Markets in Americas Rise, Oil and Gold Drop

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

U.S. stocks advanced after billionaire investors Buffett, Lampert and Carl Icahn increased their holdings of drug companies, banks and railroads. Bausch & Lomb jumped 9% after it agreed to be acquired by Warburg Pincus for $65 per share. Agile Software rose 13% on agreement to be bought by Oracle for $495 million. Applied Materials slid 3.4% after forecasting flat sales in third quarter. Brazilian currency rose on debt rating upgrade. HP reported earnings fall of 7% on revenue gain of 13%.

[R]4:30PM NY; 10:30PM Frankfurt; 2:00AM Mumbai - GLOBAL MARKETS[/R]

U.S. averages raced ahead to record level on the strength of a rebound in the final hour of trading. Deal news from Bausch & Lomb and Oracle supported trader enthusiasm. SEC filings showed that Carl Ichan has taken a stake in CSX, Buffett has doubled its stake in Johnson & Johnson and Lampert controlled fund has acquired a stake in Citigroup.

Zurich Financial reported earnings gain of 71%, Vivendi earnings jumped 25%, Telefonica earnings gained 8%, and higher steel prices lifted Arcelor Mittal earnings by 40%. On the deal front, Permira agreed to buy nearly 30% stake in Valentino for $1.1 billion.

Brazilian currency Real continued its advance, 1.5%today, on the news that the country’s debt rating was raised to one level below investment grade by rating agency S&P. The rising export and surging foreign exchange has lifted Real against the U.S. dollar by more than 50% to a record six-year high. Chiean Central Bank raised its forecast for annual inflation for the current year to 2.8%, revised its March forecast of 2.3%. Higher food and energy costs were blamed.

Yield on 10-year U.S. bond closed at 4.704% and the 30-year U.S. bond closed at 4.875%.

Gold lost $13 to close at $661.50 a troy ounce, silver decreased 38.5 cents to end at $13.315 a troy ounce and copper advanced $112.000 to close at $7799.000 per metric ton.

Oil lost 62 cents to close at $62.550 a barrel and heating oil declined 2.320 cents to finish at 186.700 cents a gallon. Natural gas increased 2.6 cents to close at $7.890 per MMBtu. Gasoline went up 3.040 cents to end at 233.200 cents a gallon.

Asian markets closed higher despite declines from its building sector, while other Asian-Pacific markets advanced. The advancers were led by China with an increase of 2.95%, India with an advance of 1.43% and Indonesia with a gain of 1.27%. There were no decliners. Australia gained 0.06%.

European markets finished lower, pressured by weak airlines. The decliners were led by Netherlands with a decrease of 0.72%, France with a loss of 0.53% and Italy with a decline of 0.50%. The advancers were Spain with an increase of 0.64%, Belgium with an advance of 0.23% and Norway with a gain of 0.18%.

Latin America markets finished higher. The advancers were led by Brazil with an increase of 2.30%, Mexico with a gain of 1.94% and Argentina with an advance of 0.77%. There were no decliners. Canada gained 0.42% on gain in the materials sector.

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

Sotheby’s ((BID)) shares slipped 7.39% after an analyst said the completion of a contemporary art auction leaves little room for growth in the near term. At the auction held Tuesday, a Mark Rothko abstract painting was sold for nearly $73 million including the buyer''s premium, well above a $40 million estimate and a record for postwar art.

Copa Holdings SA ((CPA)), airline company, said that its first-quarter net earnings rose 51% to $48.6 million, or $1.12 per share, compared with $32.3 million, or 75 cents per share, in the year-ago period. Revenue rose 27% to $242.7 million. Shares in Copa Holdings surged 9.79%.

Quanex Corp. ((NX)) jumped 8.9%. The producer of metal products for automobiles and construction said it may sell or spin off a building-products unit that generated more than half its revenue last year.

