Dow 14,000, U.S. Earnings lift Global Indexes

123jump.com Staff
19 Jul, 2007
New York City

World markets advanced on rising averages in New York. Better than expected earnings from banks, technology, industrial companies lifted Dow Jones average above 14,000. European markets closed higher on earnings from Roche and SAP. Vodafone adds 9.1 million subscribers. Asian markets advanced. Japanese yen traded at a record low against euro. India and Hong Kong close at record. Oil nears $76 per barrel and copper closes at record high. After the close Google and Microsoft drop on earnings.

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

A shift of focus to earnings from mortgage bonds worries led the averages higher. Tech companies reported better than expected earnings. European and Latin American markets tracked the rise in New York. Asian markets closed higher led by a rise in Japan.

Yields edged lower on 10-year U.S. bonds and closed at 5.03% and 30-year bond rose to close at 5.118%.

Crude oil jumped $0.87 cents to close at $75.92 per barrel, natural gas closed up 20 cent to $6.73 per mBtu, and gasoline futures increased 0.39 cents to close at 219.14 cents per gallon.

Gold traded up $4.80 to close at $678.50 per ounce, silver increased 8.5 cents to close at $13.375 per ounce, and copper futures lost $61 to close at $7,901 per metric ton.

Dow Jones increased 82.19 to 14000.41, Nasdaq advanced 20.55 to 2,720.44, and S&P 500 rose 6.19 to 1,553.08. DAX index in Germany closed up 97.60 to 7,991.21, in Tokyo Nikkei 225 closed at 18,116.57, up 100.99, and Brazil Bovespa gained 568.72 to close at 58,124.57. Dow traded near 14,000 and finally managed to close at a record level above 14,000 mark. European averages traded higher throughout the day. Japan and other Asian index closed higher after falling for three days in a row. India and Hong Kong close at record levels.

Market averages in New York rose in the early morning trading hours lifted by brighter outlook from IBM and earnings from Bank of America, Washington Mutual, and Continental Airlines. Networking gear companies and select semiconductor companies reported a sharp rise in earnings. In Europe, SAP reported solid increase in sales and earnings. China reported second quarter economic growth at 11.9%.

The Fed Chairman on the second day of testimony said that while the core inflation is under control but the rising food and energy prices, slowing productivity growth and falling dollar are concerns. The Fed testimonies in the past have talked about hawkish stand on fighting inflation and but reported data lag in capturing rising inflation. Food, energy and housing prices have risen substantially in the U.S. but the Fed and investors have chosen to ignore recent rise these purchase. Several fixed income investor suspect that actual inflation in the U.S. significantly higher than it is captured in the wholesale and consumer price index.

Tech stocks earnings lifted trading sentiment in the morning trading in New York. IBM reported earnings jump of 15% lifting the stock 4.3%, Juniper Networks jumped 12% and Avici System gained 30% on better than expected earnings. Honeywell reported earnings of 78 cents per share on compared to 63 cents a year ago on 8.1% rise in sales.

Bank of America, Washington Mutual, Continental Airlines, Johnson Controls, and Wyeth reported better than expected earnings. Dow Jones, subject of News Corp takeover reported sharply lower earnings on falling advertising rates and revenue.

MF Global Brokerage, ((MF)) an options and derivative brokerage unit of UK based hedge fund operator Man Group, priced its IPO in New York at $30 per share. The stock priced 20% below its expected range fell 8.2% on its first day of trading.

Latin American Markets advanced following the gains in New York and European trading. Argentina led the region with a gain of 1.77% followed by a gain of 1% in Brazil and 0.83% in Mexico. Chile closed 0.2% lower.

Argentine soy oil exporter Molinos Rio de la Plata jumped 12% lifting the index on expectations that the operating margins will improve on higher sales in the international markets. Brasil Telecom fell 1.7% on the news that Telecom Italia sold its stake in the company at 29% lower than the closing price. Building materials maker in Brazil, Duratex, jumped 4% on the news that the industry domestic sales in June rose 19%. In Chile Supermercados Unimarc jumped 17% after surging 20% on the news that the second largest operator in the industry, Cencosud is looking to buy the company.


