U.S., Europe Trade Sideways

123jump.com Staff
04 Oct, 2007
New York City

In a lackluster trading, markets in the U.S. and Europe searched for a direction. Ahead of the earnings season and employment report, investors were cautious. The European Bank and the Bank of England left interest rates unchaged after the Federal Reserve lowered the rate by 50 basis points three weeks ago. Oil, copper, and gold rebounded after three days of weakness. Hong Kong in Asia fell for the second day in a row after closing at a new high.

[R]4:30PM New York, 10:30 PM Frankfurt, 2:00AM Mumbai – U.S. and European markets closed nearly unchanged. Asian markets declined. ECB and BoE left the rates unchanged.[/R]

[R]Markets and Indexes[/R]

Dow Jones Industrial Average added 6.18 or 0.04% to 13,974.31, Nasdaq increased 4.14 or 0.15% to 2,733.57, and S&P 500 traded up 3.26 or 0.21% to 1,542.85. In Toronto TSX Composite gained 99.89 or 0.71% to close at 14,033.33.

Of the 30 stocks in Dow Jones Industrial Average 13 closed higher, 17 closed lower, and none were unchanged. Intel led the decliners with a loss of 0.85% followed by 0.7% loss in IBM, Citigroup, and 0.5% fall in Honeywell. Merck led the gainers with a rise of 1.4% followed by gains in Microsoft of 0.96%, in Pfizer of 0.8%, and J P Morgan of 0.6%.

Of the stocks in S&P 500 264 closed higher, 233 fell, and 3 closed unchanged. Fifteen stocks fell 3% or more and only five stocks gained 3% or more. MEMC Electric Material led the gainers with a rise of 3.6% followed by gains in Circuit City of 3.5%, in Pepsi Bottling 3.3%, and in Forest Labs of 3.2%. RadioShack led the decliners with a fall of 5.5% followed by losses of 5.3% in Lennar Corp, Marriott International of 4.7%, and in Bemis of 4.6%.

In London FTSE 100 Index edged higher by 12.70 or 0.19% to 6,547.90, in Paris CAC 40 index fell 1.79 or 0.03% to close at 5,804.39, and in Frankfurt DAX index decreased 0.13% or 10.31 to close at 7,944.99. In Zurich trading SMI declined 0.39% or 35.34 to close at 9,053.36.

In Tokyo stock market Nikkei 225 index fell 0.6% or 107.40 to close at 17,092.49, in Hong Kong Hang Seng index closed down 1.84% or 505.96 to 26,973.98, in Australia ASX 200 closed down 1.4% or 93.00 to a close of 6,566.90, Sensex fell after a record 11-day in a row surge and closed down 69.90 or 0.39% to 17,777.14. In South Korea Kospi index declined 0.52% to 2,003.60.

In Latin Markets trading Venezuela led the gainers with a rise of 0.8% followed by increases of 0.52% in Brazil, and 0.16% in Chile. Mexico fell 0.3%.

In Brazil, iBovespa Index closed 0.49% higher or 294.98 to close at 60,393.55 and in Mexico Bolsa index declined 0.28% or 87.64 to close at 31,019.20. Chile and Peru closed nearly unchanged but Venezuela increased 0.8%.

Of the 63 stocks in iBovespa index in Brazil, 49 gained, 13 lost, and one closed unchanged. Natura led the gainers with a rise of 7.8% followed by increases in Cosan of 6.5%, in Brasil Telecom of 6.3%. Vivo led the decliners with a fall of 3.44% followed by Bradespar with a loss of 3.2%, and Vale Rio Doce edged 3% lower. Vale Do Rio Doce also known as CVRD lost 8% a day ago.

Bond Yields decreased on 10-year U.S. bonds to 4.52% and 30-year bond fell to close at 4.77%.

[R]Commodities, Metals, and Currencies[/R]

Crude oil jumped $1.50 to close at $81.44 per barrel for a front month contract, up 34% for the year so far, natural gas rose 14 cents to $7.41 per mBtu, and gasoline futures increased 5.63 cents to close at 205.22 cents per gallon.

Gold added $8.10 in New York trading to close at $743.80 per ounce, silver closed up 3 cents to $13.50 per ounce, and copper for front month delivery in London gained $139.00 to $8,359.00 per pound.

Dollar edged lower against euro to $1.4136 from $1.4087 and lower to 116.53 yen from 116.74 yen.

[R]Earnings[/R]

Research in Motion ((RIMM)) reported after the close second quarter earnings of 50 cents per share compared to 25 cents a year ago. Earnings for quarter were $287.7 million compared to $140.2 million from a year ago. Revenue increased more than doubled to $1.37 billion from $658.5 million.

