Oil, Gold, Stocks Up

123jump.com Staff
31 Aug, 2007
New York City

At least for today New York markets rallied and lifted averages in Europe and South America. Two speeches from the Fed and President Bush shifted the focus from the crdit market crunch to the need for rate cut. Investors remianed optimistic and hoped that rates cut is more likely on Sept 18 meeting. what market fails to accept that how can three mortgage lending binge can be cured by one rate cut. Market is setting itself up for a fall in the coming weeks.

[R]4:30PM New York, 10:30PM Frankfurt, 2:00 AM Mumbai[/R]

[R]Market averages in New York trading were lifted as investors hoped that the Fed is leaning towards rate cut. Speeches from the President and the Fed Chairman calmed the nerves of traders for the day. The news lifted market averages in the U.S., Europe, and Latin America.[/R]

FTSE 100 Index in London increased 91.30 or 1.47% to 6,303.30, in Tokyo Nikkei 225 closed at 16,569.09, up 2.57% or 415.27, and in Brazil, iBovespa Index traded up 1779.40 or 3.37% to 54,637.24.

Yields edged higher on 10-year U.S. bonds and closed at 4.54% and 30-year bond rose to close at 4.84%.

Crude oil declined 68 cents to close at $74.04 per barrel, natural gas closed down 17 cents to $5.47 per mBtu, and gasoline futures decreased 48 cents to close at 196.45 cents per gallon.

Gold lost $8.00 in New York trading to close at $681.90 per ounce, silver closed 27 cents higher to close at $12.23 per ounce, and copper for August month deliver in London gained $34 to $7,464.00 per pound in New York trading.

In New York trading ahead of weekend investors bid up the stocks on the hopes of rate cut and a promise of help for troubled homeowners but not for lenders. The Fed Chairman Bernanke at an annual gathering of economists and academicians spoke about the troubled credit market and said that the government will not and should not help investors and lenders for their failures. However, most analysts and economists viewed the Fed speech as a positive signal for the rate cut on the next meeting on September 18th.

The Commerce Department reported that the price index for personal consumption expenditures rose 1.9% excluding food and energy.

Meanwhile President Bush promised to change tax code and asked for the Federal Housing Administration mortgage program to be expanded and help people refinance their mortgages. He also cautioned that government can only plat a limited role and bailout of lenders will only set a wrong precedent.

Trading volume was light ahead of three-day weekend. Tech and financial stocks led the rising stocks. The investors looking for safe havens gravitated to tech stocks and worried that there are significant unknowns in the financial sectors. But all the talk of troubled credit market was forgotten and forgiven in trading today.

Two speeches calmed nervous markets for now but if the Fed fails to follow through with a rate cut then volatility will return to market with a downward bias.
Accredited Home Lenders surged 43% on the lower buyout offer from Lone Star Funds. The revised offer at $214 million valued the company at $8.50 per share is 44% lower than previous offer. Beazer Homes, D R Horton, Toll Brothers, and Hovnanian rebounded. Home Depot and CB Richard Ellis jumped more than 3%. Oil and gold jumped sharply on the news.

Of the 30 stocks in Dow Jones Industrial Average listed, 3 closed lower and 27 closed higher. Honeywell, Boeing, and Verizon declined a fraction. Home Depot led the gainers with a rise of 3.4% followed by increase of 1.9% in Hewlett Packard, Intel, and 3M. American Express jumped 1.6%, Caterpillar edged 1.5%, and Citigroup added 1.4%.

Of the stocks in S&P 500, 47 stocks closed lower and 450 gained, 3 stocks closed unchanged. Of the index stocks 14 companies closed above 4%. Jones Apparel led the gainers with a rise of 6.3% followed by increase of 6.2% in Cummins, 5.5% in E*Trade, and 5.2% in ITT and Nvidia and 5% in CB Richard Ellis and US Steel.

Asian Markets rose across the region. Thailand led the region with a gain of 2.7% followed by increase of 2.6% in Japan, 2.4% in Taiwan, 2.2% in Hong Kong and Singapore. Australia added 1.8%, Korea gained 1.7% and India increased 1.3%.

Trading volumes rebounded in the region but remained well below the average volume. India reported second quarter economic growth of 9.3%.

