Overseas Gains Lift Pre-Market Mood in NY

Elena
11 Sep, 2007
New York City

U.S. stock futures were pointing higher Tuesday, benefiting from gains in overseas equity markets. Investors remained focused on interest-rate cuts, awaiting a speech from Federal Reserve Chairman Ben Bernanke. Among pre-market highlights, Wal-Mart Stores said late Monday it reduced its reported Q2 profit by $153 million due to expenses from selling its German retail operations.

[R]09:00AM U.S. stock futures pointed to a higher opening ahead of Ben Bernanke speech.[/R]

U.S. stock futures were pointing higher Tuesday, benefiting from gains in overseas equity markets. Investors remained focused on interest-rate cuts, awaiting a speech from Federal Reserve Chairman Ben Bernanke. Bernanke will be speaking to the German central bank on global imbalances. Although the subject will not be monetary policy, any clues about the U.S. central bank's intentions will be searched for.

Among pre-market highlights, Wal-Mart Stores ((WMT)) said late Monday it reduced its reported Q2 profit by $153 million due to expenses from selling its German retail operations. Take-Two Interactive ((TTWO)), video-game publisher, gained 3% in pre-open trade after it narrowed its quarterly loss. Among companies driven by analyst comments, PepsiCo ((PEP)) was upgraded to buy from hold at Goldman Sachs, citing improving fundamentals and reasonable valuation.

In the pharmaceutical sector, ImClone Systems ((IMCL)) surged 28%and Bristol-Myers Squibb ((BMY)) rose 1.3% after the two companies announced that a Phase III study of the drug Erbitux in combination with chemotherapy increased the survival rate of lung cancer patients in a late-stage study. Again in the sector, Genentech ((DNA)) dropped 3.6% on concerns about its Avastin drug.

In economic news, the Commerce Department said the U.S. trade deficit narrowed 0.3% $59.2 billion in July as higher foreign oil prices were offset by record exports of farm goods, autos and other products. However, the deficit with China reached its second-highest level of all time. S&P 500 futures rose 5.6 points at 1,460.90 and Nasdaq 100 futures gained 11.5 points at 1,979.75. Dow industrial futures rose 47 points.


[R]8:30AM ImClone Systems and Bristol-Myers Squibb released positive results for Erbitux in lung cancer.[/R]

ImClone Systems ((IMCL)) and Bristol-Myers Squibb ((BMY)) announced Tuesday that a Phase III study of the drug Erbitux along with chemotherapy increased the survival rate of lung cancer patients in a late-stage study. In the month of July, the two pharmaceutical companies said the drug failed a separate late-stage study focusing on lung cancer, with Erbitux combined with taxane and carboplatin.

The drug, already approved to treat colon cancer and head and neck cancer, was given to patients with advanced non-small cell lung cancer in combination with chemotherapy treatment including vinorelbine and cisplatin. The study compared the combination to chemotherapy alone. Erbitux is co-promoted in North America with Bristol-Myers.


[R]7:00AM New York, 8:00PM Tokyo - Property stocks lead marginal Japanese rebound. Japan machinery orders jump 17% in August. Ministries want 88.9 trillion yen for 2008 budget.[/R]

Stocks in Tokyo recovered from Monday losses on increased buying in real estate sector. Japan closed up 0.71% ending a six-day losing streak that peaked with a loss of 2.22% yesterday. Of the 225 stocks in the index, 146 stocks gained, 73 fell and 6 traded unchanged. Of the index shares, 41 stocks gained between 2% and 6.5%.

In Tokyo trading Nikkei 225 moved up 0.71% or 112.7 to 15,877.67, as bargain hunters returned for property shares that had fallen sharply in recent days.

Government announced Tuesday Japan’s core private sector-machinery orders surged 17% in August, the biggest climb in four years. The orders are considered a leading indicator of corporate capital expenditure. The highest surged stood at 17.2% in October 2003.

Finance Minister Fukushiro Nukaga said today ministries had made submissions of up to 88.9 trillion for fiscal 2008 budget, which is 7.3% higher than what government had budgeted for fiscal year 2007. Of the cumulative figure, 50.5 trillion yen relates to core policy outlays versus a spending limit of 47.4 trillion yen set by Cabinet for 2008 budget. At least 22.2 trillion yen was requested for debt servicing while that for domestic tax grants stood at 16.2 trillion yen. Nukaga said Tuesday: """"""""""""""""We need to cut around 3 trillion yen to curb the total budget within the upper limit.""""""""""""""""

Japan media reported that the government was evaluating the prospect of eliminating the corporate tax on dividend income from subsidiaries abroad to help spur local investment. The current tax system levies domestic corporate tax on income of overseas Japanese firms’ units.

Of the Nikkei 225 shares, real estate stocks gained most. Nippon Suisan led gainers surging 6.1% followed by oil producing firm, Inpex Holdings ending up 5%. Mitsubishi Estate Co lifted higher 4.3%, Nikon Corp rose 4.2% while Taiyo Yuden Co gained 4.18%. Property stocks Sumitomo Realty advanced 4.11% shedding yesterday’s losses, Tokyu Land Corp pushed up 3.9%. Heiwa Real Estate and Mitsui Fudosan gained 3.8% and 3.5% respectively.

In the index, pharmaceutical stocks fell. Hitachi Zosen paced decliners falling 4.5% followed by Sumitomo Osaka down 2.9% and Hino Motors lost 2.85%. Daiichi Pharmacy Co and Chugai Pharmacy Co dropped each 1.9%. Astellas Pharmacy fell 1.5%, Takeda Pharmaceutical shed 1.2% and Shin ETSU Chemicals eased 1.6%.

On Monday, Japanese government consented to the proposed privatization of the Japan Post Corp, the culmination of a 10-year privatization process to start effectively October 1. Under the process, Japan Post Corp will be split into four stock units-savings, insurance, mail and over-the counter services. The holding company with 26,000 ATMs would be de-activated by September 30 to pave way for privatization. All postal ATMs installed at post offices and other locations across Japan need to be suspended so as to confirm the amount of cash Japan Post holds on the last day as a public corporation, Japan Post has said. ATMs operated by financial institutions and convenience stores tied up with Japan Post will not be affected.