ING, Allianz Lead European Rally

Elena
08 Aug, 2007
New York City

European stock markets closed sharply higher Wednesday for a second day in a row, lifted by strong corporate results and optimism that U.S. economy will continue to grow regardless of the current credit-market worries. The Federal Reserve''s decision to keep U.S. interest rates unchanged also provided a boost to the sentiment. Across the region, France posted the biggest gain, up 2.3%, followed by the U.K. which rose 1.4%, and Germany, closing up 1.3%.

[R]1:00PM NY, 5:00 PM Frankfurt European markets rallied, boosted by financial stocks.[/R]

European stock markets closed sharply higher Wednesday for a second day in a row, lifted by strong corporate results and optimism that U.S. economy will continue to grow regardless of the current credit-market worries. The Federal Reserve''s decision to keep U.S. interest rates unchanged also provided a boost to the sentiment. Across the region, France posted the biggest gain, up 2.3%, followed by the U.K. which rose 1.4%, and Germany, closing up 1.3%.

Rebounding from recent declines, financial stocks were leading gainers. Shares of ING Group climbed 4% after the Dutch financial-services giant reported higher Q2 net income. Aegon rose 3.7% in Amsterdam and Swiss Life added 1.4% in Zurich.

In Frankfurt stocks gained, paced by 5.8% in the shares of drug maker Bayer AG on the back of broker upgrade. Deutsche Bank shares rose 1.3%, while Allianz increased 2.1%. Earnings-related movers included Adidas AG. The sportswear and equipment maker added 0.5% after posting 27% profit increase in Q2. Beiersdorf AG advanced 3.8% after ING lifted its rating on the shares of the maker of Nivea crème.

In Paris banks and insurance stocks posted solid gains. Natixis climbed 5%, while shares of AXA rose 3.6%. Among other notable gainers, chipmaker STMicroelectronics jumped 5.7% after Nokia selected the firm as a supplier for 3G chipsets. Nokia''s shares rose 3.7%.

In London banks advanced for a second straight session, with shares of Anglo Irish Bank rising 4.4%. Among earnings-related gainers, insurers Royal & Sun Alliance and Friends Provident rose 3.7% and 2.6%, respectively. Elsewhere, shares of Scottish & Newcastle, a brewing company, rose 1.3% after it was upgraded to buy from neutral. Vodafone Group shares climbed 2.1%, as the mobile-phone giant said that it won''t exercise an option to sell up to $10 billion of its 45% interest in U.S. mobile joint venture Verizon Wireless.


[R]11:30AM Market averages rallied. Technology, financial and homebuilding stocks led gainers.[/R]

U.S. market averages rallied Wednesday, benefiting from solid gains in the technology sector, financial and homebuilding stocks. Investors got a relief from the Fed Reserve''s assurance that the economy will keep growing at a moderate pace, despite the current unfavorable credit environment. The Dow Jones rose more than 100 points. The Nasdaq surged 2%.

In the upbeat tech news, computer network equipment maker Cisco Systems ((CSCO)) rose 5% on 25% profit increase and improved revenue forecast for the year. Wireless provider Sprint Nextel ((S)) gained nearly 1% after it posted Q2 profit decline, but beat analyst expectations. The company also said its subscriber base rose by 400,000 customers during the quarter.

Homebuilder Toll Brothers ((TOL)) said its Q3 building revenue fell 21% according to a preliminary measure. However, the stock gained 5% as the quarterly revenue estimate of $1.21 billion was better than analysts expected.

On the economic news front, a government report showed that U.S. wholesale inventories rose 0.5% in June, marking the second monthly gain in a row. In another report, the Energy Department said that crude supplies fell 4.1 million barrels in the latest week, while distillate supplies rose by 1 million barrels.

In morning trading, the Dow rose 101.77, or 0.75%, to 13,606.07.The Standard & Poor''s 500 index rose 18.91, or 1.28%, to 1,495.62. The Nasdaq gained 51.72, or 2.02%, to 2,613.32. Bonds fell as stocks rose, with the yield on the 10-year Treasury note rising to 4.84% from 4.77% on Tuesday.

[R]Wholesale inventories rose 0.5% in June.[/R]

Wednesday morning, the Department of Commerce released its report on wholesale trade in the month of June, showing that wholesale inventories increased by a little more than economists had been expecting. The report showed that wholesale inventories rose 0.5 percent in June, matching the unrevised increase reported for the previous month. Economists had been expecting inventories to increase by a slightly more modest 0.4 percent. The bigger than expected increase in wholesale inventories came as inventories of non-durable goods jumped 1.2 percent in June following a 0.5 increase in May. Inventories of durable goods were unchanged after rising 0.4 percent in the previous month.