In Latin Markets trading Brazil led the region with a gain of 3.4% followed by Mexico with a rise of 2.1%, and Chile with an increase of 1.6%. Argentina increased 1.1%. Of the 60 stocks listed in iBovespa index in Brazil, 3 fell and 55 increased and 2 remained unchanged. Gerdau led the index stocks with a rise of 6% followed by CTE Paulista and Perdiago increasing 5.8%. Light SA led the declined with a loss of 1.8% followed by 1% decline in Cosan, 0.2% decrease in Sabesp.


[R]2:00PM New York, 6:00PM London-UK shares raced third day in a row led by mining and financial stocks. Barclays to extend Cairn Capital $1.6 billion debt. Thomas Cook offered cautious business outlook. Rolls-Royce wins $400 million share of Tiger Airways V2500 order.[/R]

London stocks rose sharply in Friday trading on higher U.S. shares after Federal Reserve boss Ben Bernanke intimated rates may be slashed to “promote general financial stability.” Financial and mining shares gained the most. London gained 1.5% on top of 1.3% rise in Thursday. Stocks in London fell over 1% in August. Of the 102 FTSE 100 index stocks, 92 rose and 10 declined. Of the index shares, 17 gained over 2%.

In London trading FTSE 100 rose 1.47% or 91.3 to 6,303.30 helped by news U.S. authorities would intervene in the subprime mortgage crisis.

Of the FTSE 100 stocks, mining and financial shares rose heaviest helped by firming global metal prices. Vedanta Resource led gainers surging 4.4% followed by Rio Tinto plc up 3.72% while Imperial Tobacco ended higher 3.22%. William Morrison Supermarkets rose 3.2% while Tate & Lyle ended up 3.11%. Barclays plc gained 2.7% after revealing it would step in and provide a loan to fund Cairn Capital’s $1.6 billion debt.

Oil related and mining stocks gained. Anglo-American rose 2.6% while Lonmin plc, BHP Billiton plc and Antofagasta plc, closed firmer 2.20%, 2.17%, and 1.4% respectively. BP Plc, BG Group plc and British Energy rose over 1.3%. Financials Experian Group, HBOS plc, Man Group, Old Mutual plc and Northern Rock gained a fraction.

Of the index stocks, Home Retail Group led decliners easing 1.1% followed by Mitchells and Butler down 0.8% and Capita Group plc fell 0.53%. Persimmon ended lower 0.52% and Schroders plc fell 0.3%.

Rolls-Royce plc finished higher 1.9% after reporting Friday it had won a $400 million deal, as its share of an order for V2500 engines from Singapore’s Tiger Airways. The contract covers a fleet of up to 50 Airbus A320 family aircraft. The airline already operates a fleet of nine V2500-powered A320s on routes to the rest of South East Asia and Australia. The V2500 is produced by the International Aero Engines consortium (IAE) in which Rolls-Royce is a major shareholder.

Travel firm Thomas Cook announced Friday higher fuel costs had continued to curtail growth of its UK tour business. It said expensive air travel taxes on holidaymakers hampered its ability to raise prices as much as it would need to offset higher fuel costs. The firm also warned the cost of its 2.8 billion pound merger with My Travel would be significantly higher than originally anticipated. Nearly 3,000 jobs will be eliminated after the merger. The tie up of Thomas Cook - owned by German firm KarstadtQuelle - and MyTravel created Europe''s second biggest travel group with a 35% share of the UK package holiday market. The firm said higher sales in Belgium, Holland and France would offset ""challenging"" conditions in Germany, its largest market, and Britain and enable the business to meet its profit forecast for the year.


[R]1:00PM NY, 5:00 PM Frankfurt European markets closed higher on global economy optimism.[/R]

European stock markets closed sharply higher Friday on optimism about global economic growth, with the U.S. Fed Reserve promising to help deal with problems in the mortgage and credit markets. The gains were broad based, led by companies related to the commodities sector, like steelmaker ArcelorMittal, mining giant Rio Tinto and oil producer Royal Dutch Shell. Across the region, Germany climbed 1.6%, followed by the U.K. with an advance of 1.5% and France, rising 1.3%.

