Emerging Markets Lead Global Rise

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

Better than expected rie in first quarter worker productivity of 1.7% and slower than expected rise in labor cost of 0.6% helped averages to remain in the positive. jobless claims at the end of last week felll to 305,000. Expeditors International, Royal Dutch Shell,Symantec, and Unum reported better than expected earnings. Verizon rallied on Merrill Lynch raising the target to $42 from $40.

[R]4:30PM NY, 10:30PM Frankfurt, 2:00AM Mumbai – Global Markets[/R]

U.S. bonds yields rose and 10-year bond closed at 4.678% and 30-year bond closed at 4.84%.

Oil in New York trading fell 49 cents to close at $63.19 per barrel, natural gas gained 22 cents to close at $7.95 MBtu and gasoline rose 1.50 cents to close at 224.76 cents per gallon.

Gold gained $9.30 per troy ounce to close at $684.40 and silver price rose 17 cents to close at $13.51 per ounce. Copper lost $38 per metric ton to close at $8,010.

Asian markets rose in the region but the markets in China and Japan were closed. Markets in Singapore, Malaysia, Indonesia and Australia closed at the record levels. Shanghai closed up 2.4%, Malaysia gained 1.5% and Singapore advanced 0.96%. Reserve Bank of Australia left the rates unchanged at 6.25%.

European Markets closed higher led by 0.8% rise in U.K. and 0.7% gain in the Netherlands. Germany and France advanced 0.3% but Swiss market closed down 0.55%. Unilever advanced 4% on the better than expected earnings on higher cost cutting. UBS closed 2.5% lower on 7% decline in profit. Royal Dutch Shell advanced 2% on the profit rise of 6% on better than expected profits in refining and marketing divisions. BMW reported profit decline of 38% on higher raw material costs in the first quarter. Banking stocks closed mostly lower on the news that a court in Amsterdam has blocked sales of its Chicago based LaSalle Bank. Sweden based Svenskt Stal has agreed to buy American tube-maker Ipso for $7.7 billion in cash.

Latin American Markets closed higher led by an advance of 1.7% in Mexico and 1.5% in Brazil. Argentina and Chie rose 0.8%. Brazil reported a strong trade surplus in April. Corporate profits at steel, mining and iron ore companies have been better than expected lifting stocks in the sector. Real, Brazilian currency advanced to a six-year high against the U.S. dollar. Telmex, Cemex and American Movil gained between 0.4% and 0.7% in the session. April inflation in Chile rose to 10-month high and consumer prices rose 0.6% from 0.4% in March.


[R]1:00PM NY, 5:00 PM Frankfurt European stocks closed higher, helped by Unilever and Royal Dutch Shell.[/R]

European stock markets were volatile but finished in the positive territory on Thursday, helped by better-than-expected U.S. economic data and strong profits. A court ruling on takeover target ABN Amro also contributed to the gains. Royal Dutch Shell rose 1.9% after it said that its Q1 profit rose 6% to $7.28 billion, with improving profit in its gas and power, oil products and chemicals units offsetting declining profits at its largest arm, exploration and production.

Unilever climbed 3.9% after it posted an unexpected Q1 profit. In the financial sector, ABN Amro rose 1.9% after a Dutch judge blocked the sale of its LaSalle unit to Bank of America. Shares of Barclays climbed 3%, RBS lost 0.7%, while Fortis rose 1.1%. Prudential rose 5.6%.

In other deal news, Dutch supermarket chain Ahold rose 3.2% after it agreed to sell its U.S. Foodservices business to private equity firms for $7.1 billion. The indexes touched 6 and 61/2-year highs, with the French CAC-40 breaking though 6,000 level for the first time since December 2000 ahead of the weekend's elections. The CAC closed up 0.2% at 6,004.28, the German DAX 30 added 0.3% at 7,479.40 and the U.K. FTSE 100 rose 0.8% at 6,537.80.

