Blackstone to Price IPO

Elena
19 Jun, 2001
New York City

Wall Street opened below the flat line after data showing a smaller-than-expected drop in home construction failed to offset disappointing earnings from Best Buy, as well as concerns about rising crude oil prices. In corporate news, Blackstone Group is expected to price its long-awaited IPO on Thursday. The private equity fund plans to sell investors a 12.3% equity stake in its management business for about $4 billion, with shares expected to price between $29 to $31.

[R]9:45AM U.S. stocks opened lower, despite a smaller-than-expected drop in home construction.[/R]

Wall Street opened below the flat line after data showing a smaller-than-expected drop in home construction failed to offset disappointing earnings from Best Buy, as well as concerns about rising crude oil prices. Electronics chain Best Buy ((BBY)) fell 4.6% after reporting Q1 earnings decline.

In corporate news, Blackstone Group is expected to price its long-awaited IPO on Thursday. The private equity fund plans to sell investors a 12.3% equity stake in its management business for about $4 billion, with shares expected to price from $29 to $31. In other corporate news, Yahoo ((YHOO)) fell 1% after Chairman Terry Semel resigned as CEO.

In midmorning trading, the Dow Jones industrial average fell 19.42, or 0.14%, to 13,593.56. The Standard & Poor's 500 index fell 3.71, or 0.24%, to 1,527.34, and the Nasdaq composite index fell 11.77, or 0.45%, to 2,614.83. Bonds rose, with the yield on the benchmark 10-year Treasury note slipping to 5.13% from 5.15% late Monday.


[R]9:30AM London dips on weakness in Tesco, Vodafone.[/R]

In London, the benchmark index, FTSE 100, lost 0.4% to 6696.9.

Advancers

Capita led the advancers, up 2.4% after Citigroup upgraded its rating to buy, on a deal with Resolution that boosts Capita strong gains in the insurance outsourcing market.

The price of oil retreated slightly but was still trading around $72 on Tuesday on worries about supplies from Nigeria. The surging price of oil sent shares of BP 1.1% higher.

Strong guidance for metals prices from Man Securities supported miners. Lonmin rose 0.7% and Rio Tinto was 0.6% stronger, helped by Credit Suisse hiking its price target on the stock.

Decliners

Tesco, the biggest retailer in the UK, lost 3.3% after it posted Q1 same-store sales growth of 4.7%, which is lower than the previous quarter. The company warned it would be a tougher year in more subdued markets, as consumer spending is limited by rising interest rates. Other retailer also dipped. Marks & Spencer slid 1.9% and J Sainsbury was trading down 0.8%.

Vodafone lost 1.7%. The decline was brought about by a report, which quoted AT&T CEO Randall Stephenson stating that AT&T was not interested in coming out with a bid for Vodafone.


[R]9:00AM U.S. stock futures pointed lower, despite positive housing data. Best Buy earnings weighed.[/R]

U.S. stock futures recovered from earlier weakness following a report that showed a slightly smaller-than-expected drop in the pace of May home construction. The Commerce Department said that housing starts fell by 2.1% to a seasonally adjusted annual pace of 1.47 million in May, as building permits for new construction rose 3%.

However, disappointing quarterly results reported by Best Buy ((BBY)) prevented stock futures from getting into the positive territory. The electronic retailer said its Q1 earnings dropped 39 cents a share from 47 cents a share a year earlier, missing expectations of 49 cents a share. The stock slipped over 4%.

Among other pre-market highlights, Yahoo ((YHOO)) advanced 4% after the Internet search giant named co-founder Jerry Yang as CEO, replacing Terry Semel. Epix ((EPIX)) was a notable gainer in pre-market trading, with shares jumping 16% after the FDA declined to approve the company''s experimental blood-pool imaging agent but indicated it may not need further clinical trials to be conducted.

Cruise operator Carnival ((CCL)) is one of the very few companies of importance, scheduled to release earnings reports. Bayer ((BAY)) lifted its earnings outlook for 2007 and 2009. S&P 500 futures were down 2.80 points, but above fair value. Dow Jones industrial average futures were down 25 points while Nasdaq 100 futures were down 6.50.


