Oil and Gold Advance, Stocks Decline

123jump.com Staff
26 Dec, 2007
New York City

U.S. stocks traded sideways on weak holiday sales, rising energy prices, and falling home prices. MasterCard report on holiday sales showed 2.4% increased when gasoline sales were excluded. S&P/Case-shiller index tracking ten metropolitan homes fell 6.7% in October. Earlier OFHEO index showed a smaller decline in november, which tracks larger number of markets. Oil jumped above $95 a barrel and gold avanced to $830.

[R]4:00PM New York, 10:00PM Frankfurt – Weak retail sales dragged stocks of retailers and restaurants. Energy complex stocks gained on the rise in oil prices. Gold advanced.[/R]

European markets were closed on the account of holiday in the region.

Dow Jones Industrial Average closed up 2.36 or 0.02% to a close of 13,551.69, S&P 500 edged higher 1.21 or 0.08% to 1,497.66, and Nasdaq Composite Index traded up 10.91 or 0.40% to a close of 2,724.41. Toronto markets were closed.

Of the 30 stocks in Dow Jones Industrial Average, 12 closed higher, 18 closed lower, and none was unchanged.

AT&T led the gainers in the index with a rise of 1.7% followed by increases in Caterpillar of 1.3%, in ExxonMobil of 1.1%, in Alcoa of 1.0%, and in Verizon of 0.7%. Citigroup led the decliners with a fall of 2.2% followed by losses in Disney of 1.3%, in AIG of 1.1%, in Pfizer of 0.8%, and in American Express of 0.7%.

Of the stocks in S&P 500, 220 closed higher, 270 fell, and 10 were unchanged.

Twelve stocks fell more than 3% and five stocks rose more than 3%.

Ambac Financial led the gainers in the index with a rise of 12% followed by increases in MBIA of 11.4%, in Peabody of 3.9%, in U.S. Steel of 3.75%, and in Boston Scientific of 3.4%.

Oil complex stocks were the leading gainers in the S&P 500 index. Schlumberger added 2.8%, Transocean increased 2.45%, Hess and ConocoPhillips increased 2%, and Halliburton, Murphy Oil, and Occidental Petroleum advanced more than 1.5%.

Circuit City led the decliners with a fall of 6.3% followed by losses in Big Lots of 5.6%, in Dillards of 5.3%, in Macy’s of 3.9%, in CB Richard Ellis of 3.9%, in Radioshack of 3.6%, in Family Dollar of 3.65%.

In Latin America Brazil led the gainers with a rise of 1.9% followed by increases in Argentina of 1.6% and in Mexico of 0.4%. Venezuela led the decliners with a fall of 1.1% followed by losses in Colombia of 0.8%, in Peru of 0.03%, and in Chile of 0.09%.

In Tokyo Nikkei 225 Index closed higher 100.95 or 0.65% to 15,653.54. Market of Hong Kong and Australia were closed today.

Dollar edged higher in the day’s trading lifting export sensitive stocks. Cannon, Toyota closed higher.

In South Korea Kospi Index increased 12.75 or 0.66% to close at 1,906.72, in Thailand SET index closed up 2.08 or 0.25% to 841.20, and in Indonesia JSE Index edged higher by 56.57 or 2.13% to 2,714.55. Sensex index in India surged 338.40 or 1.70% to 20,192.52.

Shipbuilders in Korea added as investors bet that the rising oil prices will keep order for new tankers flowing. STX Shipbuilding jumped 4% to 48,000 won.

SK Energy, the largest oil refiner in Korea, fell 3% to 1178,500 won as the spreads between the crude oil and refined crude fell in the international markets. SK was also fined along with other chemical makers for price fixing. The total fine levied on all the companies was 54.2 billion won.

Sensex Index in India surged 1.7% or 338.40 to close at 20,192.52. The index jumped higher on rising expectations for the third quarter earnings and the government permitting the charitable trusts to invest in stocks and bonds of listed companies. The permission will open doors for trusts with more than 25,000 crore rupees to allocate funds to the booming stock market.

Bond Yields increased on 10-year U.S. bonds to 4.29% and 30-year bonds to 4.68%.

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

Crude oil increased $1.85 to close at $95.98 per barrel, natural gas closed up 3 cents to $7.05 per mBtu, and gasoline futures inched higher by 6.70 cents to close at 245.10 cents per gallon.

Gold added $13.00 in New York trading to close at $829.50 per ounce, silver closed up 17.5 cents to $14.835 per ounce, and copper for front month delivery up 1.65 cents to 317.00 cents per pound. Trading in London metals market was closed today.

Dollar edged lower against euro to $1.4491 and lower to 114.335 yen.


[R]10:00AM New York – U.S. market averages decline in the first hour of trading after rising gasoline prices sucked consumer spending from apparel, jewelry, and furniture sales.[/R]

U.S. market averages fell at the opening as investors begin to digest the weak holiday sales and rising inflation worries.

Dow Jones Industrial Average fell 39.75 to 13,509, Nasdaq declined 11.19 to 2,702, and S&P 500 lost 5.9 to 1,490.

Tentative and preliminary holiday sales data are suggesting that consumers are holding back on spending for apparel, accessories, furniture, and other household items in the face of sharp rise in energy cost and worries of falling housing prices.

The international Council of Shopping Center- UBS Retail Chain Stores Sales Index increased 2.8% for the week ending on December 22 from a week ago on a comparable store count.

MasterCard reported, for the most watched holiday season during the days between Thanksgiving and 24th of December the total retail sales rose 3.6%. Excluding gasoline purchased, sales increased 2.4%. Gasoline prices have soared 27% in 2007 and have jumped nearly 200% in the last five years.

