U.S. Rally Sparks Rise in Europe, Latin America

123jump.com Staff
02 May, 2007
New York City

U.S. market averages rose as steady drumbeat of earnings supported a rise. Master Card, CB Richard Ellis, Nortel, Jones Lang La Salle, Yum Brands, and others reported rising earings on gains in international sales. Dow Jones is likely to receive at least two bids from private equity groups, sources in the industry confirm. European markets advanced led by a rise in Norway and UK. Brazil reported April trade surplus of $4.2 billion. HSBC stock attracts Middle-Eastern investors.

[R]4:30PM NY, 10:15PM Frankfurt, 1:45AM Mumbai – Global Markets Update.[/R]

U.S. bonds yields rose and 10-year bond closed at 4.648% and 30-year bond closed at 4.821%.

Oil in New York trading fell 63 cents to close at $63.66 per barrel, natural gas gained 1 cents to close at $7.73 MBtu and gasoline fell 1.21 cents to close at 223.26 cents per gallon.

Gold declined $2.20 per troy ounce to close at $675.10 and silver price fell 3 cents to close at $13.33 per ounce. Copper gained $242 per metric ton to close at $8,048.

Asian markets closed higher led by rise of 1.7% in Singapore, 1.4% in Australia, 0.9% in Thailand, and 0.7% in Japan and Singapore. Auto companies led the rise in Japan with Mazda up 3.6% but Toyota and Nissan declined. In Hong Kong HSBC rose on the news report that Dubai based investment group has bought a substantial stake in the company. BHP Billiton gained 2% on the record price in copper trading and firm oil prices. China, India and Malaysia were closed. Singapore property stocks led the market gain.

European Markets closed higher with Belgium, U.K. and Norway closing above 1%. Germany rose 0.6% and France advanced 0.5% and other markets in the region gained a fraction. Mining and media stocks led the rise in the U.K. averages. Other media companies rose in the region on the bid by News Corp for Dow Jones. BSkyB gained 5% on revenue rise of 9% and earnings fall of 6%. Wolter Kluwer gained 3%. Allianz profit advanced nearly 100% to 3.2 billion euros and laundry detergent maker Henkel gained 3.5% on net income growth of 14% and revenue rise of 6%.

Latin American Markets advanced across the region led by a gain of 1.1% in Brazil, 0.9% in Mexico, 0.3% in Chile and 0.11% in Argentina. Oil and mining stocks led the rise in Brazil but telecom and steel companies declined. Brazilian currency Real gained on strong flows of funds and widening trade surplus to $4.2 billion in April from revised $3.6 billion in March. Economists are predicting surplus for the year between $45 billion and $47 billion. French largest retailer Casino Guichard has agreed to partner with Chile based Cecosud SA to launce a chain of hardware stores in Colombia. Striking mining workers in Peru resumed talked with labor minister to seek better working conditions and wages for subcontract workers.

[R]2:30PM NY – U.S. Market Movers.[/R]

U.S. market averages maintained their upward momentum on earnings, factor orders report and deal news.

Yum! Brands Inc ((YUM)) reported first quarter earnings of 70 cents vs. 59 cents a year ago on revenue rise of 4%. The company reported revenue of $1.94 billion in the quarter and earnings of $194 million compared to revenue of $1.82 billion and earnings of $170 million a year ago. Total number of stores across the system rose 2% to 32,558. The company revised the earnings guidance to $3.23 per share from $3.21 and expressed that the operating profit growth in the U.S. division is going to be below the long term growth rate.

The company generates approximately 49% of its sales from its international operations and revenues in China increased by 24%. Sales in the U.S. based stores owned by company fell by 12% and at franchise owned locations rose by 1%.

CB Richard Ellis Group ((CBG)) reported first quarter earnings of $12 million or $65 million excluding one time items vs. $36.9 million a year ago on revenue increase of 62% to $1.2 billion. The company reported earnings per share of 5 cents vs. 16 cents a year ago. Adjusting for accounting the earnings per share were 27 cents beating the analyst’s expectations of 15 cents.

In January 2007, the Company sold Trammell Crow Company’s approximately 19% ownership interest in Savills, plc, a real estate provider in the United Kingdom. This sale resulted in a non-cash, pre-tax loss of $34.9 million in the first quarter of 2007, which was largely driven by stock price depreciation at the date of sale as compared to December 31, 2006 when the investment was marked to market. The pre-tax proceeds from this sale, net of selling expenses, of approximately $311.0 million has been used to reduce net indebtedness.

The real estate advisory services and brokerage company generated $225 million in revenue in Europe, Middle East and Africa, $94 million in Asia and global investment management services revenue increased 181.6% to $85.6 million. The company guided that the annual earnings per share will be in the upper end of the previously issued forecast between $1.85 and $1.92.