[R]3:00PM New York, 9:00PM Frankfurt – European markets closed higher across the region.[/R]

European Markets closed higher across the region led by 1.2% rise in Switzerland and Germany followed by 1.1% rise in UK and France, and 1% rise in Spain, the Netherlands and Italy. Broker upgrades and earnings drove the indexes in the region higher.

SAP earnings rose 8% to 449 million euros on software sales license revenue of 715 million euros with a gain of 18%. SAP stock surged 6.1%. Pharmaceutical company Roche reported net income for the first half 4.92 billion Swiss francs. Roche jumped 3%. Roche chief executive Franz Humer will step down and assume the rose of chairman of the board at the UK based liquor and drinks company Diego.

Vodafone ((VOD)) reported new subscriber addition in the second quarter ending in June of 9.1 million with a total of 232 million subscribers. The stock gained 0.8%.

Sandvik AB, Swedish maker of cutting tools, reported second quarter earnings surged 38% to 2.62 billion kronor.

Food and snack products companies traded higher amid merger and takeover news. Nestle reportedly held talks with Pepsi to merge two businesses but declined the opportunity. Wall Street Journal reported that the companies could not find enough synergies between businesses. Nestle jumped 2% on the news. Groupe Danone jumped 2.4% and Unilever jumped 2.4%.


[R]1:00PM New York – Nasdaq earnings jump three fold. MF Global IPO declines on the first day in trading in New York.[/R]

Nasdaq Stock Market Inc reported second quarter profit of $$56.1 million from $16.6 million a year ago on rising trading volume, higher number of company listing, and lower trading fees. Earnings per share jumped to 39 cent from 13 cents a year earlier. Revenue in the quarter jumped 30% to $558.2 million on increasing market share in NYSE listed stocks. At mid-day the stock traded 3.5% higher after rising as high as 5%. The company revised its annual income forecast to $171 million and $181 million from the earlier projection between $165 million and $175 million. Nasdaq revised revenue projection between $775 million and $790 million.

Man Group Plc, UK based hedge and private fund management group, raised $2.92 billion for IPO of MF Global Brokerage. MF priced its 97.4 million shares at $30, lower than its expected price range between $36 and $39. The stock dipped as low as $27.13 before settling at $27.73 after 29.4 million shares changed hands at 12:52 pm. The second largest IPO this year in New York valued the company at $3.64 billion with 80% of its stake trading on the exchanges and 20% controlled by Man Group. The company reported at the end of the fiscal year ending in March 31, revenue of $5.7 billion and earnings of $188 million.


[R]10:00AM London is higher Thursday afternoon with mining leading the rally.[/R]

The benchmark FTSE 100 Index increased 1.19%, to 6645 in early afternoon in London.

BHP Billiton Ltd. and Rio Tinto Group led shares of mining companies higher. BHP Billiton Ltd was 3.5% higher and Rio Tinto also advanced 3.5% as copper prices advanced for a second day in Shanghai on worries lower output from Chile, will further cut global supply as stockpiles decline.

Vodafone climbed 0.9%. The company announced it added 9.1 million subscribers in the three months through June, totaling 232 million subscribers.

Broker comments lifted few stocks. LogicaCMG gained 4.25 after UBS AG hiked its recommendation on the Anglo-Dutch computer-services provider to buy from neutral. Segro, the owner of five of the largest business parks in the U.K., climbed 2.3% as UBS also raised its recommendation on the shares to buy from neutral.

National Grid also benefited from broker comment as it advanced 1.5% after Dresdner Kleinwort hiked its recommendation on the owner of the U.K. natural-gas and electricity transmission networks to add from hold.

Colt Telecom Group, phone-service provider, surged 3% as it posted a second-quarter profit of 8.9 million euros, or $12.3 million, compared with a loss in the year-earlier period.

Dairy Crest Group, U.K. dairy producer, gained 4.1% as it said it had a strong performance in the first three months of the fiscal year, led by sales of products such as Cathedral City cheese and Utterly Butterly spread.

Drugmaker GlaxoSmithKline increased 1% as the company said advisers to the European Union recommended approval of a Glaxo’s vaccine that prevents cervical cancer.


[R]9:30AM New York – Banks report earnings gains on higher fees and charges.[/R]

Market averages are expected to open higher this morning in New York trading on brighter outlook from IBM and better than expected earnings from banks. Three popular averages, Dow, S&P 500 and Nasdaq opened with over 0.5% gain in the morning trading.

