Drop in Oil Leads Higher Opening

Elena
20 Sep, 2005
New York City

Housing starts index for Aug declined by 1.3%. Goldman Sachs posted 3Q earnings of $3.25 a share vs. $1.74 last year, beating expectations of $2.31 a share. Circuit City Stores reported 2Q profit of 1 cent per share, exceeding estimates of a loss of 3 cents per share. The company raised its 2005 sales outlook to 5%-8% growth from previous 3%-6%.

U.S. MARKET AVERAGES

U.S. stock futures poise to a higher opening of the trading session, rebounding from heavy losses Monday when crude-oil prices made the highest one-day jump ever of $4.39 a barrel on the approaching threat of another tropical storm, expected to grow into a hurricane and hit the still recovering oil facilities in the Gulf Coast.

In early Tuesday trading oil prices eased back below $67 a barrel, despite oncoming Rita. Natural gas, heatng oil and gasoline prices also retreated. Traders were cautious, awaiting the U.S. Fed Reserve’s decision on interest-rate with expectations that the benchmark interest will be increased by 3.75%.

S&P 500 futures (SPZ5) were up 1.5 points. Dow Jones industrial average futures (DJZ5) advanced 16 points. Nasdaq 100 futures (NDZ5) ticked up 1.5 points.

As far as earnings news is concerned, investors' attention will be focused on reports from Circuit City Stores, electronic retailer and Goldman Sachs Group, investment bank. Soft-drink maker PepsiCo Inc., will also be in the centre of their attention on talk that it may still be eyeing French food group Danone. They'll also be looking at Chiron Corp. after Novartis' CEO announced that he was not afraid to terminate an acquisition deal with the vaccine maker for $40 a share.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed Tuesday session with solid gains. The Nikkei climbed 1.5%, reaching a four-year intraday high on the back of financial, automotive and commodity-related stocks. South Korea’s Kospi rose to an all-time peak of 1.4% to 1190 after North Korea agreed to abandon its nuclear weapons program. Among the leading gainers were Samsung Electronics, Korea Electronic Power and steelmaker Posco. Across the region, Hong Kong’s Hang Seng gained 1.7% and Thailand’s SET index jumped 2%. The dollar bought 111.55 yen.

European markets traded in the positive at mid-day dealings, supported by surging oil and automakers shares. Investors were also awaiting the U.S. Fed Reserve’s decision on interest-rate hikes. The German DAX 30 rebounded from Monday’s sharp declines after the general election and rose 0.6% on the back of automakers like Volkswagen and BMW. The French GAC 40 and London’s FTSE 100 were mainly boosted by oil stocks like BP, Royal Dutch Shell, Total and climbed 0.6% and 0.2% respectively.

ENERGY, METALS, CURRENCIES

Oil prices declined over $1 despite the threatening tropical storm Rita which caused the crude-oil jump of more than 4$ a barrel Monday. Light sweet crude October delivery fell $1.17 to $66.25 a barrel in electronic trading on the Nymex. Heating oil lost 6cents to $1.9750 a gallon, while gasoline fell 7 cents to $1.9680. London Brent dropped 96 cents to trade at $64.65.

Gold advanced in European trading. In London the precious metal traded at the recommended price of $470.00 per troy ounce, up from $467.50. In Hong Kong gold rose $12.40 to close at $470.25. Silver was trading at $7.34 per ounce, down from $7.37.

The U.S. dollar was mixed against the other major currencies in European trading. The euro was quoted at $1.2150, up from $1.2142. The dollar changed hands at 111.42 yen, down from 111.46. The British pound traded at $1.8022, down from $1.8026.

EARNINGS NEWS

Goldman Sachs, ((GS)) investment banking company, posted 3Q profit OF $3.25 a share, driven by the best performance in four years in its investment banking business. The company’s total revenue increased 81% to $12.3 billion from the year-ago period of $8.9 billion. Analysts’ forecasts for the fiscal 3Q earnings were $2.38 a share. The company announced that investment banking revenue rose 14% compared to last year’s levels, to just over $1 billion from $890 million a year ago.

Circuit City Stores Inc., ((CC)) retailer of consumer electronics, reported 2Q net earnings from continuing operations amounted to 1 cent per share, compared with a net loss from continuing operations of 6 cents per share for the same period of fiscal 2005 results. Total sales rose 7.8 % to $2.56 billion from $2.38 billion in the same period a year ago, with consolidated comparable store sales increasing 5.3 % from the prior year.

Swift Transportation Co. ((SWFT)) announced it's lowering its profit outlook for 3Q to a range of 30 cents to 33 cents a share, excluding non-cash expenses for accelerating stock options and a charge to be taken by the trucking firm for the asset impairment. The company had been looking for earnings of 33 cents to 46 cents a share, prior to this announcement. The analyst estimate stands at 41 cents. Including the special items, Swift fixed quarterly earnings at 11 cents to 14 cents a share. The company said increased fuel costs will subtract 4 cents to 6 cents a share from earnings.


FactSet Research, ((FDS)) provider of financial and economic information, posted fiscal 4Q earnings of 37 cents a share, up vs. 30 cents a share in the year-ago period on revenue growth, beating analysts’ forecasts of 36 cents a share. Subscriptions increased 23% to $336.5 million. For its fiscal 1Q, the company expects revenue of $88 million to $90 million, which is above analyst projections of $83 million.