[R]1:00AM NY, 5:00 PM Frankfurt European stocks closed higher, led by media stocks.[/R]

European stock markets closed higher on Wednesday, boosted by strength among media stocks. Shares in satellite broadcaster British Sky Broadcasting rose more than 5% after the company''s key performance indicators in Q3 exceeded market expectations. Dutch publisher Wolters Kluwer gained 2.8%, while Pearson closed down 3.4% in London. Mining stocks also contributed to the upward trend, with shares in Lonmin surged 7.7% after it posted a 63% increase in first-half pretax profit.

In earnings news, Henkel rose 2.7% after it said Q1 profit rose 14%. Shares of German tire maker Continental rose 3% after it reported 22%increase in Q1 profit. Shares of Danish pharmaceutical producer Novo Nordisk rose 7.6% after it reported Q1 profit increase of 41%. The U.K. FTSE 100 climbed 1% to 6,484.50, the German DAX Xetra 30 rose 0.6% to 7,455.93 and the French CAC-40 gained 0.5% to 5,990.13.


[R]11:30AM U.S. stock averages traded higher, driven by strong factory orders.[/R]
The three major stock averages rallied on Wednesday, driven by strength in the deal sector amid deal speculation, Q1 financial results released by Time Warner, and stronger-than-expected factory data.

Time Warner ((TWX)) rose 2.5% after the media posted higher-than-expected quarterly earnings. Chipotle Mexican Grill ((CMG)) jumped 16% after the restaurant chain reported a profit rise above forecasts. On the merger-and-acquisition news front, Bisys Group ((BSG)) rose 1.7% after Citigroup ((C)) agreed to acquire financial services outsourcing company for $1.45 billion in cash.

The blue-chip average was boosted steeply higher, crossing the 13,200 level for the first time. The Dow benefited from strong gains by General Motors ((GM)), up 3.3%, Verizon ((VZ)), up 3.2%, and DuPont ((DD)), up 2.6%. By sector, multimedia, telecoms, industrials, airlines, metals miners, and broker/deals moved notably higher.

Media stocks were lifted by deal speculation. News Corp. ((NWS)) rose 1.8% after it launched a surprising bid for Dow Jones ((DJ)). In another deal , Cablevision Systems ((CVC)) gained 8% amid speculation it will be bought for $10.5 billion by its founding family, the Dolans.

In late morning trading, the Dow rose 84.11, or 0.64%, to 13,220.25. The blue chip index hit a fresh trading high of 13,228.78 after reaching 13,184.14 Tuesday. The Standard & Poor''s 500 index advanced 9.73, or 0.65%, to 1,496.03. The Nasdaq composite index rose 21.30, or 0.84%, to 2,552.83. Bonds fell following the factory order data. The yield on the benchmark 10-year Treasury note rose to 4.65% from 4.64% late Tuesday.

[R]New factory orders rose 3.1% in March.[/R]
The Department of Commerce released its report on new orders for manufactured goods in the month of March on Wednesday, showing that new orders increased by much more than economists had been expecting. The report showed that new orders for manufactured goods rose 3.1 percent in March following an upwardly revised 1.4 percent increase in February. Economists had expected orders to increase by 2.1 percent compared to the 1.0 percent increase originally reported for the previous month. The better than expected increase in orders for manufactured goods was partly due to a 3.7 percent increase in orders for manufactured durable goods.

The increase in durable goods orders was revised up from the 3.4 percent increase reported last week. A 9.5 percent increase in orders for transportation equipment contributed to the strong growth in orders for durable goods. The report also showed that orders for manufactured non-durable goods rose 2.3 percent in March following a 0.5 percent increase in February. The Commerce Department added that shipments of manufactured goods rose 1.5 percent in March following a 0.6 percent decrease in the previous month. At the same time, inventories of manufactured goods rose 0.2 percent. Subsequently, the inventories-to-shipments ratio came in at 1.23 in March, down from 1.25 in February.


[R]9:45AM U.S. markets opened higher, boosted y media stocks.[/R]
U.S. stocks opened higher on Wednesday, lifted by deal news in the media sector and better-than-expected corporate profits. The Dow Jones industrials crossed 13,200 for the first time after a strong reading on U.S. factory orders raised optimism about the economy. The Commerce Department said orders to U.S. factories jumped 3.1% in March, helped by strong demand for commercial aircraft, easily beating forecasts of 2% increase.

On the earnings news front, Master Card ((MA)) surged 10% after reporting 70% earnings rise to $1.57 per share from 94 cents per share a year ago, beating estimates of $1.15 a share. Revenue climbed 24% on favorable currency exchanges and stronger use of its brand overseas. Yum Brands Inc. ((YUM)) reported a 14% increase in Q1 earnings as its international operations turned in a tidy profit.

