Stock Futures Point Lower

Elena
13 Jun, 2007
New York City

U.S. stock futures traded lower on Wednesday, following several weak sessions in a row and news that U.S. retail sales advanced 1.4% in May. This is the biggest gain in 16 months, coming in well above analyst expectations of a 0.7% increase. Consequently, the dollar continued its recent upward move. In addition, bond yields on 10-year Treasurys jumped 5.315%, up from 5.25% on Tuesday.

[R]9:00AM U.S. stock futures indicated a lower market opening. Retail sales jumped 1.4% in May.[/R]

U.S. stock futures traded lower on Wednesday, following several weak sessions in a row and news that U.S. retail sales advanced 1.4% in May. This is the biggest gain in 16 months, coming in well above analyst expectations of a 0.7% increase. Consequently, the dollar continued its recent upward move, rising 0.7% vs. the yen.

In another economic report, the Labor Department reported that prices of imported goods rose 0.9% in May, as imported petroleum prices climbed 2.7%. In addition, bond yields on 10-year Treasurys jumped 5.315%, up from 5.25% on Tuesday.

In deal news, investors led by The Blackstone Group, Goldman Sachs, Kohlberg Kravis Roberts and TPG revealed their bid offer of $46 a share, or $11.4 billion, for medical devices maker Biomet. Walt Disney ((DIS)) completed the sale of ABC Radio to Citadel ((CDL)) for $1.35 billion. S&P 500 futures fell a half point at 1,507.00 and Nasdaq 100 futures fell 1.5 points at 1,916.50. Dow industrial futures were up 8 points.


[R]8:15AM Investor group offered $11.4 billion for Biomet.[/R]

Investors led by The Blackstone Group, Goldman Sachs, Kohlberg Kravis Roberts and TPG revealed their bid offer of $46 a share, or $11.4 billion, for medical devices maker Biomet ((BMET)).

LVB Acquisition LLC and LVB Acquisition Merger Sub announced on Wednesday that they started a tender offer to buyout the outstanding shares of the company, whose shareholders have shown reluctance to support the deal.

Following completion of the tender offer, LVB Acquisition will complete a second-step merger in which any remaining common shares of Biomet will be converted into the right to receive the same per share price paid in the offer. The offer and withdrawal rights will expire at 12:00 a.m.ET on July 11.


[R]7:30AM NY-6:30PM Mumbai Sensex loses 128 points Wednesday in lackluster session.[/R]

The Sensex on BSE finished Wednesday 127.92 points lower, or 0.91%, at 14,003.03.

The market-breadth was very weak. For 1,083 stocks which advanced, 1,372 declined and 85 were unchanged. Of the 30 stocks in the Sensex, only nine stocks advanced, while all the rest declined. The turnover on BSE was Rs 3,530 crore, lower than Rs 3,836 crore on Tuesday. On NSE, the turnover was Rs 8,096 crore, slightly lower than Rs 8,177 crore on Tuesday.

Economic news

The strike of the employees of state-owned airline Indian brought to a halt operations and wreaked havoc in airports across the country today. The workers paid no heed to the government’s threat of a lock-out, and were unfazed by warnings that the strike was illegal.

The rupee retreated against the U.S. dollar on Wednesday, June 13 2007, as buying from importers broke its rising streak.. In early trade, the rupee stood at 40.855 per dollar, lower than the previous close of 40.747.

Trading highlights

New issue Time Technoplast was the most-active stock with a turnover of Rs 636.30 crore followed by Reliance and Nestle. Time Technoplast ended at Rs 480.35 on BSE, 53% over the IPO price of Rs 315.

Advancers

Dr.Reddy''s surged 2.7% to Rs 628 and was the best performing stock in the Sensex. The stock rallied after Credit Suisse increased its rating to outperform from neutral. Satyam surged 1.7% to Rs 486. All other major IT stocks declined, though.

Tata Motors advanced 0.7% to Rs 646, Hindalco Industries advanced 0.6% to Rs 160 and Cipla edged 0.1% higher to Rs 208.

Decliners

SBI led the decliners, down 3.2% to Rs 1,289. The bank declined on worries of a possible interest rate hike by RBI in the wake of the strong industrial production data for April. Other banks also lost. ICICI Bank dipped almost 1% to Rs 910. The bank announced today it had moved forward documents to raise up to Rs 8,750 crore, or $2.1 billion, in India in a sale of shares as part of a programme to raise up to $5 billion both in India and the U.S.

