Steel Stocks Rise

123jump.com Staff
15 Apr, 2008
New York City

Two industry associations one in Europe and the other in China forecasted higher demand for steel in 2008. The revised estimates lifted steel companies talks higher in the region and talks of price hikes intensified. Automakers and other durable goods makers are bracing for a price hike between 5% and 9%. LVMH reported first quarter sales rise of 5% but at Accor declined on exchange rate losses. Tesco annual earnings rose 12% on 11% rise in sales.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – Estimates of higher steel prices lifted stock in the sector. ECB board member indicated rates may not be lowered as inflation in the region remains elevated.[/R]

Global Markets Update

European markets edged higher as cautious investors participated in the commodities rally and a record crude oil prices. Energy and mining related stocks gained. ECB Executive Board member Juergen Stark commented that the European rate may not be high to combat the rising inflation on the continent.

French stocks rose after expectations of higher steel prices in 2008 and 2009 lifted Arcelor Mittal. International Iron & Steel institute estimated world steel demand to rise 1.28 billion tons and Chinese industry association forecasted a rise of 10% to 520 million tons. The news of the higher estimates of demand lifted steel companies in Germany and in the region.

Salzgitter AG jumped 4.5% to €113.7, Kloeckner & Co increased 2.3% to €34.45 and ThyssenKrupp added 2% to €37.80.

In Paris trading, Eramet jumped 3% after it agreed to purchase Norway based ferroalloy producer for Nkr 4.7 billion or less than €600 million.

LVMH Moet Hennessy reported first quarter sales rise of 5% to €4.02 billion from €3.8 billion a year ago. Organic revenue rose 12%, excluding the impact of exchange rates. Wines & Spirit sales declined 7%, fashion and leather goods sales rose 7%, perfumes and cosmetics increased 8%, watches and jewelry gained 12%, and brand retailing rose 8%.

Accor SA, largest European hotel operator, reported sales decline of 5.1% to €1.79 billion or increase of 4.8% when currency fluctuations are excluded. Hotel revenues fell 2.8% to €1.286 billion and service revenue increased 9.5% to €227 million.

Economy hotels revenue outside the United States increased by 5.3% or 6.8% when adjusted for the earlier Easter vacation. In France, economy hotels revenue increased 4.9% like-for-like on the back of a strong performance at Ibis and a 6.8% increase in revenue per available room.

The shift in the Easter vacation calendar also had a significant impact in the major European countries. In Germany, revenue declined by 0.2% but increased by 5.6% when adjusted for the earlier vacation. In the United Kingdom, revenue rose by 7.0% like-for-like and by 11.3% excluding the calendar effect.

Tesco, the largest UK retailer with more than 30% market share in UK grocery sales, reported fiscal 2008 earnings increase of 12% to £2.12 billion from £1.89 billion. The third largest European retailer sales increased 11% to £42.64 billion excluding value added tax in the year. Tesco operates nearly 2,000 stores in UK and operates another 1,320 stores in Eastern Europe, China, Japan, Malaysia, Thailand and South Korea. In the fiscal year Tesco paid dividend of 10.9p compared to 9.64p in fiscal 2007.

In New York trading crude oil prices reached another record intra-day high as investors pile in looking for higher returns. Speculators and commodities investors are driving crude oil prices higher as the Fed keeps lowering interest rate. The Fed and the U.S. Treasury talks about strong dollar but have done little to save the dollar. U.S. dollar has fallen 60% against the euro in the last four years. Wheat led commodities with a rise of 120% followed by soybean with 94% and crude oil with 68% in the last 12 months.

Delta Airlines and Northwest Airlines agreed to merge after months of discussions that almost floundered on opposition from pilots and other unions at Northwest. The merger of two airlines with little routes overlap is likely to pass regulatory approval as industry consolidates in the face of rising oil prices and weak pricing power. The merged airlines will retain Delta name have global headquarter in Atlanta and current Delta executives will dominate the board and executive positions. Merger between two airlines is expected by the year 2012.

Stocks in Japan and Asia rebounded on rising energy and metals prices. In Tokyo trading Nikkei 225 increased 0.6% or 73 to 12,990, and the broader Topix Index rose 0.8% to 1,255.97.Corporate bankruptcy filing increased 18% to 11,333 for the year ending in March. New condominiums put up for sale in the Tokyo metropolitan area in March fell for the seventh straight month by 17.8% from a year ago to 4,490 units.