The SpendingPulse data published by MasterCard includes the payment through its network and estimates of payment using cash and check. However, the data does not include sale of gift cards. According to the data electronics sales which included appliance sales rose 2.7%, women’s apparel sales declined 2.4%, menswear rose 2.3%, and footwear sales rose 6%. Luxury retailer sales’ fell 1.9% but rose 7.1% excluding jewelry sales.

Gift cards have increasingly extended holiday period sales in January. According to ShopperTrak sales in January were 25% of the three months during the last year and this year sales are estimated to rise to between 28% and 30% for the three-month period.

Target ((TGT)) declined $1.51 to $50.95 after it said on Monday that its December sales may be lower than previously estimated. Wal-Mart, J C Penney, Macy’s, Chico’s, Abercrombie & Fitch, and Guess declined between 2% and 4%.

Restaurant stocks fell after the weak holiday sales data on the worries that spending in the next five days may be lower than anticipated. PF Chang’s China Bistro ((PFCB)), Darden Restaurant ((DRI)), and Morton’s stocks fell more than 1%.


[R]9:00AM New York – 9:00PM Hong Kong – SAIC and Nanjing, two Chinese government controlled auto makers merged to compete in a fiercely competitive local market and rising foreign competition.[/R]

In a fast consolidating auto industry in China encouraged by the government largest auto maker, Shanghai Automotive Industry Corp today agreed to purchase Nanjing Automobile Group for 2.1 billion yuan or $286 million.

Both companies controlled by Chinese government were encouraged to merge in the face of rising competition and growing market in China. Auto sales in China are expected to climb 29% in 2007 and another 15% in 2008 to cross eight million units.

Shanghai Automotive will allocate 320 million shares or 4.9% stake in the company to shareholders of Nanjing Auto Group parent Yuejin Motor. The two merging companies will also set up joint venture Dong Hua Company that will own parts and services divisions of Nanjing. Yuejin will control 25% and the rest will be owned by Shanghai Auto.

Nanjing Automobile, smaller auto maker with less than 1% market share has seen it sales declined in nearly 9% in 2007 and struggled in the past to attract customers. In 2005 it paid $97 million to purchase UK based MG Rover Group. The company also has alliance to make cars and commercial vehicles with Italian company Fiat SpA.

Shanghai Auto has joint ventures to make cars with Volkswagen and General Motors has the largest market share with sales of more than one million vehicles followed by Volkswagen and Toyota.

Nanjing will continue its alliance with Iveco, truck making subsidiary of Fiat, to make light commercial vehicles.

Shanghai Auto, favored by the Chinese government is prepared to compete with the rising competition from European and Japanese companies. After the merger of two companies, Shanghai Auto expects its sales to increase to 2 million units by the year 2010.

SAIC, as it is popularly known, jumped 2.7% in yesterday’s trading to 27 yuan ahead of today’s announcement when the stock was suspended from trading.


[R]8:00AM New York, 10:00PM Tokyo – Asia markets closed higher led by a sharp surge in India, Japan, and Indonesia.[/R]

Asian markets closed higher on the optimism on earnings and expectations of better than expected retail sales in the U.S. during holiday period.

In Tokyo Nikkei 225 Index closed higher 100.95 or 0.65% to 15,653.54. Market of Hong Kong and Australia were closed today.

Dollar edged higher in the day’s trading lifting export sensitive stocks. Cannon, Toyota closed higher.

Toyota revised its annual forecast for auto sales for the fiscal 2008 to 9.85 million cars from 9.8 million on rising sales in Asia. Sales growth for Toyota and other automakers in Japan has been lackluster. Toyota jumped 1.2% to close at 6,180 yen.

Mitsubishi UFJ Securities forecasted one of the most bearish outlooks for dollar against yen. The forecast from the chief economist suggested that dollar could fall to 95 yen in 2008 and may take another year to recover. Most economists in Japan are looking for dollar to trade between 110 and 105 yen.

Dollar has lost more than 10% against most Asian currencies but has declined the most against euro in 2007 and in the last four years. Dollar has lost 5% against yen and most economists expect dollar to slide another 3% to 5% in the year 2008.

Sanyo Electric plunged 11% after the Tokyo Stock Exchange said that the company may be delisted.

Central Japan Railway declined 9% to 1.028 million yen after the company announced plans to build 5.1 trillion yen train link with little financial plan in place. Investors feared that company may take additional debt or sell equity to fund the project.

In South Korea Kospi Index increased 12.75 or 0.66% to close at 1,906.72, in Thailand SET index closed up 2.08 or 0.25% to 841.20, and in Indonesia JSE Index edged higher by 56.57 or 2.13% to 2,714.55. Sensex index in India surged 338.40 or 1.70% to 20,192.52.

Shipbuilders in Korea added as investors bet that the rising oil prices will keep order for new tankers flowing. STX Shipbuilding jumped 4% to 48,000 won.

SK Energy, the largest oil refiner in Korea, fell 3% to 1178,500 won as the spreads between the crude oil and refined crude fell in the international markets. SK was also fined along with other chemical makers for price fixing. The total fine levied on all the companies was 54.2 billion won.

Sensex Index in India surged 1.7% or 338.40 to close at 20,192.52. The index jumped higher on rising expectations for the third quarter earnings and the government permitting the charitable trusts to invest in stocks and bonds of listed companies. The permission will open doors for trusts with more than 25,000 crore rupees to allocate funds to the booming stock market.

Reliance Industries jumped 4% to 2,896 rupees, HPCL surged 7% to 340 rupees, and Indian Oil added 5.5% to 475 rupees.

Metals and mining stocks led the gainers in the index. Hindalco Industries jumped 4% to 209 rupees, Sterlite Industries added 2.6% to 1,026, and Hindustan Zinc increased 2.6% to 791 rupees.