Gaming Partners International Corp. ((GPIC)) shares slipped 31.8%, after the maker of gambling products said that its fourth-quarter net earnings declined to $115,000, or a penny per share, compared with net earnings of $2.1 million, or 26 cents per share, in the year-ago period. Revenue fell to $16.1 million from $16.2 million in the same period last year.

Epoch Holding Corp. ((EPHC)) reported a total revenue growth rate that exceeds the rate of growth of expenses. Total operating revenue increased by 114% while total operating expenses increased by 56%. The company recorded net income of $2.3 million, compared to a net loss of $1.1 million for the same period a year ago. The increase in revenue, coupled with investment income from the Strategic Data transaction and realized gains on the sale of ARTG securities, were the primary reasons for this increase. Basic earnings per share for the quarter were $0.11 per share versus a loss of $0.06 per share for the same period a year ago. Shares in Epoch Holding slipped 13.86%.

Bancorp Rhode Island, Inc. ((BARI)) shares dropped 5.24% after the company announced that, based on an estimate of the votes cast at the company''s annual meeting of shareholders, the company believes that shareholders have voted to elect all of the Board of Director''s nominees.

[R]1:00PM NY, 5:00 PM Frankfurt European stocks closed lower, pressured by weak airlines.[/R]

European stock markets closed in the negative territory on Wednesday, pressured by weakness among airlines stocks as well as mixed earnings from Credit Agricole and Vivendi. Air France-KLM dropped 2.1% after UBS downgraded the company to neutral from buy. Shares in the French Credit Agricole slipped 4.1% after the bank reported a 92% increase in Q1net income, but excluding special items, earnings came below estimates.

Again in France, Vivendi shares rose 1.1% after reporting 23% increase in Q1 adjusted net income. Among tech stocks, chipmakers Infineon Technologies dropped 3.2% and STMicroelectronics fell 1.8% after U.S. peer Applied Materials posted a weak outlook Tuesday. In contrast, automakers were mostly higher, with Volkswagen rising 1.8% and Porsche moving up 2.3%. The U.K. FTSE 100 edged down 0.1% at 6,559.50, the French CAC-40 declined 0.2% to 6,017.91, and the German DAX Xetra 30 lost 0.3% at 7,481.25.

[R]11:30AM Market averages moved lower on weak resource and semiconductor stocks.[/R]

In late morning trading, U.S. stocks reversed from earlier gains made on the back of better-than-expected economic data. On Wednesday, investors welcomed data which showed that construction of homes and apartments rose 2.5% in April to a seasonally adjusted annual rate of 1.528 million units. However, requests for new construction permits fell 8.9% in April, the biggest drop since a 24% plunge in February 1990. According to another report, industrial output rebounded by 0.7% in April, more than double the 0.3% gain that had been expected.

Market sentiment was hurt by weakness in resource and semiconductor stocks. Metals companies declined amid a decrease in commodities prices. Semiconductor stocks came under pressure after Applied Materials ((AMAT)) posted a disappointing guidance. While the Dow and the Nasdaq traded below the flat line, the S&P 500 managed to remain in positive territory on strong gains by Compuware ((CPWR)) and Bausch & Lomb ((BOL)), rising 12.2% and 8%, respectively.

In late morning trading Wednesday, the Dow fell 1.95, or 0.01%, to 13,381.89 after being up as high as 57 points earlier. The Standard & Poor''s 500 index advanced 2.30, or 0.15%, to 1,503.49 and the Nasdaq composite index fell 1.91, or 0.08%, to 2,523.38. Bonds showed little change despite the economic readings. The yield on the benchmark 10-year Treasury note remained flat at 4.71% from late Tuesday.


