U.S. Averages Struggle, Shanghai Up

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

U.S. market averages struggled during the day but managed to close higher. European averages rose on merger revised bid for ABN Amro earnings from Vodafone. Asian stocks closed higher led by sharp rise in Shanghai and steady gains in Japan and India. Brazil and Mexico closed lower on weak currencies. Archstone-Smith surged 10% on the news that it will be acquired by Lehman Bros and Tishman Speyer for $12 billion. China reported nearly 100 million stock trading account.

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

Crude oil fell $2.05 or 3.2% to $63.15 per barrel, gasoline fell 9.37 cents to close at 231 cents per gallon and natural gas price fell 5 cent to close at $7.59 per mBtu.

Gold rose $2 to $663.40 per ounce, silver gained 22 cents to close at $13.223 per ounce and copper advanced $221 to $7,255 per metric ton.

Asian Markets advanced led by 1.2% gain in Shanghai, 1% rise in Australia, and India 0.8%. Indonesia led the region with a loss of 0.9% and Malaysia and Hong Kong fell 0.3%. Japan gained 0.5% on the report that unemployment in the country fell to 3.8% from 4% lifting Mizuho Financial by 2%. Widespread hopes of lower interest rate and rising expectation of rising consumer spending supported a broad advance in Tokyo. Larsen & Toubro in India reported earnings growth of more than 50%. Reliance industries Chairman Mukesh Ambani suggested that intrinsic value of the company may double in the next three to five years.

European Markets closed mostly higher led by 0.6% rise in Germany and UK, 0.4% gain in Spain, and 0.2% increase in Switzerland. Belgium dropped 0.6% leading the decliners in the region and Norway lost 0.4%. Vodafone rose on reporting wider than expected loss and predicted better outlook for 2008. The stock rose 5.5% on the news that it has increased its dividend 11% to 6.76 pence, one of the highest yielding stock in FTSE 100 Index. Other telecom stocks in the region advanced. RBS and its consortium partners declined on the higher bid for ABN Amro. British Air rose 4.5% on the back of Goldman Sachs reporting stake worth 5.1%.

Latin American Markets closed lower led by near 1% decline in Mexico, 0.9% loss in Brazil but Argentina gained 0.33% and Chile advanced 0.14%. Energy and mining stocks traded lower across the region. Venezuelan bonds in New York trading fell on the government decision to close local TV station. Contract workers at largest Chilean copper mine, Codelco, stopped work demanding higher wages.


[R]1:00PM NY, 5:00 PM Frankfurt European stocks closed mixed. Banking and telecom stocks advanced.[/R]

European stock markets finished Tuesday trading session mixed. Positive market sentiment was generated by deal moves in the banking sector, gains in the shares of telecom stocks and higher U.S. market opening.

Banks were in the spotlight after Royal Bank of Scotland-led consortium offered to buy Dutch bank ABN Amro for $95.5 billion, topping Barclay’s takeover bid. Shares in ABN Amro slipped 0.8%, Royal Bank of Scotland declined 0.8%, while Barclays'' shares added 1.9%.
Telecom stocks were leading gainers, led by 5.5% rise in shares of Vodafone Group. The mobile-phone company made strong gains after it narrowed its net loss for the fiscal year and gave an upbeat outlook for 2008. Again in the sector, France Telecom added 0.4%, while Deutsche Telekom shares rose 1.8%.

Among other notable movers, British Airways jumped 4.7%. Shares of car maker BMW rose 1.7% on reports it is interested in buying Volvo from Ford Motor Co. The U.K. FTSE 100 rose 0.6% to 6,606.40, the German DAX 30 added 0.5% to 7,771.16, while the French CAC-40 index slipped 0.3% to 6,056.19.

[R]11:30AM Strong consumer confidence and deal news supported averages.[/R]

U.S. stock averages traded higher, as merger activity boosted corporate optimism and consumer confidence index in May improved more than expected. The largest deal was offered by a consortium of banks led by Royal Bank of Scotland. The consortium said it will bid $95.5 billion for the Dutch bank ABN Amro ((ABN)), topping an offer from Barclays ((BCS)). Archstone-Smith ((ASN)) surged 10% amid reports that the company is close to a $20 billion acquisition deal by Tishman Speyer and Lehman Brothers. In completed deals, URS Corp. ((URS)) added 3.6% after it agreed to buy engineering and design company Washington Group ((WNG)) in a deal worth $2.6 billion. Washington Group stock climbed 17%.