Reliance Communications lost 2.5% at Rs 486 and Hindustan Unilever and Larsen & Toubro sank nearly 2% each to Rs 186 and Rs 1,871, respectively. Tata Steel eased from high of Rs 611 and was down 1.3% to Rs 595. Index heavy Reliance Industries slipped 1.5% to Rs 1,674.

Except for Satyam, all other major IT stocks declined. TCS was down 1% to Rs 1,202, Infosys lost 0.4% to Rs 1,980 and Wipro shed 1.6% to Rs 531. Cement stocks were also hit as Gujarat Ambuja dipped 1.3% to Rs 109 and ACC, which was leading the advancers yesterday, dropped around 1% to Rs 979.


[R]6:30AM European stocks decline on Wednesday on interest rate fears.[/R]

European markets declined on Wednesday. The U.K. FTSE 100 index slipped 0.1% at 6,513.10, the German DAX Xetra 30 index declined 0.5% at 7,643.90 and the French CAC-40 index lost 0.3% at 5,879.90. National benchmarks fell in all 17 western European Markets that were open.

Advancers

Alliance & Leicester gained 0.9% after it upgraded core operating profit for 2007 at the top end of the forecast range as it also named finance director David Bennett as its next CEO.

Spanish clothing chain Inditex gained 1.7% after its first-quarter net profit rose 33% to 200 million euros, with sales up 19% to 2.0 billion euros. Profit of 185 million euros had been expected from the owner of the Zara and Massimo Dutti clothing chains.

Decliners

Allianz, the largest insurer in the region, slid 0.8 percent and Deutsche Bank, the largest bank in Germany, fell 0.8 percent.

Utilities fell, being most sensitive to interest rate hikes. British Energy, whose nuclear reactors can produce about a fifth of the electricity in the U.K., slipped 1.3 percent. RWE AG, Germany second-largest utility, shed 1.1 percent.

Construction companies also suffered. Bouygues, the second-biggest construction company in the world, fell 2 percent. Skanska AB, No. 3 construction company in Europe, dropped 1.6 percent. Acciona SA, Spain fourth-biggest construction company, slid 3 percent.

Oil and gold

Crude oil traded little changed in New York on talks U.S. gasoline stockpiles advanced for a sixth straight week as refiners increased output. Oil for July delivery was down 19 cents at $65.16 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Gasoline for July delivery was at $2.13 a gallon in New York after falling 0.8 percent to $2.135 yesterday. Brent crude oil for July settlement fell 21 cents to $68.58 a barrel on the London-based ICE Futures exchange in London.

Gold traded in London at $644.10, down from $648.60 late Tuesday. Silver opened in London at $12.98, down from $13.09.

Currencies

The U.S. dollar surged against other major currencies in European trading Wednesday morning. The euro traded at $1.3271, down from $1.3318 late Tuesday in New York. The British pound traded at $1.9693, down from $1.9727. The dollar fetched 122.32 Japanese yen, up from 121.82.


[R]5:30AM Copper loses more than 2% Tuesday, gold and silver sink on profit-booking.[/R]

On the New York Mercantile Exchange, copper shed 6.9 cents to end at $3.287 a pound. Chinese imports of copper fell 28 percent in May from April. China is the greatest source of demand in the metals futures and any waning in Chinese imports unnerves the market.

Precious metals prices also retreated. Gold for August delivery shed $5.90 an ounce to settle at $653.10 on the Nymex as the U.S. dollar gained against the euro and other world currencies. Gold is considered a hedge against inflation. July silver gave up 18.5 cents, settling at $13.09 an ounce.

After crude oil futures added more than 1$ a barrel on Monday, gold lost on Tuesday on profit-taking. Light, sweet crude for July delivery fell 62 cents to close at $65.35. Gasoline futures dropped 1.63 cents to end at $2.135 a gallon.

On the Chicago Board of Trade, wheat rallied, extending gains from Monday when it advanced 28 cents. July wheat rose 9 cents to settle at $5.65 a bushel on the CBOT. July corn lost 2.4 cents a bushel to close at $3.934, while soybeans finished down 3.4 cents at $8.264 a bushel.