[R]11:30AM U.S. stock averages traded higher, driven by strong economic reports.[/R]

U.S. market averages traded higher, helped by upbeat economic data which managed to offset news that General Motors Q1 profit fell 90%. Optimism about the economy sent the S&P's 500 past 1,500 for the first time since September 2000. GM ((GM)) weighed on the Dow, falling 3.8% after its quarterly results missed forecasts. At the same time, the blue-chip average was supported by 3% increase for Verizon Communications ((VZ)) and 1% gain in the shares of Exxon Mobil ((XOM)), Microsoft ((MSFT)), and Pfizer ((PFE)).

Among the most notable movers, Hanson ((HAN)) climbed 18%, while IPSCO ((IPS)) rose 6% after the Swedish steel firm SSAB Svenskt Stal announced that it was buying the company for $7.7 billon. The $160 per share offer represents a 7.7% premium to IPSCO's closing price on Wednesday. The deal needs the approval of two-thirds of the votes cast by IPSCO shareholders as well as Ontario court approval.

By sector, airlines, transportation and software stocks led advancers, while gold, biotechnology and oil services declined. In late morning trading, the Dow Jones rose 23.24, or 0.18%, to 13,235.12. The S&P 500 index rose 5.75, or 0.38%, to 1,501.67. The Nasdaq composite index rose 9.44, or 0.37%, to 2,265.28.

[R]U.S. service sector grew at a faster rate in April.[/R]
Thursday morning, the Institute for Supply Management released its report on business activity in the service sector in the month of April. The report showed that the pace of growth in the sector accelerated more than economists had expected. The ISM said that its index of activity in the sector rose to 56.0 in April from 52.4 in March, with a reading above 50 indicating growth in the sector. Economists had been expecting a more modest increase to a reading of 53.0. The faster pace of growth in the sector was partly due to an acceleration in the pace of new orders growth, with the new orders index rising to 55.5 in April from 53.8 in March. The report also showed some improvement in pace of employment growth, as the employment index rose to 51.9 in April from 50.8 in the previous month. Prices rose at a faster pace than in the previous month, according to the report, with the prices index edging up to 63.5 in April from 63.3 in March.

[R]9:45AM U.S. markets opened higher, boosted by productivity report.[/R]
Wall Street started trading moderately higher on Thursday, as stronger-than-expected Q1 productivity growth and a modest increase in labor costs helped generate some optimism about the outlook for interest rates. However, the upside move was limited by 3% decline for General Motors ((GM)) amid 90% profit drop. Among other earnings-related movers, CBS ((CBS)) added 0.6% after it said quarterly profit fell 5.9%, hurt by a tax charge selling radio stations and lower TV syndication income. At the same time, its adjusted earnings per share were slightly above analyst expectations.

Martha Stewart Living Omnimedia ((MSO)) posted wider Q1 loss, weighed down by a charge associated with production of its syndicated TV program. The multimedia empire reported a loss of 23 cents per share, compared with a loss of 13 cents per share last year. Company's stock dropped 1.7%. European largest oil company Royal Dutch Shell PLC ((RDS-B)) said its Q1 earnings rose 5.7%, despite falling oil prices and declining profit at its production and refining arms.

In corporate news, Russia's Norilsk Nickel, the world's largest nickel producer, offered to buy Canada's LionOre Mining International for $4.8 billion in cash, seeking to break up Xstrata's agreement to buy the company. The Dow Jones Industrial Average was up 7 points at 13,218. The S&P 500 was up 1.75 points at 1,497, while the Nasdaq Composite rose 0.6 points to 2,558.


[R]Labor productivity rose 1.7% in Q1.[/R]
The Department of Labor released its preliminary report on productivity and labor costs in the first quarter on Thursday, showing productivity growth that exceeded economist expectations and labor cost growth that slowed substantially from the fourth quarter. The report showed that productivity in the non-farm business sector rose 1.7 percent following a revised 2.1 percent increase in the fourth quarter. Economists had expected productivity growth of 0.8 percent compared to the 1.6 percent growth originally reported for the previous quarter.

The stronger than expected productivity growth came as output increased by 1.4 percent, while hours worked decreased by 0.3 percent. In the fourth quarter output and hours increased by 2.9 percent and 0.8 percent, respectively. The first quarter productivity growth also reflected a 2.7 percent increase in productivity in the manufacturing sector, which compares to a 1.9 percent increase in the fourth quarter.