[R]9:45AM U.S. markets opened higher on mixed housing data and gains for Citigroup.[/R]

U.S. stocks advanced at opening on Wednesday, reflecting mixed housing data, speculation about Citigroup and a cautious outlook at chip-equipment maker Applied Materials. Dow component Citigroup ((C)) jumped 3% after hedge-fund manager disclosed he bought more than 15 million shares in the bank. The blue-chip average received further support from gains in the shares of Johnson & Johnson ((JNJ)), up 1.8%, J.P.Morgan ((JPM)), rising 1.4%, and Boeing ((BA)), higher by 1%.

Tech stocks were pressured by Applied Materials ((AMAT)) which fell 4.6% after forecasting flat Q3 sales and up to a 15% drop in orders. Rival chip equipment makers KLA-Tencor ((KLAC)) fell 2.1% and Lam Research ((LRCX)) slipped 2.7%. Homebuilders advanced as investors shrugged off data showing 8.9% drop in building permits. Hovnanian Enterprises ((HOV)) rose 1.3%, while Toll Brothers ((TOL)) added 0.3%.

Again in the tech sector, Agile Software ((AGIL)) dropped 13% after agreeing to be bought by Oracle Systems ((ORCL)) for $495 million, or $8.10 a share. On the earnings news front, Federated Department Stores ((FD)) said it swung to a profit from a loss, although earnings fell short of analyst expectations. Jack in The Box ((JBX)) climbed 5% after it reported a better-than-forecast 25% profit rise.

In early trading, the Dow rose 45.99, or 0.34%, to 13,429.83. The Standard & Poor''s 500 index rose 7.35, or 0.49%, to 1,508.54 and the Nasdaq composite index rose 10.78, or 0.43%, to 2,536.07. Bonds showed little change despite the economic readings. The yield on the benchmark 10-year Treasury note remained flat at 4.71% from late Tuesday.


[R]9:30AM The UK index is lower Wednesday on weak retail sector.[/R]

By mid-day, the FTSE 100 shed 5 points, 0.1%, to 6,564.4.

Advancers

There were few advancers on Wednesday. Vedanta Resources gained 1.9% after it posted full-year revenues increased 76% to $6.5 billion and earnings before interest, taxation, depreciation and ammortisation more than doubled to $2.7 billion.

Catering company Compass, up 2.2%, was in demand after it reported a solid rise in first half operating profit and sees growth continuing.

Decliners

Next, down 5.8%, said trade has been extremely volatile, with a good Easter followed by a very disappointing first two weeks of May. The group continues to budget on the basis that first half same-store sales at Next Retail will be in the range -1% to -4%.

Land Securities shares dipped, down 3.7%, after it reported full-year profits declined and growth was slowing as expected. The real estate investment trust reported a 14 % rise in adjusted diluted net asset value.

Supermarket company J Sainsbury, down 0.1% reported a huge 42% increase in underlying profits last year to 380 million, adding it intends to retain ownership of its properties. Sales rose by 6.9% to 18.5 billion pounds.

Ex-dividend stocks were lower. Sage Group lost 1.2% and Carnival declined 1.6% as all these stocks went ex-dividend.


[R]9:00AM Stock futures traded slightly higher.[/R]

U.S. stock futures moved slightly higher on Wednesday. Pre-market sentiment was supported by Citigroup ((C)) which rose 1.7% after a hedge-fund manager bought the stock, but a cautious outlook at chip-equipment maker Applied Materials ((AMAT)) weighed, sending the stock down 4.2%. Among earnings-related movers, Jack in The Box ((JBX)) rose 5.6% after it reported a better-than-forecast 25% profit rise. Federated department Stores ((FD)) gained 0.8% although the retailer cut its Q2 earnings outlook. Deere & Co ((DE)) said its profit dropped 16%, though it beat analyst expectations. Company''s stock gained 1.4%.