The company added 1.45 million subscribers and shipped 3 million devices in the quarter. The company guided revenue in the current quarter to be between 59 cents and 63 cents higher than 58 cents estimated by the analysts surveyed by 123jump.com. The stock in the after-hours trading fell 1% after gaining $4.26 to close at $100.54 in the regular trading.

Marriott International ((MAR)) reported third quarter earnings of 33 cents same as in the last year, Constellation Brands reported 33 cents per share in the fiscal second quarter 2008 compared to 28 cents a year ago. Family Dollar ((FDO)) reported fiscal 2007 fourth quarter earnings of 26 cents compared to 21 cents.


[R]10:00AM New York – Stocks in New York trade lower at the opening. ECB and BoE left rates unchanged.[/R]

U.S. Labor Department of Labor said today that initial jobless claims increased by 16,000 to 317,000 during the week ending Sept 29. The 4-week moving average was 312,750, an increase of 500 from the previous week's revised average of 312,250.

The advance seasonally adjusted insured unemployment rate was 1.9 percent for the week ending Sept. 22, unchanged from the prior week's unrevised rate of 1.9 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Sept. 22 was 2,541,000, a decrease of 10,000 from the preceding week's unrevised level of 2,551,000. The 4-week moving average was 2,557,250, a decrease of 12,750 from the preceding week's unrevised average of 2,570,000.

Asian markets fell across the region led by a sharp fall for the second day in Hong Kong. The Chinese regulators are likely to prevent simultaneous listing of government controlled companies in Hong Kong and exchanges on mainland China. India dropped after a daily rise for nearly two weeks.

European markets traded fractionally higher in the afternoon trading. Dollar was slightly weaker against euro at $1.4103 after the ECB and the Bank of England left the rates unchanged.

The European Central Bank left the rates unchanged at 4% after issuing a statement that talked about fighting inflation but offered little clues to the bank’s next move. The ECB is battling rising euro against dollar and worried that the current global credit market malaise induced by the U.S. subprime lending is likely to act as a drag on the European economy. ECB has injected at least $300 billion in liquidity, more than funds injected by the Federal Reserve Bank in the U.S.

The Bank of England also left its interest rate unchanged at 5.75%, highest among the Group of Seven wealthiest nations. Pound rose after the news against euro and dollar.

Earlier Reserve Bank of Australia and the Bank of Japan left its rate unchanged in what appears to be a coordinated move among central banks around the globe.

Following are some of the stocks to watch in early trading in New York.

Marriott International ((MAR)) reported earnings of 33 cents per share or $131 million, a decline of 7% from a year ago.

Wet Seal ((WTSLA)) lowered its estimate for the third quarter profit less than 2 cents from an earlier estimate between 7 cents and 10 cents.

NutriSystems ((NTRI)) lowered its earnings estimate between 62 cents and 66 cents from 77 cents and 82 cents in the third quarter. The company lowered its quarterly revenue estimate to $188 million from $200 and $208 million. In the early trading stock was down $11 to $37.

Family Dollar ((FDO)) reported earnings for the fiscal fourth quarter ending on September 1 of 26 cents per share compared to 21 cents a year ago.

Research in Motion (((RIMM)), the maker of wireless devices, is expected to report third quarter profit between 49 cents and 50 cents after the close.


[R]6:00AM New York, 7:00PM Tokyo - Profit taking weighs Japan down 0.62%. Energy technology stocks and retailers retreat.[/R]

Japan stock index traded in negative territory on profit taking from investors as the stock market peaked to an eight week high in the past three days.

In Tokyo trading Nikkei 225 fell 0.62% or 107.4 to 17,092.49. Of the Nikkei 225 stocks 65 rose, 153 declined and 7 traded unchanged. 56 stocks lost 1%. In the index stocks, Itochu Corporation led decliners, slipping 5.44%, followed by Sapparo Holdings, which shed 5.22%.

Oil fell below $80 per barrel after an unexpected increase in U.S. inventories. Crude oil was trading at $71.96 per barrel in Tokyo. Energy stocks fell as a result. Mitsubishi Corp declined 3.59%, Mitsui & Co fell 3.64%, and Inpex Holdings lost 0.84%

Deputy Governor of the Bank of Japan Kazumasa Iwata told business leaders in Shimonoseki, South West Japan today a recession in the U.S. and economic slowdown in the Euro zone would impact negatively on Japan’s economic growth. Iwata also added that a fall in Japanese stocks and gains in the yen would have the same adverse effect. Iwata was the only member to vote for a rate hike in the last meeting and majority of the economists are of the opinion that interest rate will not be raised in Japan in the next meeting on October 11th.