The Labor Department added that the pace of growth in unit labor costs slowed to 0.6 percent in the first quarter from a revised 6.2 percent in the fourth quarter. The unit labor cost growth in the fourth quarter was originally reported at 6.6 percent. The increase in unit labor costs in the fourth quarter was due in large part to big bonuses paid to high-income workers.


[R]First-time jobless claims dropped 21,000.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended April 28, showing that jobless claims unexpectedly fell compared to an upwardly revised reading for the previous week. The report showed that jobless claims fell to 305,000 from the previous week's revised figure of 326,000. Economists had expected jobless claims to rise to 325,000 from the 321,000 originally reported for the week ended April 21. The Labor Department also said that the less volatile four-week moving average fell to 328,750 from the previous week's revised average of 333,250. Additionally, the report showed that continuing claims in the week ended April 21 dropped to 2.495 million from the preceding week's revised level of 2.588 million. The unexpected decrease in initial jobless claims may generate some optimism about the April employment report that is due to be released on Friday. Economists expect the report to show an increase of about 100,000 jobs.

[R]9:30AM FTSE 100 rallies on strong earnings results from Unilever, Royal Dutch Shell.[/R]
The UK benchmark hit a new record on Thursday.

The FTSE 100 hit 6,530.4 in early exchanges, its highest level since 2001. By mid-day, the FTSE 100 index advanced 30.6 points to 6,515.2.

Advancers

Prudential led the advancers on reports that some shareholders were insisting on a break-up of the life assurer. The shares rose 5.1 per cent.

Consumer goods company Unilever gained 5.1 per cent as it reported a 5 per cent rise in first-quarter pretax profit. Same-store sales rose 4.3 per cent while margins also improved.

Royal Dutch Shell advanced 1.8 per cent o £18.40 on earnings of $6.9 illio in the first quarter compared to $6.1 billion a year ago and topped forecasts with a 14 per cent rise in net profit.

ICI gained 1 per cent on a 12 per cent growth in profit before tax. The paints and chemicals company also announced its outlook for the second quarter remained positive and expectations for the year as a whole remained unchanged.
British American Tobacco announced first-quarter profit from operations advanced 11 per cent, also beating expectations. The cigarette group gained 1.3 per cent

Decliners

A profit warning weighed on Games Workshop, pulling it 20.6 per cent lower. Shares plunged after the war gaming model specialist issued a warning that full year profits are unlikely to meet market expectations on weaker than anticipated sales in continental Europe.

Carter & Carter, down 7.9%, said that non-executive chairman Rodney Westhead will become chief executive on an interim basis after the car mechanic training group said Phillip Carter is believed to have been killed in a helicopter crash on Tuesday night.

[R]9:15AM Asian markets finish higher Thursday in a broad rally.[/R]
Asian markets rallied Thursday. Markets in Japan and China were closed for public holidays. In Hong Kong, the Hang Seng Index closed 1.4% higher at 20,681.58. China Mobile led gains among Hong Kong large-caps, as the world largest cellular operator by subscribers surged 1.5%. HSBC Holdings gained e 0.9%, adding to prior-session gains.

South Korean Kospi advanced 0.4% to end at 1559.86, slightly below its all-time high of 1,565.03. Hyundai Motor, the largest auto maker in South Korea, gained 0.2%, while industrial conglomerate Hyundai Heavy Industries added 1.5%. Samsung Electronics Co., a leading maker of flash memory chips used in digital cameras and music players, added 0.4%.

Australian benchmark S&P/ASX 200 index closed 0.1% higher at 6,245.60, adding to its record finish in the previous session as BHP Billiton and other mining shares held onto their previous gains. BHP Billiton added 0.6% and Rio Tinto climbed 0.8%. The National Australia Bank added 0.1% ahead of its first-half earnings, which are due to be released next week.

Singapore Straits Times Index added 1.4% to close at 3,463.86, while Malaysia KLSE Composite finished up 1.4% to 1,341.18.


[R]9:00AM U.S. stock futures turned higher on robust Q1 labor productivity.[/R]
U.S. stock futures advanced Thursday after data showing a bigger-than-expected rise in labor productivity in Q1, and lower-than-anticipated unit labor costs. The Labor Department said that productivity of the U.S. non-farm business sector rose 1.7%, much higher than the expected 0.8% increase. Unit labor costs at an annual rate of 0.6%, well-below expectations of a 2.1% gain.

