Oil Drops, Fed Rates Unchaged, Venezuela Falls

123jump.com Staff
09 May, 2001
New York City

The Fed kept the federal funds rate at 5.25%, unchanged since June 2006. Investors gave a boost to stocks hoping the Fed would cut rates by year-end. OfficeMax jumped 8.3%. Cisco posted a 34% quarterly profit rise and shares slid 6%. News Corp. lost 2.1%. Alltel advanced 2%. Rio Tinto climbed 11% amid market speculation that BHP Billiton launched a takeover offer for it. Toyota forecast slowest profit growth in ten years.

[R]4:00PM NY; 10:00PM Frankfurt; 2:00AM Mumbai - GLOBAL MARKETS[/R]

The Federal Reserve Bank left short term rates unchanged at 5.25% and noted that inflation remains at elevated level. Oil price in New York declined on weekly inventory report. Gold and silver price fell. European stocks closed higher on merger speculation in mining sector. Venezuela lost nearly 35% in last two trading days. Brazilian banks continue to climb higher and increased consumer lending.

Yield on 10-year bond closed at 4.659% and the 30-year bond closed at 4.829%.

Gold lost $4.900 to close at $682.500 a troy ounce, silver decreased 13 cents to end at $13.470 a troy ounce and copper declined $160.000 to close at $8210.000 per metric ton.

Oil lost 71 cents to close at $61.550 a barrel and heating oil declined 1.410 cents to finish at 181.580 cents a gallon. Natural gas increased 8.3 cents to close at $7.720 per MMBtu. Gasoline went up 3.150 cents to end at 223.600 cents a gallon.

Asian markets closed higher as investors sold NTT DoCoMo and other blue-chip stocks ahead of the Federal Reserve''s meeting on interest rates. The advancers were led by Indonesia with a gain of 0.75%, South Korea with an advance of 0.68% and Hong Kong with an increase of 0.67%. The decliners were Thailand with a decline of 0.92%, Taiwan with a decrease of 0.53% and Malaysia with a loss of 0.31%. Australia gained 0.59% lifted by talk of a possible takeover in the global-resources sector.

European markets finished higher as deal-related gains for miner Rio Tinto and well received earnings from BNP Paribas outweighed auto- and tech-sector declines and caution before a U.S. Federal Reserve decision on interest rates. The advancers were led by Switzerland with an increase of 0.54%, Italy with an advance of 0.52% and Germany with a gain of 0.45%. The decliners were Netherlands with a loss of 0.26% and U.K. with a decrease of 0.01%.

Latin America markets finished higher ahead of a U.S. Federal Reserve announcement on American interest rates. The advancers were led by Brazil with a gain of 1.98%, Mexico with an increase of 1.16% and Argentina with an advance of 0.56%. Venezuela fell another 1% after dropping a whopping 33% a day ago. Caracas exchange suffered heavy losses due to delisting of CAN TV and Electricidas de Caracas.

Canada lost 0.02% due to declines in the financial services and energy sectors. Research in Motion ((RIMM)) gained $8.07 after rising $6.55 a day ago.

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

Barnes Group Inc. ((B)), metals manufacturer and industrial supplies distributor, said that its first-quarter net income increased to 50 cents per share compared with 36 cents per share in the year-earlier period. Sales climbed 20% to $360.7 million. The aerospace-parts group lifted its fiscal-year earnings estimate to a range of $1.74 to $1.83 per share, from a range of $1.53 to $1.60. As a result, shares of the company climbed 13.1%.

Brightpoint Inc. ((CELL)), cell phone distributor, posted a sharp decline in its first-quarter profit, as gross margins retreated due to partly to a shift toward lower-margin distribution. The company earned $1.8 million, or 4 cents per share, down 79% compared with $8.7 million, or 18 cents per share, during the same period a year ago. Revenue climbed 14% to $641.6 million from $564.6 million. Of this, distribution revenue grew 17% to $564 million, while logistic services revenue declined 8 % to $74.6 million. Shares climbed 9.4%.

EFunds Corp. ((EFD)) shares surged 12.1% after the provider of electronic payment services said it has been approached by parties who have expressed a desire to explore possible strategic alternatives. The company has offered to Goldman, Sachs & Co. and BlackRock Inc. to assist it in exploring all of its options, including potential merger opportunities. EFunds also said that its first-quarter net income declined to $10.5 million, or 22 cents per share, compared with $10.7 million, or 23 cents per share, in the year-ago period. Revenue decreased to $134 million versus $139.7 million last year. The company now expects revenue and earnings to trend toward the lower end of its previously forecasted ranges.