On the economic news front, the Commerce Department posted mixed housing data, as U.S. home builders pulled back on filing for permits to build homes in April, but the construction of new houses advanced. The government said building permits fell 8.9% to a seasonally adjusted annual rate of 1.429 million, coming in much lower than the 1.51 million pace expected by economists. The number of new houses started increased by 2.5% to a seasonally adjusted annual rate of 1.528 million, higher than the 1.48 million pace expected. S&P 500 futures rose 1.6 points at 1,501.00 and Nasdaq 100 futures improved 3.75 points at 1,887.25. Dow industrial futures rose 17 points.


[R]8:45AM Asian markets closed higher on Wednesday with Japan up despite weak building sector.[/R]

Asian markets ended higher on Wednesday. Japanese Nikkei 225 ended 0.1% higher at 17,529.00. Kajima, the largest contractor in Japan, finished almost 10% lower after announcing this fiscal year profit will fall 23%. However, other companies including Hitachi, up 2%, Nippon Oil, up 3.2%, and engineering firm JGC, up 12%, buoyed the Japanese market as a two-day Bank of Japan meeting got under way.

The Hang Seng in Hong Kong closed up 0.3% at 20,937.26, and the Shanghai Composite ended 2.2% higher at 3,986.04 after losses on Tuesday. Among the large-caps powering the market advance was China Mobile, the second-biggest stock in the benchmark index by market capitalization, which gained 1%.

Financials and alcohol-makers were strong in China on expectations of robust quarterly results. China Merchants Bank gained 1.4%. Shanghai Pudong Development Bank advanced 1.1%, and China Life increased 2.4%. Kweichow Moutai added 2.9% and Wuliangye Yibin soared 8.1%.

Other indices also gained. The Australia All Ordinaries rose 0.1% at 6,301.10, the South Korean Kospi advanced 0.7% at 1,600.60 and the Singapore Strait Times index settled 0.5% higher at 3,494.00.


[R]8:30AM Bausch & Lomb agreed to be acquired for $4.5 billion.[/R]

Bausch & Lomb ((BOL)), eye-care company, announced on Wednesday that it agreed to be acquired by affiliates of private equity firm Warburg Pincus in a deal worth $4.5 billion. The acquisition deal includes about $830 million in debt. The offer represents a 26% premium to the average price of the stock over a 30-day period of deal speculations. The firm will take on about $830 million in debt.

Under the terms of agreement, affiliates of Warburg Pincus will acquire all of the outstanding shares of Bausch & Lomb common stock for $65 a share in cash. The company was recently hit by a massive product recall when some of its contact lens solution was linked to an eye disease and, in some cases, blindness. Morgan Stanley advised Bausch & Lomb, while Banc of America, Citi, Credit Suisse and JP Morgan were the financial advisors of Warburg Pincus. The stock jumped 9.5% in pre-market trading.


[R]8:00AM NY-7:00PM Mumbai Sensex rallies Wednesday on SBI, Reliance Industries.[/R]

The Sensex on BSE finished Wednesday 197.98 points, or 1.42%, higher at 14,127.31.

The market-breadth was very strong with two advancers for each decliner. For 1,628 stocks that advanced, 987 declined and only 66 stocks remained unchanged. Of the 30 stocks in the Sensex, 20 advanced, while the rest declined. The turnover on BSE was Rs 5,151 crore compared to Rs 4,154 crore on Tuesday. On NSE, the turnover was Rs 10,684.34 crore, much higher than Rs 9,135.04 crore on Tuesday.

Economic and corporate news

Liquor billionaire Vijay Mallya through his company United Spirits announced Wednesday he had bought Scottish whiskey maker Whyte & Mackay for 595 million pounds, nearly Rs 4,819 crore. United Spirits informed the Bombay Stock Exchange that it had acquired 100% of Whyte & Mackay. United Spirits gained 8% to Rs 904 on the news.

Arcelor-Mittal, the largest steelmaker in the world, posted on Wednesday a 41% rise in first-quarter profit and added that higher prices would boost earnings in the second quarter.