A sharp rise in inventories of farm products contributed to the increase in inventories of non-durable goods, with inventories of farm products surging up 5.6 percent. Apparel inventories also showed a notable increase. The Commerce Department also said that wholesale sales rose 0.6 percent in June following a 1.3 percent increase in May. The increase reflects higher wholesale sales of both durable and non-durable goods. Wholesale sales of computer and computer peripheral equipment showed a significant increase, rising by 5.4 percent. While wholesale sales of apparel also showed a notable increase, sales of furniture fell after surging higher in the previous month. The report also showed that the wholesale inventories/sales ratio came in at 1.11 in June, unchanged from May. The ratio compares to the June 2006 ratio of 1.13.


[R]09:45AM Wall Street opened higher, boosted by tech stocks. Nasdaq gained 1%.[/R]

Wall Street advanced at opening Wednesday, boosted by an improved revenue outlook from Cisco Systems along with reassuring assessments about global economic growth amid credit markets troubles. The Fed Reserve said Tuesday that the economy will continue to grow at a moderate pace, despite the difficult credit environment.

Cisco ((CSCO)) posted 25% earnings rise in Q2, followed by Bear Stearns upgrade to outperform from peer perform. Shares of the computer networking equipment maker jumped nearly 6%, giving tech stocks a strong boost and sending the Nasdaq up 1%.

Again in the sector, wireless provider Sprint Nextel ((S)) posted a 95% drop in Q2 profit, but the results came in above analyst expectations. In addition, the company said its subscriber base rose by 400,000 customers during the quarter. Stronger-than-forecast Q2 profit at Priceline.com ((PCLN)) sent the online travel agent''s stock up 21%.

Apart from tech stocks, financial shares also contributed to the advance. Citigroup Inc ((C)) rose 1%, while of JP. Morgan Chase & Co ((JPM)) added nearly 2%. Housing market continued to suffer weakness. Toll Bros ((TOL)) said its Q3 home-building revenue fell 21% from a year earlier to $1.21 billion amid a slowing housing market and subprime worries. Quarterly revenue exceeded analyst estimates. The stock gained 4.4%.

The Dow was supported by 3% increase in the shares of General Motors ((GM)), as well as McDonald''s ((MCD)) which added 1% after it reported a 6.5% rise in same-store sales in July.

The Dow Jones industrial average rose 58.69, or 0.43%, to 13,562.99, while the Standard & Poor''s 500 index rose 10.94, or 0.74%, to 1,487.65. The Nasdaq composite index gained 33.63, or 1.31%, to 2,595.23. Bonds fell, with the yield on the 10-year Treasury note rising to 4.82% from 4.77% on Tuesday.


[R]09:00AM U.S. stock futures indicated a higher opening on Cisco outlook[/R]

U.S. stock futures were indicating a higher opening of Wednesday trading session, following a positive close yesterday, as the Fed Reserve decided to keep interest rates unchanged as well as its bias toward inflation. Australia''s central bank joined the Federal Reserve in reassuring investors about economic growth prospects amid credit-market troubles.

Pre-market sentiment was lifted by improved revenue guidance at technology bellwether Cisco Systems ((CSCO)) which also reported a 25% jump in quarterly profit. Bear Stearns raised its rating on the stock to outperform from peer perform. Cisco rose 6% in the pre-open. Luxury builder Toll Brother ((TOL)) edged down after saying that home-building revenue in the last quarter dropped 21%.

Among other srtocks in focus, Sprint Nextel Corp. ((S)) reported a 95% drop in Q2 earnings as a result of higher costs and a lower contribution from operations. However, its underlying earnings of 25 cents a share beat analyst estimates.

The U.S. economic agenda is light Wednesday, with reports of June wholesale inventories and weekly energy inventories due out later in the session. S&P 500 futures rose 6.3 points at 1,488.70 and Nasdaq 100 futures advanced 11.75 points at 1,985.75. Dow industrial futures rose 41 points.


[R]8:30AM New York, 8:30PM Hong Kong – Asian markets surge after the Fed decision to not hike interest rates.[/R]

Asian markets surged across the region as the worries related to the U.S. economic slowdown receded. The Federal Reserve in Washington left the short term rate unchanged to 5.25% and guided that fall out from riskier mortgage bonds is not likely to spread to wider economy.