Leap Wireless International Inc. ((LEAP)), cell phone service provider, shares climbed 6.6% after the company said that it swung to a first-quarter loss of 12 cents per share from a year-earlier profit of 29 cents per share, as expenses, including those associated with acquiring new customers, increased 56%. The company''s revenue climbed 46% to $389.4 million.

Macrovision Corp. ((MVSN)), which makes copy protection software for music labels, software companies, film studios and others, said that its first-quarter profit more than doubled, as services revenue rose sharply and the company''s tax bill shrank. Net income rose to $5.7 million, or 11 cents per share, from $2.5 million, or 5 cents per share, in the year-ago period. Revenue rose to $65.2 million from $57 million last year. Services revenue climbed 40% and the company''s tax bill fell to $878,000 from $6.3 million a year ago. Shares climbed 15.6%.

Maximus Inc. ((MMS)), government services provider, said that its second-quarter earnings tumbled 73% because of $6.1 million in legal expenses. For the quarter Maximus earned $2.4 million, or 11 cents per share, compared with $8.9 million, or 41 cents per share, in the year-ago quarter. Revenue declined less than 1% to $179.1 million, compared with $179.8 million in the year-ago period. The company said sales in last year''s second quarter included $6.9 million in corrections and voter hardware revenue that has been divested. Shares climbed 6.4%.

Allscripts Healthcare Solutions Inc. ((MDRX)), which makes prescription-management software, said that its first-quarter profit more than tripled on a jump in revenue and surge in income tax benefits. The company earned $4.5 million, or 8 cents per share, compared with a profit of $1.3 million, or 3 cents per share, during the same period a year prior. Revenue rose 54% to $65 million from $42.2 million a year ago. Shares fell 10.6%.

Cisco Systems Inc. ((CSCO)) shares went sharply down 6.6% after the company reported its third-quarter results, but analysts continued to see the tech bellwether as best positioned to benefit from growing demand for networking equipment. Third-quarter profit rose 34% on the growing appetite of corporate customers and Internet-service providers for its networking gear.

Hoku Scientific Inc. ((HOKU)), materials science company, focused on clean energy technologies, recorded a first-quarter net loss of $1.74 million, or 11 cents per share, compared with a year-ago net profit of $508,000, or 3 cents per share. Excluding certain items, the company lost $1.2 million, or 7 cents per share, in the first quarter. Revenue declined to $1.14 million against $1.34 million in the comparable period last year. Shares fell 12.3%.

SWS Group Inc. ((SWS)) posted a 10% drop in third-quarter profit from a year ago, when the results benefited from a tax gain. The investment and financial services holding company reported net income of $7.6 million, or 28 cents per share, compared with net income of $8.4 million, or 32 cents per share, in the year-ago period. Shares fell 14.9%.

[R]1:00PM NY, 5:00 PM Frankfurt European stocks gained ground, helped by Rio Tinto and BNP Paribas.[/R]
European stock markets recovered from recent losses to finish higher on Wednesday. The upbeat market sentiment was generated by deal-related gains for Rio Tinto and well-received earnings from BNP Paribas which managed to offset losses among automotive and tech stocks, as well as caution before the U.S. Fed Reserve decision on interest rates. Rio Tinto jumped 10% in London on speculation that the company had rejected a bid of $110 a share (45.81 pounds) from competitor BHP Billiton which rose 5.4%.

Among earnings-related gainers, BNP Paribas climbed 4.2% on higher-than-expected Q1 profit. Again in the bank sector, Credit Suisse rose 1% in after Merrill Lynch upgraded its stock to buy from neutral. Among other bank stocks, Credit Agricole rose 3.1% while Societe Generale lost 2.6%. Unicredit shares rose 1%. On the side of the losers, car maker Porsche lost 0.8% and tire company Michelin fell 1.5%. Tech stocks declined after Cisco Systems predicted slowing revenue growth. Ericsson shares lost 1%. The DAX Xetra 30 rose 0.5% to 7,475.99, the French CAC-40 added 0.3% to 6,051.63 and the U.K.''s FTSE 100 closed flat at 6,549.60.


[R]11:30AM U.S. stock averages remained in the negative. News Corp. profit rose 6.2%.[/R]
U.S. stock averages continued to trade in the negative, awaiting the Fed Reserve''s decision later today. Among companies in focus, Toyota Motor ((TM)) reported a 9% profit increase in Q1 on 10% revenue growth, helped by robust U.S. and European sales. The stock lost 0.6%. Among other companies releasing quarterly earnings, News Corp. ((NWS)) posted 6.2% earnings increase to 27 cents a share, coming in line with analyst estimates. Company''s shares fell 1.6%.

