced 0.4% at 5,952.73. National benchmarks increased in 13 of the 16 western European markets that were open.

Advancers

Telecom Italia advanced 1.5% after Spanish phone company Telefonica and a group of Italian financial large-caps Saturday bought 100% of Telecom Italia largest shareholder, finishing a long battle over control of the main telecommunications operator in Italy in a 4.1 billion euro deal. Telefonica shares rose 0.6%.

Oil and gas companies were higher with BP gaining 0.6% after a report that it is leading the race to buy a controlling stake in Pakistan State Oil in a deal worth around $600 million. Shares in Eni advanced 0.2% as it agreed to buy the Gulf of Mexico upstream assets of Dominion for $4.76 billion in cash.

Decliners

Bank deals hogged the limelight as well, with ABN Amro shares off 0.1% after an Amsterdam court announced on Saturday that it would decide next Thursday on whether or not to freeze the sale of ABN Amro LaSalle Bank to Bank of America.

Turkish lira plunged the most in 11 months and bonds and stocks slumped after the military threatened to block the presidential candidate of the ruling party because of his support for Islamist causes.

Oil and precious metals

Crude oil declined in New York as worries abated that supplies from Saudi Arabia would be disrupted, after security forces crushed a plot to attack oil fields and refineries in the world largest producer of petroleum. Crude oil for June delivery was at $66.13 a barrel, down 33 cents, on the New York Mercantile Exchange. In London, Brent crude oil for June settlement was at $68.14 a barrel, down 21 cents, in electronic trading on the ICE Futures exchange.

Gold for immediate delivery dropped $4.10, or 0.6% to $677.45 an ounce in early trade in London.. Silver fell 7.5 cents to $13.46 an ounce, after a drop of 2.9% last week.

Currencies

The U.S. dollar was mostly higher against other major currencies in European trading Monday morning. The euro traded at $1.3607, down from $1.3643 late Friday in New York. The British pound traded at $1.9918, down from $1.9970. The dollar fetched 119.61 Japanese yen, down from 119.65.