Indonesia led the region with a gain of 4.1% followed by 3.4% rise in Singapore, 2.9% gain in Hong Kong, and 2.5% increase in India. South Korea increased 2.4% on the optimism that summit between two Koreas will improve economic ties on the peninsula.

In Hong Kong trading Industrial & Commercial Bank of China jumped 5% and its yuan-priced shares in Shanghai soared 10%. The surge in the bank stock lifted other stocks in the sector. China Construction Bank jumped 4%. Bank of China in Shaghai rose 7.5%. Cathay Pacific reported its first half profit of HK$2.58 billion from HK$1.67 billion on 28% rise in sales to HK$34.6 billion. The airline also raised its dividend in the period to 25 cents from 20 cents a year ago. Including the recent acquisition of the carrier, Dragon Air, the airline served 11 million passengers with a load factor of 78.1%. Passenger traffic rose 1.3% but cargo volume fell 0.4%.

In Sydney trading ASK 200 index jumped 1.9% on a rebound in banking stocks. Of the 201 stocks in the index, 165 climbed, 34 declined, and 2 were unchanged. Pallet maker, Brambles soared 12.2% on the hopes that a takeover may emerge. Asciano Group, operator of port and rail terminal jumped 5% and Toll Group rose a fraction. Macarthur coal and Centennial Coal jumped 8%. David Jones jumped 2% after reporting 12% rise in fourth quarter sales and guided net income rise of between 8% and 13%. Resmed Inc fell 6% after reporting 20% increase in earnings but below the estimates of most analysts and Consolidated Minerals dropped 5%.


[R]8:00AM Sprint Nextel reported 95% earnings drop in Q2.[/R]

Sprint Nextel Corp. ((S)) said its Q2 earnings dropped 95% to $19 million, or 1 cent a share, compared with $370 million, or 12 cents, a year earlier. The steep profit decline was attributed to higher merger expenses, a lower contribution from operations, WiMAX-related costs and increased net interest expenses.

However, excluding discontinued operations, merger and severance costs, investment gains and losses on the early retirement of debt, the communications company posted earnings of 25 cents a share, compared with 32 cents last year. Sprint Nextel’s Q2 net operating revenue rose 1.5% to $10.16 billion from $10.01 billion a year ago.


[R]7:00AM New York, 8:00PM Tokyo – Broad rally in Tokyo trading lifted averages.[/R]

Nikkei 225 closed 107.51 or 0.6% higher to close at 17,029.28. Topix index rose 8.9 or 0.5% to close at 1,669.02.

In broad rally industrials, international trading companies, banks, and brokerage companies led the advances in indexes. Government also reported that June machinery orders fell 10.4% dragging most machinery stocks lower led by 5% loss in Komatsu.

Asian markets rallied across the region led by a sharp gain in Indonesia, Singapore, Australia, and India. The Federal Reserve Bank in Washington left key interest rate unchanged at 5.25% and supported a view that economic growth is not likely to be affected by current problems in the subprime mortgage market. The bank also said that fighting inflation is its main focus.

Of the 225 stocks in the Nikkei index 118 closed higher, 103 declined, and 4 were unchanged. CSK Holdings and Trend Micro led the index stocks with 11% surge. Two days ago, Trend Micro revised its sales guidance for the current quarter by 11% and earnings by 65%. Nippon Sheet Glass, Daikin Industries, and Resona Holdings jumped 8% in the rally.

Shinsei Bank, Bank of Yokohama, Mizuho Holdings, and Mitsubishi UFJ gained more than 3.5%.

Eleven stocks in the index fell 5% or more led by Taiheiyo Cement with a loss of 8%. Shipping companies, Kawasaki Kisen Kai Sha and Mitsui OSK Lines fell 7%.

Daikin first quarter profit nearly doubled to 265. billion yen and company revised its guidance for the operating profit for the full year. The stock closed up 8.22% to 4,950 yen.

Trend Micro, Internet security and software provider, jumped 11% on top of 14% surge in previous session. The company revised its guidance for the second quarter sales to 25 billion from 22.5 billion yen and earnings to 6.2 billion yen from 3.7 billion yen. The sales were revised up 11% and earnings were revised up 67%.

Alpine Electronics, maker of audio systems for vehicles, soared 13% to close at 2,045 yen on 20% revised guidance for the first half income to 3 billion yen. Earlier the company had guided for the full year 255 billion yen in sales and 5 billion yen earnings.