[R]8:30AM Asian markets gain on Tuesday with Japan and South Korea leading the region higher.[/R]

Asian markets ended higher. The Nikkei 225 Average closed 0.1% higher at 18,164. Kawasaki Heavy gained 1.6% after announcing it is likely to join a project, led by China Ocean Shipping, to build a shipyard in China. Oji Paper advanced 1.5% and Tokushu Tokai added 1.9% after the companies stated they will form an alliance.

South Korean Kospi Index added 0.1% to 1,807.85. Construction stocks and shipbuilders rallied on their second-quarter results. Daelim Industrial soared 9.2% and Daewoo Engineering & Construction gained 4.3%.

In China, the benchmark, Shanghai Composite Index, added 0.4% to close at 4,270. Property stocks gained on strong earnings expectations. China Vanke advanced 4.2% and China Merchants Property gained 4.6%. Shares of banks fell. Bank of China declined 0.2%, Bank of Communications lost 1.4% and China Citic Bank slipped 1.3%.

Australian S&P/ASX 200 rose 0.5% to 6,372. BHP Billiton advanced 0.7%, Rio Tinto added 1.2% and Woodside Petroleum rose 2%. Financials also performed strongly, with National Australia Bank gaining 0.5% and Westfield Holdings rising 1.7%.


[R]8:15AM Best Buy Q1 earnings dropped 18%.[/R]

Best Buy Co. ((BBY)) announced that its Q1 earnings declined 18%, due to weak results in China and increased sales of lower-margin products. The electronics retailer said its quarterly profit fell to $192 million, or 39 cents per share, from $234 million, or 47 cents per share a year ago. Revenue rose 14% to $7.93 billion, from $6.96 billion last year.

Quarterly results came in below earnings estimates of 49 cents a share, but topped revenue expectations of $7.85 billion. Revenue growth was driven by higher transaction size, as consumers bought higher-priced items. Same-store sales increased 3% during the quarter. Best Buy fell 5% in premarket treading.


[R]7:30AM NY-6:30PM Mumbai Sensex surges 215 points Tuesday, on banks, oil.[/R]

The Sensex on BSE finished Tuesday 215.36 points, or 1.53%, higher at 14,295.50.

The market-breadth was positive with 1,403 stocks gaining, 1,144 stocks declining and only 82 stocks were unchanged. Of the 30 stocks in the Sensex, 23 advanced, while the rest declined. The turnover on BSE was Rs 4,326 crore, compared with Rs 3,795 crore on Monday. On NSE, the turnover was Rs 8,350 crore, higher than Rs 7,064 crore on Monday.

Economic news

Copper and zinc producer Sterlite Industries raise over $1.75 billion of stock through the issue of American depository receipts at $13.44 apiece, the biggest by any Indian company. One ADR is equal to one local share.

A government official announced today that the Indian textile industry is targeted to reach $115 billion by the year 2012 and accelerate its growth rate to 16% from 9%.

Trading highlights

Time Technologies was the most-active stock with a turnover of Rs 180.41 crore followed by HTMT Global and Nitin Fire.

Advancers

Bank stocks were buoyed by the strong sale of ICICI Bank’ secondary offering. ICICI Bank made its record sale in 20 minutes. The simultaneous offering in New York and Mumbai is expected to raise $4.3 billion.

State Bank of India surged over 4% to Rs 1,372 and was the best performing stock listed among stocks listed in the Sensex index. SBI is set to raise $225 million from the overseas market this year by issuing perpetual bonds.

Other banks also followed suit. Bank of India was up 6.7% to Rs 204, Bank of Baroda gained 1.9% to Rs 265, and Kotak Mahindra Bank advanced 4.8% to Rs 589. Engineering & construction large-cap L&T advanced 3.6% to Rs 1996. The company won an order worth Rs 610 crore for a residential building project in Dubai.

Auto makers jumped on the announcement from the minister for petroleum and natural gas Murli Deora that the government does not intend to raise the price of petrol or petroleum products, auto makers extended their gains. Tata Motors gained 2.8% to Rs 663, Bajaj Auto rose 2.1% to Rs 2125, Maruti Udyog added 1.1% to Rs 752 and Hero Honda Motors gained around 2% to Rs 666.