Sensex in India surged 2% after Infosys, the second largest software exporter reported first quarter income rise of 19% and the company expects higher revenue in the medium term. The earnings report lifted market averages. In Mumbai trading, the 30-share BSE Sensex gained 346.02 at 16,153.66. In the broader markets, the National Stock Market rose 2.1% or 101.85 at 4879.65.

Hong Kong edged higher after record prices in metals and crude oil lifted select stocks and broader market averages but inflation fears persisted in the market. In Hong Kong trading, Hang Seng Index rose 0.40% or 90 to 23,901.33. In Shanghai trading, CSI 300 Index rose 1.3% or 46 to 3,583.30. China expects steel demand to rise 10% to 520 million tons and domestic suppliers are expected to meet almost all the demand. Dubai based fund expects to set up a fund to invest $1 billion in China.

European Markets indexes

In London FTSE 100 Index closed higher 75.30 or 1.29% to 5,906.90, in Paris CAC 40 Index increased 14.19 or 0.30% to close at 4,780.68 and in Frankfurt DAX index higher 30.56 or 0.47% to close at 6,585.05. In Zurich trading SMI increased 47.87 or 0.67% to close at 7,187.42.

North American Markets indexes

Dow Jones Industrial Average gained 60.41 or 0.49% to a close of 12,362.47, S&P 500 closed up 6.11 or 0.46% to 1,334.43, and Nasdaq Composite Index increased 10.22 or 0.45% to close at 2,286.04. In Toronto TSX Composite closed up 112.35 or 0.82% to 13,850.95.

Of the 30 stocks in Dow Jones Industrial Average, 21 closed higher, 9 closed lower, and none was unchanged.

Boeing led decliners in the Dow Jones Industrial Average with a loss of 1.86% followed by losses in Verizon Communications of 0.85% in Bank of America of 0.65%, in Disney of 0.53%, and in Johnson & Johnson of 0.47%.

Alcoa led the gainers in the Dow with a rise of 2.4% followed by gains in Wal-Mart of 1.8%, in Exxon Mobil of 1%, and in AIG of 0.97%.

Of the stocks in S&P 500 index, 302 stocks increased, 192 declined, and 6 were unchanged. Of the stocks in the index, 18 stocks fell more than 3% and 14 gained more than 3%.

State Street led the decliners in the S&P 500 index with a loss of 10.3% followed by losses in Forest Labs of 9.95% in Manitowoc of 9%, and in Northrop Grumman of 6.8%.

Compuware led gainers in the S&P 500 index with a rise of 11% followed by Charles Schwab of 8.8%, in Cognizant Technologies of 8.5%, and in Regions Financials of 7.8%.

South American Markets Indexes

Colombia led the gainers in South American trading with a rise of 1.40% followed by increases in Chile of 0.99%, in Argentina of 0.90%, in Brazil of 0.75%, and in Mexico of 0.6%. Venezuela fell 0.18% and Chile gained Peru added 0.38%.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 73.07 or 0.57% to 12,990.58, in Hong Kong Hang Seng index increased 90.13 or 0.38% closed to 23,901.33. In Australia ASX 200 index higher 58.00 or 1.09% to close 5,400.40. In Malaysia KL Composite index increased 10.77 or 0.87% closed to 1,244.20.

In South Korea Kospi Index decreased 4.54 or 0.26% to close at 1,742.17 and Indonesia JSE Index edged increased 21.78 or 0.96% to 2,294.26. Sensex index in India increased 346.02 or 2.19% to 16,153.66. Market of Thailand was closed today.

Commodities, Metals, and Currencies

Crude oil increased $2.10 to close at $113.86 a barrel for a front month contract, natural gas increased 18 cent to $10.24 per mBtu, and gasoline futures increased 5.52 cents to close at 287.00 cents per gallon.

Gold increased $3.30 in New York trading to close at $932.00 per ounce, silver closed up $0.06 cents to $17.85 per ounce, and copper for front month delivery decreased 3.75 cents to $3.86 per pound.

Wheat futures were unchanged in Chicago trading and closed at $9.105 per bushel. Sugar increased 30.00 cent to $13.31 per pound. Soybean future closed up 7.75 cents to $13.97 a bushel.

Dollar edged higher but traded near a record low against euro to $1.5787 and edged higher against yen to 101.62.

Yields on U.S. bonds increased to 3.58% with 10 years of maturities and increased 4.42% with 30-year of maturities.