The prime minister''s economic adviser stated on Wednesday that Indian economy should expand by at least 8.5% in fiscal 2007, but high economic growth was curtailed by widespread power shortages. He added that India had suffered major power shortages for years, and also poor infrastructure stood in the way of the fourth-largest economy in Asia to sustain even higher growth.

Trading highlights

Unitech was the most-active stock with a turnover of Rs 225 crore followed by HDFC Bank and SBI.

Advancers

SBI soared nearly 5% to Rs 1,284. The bank gained for the second day in a row today, as the Lok Sabha, on Tuesday, May 15 2007, passed the State Bank of India, or Subsidiary Bank Laws Amendment Bill, 2006. The amendment bill will help SBI to reduce its stake in subsidiary banks to 51%, from the existing 55%. Other banks also rallied. ICICI Bank rallied over 3% to Rs 919, and HDFC Bank added 2% to Rs 1,031.

Index heavy Reliance Industries surged 2.2% to Rs 1,634. Reliance announced yesterday it had made two gas discoveries in separate blocks off the east and west coasts of the country.

Tata Motors gained 2.8% to Rs 735 ahead of its earnings. It releases fourth quarter fiscal 2007 results on May 18th. Bajaj Auto advanced nearly 2% to Rs 2,686 ahead its board meet on Thursday, May 17 2007, to consider proposal to split the company into two and Q4 March 2007 results. Hindalco ended up 2.5% to Rs 149 and Bharti Airtel was up nearly 2% at Rs 848

Decliners

Hero Honda tumbled nearly 3% to Rs 678. Infosys and TCS slipped 1% each to Rs 1,952 and Rs 1,224, respectively. Other decliners included Cipla, down 0.8% to Rs 210, Tata Steel, off 0.5% to Rs 588 and Reliance Energy, also 0.5% lower at Rs 506.


[R]6:30AM European markets decline Wednesday on weak banking stocks.[/R]

European markets declined on Wednesday. In mid morning trade, Frankfurt Xetra Dax lost 0.2% to 7,494.37, the CAC 40 in Paris shed 0.2% to 6,037.78 and London FTSE 100 was flat at 6,567.6. National benchmarks fell in nine of 17 markets in western Europe.

Advancers

Oil stocks were higher, with Spanish Repsol up 0.9% and Royal Dutch Shell 0.6% higher. Shares in Volkswagen, which experienced an over sales decline of 0.2%, were up 2.2% thanks to strength at Audi, its luxury brand, whose sales rose 7.8%.

Julius Baer, Swiss private bank, rose 3.9% on speculation that Deutsche Bank was interested in mounting a takeover.

Zurich Financial, the Swiss insurer, climbed 2.2% after reporting a 71% rise in first-quarter net profit, beating expectations, thanks to strong gains in emerging markets such as China.

Decliners

Credit Agricole slumped 4.3%. The bank said first-quarter net income rose 92% to 2.66 billion euros after a gain from reducing its stake in the Intesa Sanpaolo of Italy. That missed the 2.74 billion-euro median estimate.

Shares of Air France-KLM, the biggest airline in Europe, slipped 2.4% after UBS AG cut its recommendation to neutral from buy.

EasyJet fell 2.4% after Goldman, Sachs & Co. put the carrier shares on its Pan-Europe Sell List, cutting its recommendation to sell from neutral.

Commodities

Crude oil traded near $63 a barrel in New York after unrest disrupted production in Nigeria. Crude oil for June delivery fell 9 cents to $63.08 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Gold for immediate delivery rose as much as $1.50, or 0.2%, to $673.55 an ounce and traded at $673.35. Silver for immediate delivery was unchanged at $13.20 an ounce at the same time.

Currencies

The U.S. dollar was mostly higher against other major currencies in European trading Wednesday morning. The euro traded at $1.3594, up from $1.3592 late Monday in New York. The British pound traded at $1.9834, down from $1.9853. The dollar fetched 120.48 Japanese yen, up from 120.26.