World Markets Rally, Banks Lead HK, Germany

123jump.com Staff
15 Jun, 2007
New York City

New York rally was built on the hope that mild core inflation data will keep consumers in the spending mood. U.S. also reported first quarter current account deficit of $192 billion. Nymex rallied on merger rumors and Intel rose on upgrade from Goldman Sachs. European stocks rallied led by German banks. Banks in Hong Kong led the index higher. Shanghai and Brazil surged more than 4% in the week. Tokyo Stock Exchange buys 5% stake in Singapore Exchange. Bank of China to issue yuan bonds in HK.

[R]5:00PM NY, 11:00 PM Frankfurt, 2:30AM Mumbai – Global Markets[/R]

Yields edged lower on 10-year U.S. bonds and closed at 5.17% and 30-year bond rose to close at 5.25%.

Crude oil gained 35 cents to close at $68.00 per barrel, natural gas up 11 cents to close at $7.92 per mBtu, and gasoline futures rose 3.54 cents to close at 226.01 cents per gallon.

Gold gained $2.80 to close at $658.70 per ounce, silver gained 9.5 cents to close at $13.26 per ounce, and copper futures increased $159 to close at $7,541 per metric ton.


In New York stocks rallied led by a rise in energy, tech and retail stocks. Economic reports on inflation, capacity utilization and consumer confidence brought buyers to the table. Consumer Price index rose 0.7% in May and core rate of inflation, excluding food and energy prices, gained 0.1%. Investors cheered and saw little trouble on the inflation front lifting stocks across sectors and bond yields edged lower. Consumer sentiment index declined on falling home values and rising gasoline prices. Current account deficit widened to $192.6 billion in the first quarter on higher energy prices. Empire State manufacturing survey for the month of June showed a sharp rise in manufacturing activity.

MasterCard International ((MA)) saw nearly 5% jump on the economic news and other large retailers gained as well. Intel ((INTC)) jumped 5% on a recommendation from Goldman Sachs. Monsato Co. ((MON)), largest seed producer jumped 2.5% on the earnings revision from the company between $1.75 and $1.80 from the previous forecast of $1.60 and $1.65 per share.

Nymex ((NMX)), operator of commodities exchange rose 1.7% on the news reports that the exchange is exploring possible merger with NYSE Euronext, Deutsche Boerse and Chicago Board of Trade ((BOT)). Sherwin-Williams ((SHW)) gained 2.4% on the ruling from New Jersey court that the company will not have to pay for lead paint related claims from local counties and cities in the state. The ruling lifted stocks of other paint makers including DuPont and Lyondell Chemical.

Penn National Gaming ((PENN)) jumped $12 to $62.12 on the news that the company has accepted a bid from Fortress Investment Group ((FIG)) for $67 per share or $6.1 billion. Isle of Capri and Boyd Gaming jumped on the news as well.

Latin American Markets closed higher led by a 1.6% rise in Brazil followed by 1.0% gain in Argentina and 0.3% increase in Chile and fractional high in Mexico. Markets in the region surged in sympathy with a rise in New York trading reflecting benign core Consumer Price Index data for the U.S. Real in Brazil and peso in Mexico gained on the hopes that central banks have more room to cut interest rates in both countries. Bond in both markets gained.

In Sao Paulo trading stocks rose 1.5% today and 4.2% for the week. In the last four years inflation has been tamed to 3.2% from 17% and currency has appreciated 83% against dollar. Petrobras led the list of rising stocks with a gain of 2.5% on the news that oil production will increase 10% at the end of the third quarter this year. Steel, telecom, mining and retail stocks rallied. CSN, Usinimas and CVRD closed up 2%. Banking stocks rallied for the third day of this week. Bradesco ((BBD)) added 4% and Itau ((ITU)) gained 2.5% in ADR trading in New York reflecting similar gains in Sao Paulo.