In Frankfurt, Infineon Technologies climbed 3.7% after the semiconductor maker agreed to sell its stake in a joint venture and Dell posted strong quarterly earnings. Engineering company Siemens rose 2.5%. Outside the tech sector, Arcandor soared 11% after Germany''s largest department-store company said it swung to profit in Q2.

In Paris gains were paced by PPR, Suez and Gaz de France. PPR shares jumped 4% on strong first-half results. Gaz de France climbed 3.7% and Suez rose 2.8% on merger speculations. Commodities stocks advanced, with ArcelorMittal rising 2.8%. Oil company Total rallied 1.8 on higher crude oil prices. Shares in luxury-goods firm PPR rose 4.1% on improved first-half net income. On the side of the losers, media-to-telecoms group Vivendi dropped 1.7% on lower-than-expected first-half adjusted profit and unchanged profit view.

In London shares of Barclays rose 2.7%, recovering from recent losses. The bank injected $1.6 billion into a struggling investment fund. Commodities stocks posted strong gains, with Anglo American rising 2.6%, Rio Tinto Group moving up 3.7%, and oil giant Royal Dutch Shell, up 1.4%. BG Group, oil and natural-gas company, gained 1.5%.


[R]11:30AM Market averages rallied. Mortgage lenders gained on Bush’s comments.[/R]

U.S. market averages posted solid gains Friday, as comments from President Bush and Fed Reserve Chairman Ben Bernanke reassured investors that Wall Street would not be left to cope with mortgage and credit market problems on its own. President Bush proposed a change in the Federal Housing Administration mortgage insurance program to let more people get federally insured mortgages.

The markets saw broad based strength, with financials providing a significant boost to the sentiment. Banking and brokerage stocks advanced on speculation that the Fed will reduce interest rates in September.

Shares of mortgage lenders gained, following Bush''s speech. Accredited Home Lenders ((LEND)) surged 40%, Countrywide ((CFC)) rose 1%, while Impac Mortgage Holdings ((IMH)) climbed 1.8%.

Most of the Dow components traded higher on the day, with Hewlett Packard ((HPQ)) leading gainers, up 2.3%. Caterpillar ((CAT)) advanced 1.8%, followed by Intel ((INTC)) and Exxon Mobil ((XOM)) each rising 1.4%.

The Dow Jones industrial average rose 90.64, or 0.68%, to 13,329.37. The Standard & Poor''s 500 index rose 9.60, or 0.66%, to 1,467.24, and the Nasdaq composite index rose 16.86, or 0.66%, to 2,582.16.


[R]10:00AM New York, 7:30PM Mumbai – Second quarter GDP growth was reported at 9.3%. Manufacturing and Service sectors grew at more than 10%.[/R]

Sensex in Mumbai trading jumped 196.86 or 1.3% to close at 15,318.60. CNX Nifty gained 51.70 or 1.17% to 4,464.

Of the stocks traded in Mumbai 1,653 gained, 1,049 declined, and 73 remained unchanged. Of the 30 stocks in the Sensex, 24 advanced and the rest declined. Daily turnover on the BSE exchange declined to 5,038 crore rupees from 5,668 crore rupees. The turnover on the NSE exchange dropped to 11,088 crore rupees from 15,126 crore rupees in the previous session.

State Bank of India closed up 1.6% to 1,596 rupees after three blocks of stocks totaling 2.45 lakhs (or 245,000) changed hands at a price of 1,886.75 rupees.

Manufacturing and services led the growth in economy in the second quarter. In the quarter the economy grew at 9.3% from a year ago led by 11.9% in manufacturing and 10.6% growth in services, and 3.6% in agriculture. The lag in farming has spread the benefits of economic growth unevenly to the urban region. Rural and agricultural driven regions in the country continue to suffer from low growth in productivity and investment.

Wholesale price index, a measure of annualized wholesale inflation declined to 3.94% ending on August 18 from 4.10% at the end of previous week.

Essar Oil is planning to raise $750 million in the international markets. The news sent the stock up 1.2% to 52 rupees.

Auto sector rallied led by Mahindra & Mahindra with a gain of 4.5% to 705 rupees in addition to 10% rise in the earlier session. The company is in early stages of exploring a bid for luxury divisions Jaguar and Land Rover of Ford Motor Company. In the rally, Maruti Udyog jumped 4.1% to 867 rupees and Tata Motors increased 3% to 701 rupees.