By sector, telecoms, networking and internet stocks led decliners. Cisco Systems ((CSCO)) pressured tech stocks with a decline of 6.6% after predicting slowing revenue growth. The tech-heavy Nasdaq was also kept firmly lower by notable losses for Priceline.com ((PCLN)), down 8.8% and Gateway ((GTW)), falling 3.9%. Energy stocks also posted weakness, as the price of oil fell sharply following the release of a petroleum report. At the same time, the oil-sensitive airline sector advanced.

In merger-and-acquisition action, mining company Rio Tinto Group ((RTP)) rose to a record 7.3% in London on speculation of a takeover bid from BHP Billiton Ltd. Rio Tinto said it was not aware of any approach. A union would create the world''s largest copper producer and iron-ore miner. In late morning trading, the Dow Jones industrial average rose 2.28, or 0.02%, to 13,311.35. The Standard & Poor''s 500 index was down 0.26, or 0.02%, at 1,507.46. The technology-dominated Nasdaq composite index declined 8.36, or 0.33%, to 2,563.39.

[R][Crude oil, gasoline and distillate inventories advanced.[/R]
Government data released Wednesday showed that crude oil inventories advanced in the most recent week, adding to a gain posted in the previous couple periods. Stockpiles of gasoline recorded a mild build as well, breaking a recent streak of declines. The Department of Energy''s Energy Information Administration said that crude oil inventories climbed 5.6 million barrels in the week ended May 4. Specifically, the measure rose to 341.2 million barrels from the previous week''s level of 335.6 million barrels. This followed an advance of 1.1 million barrels in the prior week. Oil inventories for the week were 1.7% below last year''s level. Meanwhile, gasoline inventories showed a week-over-week advance of 400,000 barrels. This halted a recent streak of declines, including a drop of 1.1 million barrels in the previous week. The level of gasoline inventories was 7% below last year. Distillate fuel oil also advanced for the week. Stockpiles of these products, which include heating oil, rose by 1.7 million barrels after slipping 200,000 barrels in the previous week.


[R]9:45AM U.S. markets opened lower on weak tech stocks and nervousness ahead of FOMC meeting.[/R]
Wall Street started trading lower, reflecting cautiousness before the FOMC meeting, as well as weakness in the tech sector amid disappointing revenue forecast from Cisco Systems. Investors, who expect that interest rates will remain unchanged, are more concerned about the central bank''s economic assessment statement. The downward trend was also attributed to consolidation of market''s record gains of the last two months.

Technology giant Cisco ((CSCO)) slipped 6% after projecting slowing revenue growth. The company reported a 34% profit rise and 21% revenue rise. Walt Disney ((DIS)) weighed on the Dow, falling 1.2% after posting lower-than-expected revenue. At the same time, the blue-chip average was helped by International Business Machines ((IBM)) which rose 1.3% after Goldman Sachs lifted its rating on the stock to buy from neutral.

In other corporate news, home builder Toll Bros ((TOL)) lost 0.6% after it issued another profit warning, noting that tighter lending standards were affecting affordability at lower price points. Toyota Motor ((TM)) lost 0.6% after it posted a 9% profit rise on 10% revenue growth in Q1, boosted by strong U.S. and European sales.

In early trading, the Dow slipped 14.55, or 0.11%, to 13,294.52. The S&P''s 500 index was down 3.48, or 0.23%, at 1,504.24, and the Nasdaq declined 15.15, or 0.59%, to 2,556.60. Bonds were little changed ahead of the Fed''s decision. The yield on the benchmark 10-year Treasury note slipped to 4.63% from 4.64% late Tuesday.


[R]9:30AM UK benchmark index is lower Wednesday as speculation around Rio Tinto fizzles out.[/R]

The UK benchmark is lower in mid-afternoon trading on Wednesday. The FTSE 100 is 0.18% lower at 6,538.

Advancers

Rio Tinto is still higher, up 6.4%, even though it announced it will refrain from comment on market gossip. Its shares jumped by 11% at one point on the Australian market overnight as the story of a bid from BHP took hold.

Other miners also advanced in sympathy. Kazakhmys gained 3.1%, Vedanta rose 1.8% and BHP itself was 2.2% higher.

Hanson gained 0.7% as it confirmed that HeidelbergCement was considering a bid for the aggregates provider.

Scottish & Newcastle, also seen as a bid target, gained 1.7% after robust figures from its eastern European joint venture BBH. Broker upgrades sent DSG International 3.3% higher.

Decliners

Sage Group, the last remaining technology stock on the FTSE 100, shed 3% after it said it had plans to restructure in the US and said it was looking to make further acquisitions.