In Mexico City trading stocks closed higher on a decline in bond rates and higher peso. The rally in the morning was led for the second day by retailers, telecom and home builders. Telmex and American Movil ((AMX)) jumped 2.5%, Homex ((HMX)) traded higher but at closed a fraction lower.


European Markets closed higher bolstered by inflation data in New York and investment from Qatar Investments and deals news. Markets across the region closed up sharply with a gain of 2.3% in Germany and 2% in Norway. U.K., Italy, the Netherlands, Spain and Switzerland gained 1.2%.

In Paris and Frankfurt trading insurers, realtors, and banking stocks closed higher. Hypo Real Estate jumped 4.4%, AXA and Allianz were up 2.3%, followed by 1.7% gain Deutsche Bank. Commerzbank jumped 3% on the news that the City of Berlin has agreed to sell its 81% stake in Landesbank Berlin Holding to community savings association DSGV for 4.6 billion euros. Commerzbank was considered a front runner for the deal. Broker recommendation for Siemens lifted the stock 4.3%, seven year-high on the hopes that orders from China and India will support further rise in earnings. E.ON gained on a ‘buy’ recommendation from Goldman Sachs. Norddeutsche Affinerie surged 11% on the news that Austrian company A-Tec Industries has taken 10% stake in largest European copper refiner.

Energy stocks across the region gained on higher oil prices. Total ((TOT)), Royal Dutch Shell, British Petroleum ((BP)), Norsk Hydro ((NHY)) and Stat Oil ((STO)) advanced at least 2%.

In London trading retailers, miners, utilities and energy companies participated in rally driven by U.S. economic data. News of Qatari backed investment fund lifting its stake in J. Sainsbury to 25% with the addition of 7.1% helped stock to surge 4.4%. The news lifted other stocks in the sector including 2.6% gain in William Morrison and 1.7% in Tesco. Asda and Tesco dominate UK grocery retail market. Lonmin Plc rose 4.8% on target price revision from Morgan Stanley to 5,075 pence. Trace Group, a subject of management led buy-out, soared 15% on a bid from Internet based personal finance service company for 25.6 million pounds. Wolseley, distributor of heating and plumbing equipment, jumped nearly 5% on the takeover rumors.


Asian Markets closed higher in sympathy with higher closing in New York in the overnight trading led by a sharp rally in several markets. Taiwan led the region with a rise of 1.45% followed by 1.2% gain in Philippines and Thailand, 0.7% advance in Hong Kong and Japan, Australia and Shanghai rose 0.5%. Korea closed at a record high. Bank stocks in Hong Kong lifted the index.

In Tokyo trading steel companies, high tech exporters and automobile makers led the rally. U.S. dollar is now trading at 54-month high against the yen lifting stocks of Toyota, Sony, Nippon Steel, Godo Steel, Marubeni, and Mitsubishi. A day ago Nippon Steel said that it will spend $50 million to increase its stake in Godo Steel. Honda jumped 2% and Toyota added 1.6%. The yen dropped as low as 123.13 to a dollar. Tokyo Stock Exchange acquires 4.99% stake in Singapore Exchange for $303 million or 37.4 billion yen.

In Sydney trading, mining and energy stocks participated in the rally for the second day. Third largest oil producer Santos jumped 2%, followed by 1.6% rise in Rio Tinto and 0.3% lift in BHP. Alliance Resources jumped 16% on the news that the company has found uranium deposits in South Australia State.

In Shanghai and Hong Kong stocks advanced. In Shanghai stocks gained 0.5% and for the week soared 6.8%. China Construction Bank jumped 3.2% on the news that company plans to raise $5.5 billion in Shanghai. Bank of China rose 1.3%. Bank of China shareholders authorized company to issue 3 billion yuan ($390 million) bond, first Chinese currency debt in Hong Kong.


[R]9:45AM U.S. stocks rallied at opening, boosted by strong inflation data.[/R]

Wall Street opened higher Friday, with the three major averages accelerating quickly to climb 1% soon after the market opening. The rally was fueled by the release of some relatively tame inflation data.