Real estate stocks were notable gainers in early trading, led by Jones Lang Lasalle ((JLL)) and CB Richard Ellis Group ((CBG)), rising 15% and 13%, respectively. CB Richard Ellis, the biggest U.S. commercial real estate brokerage, posted a lower quarterly profit due to charges. However, excluding the charges, the company''s earnings beat analyst estimates. Cablevision Systems Corp. ((CVC)) jumped 8% after the cable TV provider said it struck a $10.3 billion deal to be taken private by its controlling shareholders, the Dolan family.

In early trading, the Dow Jones industrial average rose 37.46, or 0.29%, to 12,173.60. The Standard & Poor''s 500 index advanced 3.19, or 0.21%, to 1,489.49, and the Nasdaq composite index rose 5.44, or 0.21%, to 2,536.97. Bonds showed little movement, with the yield on the benchmark 10-year Treasury note unchanged at 4.64% from late Tuesday.


[R]9:30AM London equities gain Wednesday on BSkyB and Lonmin.[/R]
The UK market was higher on Wednesday. By mid-day, the benchmark FTSE 100 Index rallied 37.2, or 0.6%, to 6456.8.

Advancers

BSkyB, the satellite pay-TV company, jumped 6.8%. The shares rose the most in four years after the company posted a smaller-than-expected drop in third-quarter profit. Net income dipped 6% to 142 million pounds, or $284 million, beating analysts estimates of 132 million pounds.

Lonmin, the world third-largest platinum producer, rallied 6.4%. The company first-half loss narrowed to $3 million from $67 million a year earlier. Antofagasta, owner of copper mines in Chile, climbed 3%. Vedanta Resources, the largest copper producer in India, gained 2.2%. Xstrata, the world fourth-largest producer of the metal, advanced 2.1%.

William Morrison, the fourth-biggest U.K. food retailer, gained 1.4%. Reportedly, investors bought the stock late yesterday on speculation the company may soon receive a private-equity bid.

Liberty, the U.K. largest owner of shopping malls, rose 2.1% after Credit Suisse raised its recommendation for the shares to outperform from underperform.

Decliners

PartyGaming declined 7%. The world biggest Internet poker company announced that annual profit will miss analysts estimates significantly because of higher-than-forecast costs for signing up customers in the first quarter.

Retailer Home Retail shrugged off challenging conditions for consumers as it reported profit before tax goodwill and one-off items up 12% to 376.7 million pounds in the year ended March 3 2007. The company lost 1.3%.

Northgate says that due to the impact of the challenging market conditions in criminal justice and the group''s on-going investment in sales and marketing, underlying profits will be towards the lower end of management''s expectations. The software group also unveiled a 260 million pounds acquisition in Belgium. Northgate plunged 6.3%.


[R]9:15AM U.S. stock futures traded higher. Jobs data were the weakest in 4 years.[/R]
U.S. stock futures traded higher Wednesday, although a payroll data helped erase some of the earlier gains. The ADP national employment report said private employment gained 64,000 in April, the weakest job growth in four years.

The media sector was in the spotlight as Time Warner ((TWX)) reported earnings. The media giant said its Q1 profit slipped 18% to $1.20 billion, or 31 cents per share, from $1.46 billion, or 32 cents per share a year ago, but beat expectations as revenue increased by 9%. Time Warner also raised its full-year profit outlook, saying it now expected to earn $1.05 per share. Among other companies releasing earnings before the opening bell, Chipotle Mexican Grill ((CMG)) rallied 3.4% in pre-open after the restaurant owner reported a stronger-than-forecast 56% profit rise.

Deal speculation in the sector also provided support. Dow Jones ((DJ)) continued to advance amid speculations that News Corp. ((NWS)) will raise its bid or that a rival suitor may emerge. In other deal news, Citigroup ((C)) agreed to buy financial services outsourcing company Bisys Group ((BSG)) for $1.45 billion in cash. S&P 500 futures rose 1.70 points to 1,494.40 and Nasdaq 100 futures inched up 0.50 of a point to 1,886.25. Dow industrial futures gained 17 points to 13,195.


[R]9:00AM Asian markets end higher on Wednesday, as Japan advanced on auto stocks.[/R]
Asian markets advanced on Wednesday. In Japan, the 225-issue Nikkei Average finished 0.69% to 17,394.92. Shares of Mazda rose 3.6%, gaining for a second day, after the company reported earlier in the week that group net profit jumped 24% in the January-to-March quarter, helped by stronger sales of its new sport-utility vehicle. Bridgestone rose 2.8% after the company reported a 3.6% rise in first-quarter net profit.