Ex-dividends also weighed on the index. Antofagasta retreated 4.8% and Rexam lost 2.5%. Pub operator JD Wetherspoon lost 3.6% after it warned that higher costs in preparing outlets for the upcoming UK smoking ban would take its annual profits marginally below expectations.

EasyJet, the airline, dropped 3.1% despite cutting its interim losses as it announced it had reduced ticket prices further in a competitive market.


[R]9:00AM U.S. stock futures traded lower on rate concerns and Cisco forecast.[/R]
U.S. stock futures moved to the downside on Wednesday amid cautiousness before Fed Reserve’s interest rate policy decision. The Fed is due to announce its interest rate decision today, with the market largely expecting that rates will remain unchanged at 5.25%.

Technology giant Cisco Systems and entertainment company Walt Disney also weighed after posting quarterly results. Cisco ((CSCO)) shares fell 5.1% in pre-open trading after reporting 34% profit rise in Q1 but also predicting slowing revenue growth. Also in the networking sector, Finisar ((FNSR)) dropped 7.1% after the fiber-optic products maker warned that its Q4 revenue would come below previous forecasts. Juniper Networks ((JNPR)) declined 1.5%.

Dow component Walt Disney & Co. ((DIS)) lost 2.1% on lower-than-expected revenue increase, although its 27% profit rise beat expectations. Again on the Dow, International Business Machines ((IBM)) rose 1% after it was upgraded to buy from neutral at Goldman Sachs after, following the tech giant''s buyback move. In other earnings news, Toyota Motor ((TM)) reported a 9% profit rise on 10% revenue growth in Q1 on strong U.S. and European sales.

Among metals stocks, Rio Tinto ((RTP)) climbed 5.6% in pre-market trading on speculation that miner BHP Billiton ((BHP)), launched a takeover offer. BHP shares added 1.7%. S&P 500 futures lost 2.50 points to 1,509.70 and Nasdaq 100 futures declined 5.50 points to 1,900.00. Dow industrial futures gave up 16 points to 13,330.


[R]8:30AM Asian stocks end mostly higher on Wednesday with Shanghai setting a new record high.[/R]

Asian markets closed mostly higher on Wednesday.

In China, the Shanghai Composite Index ended up 1.6% at 4013.09, a new record high. The Shenzhen Composite Index rose 0.3% to 1111.29, also a record close. The Shanghai index more than doubled last year and has increased another 50% so far this year. Drawn by the robust performance of the stock market and the potential for high investment returns, retail investors have been flooding the market in the past months. Industrial & Commercial Bank of China rose 5.5% and Bank of China gained 7.8%. Baoshan Iron & Steel added 4.7% and China Yangtze Power advanced 2.9%.

The 225-issue Nikkei Average in Tokyo closed 0.5% higher at 17,748.12. Olympus surged 3.3% after the company raised its net profit forecast for the current fiscal year. Bucking the trend, Softbank shed 3% after UBS Securities recommended investors to sell the share on concerns its valuation is above the brokerage price target.

Hong Kong Hang Seng Index added 0.7% to end at 20,844.78 and Australian S&P/ASX 200 climbed 0.6% to close at 6,341.00, buoyed by talk of a possible takeover in the global-resources sector. Bid target Rio Tinto soared 6.7% in Sydney on speculation the miner may have been approached by BHP Billiton. Shares of BHP Billiton gained 1.1%.

South Korean Kospi Index gained 0.7% at 1,593.42. bucking the uptrend, Taiwan Weighted Price Index lost 0.5% to finish at 8,052.70.


[R]8:15AM Legg Mason Q4 profit beat estimates.[/R]
Legg Mason Inc.''s ((LM)) said its Q4 net income rose 15% to $172.5 million, or $1.19 a share, compared with $150.1 million, or $1.03 a share a year earlier. The asset manager said that quarterly revenue increased 8.5% to $1.14 billion from $1.05 billion as the company had more average assets under management. Company’s fourth-quarter financial results exceeded expectations of earnings of $1.17 a share on revenue of $1.13 billion. Legg Mason''s total assets under management climbed 12% to $968.5 billion from $867.6 billion a year earlier


[R]8:00AM NY-7:00PM Mumbai Sensex ends higher on a rally in banking stocks.[/R]

The Sensex on BSE finished 16.05 points, or 0.12%, higher at 13,781.51.

