Stock Futures Fall Before Data

Elena
05 Jun, 2007
New York City

U.S. stock futures were indicating a lower opening Tuesday, with the market awaiting data on the nation''s service sector. The ISM index on non-manufacturing industries in May is expected to hold steady at 56%. In addition, the Fed Reserve''s Chairman Bernanke said in a speech that U.S. inflation risks are on the upside, giving investors little incentive to buy.

[R]9:00AM U.S. stock futures pointed lower ahead of economic data.[/R]

U.S. stock futures were indicating a lower opening Tuesday, with the market awaiting data on the nation's service sector. The ISM index on non-manufacturing industries in May is expected to hold steady at 56%. In addition, the Fed Reserve's Chairman Bernanke said in a speech that U.S. inflation risks are on the upside, giving investors little incentive to buy.

Profit warnings in the retail sector also weighed on the sentiment. Bed Bath & Beyond ((BBBY)) dropped 6% in pre-market opening amid profit warning. Goldman Sachs downgraded its stock to neutral from buy. Cache ((CACH)) said that its Q2 earnings would miss an earlier forecast due to a 2% decline in same-store sales in May. Again in the sector, Moody's ((MCO)) lifted its earnings outlook on an improved view of structured finance, but the stock lost 1% in pre-open trade.

Among other pre-market highlights, Avaya ((AV)) reportedly agreed to be bought by TPG Capital and Silver Lake Partners for $8.2 billion in cash.
European budget airline Ryanair ((RYAAY)) posted a record 2006 profit, due to higher fuel prices and strong competition, but made a cautious forecast for 2007. Company's shares fell nearly 4%. Dow Jones industrial futures expiring in June fell 33, or 0.24%, to 13,645. Standard & Poor's 500 index futures fell 3.10, or 0.20%, to 1,537.20. Nasdaq 100 index futures declined 5.00, or 0.26%, to 1,931.75.


[R]8:30AM Asia finishes mostly higher as China bounces back and Japan sustains rally.[/R]
Asian markets finished mostly higher on Tuesday. In China, the Shanghai Composite Index advanced 2.6% to 3767.10, after it tumbled 7.2% earlier in the session. The index lost 8.3% on Monday. The sell-off yesterday is attributed to panic-selling by individual retail investors, in response to government decision last week to triple a tax on stock trades. The Shenzhen Composite Index also rose 2.5% to 1,066.05.

Among the advancers in China were Shanghai-listed China Petroleum & Chemical, rising 6.2%, while China Merchants Bank advanced 2.6% and Citic Securities added 8.2%. China Vanke, the largest property developer by market value in the country, surged 9.3%.

In Japan, the Nikkei 225 index gained 80.39 points, or 0.45%, to end at 18,053.81 points. Among the advancers were Tokyo Electron, which climbed 1.37%, Fanuc, which advanced 1.82% and Daichi Sankyo, which added 1.81%.

Elsewhere in the region, markets also advanced. Hong Kong Hang Seng Index recovered from a weak performance in the morning session, adding 0.6% to 20,855.31, up 112.56 points. The Korea Composite Stock Price Index, or Kospi, settled up 4.60 points, or 0.3%, at 1,742.19 and the Weighted Price Index of the Taiwan Stock Exchange gained 9.2 points, or 0.1%, to close at 8,303.99. Australian S&P/ASX 200 bucked the uptrend and slipped 0.4% to 6,370.8.


[R]8:15AM Avaya agreed to be acquired by private-equity firms for $8.2 B.[/R]

Avaya Inc. ((AV)), sophisticated phone systems developer, announced late Monday an agreement to be acquired by private-equity firms TPG Capital LLC and Silver Lake Partners in a deal worth about $8.2 billion. The transaction represents a premium of about 28% over the company''s closing share price of $13.67 on May 25, the last trading day prior to published reports of deal speculation.

Under the terms of the deal, Avaya shareholders will receive $17.50 in cash for each share of common stock they hold. Avaya said its board had approved the merger agreement with Silver Lake and TPG, suggesting that its shareholders should accept the deal. According to the agreement, Avaya will be able to solicit proposals from third parties during the next 50 days. The transaction is expected to be completed in the autumn.


[R]7:30AM NY-6:30PM Mumbai Sensex finishes modestly higher on a rally in banks, telecoms.[/R]

The Sensex on BSE ended Tuesday 39.29 points higher, or 0.27%, at 14,535.01.

The market-breadth was slightly positive as 1,325 stocks advanced, 1,279 declined and 73 remained unchanged. Of the 30 stocks in the Sensex, 16 advanced, while the rest declined. The turnover on BSE was Rs 3,776 crore, compared with Rs 4,061 crore on Monday. On NSE, the turnover was Rs 9,190 crore, higher than Rs 8,543 crore on Monday.

Economic news

The Agriculture Minister Sharad Pawar stated on Monday that the government is planning to double the sugar buffer stock to five million tons to prevent a sharp decline in prices.

GMR Infrastructure Ltd. announced on Tuesday that GMR Energy, owned by GMR Infrastructure, had struck a deal with Chhattisgarh State authorities to build a 1,000 megawatt thermal power project in the state.