The court battle between NTPC and Reliance Industries inched further as both companies sought early hearing for the natural gas distribution dispute. NTPC jumped 4% to 172 rupees and Reliance increased 2.5% to 1,955 rupees.

Wipro ((WIT)) has agreed to pay $160 million for New Jersey, U.S.A based marketRx. The company provides web based marketing solutions for healthcare and pharmaceutical companies. The company provides web based sales and marketing tracking and customer behavior tools.

Stocks of sugar companies fell sharply after gaining in the last two trading session. Dwarikesh Sugar, Balrampur Chini, Shree Renuka Sugars and Bajaj Hindustan lost mre than 2%.

Hindustan Zinc surged 3% to 722 rupees after the reports that Sterlite Industries is looking to buy 29.54% stake and raise its holding in the company to 95%.


[R]09:45AM Wall Street opened sharply higher ahead of Bush’s speech.[/R]

Wall Street rallied at opening, lifted by news that President Bush will announce a plan to support subprime mortgage borrowers and loosen credit conditions. Reportedly, the planned proposal would allow another 80,000 homeowners in 2008 to get federally insured mortgages in addition to the 160,000 estimated to use the insurance.

Market sentiment was further boosted by optimism that Federal Reserve Chairman Ben Bernanke might hint an interest-rate cut in his speech. However, stocks erased some of their early gains after Chairman Bernanke said that lenders and investors should not rely on protection from the central bank, as it holds no responsibility for their financial decisions.

In general, the Fed Reserve Chairman matched market expectations in his speech. He said the Fed reserve is ready to act adequately to prevent the turmoil in financial markets from spreading into the broader economy. Bernanke also said that the central bank is prepared to take further action to provide liquidity and promote the orderly functioning or markets.

In addition, several economic reports were released on Friday morning. The Commerce Department reported milder-than-expected inflation in July and better-than-forecast growth in personal incomes and spending. The Commerce Department also said factory orders surged 3.7% in July, higher than the 3.3% increase that had been expected.

Among companies in focus, Accredited Home Lenders ((LEND)) soared 36% after Lone Star Funds said it will offer $214 million for the firm, which is 44% less than it first offered for the troubled lender. Mortgage lender Countrywide Financial ((CFC)) climbed 3.5%.

In early trading, the Dow Jones industrial average rose 118.44, or 0.89%, to 13,357.17. The Standard & Poor''s 500 index rose 15.65, or 1.07%, to 1,473.29, and the Nasdaq composite index rose 27.19, or 1.06%, to 2,592.49. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.56% from 4.51% late Thursday.


[R]09:00AM U.S. stock futures rallied, boosted by rate optimism.[/R]

U.S. stock futures pointed to a sharply higher opening of Friday trading session, boosted by optimism that Chairman Ben Bernanke will give a clue about interest rate cuts in his speech. The financial futures markets expect one and even two reductions of the key interest rate by the end of September.

Investors were also optimistic because President Bush is expected to announce strategy to aid borrowers struck by the housing market slump to keep their homes. Mortgage lender Countrywide Financial ((CFC)) surged 6.3% in the pre-open, while Accredited Home Lenders ((LEND)) soared 38% after Lone Star Funds said it will offer $214 million for the firm, which is 44% less than it first offered for the troubled lender.

On the earnings news front, Dell ((DELL)) rose 1.9% in pre-open trade after it reported a 46% profit rise and a 5% revenue gain, beating analyst estimates.

Traders also digested economic data which showed that inflation remained cool while household incomes and spending strengthened in July. Personal incomes and spending rose 0.5% and 0.3%, respectively, while core PCE remained at 1.9%.

Dow Jones industrials futures expiring in September rose 101, or 0.76%, to 13,380, while Standard & Poor''s 500 index futures rose 14.60, or 1.00%, to 1,476.20. Nasdaq 100 index futures rose 17.75, or 0.90%, to 1,992.50.