Consumer prices rose 0.7%, their fastest pace since September of 2005, while core consumer prices showed a much more modest increase of 0.1%, coming in below analyst estimates. Intel ((INTC)) also gave a boost, rising 3.4%after Goldman Sachs upgraded its stock to buy from neutral.

In other corporate news, Monsanto Co.((MON)) jumped 6% after the world's largest seed company lifted its full-year earnings forecast. Gun maker Smith & Wesson Holding Corp. rose 6% after reporting stronger-than-expected Q4 profit and sales. The company also raised its full-year profit and sales forecasts.

In early trading, the Dow jumped 98.12, or 0.72%, to 13,651.84. The Standard & Poor's 500 index rose 11.74, or 0.77%, to 1,534.71. The Nasdaq composite index rose 24.88, or 0.96% to 2,624.29. The yield on the benchmark 10-year Treasury note fell to 5.20% Friday from 5.23% late Thursday after release of the CPI report helped ease rate concerns.

[R]CPI rose 0.7% in May, exceeding expectations of 0.6% increase.[/R]
Friday morning, the Department of Labor released its highly anticipated report on consumer prices in the month of May. While the report showed that prices rose a little more than expected, core prices rose less than expected. The Labor Department said its consumer price index rose 0.7 percent in May following a 0.4 percent increase in the previous month. Economists had been expecting a slightly more modest increase of about 0.6 percent. The bigger than expected increase marked the fastest pace of consumer price growth since September of 2005, when the impact of Hurricane Katrina drove gasoline prices higher and resulted in a 1.2 percent increase in consumer prices.

A sharp rise in energy prices also contributed to the bigger than expected increase in prices in May, with energy prices surging up 5.4 percent after rising 2.4 percent in April. The increase in energy prices was due in large part to a 10.5 percent increase in gasoline prices. The increase in energy prices also contributed to a significant increase in transportation prices, which rose 2.8 percent in May following a 1.2 percent increase in April. As mentioned above, however, the report also showed that the core consumer price index, which excludes food and energy prices, edged up only 0.1 percent after rising 0.2 percent in April. Economists had expected the core index to increase by 0.2 percent.


[R]9:30AM FTSE 100 advances Friday on takeover speculation around J Sainsbury.[/R]

The FTSE 100 Index advanced 39.5, or 0.6%, to 6689.4 in London at noon.

Advancers

Sainsbury climbed 5.2%. Delta Ltd., a Qatar-backed investment fund, raised its stake in the company to 25 % after acquiring an additional 7.1% of the stock.

William Morrison, the fourth-biggest U.K. food retailer, rose 2.4%. Tesco Plc, the country largest retailer, jumped 1.3%.

Accident Exchange Group soared 22%, after the U.K. provider of rental cars secured a new loan.

D1 Oils gained 6.9%. The U.K.-based maker of biodiesel fuel said it noted the recent gain in the company share price and said talks were reaching an advanced stage regarding a strategic collaboration.

Legal & General Group climbed 1.9% after Cazenove raised its recommendation on the U.K. life insurer with $450 billion under management to outperform from in-line.

Lonmin gained 4.9%. Morgan Stanley raised its share-price estimate on the world largest platinum producer.

Royal Dutch Shell, Europe largest oil company, gained 0.9%, BP, the second-largest, climbed 0.8%, as crude oil traded near a nine-month high in New York after a drop in U.S. refining raised concern that fuel supplies may remain below average.

Decliners

Online auctioneer QXL Ricardo is lower 5.7% on the placing of 17% of the group by owners Florissant and the Izaki group, which still own around a third of the group

Drax tumbled 2.3% after Goldman Sachs lowered the power station operator to neutral from buy.


[R]9:00AM U.S. stock futures predict higher opening after inflation data.[/R]

U.S. stock futures indicated a strong opening for a third consecutive session, boosted by inflation data which helped eased recent stock and bond markets concerns. The consumer price index in May showed prices rose at the fastest pace in 20 months on higher gas prices, while core consumer prices rose a lower-than-expected 0.1%. A broker upgrade of microchip giant Intel ((INTC)) also generated positive mood.