Initial jobless claims at the end of last week dropped 8,000 to 301,000.

IBM ((IBM)) reported earnings of $1.50 per share compared to $1.30 per share a year ago and is looking for annual earnings growth of between 14% and 15% from the previous growth rate of 13% to 14%. Network equipment maker, Juniper Networks reported 15 cents per share and revenue growth of 17%. Citrix Systems ((CTXS)) reported earnings and sales but not the earnings per share. The company forecasted sales for the year between $1.34 billion and $1.36 billion. Avici Systems ((AVCI)) reported 82 cents per share beating the estimates of low 21 cents per share. Motorola ((MOT)) reported earnings per share of 2 cents.

Bank of America ((BAC)) reported earnings, before the open, of $1.28 per share compared to $1.19 from a year ago and beating the estimates of $1.19 per share. The ever increasing fees to individual bank accounts and higher charges at the credit card division helped the bank to power the earnings. Washington Mutual ((WAMU)) earnings per share jumped to 92 cents from 79 cents a year ago. First Horizon National Bank reported earnings of 17 cents per share.

Continental Airlines ((CAI)) reported earnings of $2.03 per share beating the estimates of $1.71 per share. Dow Jones ((DJ)) missed the earnings target of 44 cents and reported 25 cents per share. Genuine Parts ((GPC)) earnings per share of 76 cents met the expectations. Pharmaceutical maker, Wyeth ((WYE)) reported earnings per share of 87 cents beating the estimates of 86 cents.


[R]7:30AM NY-6:30PM Mumbai Sensex soars 249 points in a large-cap rally.[/R]

The Sensex on BSE advanced Thursday 248.96 points, or 1.63% and settled at 15,550.13.

The market opened 56 points higher at 15,357 at the intra-day low. Steady buying in large-cap stocks especially in the latter part of trading saw the market surge to an intra-day high of 15,593.

The market-breadth was positive with three advancers for every two decliners. As 1,503 stocks advanced, 1,104 declined and 70 were unchanged. Of the 30 stocks in the Sensex, only four declined while 25 advanced and one was unchanged.

The turnover on BSE was Rs 5,699 crore, compared with Rs 5,750 crore on Wednesday. On NSE, turnover was Rs 11,591 crore, slightly higher than Rs 11,318 crore on Wednesday.

Economic news

The Finance Minister P. Chidambaram said in an interview yesterday that India must keep its strict monetary policy in order to curb inflation. Indian bonds declined the most in more than a month after the comments. Bond dealers were looking for an interest rate cut after inflation dipped to near a 13-month low last week.

Trading highlights

Spice was the most active stock with a turnover of Rs 695 crore followed by DLF and Zee Entertainment.

Advancers of the Day

Tata Motors advanced 4.7% to Rs 778 and led the gainers on the belief that interest rates will not increases. Companies rely for 75% of auto sales on cheap financing. Bajaj Auto also gained over 4% to Rs 2,382.

Tata Motors is reported to consider a purchase of Jaguar and Land Rover divisions from Ford Motor Company.

Index heavy, Reliance Industries surged 4.2% to Rs 1,896 on a court decision from the Bombay High Court, which on Wednesday, July 18 J 2007, repealed a decision to forbid Reliance Industries to sell gas from its KG basin field to any other firm except Anil Ambani's Reliance Natural Resources and state-run NTPC.

Cement stocks were boosted by the infrastructure boom. Grasim jumped 3.5% to Rs 2,996. Other cement shares also advanced. JK Lakshmi Cement was up 4.3% to Rs 143 and UltraTech Cement Company gained 1.4% to Rs 969. ACC, volatile during the session, but managed to finish with a gain of 1.5% to Rs 1,150.

Telecom stocks gained on strong buying interest. The second-largest mobile services firm in India, Reliance Communications advanced 2.1% to Rs 579. The company has sold a 5% stake in its telecom tower business, worth 27,000 crore.

Bharti Airtel advanced 1.4% to Rs 896. Bharti Enterprises, the parent of Bharti Airtel announced on Wednesday, July 18 2007, one of its group companies had purchased a 4.99% in the telecom firm from Vodafone. Bharti's voting interest in Bharti Airtel is now more than 50%.