Networking, airline, and utility sectors moved notably higher. Tech shares posted gains, with Google Inc. ((GOOG)) rising 1%, despite news of a preliminary antitrust probe into its planned $3 billion deal to buy online advertiser DoubleClick. Avaya ((AV)) rose 13%, leading the networking sector higher and CDW 8.6% after the companies were cited as private equity buyout targets.
In late morning trading, the Dow rose 33.16, or 0.25%, to 13,540.44. The Standard & Poor''s 500 index advanced 3.10, or 0.20%, to 1,518.83, and the Nasdaq composite index added 11.53, or 0.45%, to 2,568.72. Bonds fell after the consumer confidence data, with the yield on the benchmark 10-year Treasury note rising to 4.88% from 4.86% late Friday.
[R]Consumer confidence improved in May.[/R]
Tuesday morning, the Conference Board released its report on consumer confidence in the month of May, showing that consumer attitudes improved more than expected compared to an upwardly revised reading for the previous month. The Conference Board said that its consumer confidence index rose to 108.0 in May from an upwardly revised 106.3 in April. Economists had expected the index to increase to 105.0 compared to the 104.0 originally reported for the previous month.

The report showed that the present situation index rose to 136.1 in May from 133.5 in April, while the expectations index edged up to 89.2 from 88.2. The Conference Board said that claiming conditions are “good” rose to 29.4 percent from 27.5 percent. At the same time, those saying conditions are “bad” was almost unchanged at 14.5 percent. The outlook for the next six months remains cautious, according to the Conference Board, as those anticipating business conditions to improve increased to 15.1 percent from 13.8 percent, while those expecting business conditions to worsen edged up to 10.1 percent from 9.7 percent.

[R]9:45AM U.S. stocks opened modestly higher amid merger deals.[/R]

Wall Street opened slightly higher Tuesday, helped by multibillion-dollar acquisition deals. Better-than-expected economic data also generated positive sentiment. The Conference Board said that its consumer confidence bounced back in May to 108.0 from 106.3 in April. Economists had expected the index to rise to 105.8.

A consortium of banks led by Royal Bank of Scotland said it will bid $95.5 billion for ABN Amro ((ABN)), topping an offer from Barclays. Tishman Speyer Properties and Lehman Brothers Holdings ((LEH)) are reportedly interested in buying Archstone-Smith Trust ((ASN)) for more than $12 billion, including $6 billion in debt.

Washington Group ((WNG)) surged 16% after the engineering and construction company agreed to be acquired by URS Corp. ((URS)) for $2.6 billion in cash and stock. Shares of Avaya ((AV)) climbed 13% amid reports that the communications equipment maker is in talks regarding a sale of part or all of the company.

Airline stocks moved notably higher in morning trading, with AirTran ((AAI)) rising 3.4% and Continental ((CAL)) adding 3.8%. The wireless sector also posted gains, helped by 4% rise in the shares of Vodafone ((VOD)) on narrower full-year loss.

Strength in the gold, tobacco, and semiconductor sectors also provided a boost. Among semiconductor stocks, Marvell Technology ((MRVL)) advanced 3%. In the first hour of trading, the Dow rose 27.96, or 0.21%, to 13,535.24. The Standard & Poor''''s 500 index advanced 2.50, or 0.16%, to 1,518.23, and the Nasdaq composite index added 6.45, or 0.25%, to 2,563.64. Bonds fell slightly, with the yield on the benchmark 10-year Treasury note rising to 4.87% from 4.86% late Friday.


[R]9:30AM FTSE 100 is higher on Tuesday morning with Vodafone in focus.[/R]

The UK benchmark FTSE 100 is higher in mid-day trading on Tuesday. The FTSE 100 rose 26.8 points, 0.4%, at 6,597.3.

Advancers

Vodafone Group led the advancers after it announced an upbeat outlook statement and reported an 11.4% rise in adjusted basic earnings per share. The mobile phone company added that while it hoped operating conditions to continue to be challenging in Europe, group revenue was expected to be in the range of 33.3 billion pounds to 34.1 billion pounds. Vodafone jumped 4.8%.

Satellite TV provider BSkyB advanced 3% after UBS upped its price target, reiterating its buy rating. IMI, the engineering group, led mid-cap advancers after Citigroup hiked its rating from hold to buy. The group traded up 6.3%.

Airliner British Airways, 4.8% higher, was also reporting strong gains on reports that US investment bank Goldman Sachs has suspended its rating on the shares. Last week, Goldmans raised its stake in BA to over 5%.