Among other companies in focus, Nymex Holdings ((NMX)) surged 7% in pre-open trade amid deal speculations. Home Depot ((HD)) advanced 1.9% after it received two, separate $10 billion offers for its supply unit. Further in M&A action, an investment group led by Babcock & Brown agreed to buy Coinmach Service ((DRY)) for $1.33 billion, including debt. The offer is 15.7% premium to Thursday''s close.

Stock futures moved notably higher following the report. Dow futures expiring in September rose 65, or 0.47%, to 13,753, while Standard & Poor''s 500 index futures rose 9.00, or 0.58%to 1,548.50. Nasdaq 100 index futures advanced 12.25, or 0.63% to 1,9653.50. Bond yields on the 10-year note fell to 5.19% from 5.23%late Thursday after release of the CPI report.


[R]8:30AM Asian markets advance Friday with Japan gaining on steelmakers and export stocks.[/R]

Asian markets advanced Friday. The Nikkei 225 Average finished the day 0.7% higher at 17,971. Shares advanced for a second straight day, as JFE Holdings and other steelmakers gained on an upbeat report by Merrill Lynch. Trading companies were also higher as the dollar climbed against the yen. Marubeni ended up 3.6%, while Mitsubishi rose 3.5%.

Hong Kong Hang Seng Index gained 0.7% to close at 21,017. Insurance provider China Life surged 3.4%, China Construction Bank rose 3.2%, ICBC advanced 1.7%, and Bank of China rose 1.3%. In China, institutional demand for large-caps supported shares to settle higher. The Shanghai Composite Index added 0.4% to finish at 4,133.

In South Korea, the market hit a new record as brokerage and insurance stocks rallied on hopes they will benefit from the Capital Markets Consolidation Act, which the parliament is expected to pass by the end of this month. Samsung Securities added 5%, while Samsung Fire & Marine Insurance rallied 5.4%. South Korean Kospi Index gained 0.2% to 1,772.

Australian S&P/ASX 200 increased 0.5% to 6294. Shares in Australia rebounded with investors encouraged by U.S. increase on upbeat PPI data and other positive regional leads. Rio Tinto led gainers with a 1.7% rise and BHP Billiton closed up 0.4%.


[R]7:30AM NY- 6:30PM Mumbai Sensex erases gains in a last-hour sell-off in large-caps.[/R]

The Sensex on BSE finished Friday 41.01 points, or 0.29% lower, at 14,162.71.

The market-breadth was positive as 1,275 stocks advanced, while 1,210 declined and only 88 stocks remained unchanged. Of the 30 stocks in the Sensex, 15 advanced, while the rest declined. The turnover on BSE was Rs 4,204 crore, compared with Rs 4,427 crore on Thursday. On NSE, the turnover was Rs 8,675 crore, slightly higher than Rs 8,380 crore on Thursday.

Economic news

Wholesale prices rose 4.8% in the week ended June 2 from a year ago, down from 4.85% the previous week.

The government in India approved an ordinance that will allow the federal authorities to purchase from the Reserve Bank of India 59.7% holding in the State Bank of India. The government wants to finalize the transaction by June 31.

Trading highlights

MIC Electronics was the most-active stock with a turnover of Rs 155 crore followed by Reliance Industries and Indiabulls Real Estate.

Advancers

BHEL soared 3% to Rs 1,389. BHEL secured a Rs 430-crore order from Indian Oil Corporation to supply steam generators for IOC''s Vadodara project. Maruti surged 1.6% to Rs 741. Larsen & Toubro and Tata Motors gained 1.2% each to Rs 1,948 and Rs 650, respectively and Ranbaxy was up 1% at Rs 374.