[R]8:00AM Computer maker Dell posted 46% profit increase in Q2.[/R]

Computer maker Dell Inc. ((DELL)) advanced 2.4% in pre-market trading after it reported positive Q2 results, prompting it is trying to regain stability and lost positions in the computer industry. According to preliminary results released after the closing bell Thursday, Dell’s quarterly earnings jumped 46% to $733 million, or 32 cents per share, compared with $502 million, or 22 cents per share a year ago.

The profit increase was attributed to stronger sales of business products and services, improved average selling prices and lower component costs. Sales rose 4% to $14.8 billion. The quarterly financial results exceeded analyst expectations of earnings of 30 cents per share on sales of $14.63 billion. Dell said results were dragged down 5 cents per share by a $102 million charge for payments for expired stock options. Another $59 million was related to the internal probe, which found that Dell employees had misled auditors and manipulated results to meet performance.


[R]7:00PM New York, 8:00PM Tokyo - Japanese stocks jumped the most in a fortnight spurred by a weaker yen. Japan fiscal budget for 2008 is likely to reach 85 trillion yen. Industrial production shrank 0.4% in July while unemployment rate dropped to 3.6%.[/R]

Tokyo rallied Friday helped by a falling yen and hopes that the U.S. government may take action to prevent subprime lending crisis from widening to the general economy. Japan climbed 2.6% on increased buying, adding to the 0.9% gain yesterday. Of the 225 Tokyo shares 210 gained, 13 dropped and 2 remained unchanged. Of the index shares, 16 stocks gained over 5%.

In Tokyo trading Nikkei 225 rose 2.57% or 415.27 to 16,569.09 led by exporters. Against the U.S. dollar, the yen weakened to 116.22 from over 115 yesterday while it dropped to 158.87 to the euro from 157.48 Thursday.

Japan Finance Ministry announced Thursday it expects fiscal 2008 budget to grow to 85.71 trillion, driven higher by escalating debt-servicing costs and domestic tax grants. The 2007 budget stood at 82.91 trillion yen. This would be the second straight state budget increase in two years despite Japan’s efforts to rebuild its strained national finances. The Ministry of Economy, Trade and Industry reported Japan''s industrial production shrank a seasonally adjusted 0.4% in July drained by powerful earthquake that hit Niigata Prefecture and hurt auto production. The index of output at mines and factories stood at 108.1 against the base of 100 for 2000. The quake paralysed the automobile industry, as production of auto parts stopped.

Government said Friday unemployment rate dropped 0.1 percentage points to 3.6% in July, the lowest in 9 years, and second straight monthly decline. In July, the number of unemployed reached 2.34 million, down 340,000 from a year earlier, the Ministry of Internal Affairs and Communications said in a preliminary report. However, analysts were less optimistic, saying the improvement only resulted from a decline in the country''s potential labour force — the total of jobholders and unemployed — due largely to a mass retirement of baby boomers. The total dropped 290,000 in July from June to a seasonally adjusted 66.46 million.

The Natural Resources and Energy Agency said today that Japan''s July crude oil imports rose 7.1% to 338.63 million barrels from a year ago, the second straight monthly increase. Imports from the Middle East accounted for 85%. Saudi Arabia remained Japan''s largest oil supplier in July, with its exports down 3.9% to 89.03 million barrels followed by The United Arab Emirates shipments falling 10% to 79.81 million barrels. Qatar with exports to Japan rose 13.7% to 41.65 million barrels. Iran ranked fourth with shipments surging 10.2% to 35.45 million barrels.

Of the Nikkei 225 stocks, exporters led the rising stock helped by a weaker yen. Furukuwa Electrical led gainers rising 8.3% followed by Fujikura Ltd up 7.32% and Minebea Co Ltd closed higher 6.8%. Mitsui & Co rose 6.64%. Technology stocks, Sony Corp, NTT Data Corp, TDK Corp and Fujifilm Holdings gained 5.5%, 5.1%, 4.9% and 4.6% respectively. Industrial and motor shares gained strongly as well. Of the index shares, energy related stocks fell after leading yesterday’s rebound. AEON Co Ltd led decliners falling 2.4% followed by Chugai Pharmacy down 2.12%. Shionogi & Co lost 1.4%, Isetan down 1.23% and retailer Mistukoshi Ltd ended lower 1.2%.