The market-breadth was negative as 1,122 stocks advanced, while 1,407 stocks declined and only 104 stocks remained unchanged. Of the 30 stocks in the Sensex, 17 advanced, while the rest declined. The market was highly volatile and traded in the range of 194 points. The turnover on BSE was Rs 3,937 crore, lower than Rs 4,280.65 crore on Tuesday. On NSE, the turnover was Rs 8,394.44 crore, lower than Rs 9,549.68 crore on Tuesday.

Economic news

The Indian government fixed a floor price of 850 rupees a share for selling its remaining 10.27% stake in car maker Maruti Uduog. Suzuki Motor Corp owns 54.2% of Maruti.

Global mobile company Vodafone announced Wednesday it has formally acquired the controlling stake in Hutch-Essar from Hong Kong-based Hutchison Telecommunications International for $10.9 billion.

India’s oilmeal exports increased in April more than 8% to 432,950 tons from a year ago on improved sales of rapeseed meal. India exported 399,225 tons of oilmeal in April 2006.

Trading highlight

ICRA was the most-active stock with a turnover of Rs 250.14 crore followed by Indiabulls and new-issue Fortis.

Advancers

Late buying interest in bank stocks helped the rally. SBI soared 3.8% to Rs 1,123 and privately owned ICICI Bank was up 0.9% at Rs 849, while HDFC Bank was up 0.71% to Rs 997. Other gainers included Hero Honda, which rallied 3.2% to Rs 701, and Reliance Energy surging 2.7% to Rs 519. Tata Steel gained 1.6% to close at Rs 562 and Bajaj Auto added 1.2% to Rs 2,564.

Ranbaxy Laboratories settled 1.1% higher to Rs 393. The pharmaceutical company is intending to invest around Rs 60 crore to upgrade the recently acquired Be-Tabs Pharma units in South Africa. Index heavy Reliance Industries rose 0.27% to Rs 1,598 on 6.38 lakh shares. It recovered from a low of Rs 1,577.

Decliners

IT large-cap TCS led the decliners, shedding 2.5% to Rs 1,237. Hindustan Lever and Cipla dropped 1.8% each to Rs 191 and Rs 208, respectively. ONGC slipped 1.4% to Rs 909. ACC and Infosys declined over 1% each to Rs 876 and Rs 1,981, respectively.

New issue Fortis Healthcare finished at Rs 100, lower than the IPO price of Rs 108 per share. The stock opened at Rs 105 and rallied to a high of Rs 109.10. Its low for the day was Rs 97.90.


[R]6:30AM European markets gain Wednesday as miners lead on merger talk.[/R]
European markets are higher on Wednesday. By late morning in London, Frankfurt Xetra Dax added 0.4% to 7,468.53, the CAC 40 climbed 0.3% to 6,054.42 and London FTSE 100 gained 0.3% to 6,571.4. National benchmarks gained in 12 of 18 western European markets except Iceland.

Advancers

London-listed miners led gainers amid rumours BHP Billiton was ready to make a takeover offer for Rio Tinto. Rio shares added 5.8% and BHP gained 3%, while expectations of consolidation within the sector drove Kazakhmys 3.1% higher and Xstrata climbed 2.4%.

Financial sector gains were led by BNP Paribas of France, which added 3.8% to a record high after posting forecast-topping first-quarter profit, lifted by investment banking and asset management gains. Credit Agricole rose 3.1% as takeover speculation continued to drift among the banking stocks.

Decliners

Aegon slipped 3.7%. The second- biggest Dutch insurer announced first-quarter profit fell 23% to 485 million euros, missing analyst estimates of 619 million euros, as one-time gains were not repeated.

Technology shares declined after the quarterly sales forecast of Cisco Systems, the world biggest maker of computer-networking equipment, missed estimates for the first time in a year.

Alcatel-Lucent, supplier of telecommunications equipment, slid 0.9%. Infineon Technologies AG, Europe second-largest maker of semiconductors, slipped 0.4%.

Commodities

Crude oil traded little changed in New York, near $62 a barrel, after Chevron said four contractors were kidnapped in Nigeria, raising concern supplies from the largest producer in Africa would be disrupted. Crude oil for June delivery was trading at $62.16 a barrel, down 10 cents, in after-hours trading on the New York Mercantile Exchange. Gasoline for June delivery was up 0.12 cents at $2.2057 a gallon in after-hours trading in New York.

Gold for immediate delivery was little changed at $685.62 an ounce in early trade in London . Silver dropped 1 cent to $13.495 an ounce.

Currencies

The dollar was mixed against other major currencies in European trading Wednesday morning. The euro traded at $1.3542, down from $1.3545 late Tuesday in New York. The British pound traded at $1.9918, up from $1.9889. The dollar bought 119.93 Japanese yen, down from 119.95.