Strength in Durable Orders

Elena
28 Sep, 2005
New York City

Asian-Pacific markets finished mixed with Seoul's Kospi at a new high of 1.6% on positive earnings expectations and the Nikkei rising 1% on automakers. European markets trade higher on Fed Reserve report and Daimler Chrysler. Data on durable goods orders and crude inventories awaited. The Commerce Dept. released August durable goods orders increase of 3.3% vs. expectations of 0.9% growth.

U.S. MARKET AVERAGES

U.S. stock futures predict a higher opening Wednesday as overseas markets, boosted by the Fed Reserve Chairman Alan Greenspan’s speech on domestic economy supported U.S. stock markets in pre-trading.
The Commerce department released better-than-anticipated data, showing that durable goods orders increased by 3.3% in August after a downward revision of 5.3% decrease in July. Economists had expected an orders rise of 0.9% but as the report does not include Katrina’s impact, it will be largely ignored.

Oil prices retreated ahead of U.S. petroleum inventory report, expected to show a slip in crude, gasoline and distillate stocks, following refinery shutdowns after Katrina and Rita.

ECONOMIC NEWS

On Wednesday, the Commerce Dept. has released its report on durable goods orders in the month of August, showing much better than expected growth. However, because the data does not include the impact of Hurricane Katrina, the significance of the report is likely to be relatively limited.

The report showed that durable goods orders rose by 3.3 percent in August following a downwardly revised 5.3 percent decrease in July. Economists had been expecting orders to increase by a more modest 1.0 percent compared to the 4.9 percent drop originally reported for July.

The growth in durable goods orders was partly due to a significant increase in orders for computers and electronics products, which rose 5.5 percent in August after falling 6.5 percent in July. Orders for primary metals, fabricated metal products, machinery, and transportation equipment also had significant increases.

The Commerce Dept. also noted that excluding orders for transportation equipment, orders rose 4.2 percent in August after falling 3.7 percent in July. Orders for transportation equipment rose 1.4 percent in July following an 8.7 percent decrease in July.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed. The Nikkei rose 1% on exporter issues, boosted by the weaker yen with automakers Toyota Motor and Honda Motor sharply up, offsetting losses posted by chipmakers after J. P. Morgan downgraded the semiconductor sector. Across the region South Korea’s Kospi reached another high, rising 1.6% on upbeat earnings expectations. Hong Kong’s Hang Seng gained on property stocks. Markets in Australia, Singapore and Thailand closed down.

European markets gained ground at mid-day dealings, lifted by Daimler Chrysler’s shares up 2.7% on report that 8,000 job cuts are expected at Mercedes and a positive economic data, released by the U.S. Fed Reserve Chairman. The German DAX 30 jumped 1%, the French CAC 40 rose 0.7%, and London’s FTSE 100 gained 0.4%.

ENERGY, METALS, CURRENCIES

Oil prices eased back ahead of U.S. petroleum inventory report, expected to show a slip in crude, gasoline and distillate stocks, following refinery shutdowns after the two hurricanes. Light sweet crude November delivery slipped 7 cents to $65.00 a barrel on the Nymex. Heating oil fell 3 cents to $2.0415 a gallon, while gasoline edged up to $2.1725. London Brent declined 8 cents to trade at $62.89.

Gold gained ground in European trading. In London the precious metal traded at $462.00 per troy ounce, up from $459.40. In Hong Kong gold dropped $3.90 to close at $462.05. Silver traded at $7.27, up from $7.22.

The U.S. dollar declined against the other major currencies in European trading The euro was quoted at $1.2012, up from $1.2010. The dollar changed hands at 113.13 yen, down from 113.32. The British pound was trading at $1.7679, down from $1.7755.

EARNINGS NEWS

The Topps Co., ((TOPP)) maker of trading cards and assorted candy products, posted 2Q earnings of 12 cents a share, up vs. profit of 9 cents a share a year-earlier on 9.4% sales growth, topping the analysts’ forecasts of 7 cents a share. The results incorporate a gain of $1.6 million from a reversal of income tax reserves.

Steel Technologies Inc., ((STTX)) flat steel processor, announced it expects 4Q earnings of 6 cents a share, missing analysts’ forecast of earnings of 8 cents a share. The company stated it expects shipments to be 5% below projections in its July conference call.

Horizon Financial Corp., ((HRZB)) holding company, announced that the company's quarterly cash dividend was 14 cents per share. The dividend will be paid on November 2, 2005, to shareholders of record on October 7, 2005. Horizon has risen its cash dividend twice in the last year.

Greater Bay Bancorp, ((GBBK)) financial services holding company, stated a quarterly cash dividend of 15 cents per share outstanding to shareholders of record as of October 7, 2005. The dividend is payable on October 17, 2005.

McCormick & Co., ((MKC)) spice seller, posted 3Q earnings of 35 cents a share, up from 33 cents a share in the year-ago period on 1.5% sales growth, beating analyst estimate by a penny. The company stated it continues to expect 2005 fiscal year earnings per share of $1.58 to $1.62 a share.

CORPORATE NEWS

NRG Energy Inc. is in advanced talks to buy power generation company Texas Genco Holdings Inc at the minimum price of $5 billion in cash and stock. The company will also assume more than $2 billion of Genco debt.