Trading highlights

New issue Nitin Fire was the most-active stock with a turnover of Rs 590.50 crore followed by Reliance Capital and Reliance Industries. Nitin Fire settled at Rs 484.10 on BSE, 155% over the IPO price of Rs 190. It opened at Rs 332.50, which was its low and rallied to a high of Rs 502.70.

Advancers

SBI led the gainers, rallying 2.1% to Rs 1,436 on the decision of the government to buy RBI’s stake in SBI, which is 59.7 in a deal worth Rs 40,000 crore. Reliance Energy added 1.7% to Rs 551. Bajaj Auto and Bharti Airtel advanced 1.3% each to Rs 2,249 and Rs 837, respectively. Ranbaxy and HDFC also finished up over 1% each at Rs 392 and Rs 1,897, respectively.

IT stocks staged a strong performance as the rupee retreated from its levels last week against the dollar. TCS gained 0.10% to Rs 1,210, Infosys Technologies advanced 1.3% to Rs 1,942 and Wipro added 0.27% to Rs 535.40. i-flex solutions soared 10.5% to Rs 2,431 on speculations that Oracle Corp., which is i-flex majority owner may try to raise its stake in the Indian company. Index heavy Reliance Industries gained 0.25% to Rs 1,744.10 on 6.13 lakh shares.

Decliners

Cigarette large-cap ITC led the decliners among the Sensex stocks, off 1.8% to Rs 161.80. Other stocks that were hit by profit taking were Larsen & Toubro, which lost 1.3% to Rs 1,945, Gujarat Ambuja declining 1% to Rs 113 and Cipla which dipped 0.9% to Rs 215. Satyam also declined 0.9% to Rs 463, Maruti also lost 0.9% to Rs 800 and ONGC slipped 0.7 to Rs 894.


[R]6:30AM Europe is higher on Tuesday on telecoms, banks and oil stocks.[/R]

European markets were higher on Tuesday. . In late morning trade, Frankfurt Xetra Dax added 0.2% to 7,989.82, the CAC 40 in Paris climbed 0.2% to 6,135.28 and London FTSE 100 gained 0.3% to 6,685.0. In Europe, national benchmarks rose in 12 of the 16 western European markets that were open.

Advancers

Vodafone, the mobile-phone operator, added 1.1%. The company climbed after the reports said the mobile-phone company might be worth more split into parts, giving rise to speculation it may be a target for a takeover. AT&T or a group of hedge funds could be interested in a takeover.

Norway Telenor rose 1.9% after it said it would pay no more than a full and fair price for the share of Russian Vimpelcom owned by investment company Alpha Group.

Renault, the French carmaker, led the auto sector higher after Carlos Ghosn, chief executive, announced the company was on track to meet its 2009 targets. Renault gained 2.6%.

German drugmaker Merck rose 6.2% on recent successful trial results on its cancer drug Erbitux, and expectations that it will replace pharmaceuticals rival Altana in the blue chip Xetra Dax index.

Decliners

Ryanair, the Irish airline, fell 7% after the company warned that higher UK interest rates and increases in airport tax and passenger charges would hit growth in the sector.

Ryanair takeover target Aer Lingus fell 3.5% in spite of reassurances that Ryanair would not sell its stake should the European Union turn down its merger plans. Other airlines also fell in sympathy. Air France-KLM fell 1.1%, while German Lufthansa slipped 0.2%.

Commodities

Crude oil for July delivery fell 49 cents, or 0.7%, to $65.72 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for July settlement dropped 40 cents, or 0.6%, to $70 a barrel on the London-based ICE Futures exchange.

Gold for immediate delivery rose $1.60, or 0.2%, to $672.75 an ounce. Silver for immediate delivery gained 8 cents, or 0.6%, to $13.77 an ounce.

Currencies

The euro strengthened to a record against the yen and gained versus the dollar on expectations the European Central Bank will hike interest rates tomorrow and signal further increases this year. The euro rose to a record high of 164.61 yen, from 164.27 in late New York yesterday. It was at $1.3508 to the dollar from $1.3489. The dollar bought 121.74 yen, from 121.77.


[R]5:30AM NY- 4:30PM Mumbai Sensex is higher Tuesday in mid-afternoon trading.[/R]

The Sensex on BSE is up 40 points, at 14,536 in mid-afternoon trade.

The market-breadth is slightly positive. For 1,245 which have advanced, 1,265 have declined and 82 are unchanged. The turnover on BSE was Rs 1,780 crore in mid-afternoon trade.

Advancers

SBI has advanced nearly 2% to Rs 1,432, and Reliance Energy has surged 1.6% to Rs 550. ICICI Bank and Bharti Airtel have gained around 1% to Rs 945 and Rs 836. Infosys also advanced over 1% to Rs 1,937.

Decliners

ITC leads the decliners, down 1.7% to Rs 162. Larsen & Toubro has lost 1.4% to Rs 1,943, and Gujarat Ambuja is off 1% at Rs 113.

Refining companies declined in early trading, after they reduced jet fuel prices by 1.9%, the first cut since February 2007. Hindustan Petroleum Corporation lost 1.95% to Rs 280, Indian Oil Corporation lost 0.25% to Rs 449 and Bharat Petroleum Corporation was off 1.16% to Rs 350.