Katrina's Aftermath

Elena
02 Sep, 2005
New York City

Asian-Pacific benchmarks closed largely higher with the Nikkei up 0.7% on confidence of the Japanese economy. European markets edged up at mid-day dealings ahead of U.S. jobs report. Jobs for August are expected to rise by 190,000, slightly down vs. 207,000 for July. The jobless rate is projected steady at 5%. L'Oreal posted earnings decline but revenue growth for the first half of 2005.

U.S. MARKET AVERAGES

U.S. markets had a mixed close of the Thursday session as investors remained cautious on oil prices, and the solid gains made by 7-Eleven and Chiron were offset. Stock markets are trading slightly over the flat line in early morning. The averages are still under the reign of crude-oil prices which have been a major factor on the market since Hurricane Katrina hit the oil refineries in the Gulf of Mexico and caused great supply concerns which sent gasoline prices to record highs.

Another factor on the market today will be the employment report due later in the morning. Non-farm payroll figures for August are expected to rise by 190,000 compared with 207,000 thee previous month. The jobless rate is seen to remain stable at 5%.

Cosmetics group L'Oreal dipped 3.3% after seeing a 5.8% first-half profit decline to 892 million euros, or a 1.6% gain after eliminating the impact of deconsolidating Sanofi-Aventis in 2004. Revenue rose 3.5% to 7.16 billion euros, or a 4.1% comparable rise. The company held to guidance for double-digit earnings growth

Late Thursday, H&R Block Inc. posted a first-quarter loss wider than Wall Street's expectations, as its lending services made strong gains.

JDS Uniphase Corp. reported a wider loss for its fiscal fourth quarter, as the maker of fiber-optic products for telecommunications-service providers wrote down the value of assets and incurred expenses to reorganize operations. The fourth-quarter loss, excluding items, met the average analyst estimate.

Piedmost Natural Gas is expected to report a 9 cent a share loss before the bell Friday.

ECONOMIC NEWS

The Labor Department is due to release the August employment report at 8:30 a.m. EDT Friday. Economists look for an increase of 190,000 jobs in August, just a bit less than the 207,000 gain in the prior month, but for the jobless rate to hold steady at 5 percent.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mostly higher after mixed early trading. The Nikkei rose 0.74% on optimism about the Japanese economy and hopes that the U.S. Fed Reserve will slow the pace of interest-rate hikes. Blue chips and exporters were among the leading gainers together with automakers which rose on strong monthly sales reports. Across the region Hong Kong’s Hang Seng added 0.5% and South Korea’s Kospi gained 0.3%. The dollar stood at 109.85 against the yen.

European markets were trading higher at mid-day, enjoying limited gains ahead of U.S. jobs report. On the earnings front Air France-KLM raised its full-year outlook and surged 3.5%. Automakers traded mixed on oil prices and U.S. sales data. The German DAX 30 added 0.23%, the French CAC 40 was up 0.08%, London’s FTSE edged up 0.05%.

ENERGY, METALS AND CURRENCIES MARKETS

Oil and gasoline prices were in the focus, expected to rise as fuel crisis threatened U.S. after Hurricane Katrina’s devastating impact on oil refineries. Light sweet crude for October delivery fell 43 cents to $69.04 a barrel. Gasoline was down 6.5 cents to $2.3485 a gallon. London Brent declined 24 cents to $67.48.

The average U.S. retail price of regular unleaded gasoline climbed 52% versus last year to a record level of $2.815 a gallon. The average price of diesel fuel also hit a record Friday at $2.771 a gallon. Thursday's average price for regular unleaded was $2.707, and the average price a month earlier was $2.285.

Gold advanced in European trading. In London the precious metal traded at the recommended price of $446.30 per ounce, up from $444.20. In Hong Kong gold climbed $11.10 to close at $447.05. Silver traded at $6.97, up from $6.96.

The U.S. dollar fell against most of its major counterparts in European trading. The euro was quoted at $1.2565, up from $1.2487. The dollar bought 109.40 yen, down vs. 109.88. The British pound traded at $1.8370, up from $1.8326.

EARNINGS NEWS

H&R Block, consulting services company, posted a 1Q net loss of 9 cents a share, up vs. 11 cents a share for the same period last year on revenue growth to $615 million from $486.6 million in the year-ago period.

CSK Auto, auto parts supplier, posted 2Q net earnings 29 cents a share, down 14.5% vs. 33 cents a share in the same period last year despite revenue growth to $419 million from $409.1 million the year-ago, but missing analysts’ expectations of $424 million. Same-store sales advanced 1.1% from last year.

JDS Uniphase telecommunications service provider, posted 4Q loss reached 10 cents a share, sharply down from a loss 2 cents a share in the year-ago period on revenue decline, missing analyst estimate of 2 cents a share. Apart from onetime restructuring and other costs, JDS announced it lost 2 cents a share.

Kellwood, apparel maker, posted a 2Q net loss of $2.86 a share, down vs. a profit of 36 cents a share in the same period a year earlier despite revenue growh, missing analysts’ expectations of 19 cents a share profit. Impairment, restructuring and related non-recurring charges of $3.36 a share are included in the current quarterly results.

Finisar Corp., optical equipment maker, posted 1Q net loss of 7 cents a share, up from a loss 10 cents a share in the year-ago period on 32% revenue growth. The company’s proforma loss amounted to 3 cents a share.

Plato Learning, educational software provider, posted a 3Q net loss of a penny a share, down vs. A profit of 29 cents a share in the year-ago period on revenue decline, beating analyst estimate of 11 cents a share.

Methode Electronics, component devices and subsystems designer company, reported 1Q for fiscal 2006 net income of 13 cents share, even with the same period last year’s result. The shallow manufacturing benefits for the quarter are due to a number of the company’s business units having experienced the effects of rising costs of materials, most prominently in in petroleum-based products such as silicone, urethane and other resins, as well as the greatly increased cost of copper.

CORPORATE NEWS

Boeing machinists went on strike Friday for the first time in 10 years, following their negative vote to reject the company's latest contract offer.

Northwest, U.S. No. 4 airline, said surging oil prices could compel it to look for even greater labor concessions and force a bankruptcy filing. The company's pilots' union voted Thursday to reopen contract negotiations soon having in mind the carrier's not so rosy financial situation.

Two groups of private-equity firms submit final offers of as much as $10 billion including debt for Ford Motor's Hertz unit, according to reports. One consortium composed of Bain Capital, Blackstone Group, Texas Pacific Group and Thomas H. Lee is competing against another group made up of Clayton Dubilier & Rice, Carlyle Group and Merrill Lynch Global Private Equity.