Decliners

Royal Bank of Scotland fell 1.6% after the bank and its partners, Fortis and Santander, came with their long-awaited formal offer to acquire ABN Amro in a deal that values the Dutch bank at 71.1 billion euros, with 79 % of the payment in cash.

iSoft Group plunged 19.2% after it received notification from Computer Sciences Corporation that it does not intend to give consent to the change of control in iSoft that is a condition of IBA offer.

Biodegradable packaging group Stanelco plummeted 45.7%, admitting that its Greenseal technology is unlikely to lead to any commercial sales.


[R]9:00AM Merger activity boosted pre-market sentiment.[/R]

U.S. stock futures were indicating a positive opening on Tuesday after a three-day weekend. Pre-market sentiment was lifted by merger activity, including a $95.5 billion hostile bid for ABN Amro ((ABN)) from a group led by Royal Bank of Scotland. In other deal news, Archstone-Smith ((ASN)) is close to a $20 billion acquisition by Tishman Speyer and Lehman Brothers ((LEH)). URS Corp. ((URS)) agreed to buy engineering and design company Washington Group ((WNG)) for $2.6 B in cash and stock.

In earnings news, Vodafone Group ((VOD)) announced narrower full-year loss due to cost cutting and strong growth in emerging markets. On the economic agenda, the Conference Board is due to report its May index of consumer confidence, while Standard & Poor''''s is expected to release its home price index. The futures contact for the Dow Jones Industrial Average last was up 25 points at 13,552. The futures contract for the S&P 500 and the Nasdaq 100 last were 3 points higher at 1,520.30 and up 2.5 points at 1,895.5.


[R]8:30AM Asian markets finish mostly higher Tuesday with Japan leadeng the advance.[/R]

Asian markets ended mostly higher on Tuesday. In Tokyo, the Nikkei 225 Average finished 0.5% higher to 17,672.56. Data released before the market opened showed that Japan jobless rate fell to 3.8% in April from 4% in March. Mizuho Financial were up 2%, leading a broad advance in banking stocks on growing expectations consumer spending will help support the economy. Advantest gained 0.4%, Softbank rose 1.9% and Toyota Motor gained 0.8%. Sanyo Electric surged 10% after the company posted a narrower group net loss for the current fiscal year.

Hong Kong Hang Seng Index closed 0.3% lower at 20,469.59. South Korean Kospi Index rose 0.2% to 1,661.80, while Chinese Shanghai Composite rallied 1.5% to end at 4,334.92. In Seoul, LG.Philips LCD gained 2.9% after a brokerage report said the company will post an operating profit in the current quarter, compared with a loss in the year-earlier period.

Singapore Straits Times Index traded little changed and Taiwan Weighted Price Index advanced 0.3% to end at 8,181.49. Australian S&P/ASX 200 ended 1.1% higher at 6,317.60. BHP Billiton in Australia advanced 1.2% on higher metals prices and talk of takeover activity within the industry. BHP is one of several companies interested in bidding for Montreal aluminum producer Alcan.


[R]8:15AM Royal Bank of Scotland made a hostile bid for ABN Amro.[/R]

A consortium led by Royal Bank of Scotland PLC announced on Tuesday an agreement to make a hostile bid of 71.1 billion euros ($95.5 billion) for ABN Amro, outbidding a friendly offer from Barclays PLC. The group offered 11% more cash compared to an earlier bid of 27.30 euros a share, and in total the improved bid was worth more than the all-stock offer from Barclays. RBS, Santander and Fortis offered 30.40 euros in cash and 0.844 RBS share for each ABN Amro share, valuing the Dutch bank at 38.40 euros a share.

The banks said that they made the offer on the condition that ABN Amro shareholders would reject the company''''s proposed sale of its LaSalle Bank division to Bank of America ((BAC)) for $21.5 billion. ABN Amro''''s shares fell 0.6%, shares of RBS fell 1.1%, while Barclays shares rose 0.8%.


[R]7:30AM NY-6:30PM Mumbai Sensex rallies Tuesday on strong Reliance Industries.[/R]

The Sensex finished 110.32 points, or 0.77%, higher at 14,508.21.

The market-breadth was positive as 1,357 stocks advanced, while 1,213 stocks declined and only 102 stocks remained unchanged. Of the 30 stocks in the Sensex, 22 advanced, while the rest declined, The turnover on BSE was Rs 4,573 crore, slightly higher than Rs 4,241 crore on Monday. On NSE, the turnover was Rs 9,340.58 crore, almost unchanged from Rs 9,320.08 crore on Monday.

Economic news

The government today announced that it was considering a scheme to refund the local taxes and levies to labor-intensive industries with little import component to counter the impact of the soaring rupee, which hit a nine-year high yesterday.

