Idle Opening Despite Falling Oil

Elena
07 Sep, 2005
New York City

Stocks are trading down after Tuesday's broad rally, awaiting economic data. Asian markets finished higher , boosted by the shsarp pullback in oil prices, South Korea's Kospi climbed 1.8%, the Nikkai edged up 0.1%. European stocks gain on equity markets. Revised 2Q productivity figures are expected to show 2.1% growth rate, down from 2.2% in July. The Fed Reserve's Beige Book report is due later in the day.

U.S. MARKET AVERAGES

U.S. stock futures are trading lower, following a session of solid gains on Tuesday when declining oil and gasoline prices sent the three major averages higher. Energy stocks will remain in focus as oil-production facilities continue their recovery after Katrina.
Another factor, determining the market direction will be the economic news due later in the day. The investors’ attention will be focused on the revised information on second quarter productivity. Economists expect 2.1% growth rate for August, slightly down from 2.2% the previous month.
The Fed Reserve is expected to release its Beige Book report to give a clue on the U.S. interest rates direction

Dow Jones futures were recently down 7 points, while Nasdaq futures were off 1.5 points and S&P futures were down 0.5 point.

ECONOMIC NEWS

The Labor Department is due to release the revised second quarter productivity report at 8:30 a.m. EDT. Economists expect productivity to have grown at a 2.0 percent annual rate compared with 2.2 percent in the advance report and for unit labor costs to have risen at an upwardly revised 1.5 percent annual rate compared with 1.3 percent.

The Federal Reserve will release its latest Beige Book report at 2:00 p.m.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed higher, gaining on continuously falling oil prices which dropped to $65.96 a barrel and reduced fears of the impact of energy costs on major export markets. The Japanese Nikkei gained 0.1%, lifted by exporter issues with Sony up 2.1%, TDK Corp. 1.65%, and Suzuki Motor also up 1.2%. Hong Kong’s Hang Seng rose 0.4%, South Korea’s Kospi added 1.8%, and Australia’s All Ordinaries climbed 0.8%. The dollar bought 109.46 yen.

European markets were sent higher in mid-day dealings by strong equity markets, multy-week high close of U.S. markets overnight and positive earnings news, headed by French Bank Credit Agricole and defense contractor BAE Systems. The German DAX 30 rose 0.5%, the French CAC 40 climbed 0.3%, and London’s FTSE added 0.3%.

ENERGY, METALS, CURRENCIES

Crude-oil prices further dropped on recovering oil production. Crude-oil is more than $5 down from its all-time peak on Aug 30. Light sweet crude October delivery fell 46 cents to $65.50 a barrel in European electronic trading on the Nymex. London Brent declined 49 cents to $64.18. Gasoline rose more than a cent to $2.0679 a gallon. Heating oil was down 1 cent to $2.0470.

Gold rose in European trading as the U.S. dollar declined. Gold for immediate delivery gained $1.06 to trade at $445.06 per troy ounce.

The U.S. dollar was trading mixed against other major currencies ahead of Fed Reserve news on the future direction of U.S. interest rates. The euro rose to $1.2490 from $1.2461. The dollar bought 109.83 yen, up from 109.65. The British pound stood at $1.8418, up from $1.8417.

EARNINGS NEWS

Albertson's, supermarket chain, reported 2Q earnings of 29 cents per share, up from 28 cents per share in the same period last year on total sales growth, missing analysts' forecasts of 34 cents per share. Earnings from continuing operations came to 30 cents per share, down from 34 cents per share in the comparable period a year ago.

Casey's General Stores, convenience store operator, posted 1Q net earnings of 41 cents a share, up vs. 32 cents a share for the same period last year on revenue growth, beating analyst estimate of 34 cents a share.

McData, storage-technology company, posted a 2Q net loss of 18 cents a share, down from a loss of 5 cents a share in the year-ago period despite 68% revenue growth, missing analysts’ expectations of 1 cent a share. Its pro forma earnings amounted to 3 cents a share.

Ruth's Chris Steak House, restaurant chain, posted 2Q earnings of 11 cents a share, up vs. a net loss of 7 cents a share in the same period last year on strong revenue growth. Same-store sales rose 10.3% at company-owned restaurants and 7.4% at franchised restaurants in 2Q.

Shuffle Master, gaming supply company, said that 3Q net earnings came to 22 cents a share, up 29% from 17 cents a share in the year-earlier period on revenue growth, beating analyst estimate by a penny. The company expects 81 cents to 82 cents a share for 2005.

CORPORATE NEWS

Northrop Grumman is expected to announce Wednesday that it is ready to work in a team with European Aeronautic Defence & Space to bid on the Air Force's next-generation aerial-refueling contract, joining efforts in the competition against Boeing.