Not all auto makers ended higher. Nissan Motor declined 1% after the company announced its U.S. sales for the Nissan and Infiniti brands dropped 18% on an unadjusted basis in April from a year earlier. Toyota Motor also dipped 0.3% after its U.S. sales lost 4.3% in April from the year earlier, while Honda Motor was off 0.7% after the company said its U.S. subsidiary saw total sales of cars and trucks fall 9.1%.

Hong Kong Hang Seng Index ended 0.3% higher at 20,388.49. HSBC Holdings rose 0.8% after Dubai International Capital said it had bought a substantial stake and thus marked the second major investment in the British Bank by a Middle Eastern interest in recent weeks. Cheung Kong Holding advanced 1.6%, following broad gains in property developers, after local real estate bodies announced total sales turnover in April was likely the strongest in a year.

Australian S&P/ASX 200 settled up 1.5% to 6,237.70. BHP Billiton and other natural resource shares led the advancers after copper prices reached their highest level in a week. BHP Billiton gained 1.9% after July copper futures advanced 2.2% in New York trading Tuesday, on worries a labor dispute in Peru could disrupt the metals production.

South Korean Kospi index added 0.72% to 1,553.30. The Singapore Straits Times Index jumped 1.7% to close at 3,417.81, while Taiwan Weighted Price Index ended up 0.35% at 7,903.04.

[R]8:30AM News Corp. bid $5 billion for Dow Jones .[/R]
Rupert Murdoch’s News Corp. ((NWS)) launched a surprise bid for Dow Jones & Co. ((DJ)) valued at $5 billion, or $60 a share in cash, or a combination of cash and stock. The deal represents roughly 67% above the recent market value of Dow Jones, a massive premium at a time when most newspaper companies are losing readers and advertisers to the Internet.
The offer from News Corp. is expected to face obstacles. Dow Jones''s controlling shareholders, the Bancroft family, who own 24.7% of shares outstanding but hold 64.2% of the voting power, said they would block it. Dow Jones said late Tuesday that the Bancroft family said they would vote shares representing just over 50% of the company''s voting power against the deal. The shares shot up $19.87, or 54.7% in very heavy volume on the NYSE. Shares of News Corp. rose 1.2% in pre-market trading, while Dow Jones gained 0.5%.

[R]6:30AM European markets were higher Wednesday on strong media sector.[/R]
European markets advanced in early trade on Wednesday. By mid morning, Frankfurt Xetra Dax was 0.5% higher at 7,446.05, the CAC 40 in Paris added 0.5% to 5,989.09, and London FTSE 100 climbed 0.8% to 6,471.8. National benchmarks increased in all 16 western European markets that were open except for Sweden and Austria.

Advancers

London-listed BSkyB, which is 39% owned by News Corp, advanced 5.5% after posting better-than-expected customer growth in its third quarter. M6, the French commercial television broadcaster, gained 1% after reporting a 9.7 % increase in first-quarter sales. Other companies in the sector also gained including, Dutch publisher Wolters Kluwer rose 2.9%, while French peer Lagardere added 2.4%.

Novo Nordisk, the Danish drugs company, advanced 4.5% after reporting a better-than-expected 24% rise in first-quarter operating profit on strong growth in its European and North American markets. German household goods maker Henkel advanced 3.3% after it stated full-year sales growth would be at the upper end of estimates

Decliners

More potential deal news were at the center of attention on the stock exchanges. Shares of NYSE Euronext declined 3.5% after it disclosed in a filing that it has entered into a $3 billion syndicated revolving credit facility, which has prompted at speculation that it may gate-crash Deutsche Boerse agreed $2.8 billion acquisition of the International Securities Exchange. Deutsche Boerse shares declined 4.2%.

TeliaSonera AB fell 4.6%. The Swedish government announced it will sell a stake valued at about $2.9 billion in the biggest Nordic phone company to institutional investors as part of a plan to cede state holdings and reduce debt. Shire dropped 1%. The U.K. third-largest drugmaker will sell $1 billion in convertible bonds to fund the purchase of New River Pharmaceuticals.

Oil and precious metals

Crude oil advanced from a seven-day low on the expectation U.S. gasoline stockpiles declined last week as refiners shut units for repairs. Crude oil for June delivery rose to 27 cents, or 0.4%, to $64.67 in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for June settlement rose to 36 cents, or 0.5%, to $67.36 a barrel on London ICE Futures exchange.

Gold was little changed in Asia as investors bet the sell-off yesterday in the precious metal as the dollar rallied was overdone. Silver gained. Gold for immediate delivery rose to $1.95, or 0.3%, to $675.40 an ounce. Silver for immediate delivery gained 3 cents, or 0.2%, to $13.28 an ounce.

Currencies

The dollar was higher against other major currencies in European trading Wednesday morning. The euro traded at $1.3578, down from $1.3620 late Tuesday in New York. The British pound traded at $1.9933, down from $1.9996. The dollar fetched 120.09 Japanese yen, up from 119.72.