IT stocks gained in expectation of global merger & acquisition activity. The second-largest IT services company Infosys Technologies surged 2.6% to Rs 1,997 on speculation that it is close to buying the finance and accounting BPO arm of Philips Global.

Wipro bounced back from a low of Rs 494, and was up 0.19% to Rs 505.40. The company reported before market opening, 16% increase in net profit to Rs 710 crore in first-quarter of June 2007, below the market expectations.

Decliners of the Day

Only four stocks in Sensex fell. Hindustan Unilever dipped 0.6% to Rs 198, Reliance Energy lost 0.4% to Rs 686, Cipla declined 0.4% to Rs 205 and Tata Steel, which finished almost flat, down 0.07% to Rs 682.

[R]6:30AM European markets gain Thursday on strong corporate results in tech stocks.[/R]

European stocks advanced Thursday. All 17 markets gained in Europe, except the market in Finland. Of the three major markets, U.K. FTSE 100 index rose 0.8% at 6,618.60, while the German DAX 30 index was up 1% at 7,970.95 and the French CAC-40 index advanced 0.8% at 6,046.29.

In London, stocks gained for the first time in four days, led by Vodafone after the largest mobile-phone company in the world announced the number of subscribers surged by 4.1% in the fiscal first quarter. Vodafone climbed 1.4%.

Miners also advanced as copper prices rose for a second day in Shanghai on concern of lower output from Chile. BHP jumped 2.4% and Rio increased 2.3%. Segro, the owner of five of the U.K. largest business parks, climbed 1.9% as UBS hiked its recommendation on the shares to buy from neutral.

In Frankfurt, German benchmark DAX Index climbed for the first time in three days, led by SAP after the largest maker of business-management software in the world reported earnings that topped analysts' estimates. SAP rallied 4.7%. The company announced second-quarter profit increased 8.2% to 449 million euros or $619 million, spurred by a jump in license sales in Europe. MAN also advanced 1.4% and Siemens climbed 1.9%.

In Paris, French stocks advanced, as gains were paced by Groupe Danone. Eramet surged after a report that Areva may buy a 37% stake. Danone, the world largest yogurt maker, rose 2.6%. European food and beverage shares advanced after a report that Pepsico and Nestle considered a merger this year. Eramet, which operates the world largest ferronickel plant, soared 13%.

Currencies

The dollar traded near record lows against the euro and the pound Thursday, as the U.S. currency was hit by concerns over the U.S. housing market. The euro rallied to $1.3813 in late morning trading on Thursday, up from $1.3795 overnight in New York, but below the record high of $1.3833 reached in early Wednesday trading.

The British pound also traded near its highest point in more than a quarter-century, trading at $2.0500 Thursday, but down from $2.0533 overnight in New York.

The dollar also slipped against the Japanese yen, falling to 121.87 yen from 121.89 yen in New York late Wednesday.

[R]5:30AM Gold gains Wednesday on inflation worries, oil rallies above $75 a barrel.[/R]

Gold movement depends on four factors including inflation concerns, the movement of the dollar against the euro, bond yields and oil prices. In his comments to Congress Wednesday, Bernanke stated that growth this year will be slightly slower than the Fed had projected in February on weakness in the housing industry with inflation remaining the main concern of the Federal Reserve.

August gold gained $7.80 to settle at $673.70 an ounce on the New York Mercantile Exchange after the Fed’s Chairman speech. September silver settled at $13.29, up 27.2 cents an ounce, while September copper finished at $3.563, up 1.05 cents a pound.

The yield on the benchmark 10-year Treasury note, which rivals gold as a safe-haven investment, declined to 5.01% from 5.07% late Tuesday.

Oil prices settled above $75 a barrel for the first time since August 2006 and gasoline futures rose after the Energy Information Administration reported an unexpected drop in the nation's gasoline stockpiles.

Crude oil for August delivery surged $1.03 to settle at $75.05 a barrel on the Nymex. Gasoline futures rallied 9.46 cents to close at $2.1953 a gallon.

In Chicago, agriculture futures made a recovery from the sharp decline of the prior two days. November soybeans rebounded 16 cents to settle at $8.765 a bushel on the Chicago Board of Trade. September wheat added 22.25 cents to close at $6.235 a bushel.

December corn rose 5.75 cents to close at $3.425 a bushel. A break of that price could have sparked a fall to the low point of $2.81 a bushel in September, according to investors.