The well-received economic data managed to offset negative sentiment generated by highly disappointing quarterly results at GM. General Motors ((GM)) lost 1.4% to $32 in the pre-open after it said its Q1 profit dropped to $62 million, with GMAC hurt by the subprime mortgage sector. Among other movers in the sector, Ford Motor ((F)) fell 0.9% and DaimlerChrysler ((DCX)) slid 1.2% in the pre-open.

Among pre-market highlights, office-supply retailer OfficeMax Inc. ((OMX)) said it swung to a Q1 profit, but retail sales fell and results misses analyst expectations. The company posted earnings of $57.5 million, or 76 cents per share, versus a loss of $26.1 million, or 37 cents per share a year ago, missing estimates of 93 cents. Excluding a $1.1 million loss related to the sale of some operations in Mexico, net income was 77 cents per share.

Further in earnings news, RealNetworks ((RNWK)) climbed 7.1% in the pre-open after reporting a 60% profit surge and its board approving a $100 million stock buyback. JDS Uniphase ((JDSU)) dropped 10% after it reported a loss. CBS ((CBS)) reported a profit decline, though its profit topped analyst estimates. S&P 500 futures erased slight earlier losses to trade up 2.90 points at 1,504.00 and Nasdaq 100 futures tacked on 4.75 points to 1,903.50. Dow industrial futures climbed 22 points to 13,270.


[R]8:15AM General Motors Q1 profit tumbled 90%.[/R]
General Motors Corp. ((GM)) announced Thursday a sharp decline in quarterly profit coming in far below analysts' estimates. The auto maker said its Q1 earnings were $62 million, or 11 cents a share, down from a profit of $602 million, or $1.06 a share a year ago, missing expectations of a profit of 87 cents on revenue of $40.88 billion. Revenue in the quarter slipped to $43.91 billion from $52.38 billion in the same period a year earlier.

The latest results include charges totaling $32 million, or 6 cents a share, largely related to restructuring actions in Europe and Asia Pacific. Excluding special items, GM would have posted Q1 adjusted earnings of $94 million, or 17 cents a share.

The company attributes the disappointing results to its financial services unit's exposure to the non-prime sector of the residential mortgage business. However, the company said its North America operations posted an adjusted loss of $85 million for Q1, narrower than a year-ago equivalent loss of $251 million. The company's stock fell 1.6% to $31.90 in premarket trade.


[R]8:00AM NY-7:00PM Mumbai Sensex rallies Thursday on robust earnings from large-caps.[/R]

The Sensex on BSE finished 205.84 points, or 1.48%, higher at 14,078.21.

The market-breadth was strong as there were three gainers for every two decliners. As 1,557 stocks advanced, 1,016 declined and 87 stocks remained unchanged. Of the 30 stocks in the Sensex, 23 advanced, six declined and one remained unchanged. The turnover on BSE was Rs 4,413 crore, higher than Rs 3,282.23 crore on Monday. On NSE, the turnover was Rs 9,326.83 crore, much higher than Rs 7,571.21 crore on Monday.

Economic news

Out of the 60 certified Agri Export Zones, 54 have not been able to achieve forecast export and investments targets since 2001, according to Associated Chambers of Commerce and Industry of India.

Foreign investment companies in sensitive sectors like aviation, petroleum and retail could undergo changes next month when the government reviews the norms on foreign direct investment.

Trading highlights

IFCI was the most-active stock with a turnover of Rs 155 crore followed by Reliance Industries and Network FinCap.

Advancers

Bajaj Auto led the advancers, rallying 4.3% to Rs 2,551. The board meeting of the company is scheduled on May 17 2007, in Mumbai is likely to consider proposal to separate the manufacturing and financial assets. Bajaj Auto continued its downward trend in motorcycle sales for the third straight month this year, with its April numbers, including exports, declined by 13% compared to the same month last year.