NTT DoCoMo, Japan’s biggest mobile company, and KDDI are expected to trim mobile phone charges by 30%. The two firms are leading mobile telephone service provider in Japan.

The yen traded at 116.54 from 116.57 against the dollar and was quoted at 164.3 from 164.34 to one euro at the close of trade.

Of the Nikkei 225 index shares, Fuji Electric Holdings led the gainers with a rise of 6.23%, followed by increases of 5.72% in Yahoo Japan Corporation, 5.31% in IHI Corporation, 2.95% in Fast Retailing and 2.74% in Tokyo Dome.

Itochu Corporation led decliners with a slump of 5.40%, followed by losses in Sapparo Holdings of 5.22%, in Aeon Company Limited of 4.59% in Mitsubishi UFJ Nicos of 4% and Mitsui & Company of 3.64%.

Retailers also fell on waning investor confidence. Aeon Company Limited tumbled 4.59% to 1,623 yen, Takashimaya Company Limited shed 2.29%, while Seven & I Holdings slipped 3.31% on Nikkei Newspaper reports the company is likely to report operating profit below the estimate for the first half. The report said that operating profit is likely to be at 145 billion yen for the six months to August 31, up 2% from a year ago but below the forecasted 148 billion yen.

Izumiya Company reported first half net income of 910 million yen, a decline of 40% from a year ago. The supermarket chain fell 6.3% to 644 on the news.

The sell-off of technology stocks in the U.S. semiconductor companies including Intel Corp, Nvidia, and Advanced Micro Devices, coupled by 77% decline in prices of memory chips on the spot market also affected Japanese technology stocks. Advantest lost 0.81% and Toshiba slumped 1.74%.

Elpida Memory said that it plans to lower the chips it sells in auctioned market and sell more directly to customers. Elpida jumped 7% to 4,180 on the news bucking the decline in the chip sector trading today.

Sony plunged 2.37% after news the company will be selling some of its product lines at its chip factories in Kyushu to cut its investment in semiconductor business from 150 billion yen to 130 billion yen.

[R]5:00AM New York, 5:00PM Sydney - The Australian index lost after a steady rise in the last ten days.[/R]

In Sydney trading ASX 200 Index lost 93 or 1.4% to 6,566.90. The index has jumped 16% from the recent low of 5,711 on August 17th.

Australia's main index lost the most in two months after the index reached several news highs in the last twelve days of trading. Banks and mining stocks led the decline as copper and crude oil prices registered a fifth day decline in Asia and New York.

BHP Billiton declined 3.2% and Woodside Petroleum Ltd lost 1.9%. Commonwealth Bank declined 1.3% to A$57.20.

Australia's home-building permits declined 1.7% in August from July. Residential permits for new apartments and renovations declined for the first time in three months, sparking worries of a broader decline in the economy. Building approvals rose by a revised 0.2% in July and in August approvals were 0.1% lower than a year earlier.

Australia's largest barley exporter, ABB Grain Ltd's stock fell 5.6% after announcing a 93% decline in its profit margins. The company now estimates to earn for the year ended Sept 30, between A$5 million and A$8 million from the earlier estimate between A$16million and A$19 million. Barley production estimates were reduced as the worst drought on record hit Australia. ABB could not capitalize on the 47% jump in price as a result. The company earned A$67 million in the previous fiscal year.

The decline is expected to result in an unprecedented volatility in grains prices and an unusual impact on the results for the 2007 financial year.

The Australian dollar fell 0.7% to $0.8826 from $0.8887 yesterday.

Of the ASX 200 index shares, Gunns Ltd led the gainers with a rise of 16.9% followed by increases in Babcock & Brown by 7.4%, in Tower Australia by 6.3%, in Nufarm Ltd by 5.8%, and in Energy Devel by 3.5%. Of the index stocks Incitec Pivot led the decliners with a fall of 5.1% followed by losses in Independence Group of 5.2%, Sino Gold Mining by 6,9%, in Paladin Resource by 7%, and 12,8% in Minara Resources.

Gunns Limited jumped on the news that the government has granted the company to set up a paper pulp mill in Tasmania at A$2 billion.

Harvey Norman Holdings dropped 3% to A$5.90 on the news report in Australian Financial Review web site that it is exploring New Zealand based appliance and electronics retailer Noel Leeming Group.