Strong Opening on CPI and M&A

Elena
15 Sep, 2005
New York City

Asian-Pacific markets closed mixed with the Nikkei up 1.2% on improved household confidence, while Taiwan's stocks lost 1.1% on raised interest rates. European shares were generally higher at mid-day on oil and mining stocks. Government's CPI report said that CPI climbed by 0.5% in August, in line with expectations. Core CPI rose 0.1% vs. expectations of 0.2%. Bear Stearns posted 29% income growth in 3Q.

U.S. MARKET AVERAGES

Stock futures point to a higher opening of the trading session ahead of economic data and earnings reports.

Markets await government’s consumer price index report for August which is expected to provide initial evidence of Katrina’s impact. Economists expect CPI to climb by 0.5% in August. Core CPI, which excludes the volatile food and energy sectors, is seen rising by 0.2%.

Investors’ attention is also directed toward merger and acquisition activity. The awaited earnings report from Bear Stearns showed 3Q 29% profit rise of $2.69 a share.

S&P 500 futures (SPZ5) were up 1.6 points.Dow Jones industrial average futures (DJZ5) rose 17 points, and Nasdaq 100 futures (NDZ5) ticked up 1 point.

ECONOMIC NEWS

Consumer prices continued higher in the month of August, according to a report from the Department of Labor, although the increase came in line with economist estimates. Nonetheless, the report did not include much of the impact of Hurricane Katrina.

The Labor Dept. said that the consumer price index rose 0.5 percent in August, matching the increase seen in the previous month. Most economists had been expecting prices to increase by 0.5 percent.

The increase in consumer prices was largely due to a sharp rise in energy prices, which rose 5.0 percent in August following a 3.8 percent increase in July. The increase reflected a 7.9 percent increase in prices for energy commodities and a 1.3 percent increase in prices for energy services.

The report also showed that the core CPI, which excludes food and energy prices, rose by 0.1 percent for the fourth consecutive month. The increase came in slightly below economist expectations of an increase of 0.2 percent.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks ended mixed after higher trading at mid-day as stock markets shrugged off rising crude-oil prices. The Japanese stocks climbed 1.2% on economic data, showing improved household confidence, while Taiwan’s shares dropped 1.1% on raised interest rates. Across the region, Hong Kong’s Hang Seng lost 0.3% and South Korea’s Kospi fell 0.1%.

European stocks traded mostly higher at mid-day. The German DAX 30 was flat ahead of general elections on the weekend. In the other regional markets the French CAC 40 added 0.4% and London’s FTSE 100 climbed 0.5% as both stock markets made gains on the back of strong oil and mining sectors.

ENERGY, METALS, CURRENCIES

Oil prices surged over $65 a barrel on supply concerns after a drop in fuel stock. Light sweet crude October delivery rose 31 cents to $65.40 a barrel on the Nymex. Gasoline added a penny to $1.9450 a gallon, while heating oil slightly gained to $1.9285 a gallon. London Brent was up 7 cents to $63.44..

Gold prices slightly rose in European trading. On the London Bullion Market the precious metal traded at $449.50 per troy ounce, up from $449.30.

The U.S. dollar gained ground against the major currencies. The euro declined to $1.2220 from $1.2286 ahead of German federal election. The greenback changed hands at 110.53 yen, up from 110.34. The British pound was quoted at $1.8114, down from $1.8239.

EARNINGS NEWS

Docucorp International Inc., ((DOCC)) information software producer, posted 4Q net income of 1 cent a share, down vs. 14 cents in the same period last year4 despite revenue growth, missing analyst estimate of 7 cents a share Profit dropped as a result of lower margin in Docucorp's ASP business, increased software amortization, expenses associated with Sarbanes-Oxley Act compliance and currency exchange losses.

Pier1 Imports Inc. ((PIR)), home-furnishings retailer, reported a 2Q net loss of 12 cents a share , down from last year’s profit of 12 cents a share on decline in sales. Comparable-store sales dropped 7.7%. The market analysts’ estimate was for 13 cents a share.

The Bear Stearns Companies Inc. ((BSC)), securities broker company, posted 3Q record earnings of $2.69 up 29% vs. $2.09 per share for the comparable period last year on 18% revenue growth and 34% net income growth. Annualized after-tax return on average common stockholders' equity for the third quarter 2005 was 16.9%, and for the trailing 12-month period ended August 31, 2005 was 16.8%.

SYS Technologies ((SYS)) information technology solutions provider, reported 4Q net income of 5 cents a share, up a penny from last year result on 15% revenue growth. Operating income rose approximately 7% and net income increased 41%.

CORPORATE NEWS

Fidelity National Financial ((FNF)) and Certegy ((CEY)) announced a definitive merger deal. Under the agreement, each share of Fidelity National Information Services, a majority-owned subsidiary of Fidelity National Financial, will be exchanged for 0.6396 shares of Certegy common stock.