Index heavy Reliance Industries surged 4% to Rs 1,623. Reliance will pay over $600 million for hiring deep-sea drilling rigs for developing the gas fields in the prolific KG-D6 block off the east coast. KG-D6 is the world second largest deepwater find last decade.

Ranbaxy soared 3.5% to Rs 384, while Gujarat Ambuja and Hero Honda advanced over 3% each to Rs 122 and Rs 705, respectively. Hero Honda reported a 4.86% increase in vehicle sales during April 2007 at 2,62,544 units compared to a year ago. Hero Honda expects to maintain its growth momentum in the coming years. Bharti Airtel and Larsen & Toubro also settled up 2.7% each to Rs 834 and Rs 1,741, respectively.

Housing finance company HDFC reported 29% jump in net profit to Rs 550.05 crore for the fourth quarter ended March 2007, 15% rise in earnings. The total income surged 40% to Rs 1,732.95 crore compared to a year ago. The stock advanced 0.4% to Rs 1,667 on Thursday.

Decliners

Tata Motors and HDFC Bank led the decliners, dipping over 2% each to Rs 734 and Rs 1,006, respectively. Tata Motors plunged after rallying to a high of Rs 764.50, on posting total sales of 40,486 vehicles for April, a growth of 10.7% compared with 36,574 vehicles sold in April 2006.

Other leading decliners included Hindustan Lever shedding 1.8% to Rs 196, and Reliance Communications losing 1% to Rs 472.


[R]6:30AM European shares declined Thursday on weak earnings reports from UBS and BMW.[/R]
European markets declined in mid-morning trade on Thursday. National benchmarks fell in 10 of the 17 western European markets that were open.

The German DAX Xetra 30 index lost 0.2% at 7,442.43 and the French CAC-40 index slipped 0.1% at 5,987.37. However, the U.K. FTSE 100 index rose 0.4% to 6,507.30.

Advancers

Royal Dutch Shell advanced 1.6% after saying that its first-quarter profit rose 6% to $7.28 billion, with improving profit in its gas and power, oil products and chemicals units countering declining profits at its largest arm, exploration and production. Competitor BP rose 1.5% in London, while Total climbed 0.8%.

Unilever rose 5.1%. It posted an unexpected increase in first-quarter profit, as cost savings and strong sales volumes outweighed currency effects and higher raw material prices. Dutch supermarket chain Ahold shares rose 2.8% in Amsterdam, after it agreed to sell its U.S. Foodservices business to private equity firms for $7.1 billion.

Decliners

Automaker BMW led the car making sector lower. Its shares declined 2.6% after the first-quarter profit of the company slipped just below analyst expectations and it reported a weaker margin. In IT news, Infineon Technologies lost 1.4%.

UBS fell the most in six months after the biggest Swiss bank reported a third straight decline in quarterly profit. UBS sank 2.7%. Shares in UBS competitor Credit Suisse lost 2.4%, also in Switzerland.

Sanofi-Aventis shares also lost ground. The first-quarter sales of the company grew 2% to 7.12 billion euros, or up 7% on a comparable basis; slightly lower than analyst estimates. Combined with lack of news on the status of a U.S. review of its weight-loss drug, Acomplia, Sanofi shares slipped 1.3%.

Commodities

Crude oil advanced after rebels attacked an oil facility for the third time this week in Nigeria, where unrest has cut about a quarter of the output of the country. Crude oil for June delivery rose 32 cents, or 0.5%, to $64 a barrel on the New York Mercantile Exchange, and traded for $63.88 early in London. Brent crude for June settlement gained 45 cents, or 0.7%, to $66.70 a barrel on London ICE Futures exchange.

Gold gained for the first time this week after Gold Fields Ltd., the world fourth-biggest producer of the metal, announced output declined at seven of its eight mines. Silver also increased. Gold for immediate delivery rose $2.85, or 0.4%, to $676 an ounce, after declining $8.40 in the first three days of this week. Silver rose 11.5 cents to $13.33 an ounce, its first gain this week.

Currencies

The dollar was mostly lower against other major currencies in European trading Wednesday. The euro traded at $1.3609, up from $1.3598 late Wednesday in New York. The British pound traded at $1.9924, up from $1.9896. The dollar fetched 120.12 Japanese yen, unchanged.