Decliners

Tata Steel and HDFC shed around 2.3% each to Rs 600 and Rs 1,785, respectively. Other decliners included NTPC, which lost nearly 2% to Rs 151. Reportedly, NTPC, largest power generator in India, is planning a follow-on public offer to raise funds for expansion. Grasim and Hindalco dipped 1.7% each to Rs 2,389 and Rs 161, respectively.

Hindalco Industries slipped 1.7% to Rs 161. Hindalco was downgraded by credit rating agency Crisil, from triple-A to double-A. Crisil had been observing HIndalco, following a large debt raised by the company to funds its acquisition of Novelis.

Both TCS and Satyam slipped around 1.5%, respectively to Rs 1,184 and Rs 483,. Index heavy Reliance and Dr.Reddy''s were also down 1% each at Rs 1,680 and Rs 632.


[R]6:30AM European markets advance Friday on oil and banking stocks.[/R]

European markets rose in all 17 markets in western Europe that were open except for Denmark and Luxembourg. In late morning trade, Frankfurt Xetra Dax added 0.6% to 7,892.04, the CAC 40 in Paris climbed 0.4% to 6,073.87 and London FTSE 100 rose 0.6% to 6,687.8.

Advancers

EADS, the European aerospace group, rose 4.4% after Francois Fillon, France’s prime minister, announced that the company was strategic for France, denied any ideas of nationalising the company.

Commerzbank was up 2.3% after the prospect of a capital increase diminished after the city of Berlin government stated it was selling its 81% stake in Landesbank Berlin to DSGV, the public-sector savings bank, for 4.622 billion euros.

Hypo Real Estate, the German property lender gained 2.7% after Morgan Stanley raised its price target on the stock, keeping its rating at overweight.

Oil companies also helped boost the markets as crude prices remained above $70 a barrel. Total added 1.1%, Repsol gained 1.3% and OMV climbed 1.3%.

Shares of Sainsbury climbed 5%. A Qatar- backed investment fund acquired 7.1% of the company''s stock, raising its stake in the supermarket chain to 25%.

Decliners

RWE, the second-largest utility in Germany, fell 0.1% after Goldman Sachs put a sell rating on the stock.

Commodities

Oil prices were little changed Friday after rising overnight to a nine-month-high finish on worries the U.S. refining industry will not meet peak summer gasoline demand. Crude oil for July delivery was down 10 cents at $67.55 a barrel on the New York Mercantile Exchange. Gold opened Friday at a bid price of $650.70 a troy ounce, down from $650.90 late Thursday.

Currencies

The U.S. dollar was mostly lower against other major currencies in European trading Friday morning. The euro traded at $1.3310, up from $1.3307 late Thursday in New York. The British pound traded at $1.9703, up from $1.9694. The dollar bought 123.43 Japanese yen, up from 122.97.


[R]5:00AM Gold and silver advance Thursday on U.S. economic data.[/R]

Gold for August delivery gained $3.20 to end at $655.90 an ounce on the New York Mercantile Exchange, while silver advanced 10.5 cents to settle at $13.165 an ounce. Overseas, the industrial metals market advanced, helped by the Fed''s Beige Book report, which showed the U.S. economy developed at a moderate rate in the first part of the second quarter.

Nickel surged nearly 5 % and copper gained more than 2 % before the close of the London Metal Exchange. Zinc, lead, aluminum and tin also advanced. On the Nymex, copper prices rose 7.95 cents to end at $3.3925 a pound.

Crude oil and gasoline prices continued to strengthen buoyed by the inventories report on Wednesday from the Energy Information Administration. Crude oil for July delivery increased $1.39 a barrel to settle at $67.65 on the Nymex. July gasoline futures rose 6.94 cents to close at $2.2247 a gallon.

On the Chicago Board of Trade, wheat prices rallied to a 10-year high on heavy rains in the Plains. July wheat futures climbed 17 cents to settle at $6.064 a bushel on the CBOT. Corn and soybean prices followed wheat, with July corn rising 5 cents to close at $4.094 a bushel and soybeans gaining $1.60 to end at $8.274 a bushel.