Prime Minister Manmohan Singh, concerned about the slowdown of the agriculture sector, has told the Chief Ministers that the government is willing to support their plans for enhancing productivity in the segment.

The annual monsoon rains, vital for the economy of the country, hit Kerala, four days ahead of the normal date of June 1.

Trading highlights

Orbit Corp was the most-active stock with a turnover of Rs 208.40 crore followed by Unitech and Reliance Industries. New issue, real estate company Orbit Corporation, surged 15.13% to Rs 252.60 on huge volumes of 84.38 lakh shares.

Advancers

BHEL and Cipla soared nearly 5% each to Rs 2,856 and Rs 219, respectively. Pharmaceutical large-cap Cipla was in focus today and enjoyed strong buying momentum, after it was hit in the past few weeks, for posting poor fourth-quarter fiscal 2007 results. BHEL had struck a record high of Rs 2,889.90 in intra-day trade. The company had reported 32.54% increase in net profit in the fourth-quarter of fiscal 2007 to Rs 1,150.37 crore from Rs 867.95 crore in the comparable period a year earlier, after trading hours on May 25 2007.

Larsen & Toubro surged 4% to Rs 1,857. L&T reported 50% rise in net profit in fourth-quarter of fiscal 2007 to Rs 701 crore from Rs 467 crore a year earlier. Ranbaxy and Reliance Communications rallied over 2% each to Rs 390 and Rs 521, respectively. Ranbaxy Laboratories, the wholly owned subsidiary of Ranbaxy Laboratories, acquired the US rights to a group of 13 dermatology brands from Bristol-Myers Squibb Co for $26 million on Monday, May 28 2007.

Reliance and HDFC Bank advanced 1.8% each to Rs 1,755 and Rs 1,145, respectively. Reliance was highly volatility, as it traded in a range of Rs 1,711.95 to Rs 1,765.80. SBI, Grasim, Hindustan Lever, Tata Motors and Reliance Energy advanced around 1% each at Rs 1,322, Rs 2,509, Rs 203, Rs 741 and Rs 555, respectively.

Decliners

HDFC shed 1.7% to Rs 1,813. Gujarat Ambuja and NTPC declined 1% each at Rs 115 and Rs 161, respectively. Bajaj Auto was down 0.5% to Rs 2,192, NTPC was off almost 1% to Rs 161, and ITC shed 0.7% to Rs 165.


[R]6:30AM European stocks inch higher Tuesday on Vodafone and deal offers.[/R]

European markets were mostly higher Tuesday. The U.K. FTSE 100 index advanced 0.2% at 6,581.20 while the German DAX Xetra 30 index increased 0.1% at 7,745.68 as British and German investors returned from a long holiday weekend. The French CAC-40 index inched down 0.1% at 6,063.66. National benchmarks rose in 10 of the 17 western European markets that were open.

Advancers

Mobile phone company Vodafone Group posted strong share gains in early trading as investors welcomed the company announcement that its fiscal-year loss narrowed to 5.3 billion pounds, from 21.8 billion pounds a year ago, in part on much lower impairment losses. Vodafone climbed 4%.

France Telecom gained 0.2%, adding to recent strong gains made amid growing speculation that it is on the verge of selling its Orange Netherlands division, most likely to Deutsche Telekom, which shares rose 0.8%.

Philips gained 1.2% as it was added to Lehman Brothers European Recommended Portfolio.

Decliners

Bid target ABN Amro declined 0.6% after a consortium led by Royal Bank of Scotland officially launched its offer for the bank, bidding 71.1 billion euros, or $95.5 billion for the firm.

Shares in Royal Bank of Scotland fell 1.2% while its consortium partners put in a mixed performance, with Fortis shares down 1%.

Commodities

Crude oil for March delivery was at $64.35 a barrel in after- hours electronic trading on the New York Mercantile Exchange, down 85 cents from the closing price on May 25. Brent crude oil traded little changed in London on expectations of higher gasoline demand in the U.S.

Gold advanced in London as a decline in the dollar against the euro revived demand for the metal as an alternative investment. Gold for immediate delivery rose $2.25, or 0.3%, to $657.80 an ounce, after falling 45 cents yesterday. Silver gained 7 cents to $13.01 an ounce.

Currencies

The U.S. dollar was mostly down against most major currencies in European trading Tuesday. The euro traded at $1.3483, up from $1.3451 late Monday in New York. The British pound traded at $1.9874, up from $1.9834. The dollar bought 121.41 Japanese yen, down from 121.68.