Grasim, Reliance Communications, ONGC, and Gujarat Ambuja surged near 3% each to Rs 2,450, Rs 504, Rs 915, and Rs 113, respectively. Index heavy Reliance Industries advanced 3.3% to Rs 1,727.

Decliners

IT large-caps declined the most today, as the Indian rupee hit a one-week high against the dollar. Satyam slipped 1.8% to Rs 468, and Infosys declined 1.6% to Rs 1,957. Hindalco Industries also lost 0.3% to Rs 162.


[R]6:30 AM European markets edged higher on Bayer and oil companies.[/R]

European markets advanced on Tuesday morning. The U.K. FTSE 100 index rose 0.2% at 6,715.10, the German DAX Xetra 30 index increased 0.4% at 8,064.23 and the French CAC-40 index advanced 0.3% at 6,104.14.

Advancers

Oil and gas companies were strong as BP and Royal Dutch Shell gained more than 0.5% each while other commodity sector companies. Potential mining sector deals were back in the spotlight early Tuesday, with the resource sector in focus after reports that mining giant BHP Billiton planning a bid for Alcan of Canada. BHP Billiton added 0.7%.

Bayer also advanced with shares up 1.4% after the German pharmaceutical company, at its investor day presentation, upped its earnings forecast for 2007 and 2009. Bayer announced that the integration of Bayer Schering Pharma is proceeding more quickly than planned and its consumer health business has had a strong performance.

Vivendi rose 1.2% after Goldman Sachs upgraded the media and telecommunications conglomerate to buy from neutral.

Decliners

Retailers were weak. Tesco dropped 3%, the biggest decline since September 2005. The retailer announced first-quarter sales, excluding gasoline revenue, gained 4.7% in same-store sales. That is the slowest pace in a year and less than the median estimate of 5%.

Marks & Spencer also declined 1.3% in sympathy and Carrefour, the world second-largest retailer, dropped 2%. J Sainsbury, the U.K. third-largest supermarket chain, slid 0.7%.

Commodities

Crude oil declined from near a nine-month high in New York as investors speculated recent gains that followed unrest in Nigeria were unjustified. Crude oil for July delivery fell 35 cents, or 0.5%, to $68.74 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for August settlement fell 40 cents, or 0.6%, to $71.78 a barrel on the ICE Futures exchange.

Gold fell in London for the first time in five days as the dollar decline against the euro came to a stop, reducing demand for the metal as an alternative investment. Silver also declined. Gold for immediate delivery dropped $1.70, or 0.3%, to $654.65 an ounce. Silver fell 1 cent to $13.21 an ounce.

Currencies

The U.S. dollar was mixed against other major currencies in European trading Tuesday morning. The euro traded at $1.3389, down from $1.3411 late Monday in New York. The British pound traded at $1.9836, down from $1.9837. The dollar bought 123.66 Japanese yen, up from 123.61.


[R]5:30AM Gold and copper gain Monday on dollar weakness, Treasury yields.[/R]

Gold for August delivery advanced $1.40 to settle at $660.10 an ounce on the New York Mercantile Exchange. August silver, though, shed 2.4 cents to finish at $13.296 an ounce, declining after traders made profits from last week gains. Platinum for July advanced $12 to close at $1,299.50 an ounce after production was halted at a major mine in South Africa, a country where strike threats are also lifting prices.

On the Nymex, July copper futures gained 0.10 cent to end at $3.4220 a pound. Lead on the LME advanced 1% to a new record high, while zinc dipped 1.5%, nickel shed 4% and aluminum fell 1%.

Labor unions in Nigeria called for a general nationwide strike to protest a government price raise on automobile fuel. Mounting political tensions in the Middle East and tight gasoline supplies and refinery glitches in the United States also boosted energy prices. Crude oil futures for July delivery gained $1.09 to settle at $69.09 a barrel. July gasoline futures added 0.42 cent to settle at $2.2643.

Grain prices were mixed on the Chicago Board of Trade. July wheat futures slid 5.5 cents to close at $6.01 a bushel on the CBOT, still trading near levels unattained in over 10 years after heavy rains hurt the U.S. wheat crop. July corn shed 3 cents to close at $4.16 a bushel.