Steel Stocks Rise Ahead of Earnings

123jump.com Staff
12 May, 2008
New York City

European markets edged higher on the strength in energy and steel stocks. ArcelorMittal and ThyssenKrupp led the rise in market averages in Germany and in France ahead of earnings this week. Societe Generale fell after HSBC took a charge of $3.2 billion to cover losses in the U.S. mortgage loans.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – European stocks closed higher despite a large charge at HSBC. Steelmakers and energy companies closed higher despite a fall in crude oil prices.[/R]

Global Markets Update

European stocks closed higher ahead of earnings from ArcelorMittal and Societe Generale. ArcelorMittal added 1.2% after adding nearly 6% in the previous week on optimism on rising earnings and steel prices edge higher. Societe Generale fell 1.5% after losing 4% in the previous week on the worries related to asset write downs related to credit market turmoil. Hermes International soared 6%, fifth gain in a row of more than 1%. In Frankfurt trading steelmakers ThyssenKrupp and Salzgitter AG gained 3% and 4% ahead of earnings from ThyssenKrupp.

Shipping brokers and freight companies surged after Baltic index gained on the speculation that more orders for new shipbuilding are likely to be cancelled as lenders tighten lending requirements and curtail exposure to the sector. Industry analysts, as reported on Bloomberg News, estimate that nearly 100 orders worth $14 billion of ships have be cancelled and contracts between 10% and 30% may be cancelled if lending conditions do not improve.

Renault and Nissan in partnership with Bajaj Auto Ltd. of India will manufacture small car that will be sold at $2,500. The small car will be in direct competition with the current market leader Suzuki Maruti which has nearly 50% market share in 1.2 million unit market. Tata Motors Ltd earlier in the year proposed to sell Nano, a small car with a price target of $2,300 or 100,000 rupees as 45 million motorcycle and scooter owners are likely to upgrade to a smaller car.

U.S. stocks closed higher on falling crude oil and intra-day rise in dollar. Hewlett Packard is in discussion with EDS to acquire the company at a price near $13 billion. The deal could be priced between $24 and $26 per share. The EDS stock surged $5.14 to $24 on the news. The EDS stock closed on Friday at $18.87 with the market cap of $9.5 billion. Apple rose 2.6% after it said that inventories of iPhone are at lower level than its previous estimate.

HSBC Bank took a charge of $3.2 billion in its first quarter as the U.S. housing markets continue to fall. The bank also reported a sharp rise in delinquent borrowers at the end of the quarter. Separately MBIA, bond insurer reported a loss of $2.4 billion but asserted that it has ample liquidity. Stocks of HSBC and MBIA rose.

Retail stocks jumped after Ann Taylor revised its earnings guidance for the first quarter higher. The apparel retailer now hopes to earn between 45 and 47 cents a share compared to its previous guidance of 35 and 40 cents. Collective Brands los a case against Adidas and jury awarded $305 million of award to Adidas. Collective Brands, operator of Payless ShoeSource plans to appeal the verdict.

European Markets indexes

In London FTSE 100 Index closed higher 15.90 or 0.26% to 6,220.60, in Paris CAC 40 Index increased 15.65 or 0.32% to close at 4,976.21 and in Frankfurt DAX index higher 32.78 or 0.47% to close at 7,035.95. Market of Zurich was closed today.

North American Markets indexes

Dow Jones Industrial Average rose 130.40 or 1.02% to a close of 12,876.31, S&P 500 closed up 15.30 or 1.10% to 1,403.58, and Nasdaq Composite Index increased 42.97 or 1.76% to close at 2,488.49. In Toronto TSX Composite closed up 144.88 or 1.01% to 14,666.07.

Of the 30 stocks in Dow Jones Industrial Average, 26 closed higher, 4 closed lower, and none was unchanged.

Alcoa led the gainers in the Dow Jones index with a rise of 5.9% followed by increases in McDonalds of 2.9%, in Caterpillar of 2.8%, in General Motors of 2.3% and in Bank of America of 2.2%. Hewlett Packard led the decliners in the Dow Jones index with a loss 4% followed by losses in AIG of 3% in Citigroup of 0.4% and in Chevron of 0.02%.

Of the stocks in S&P 500 index, 411 stocks increased, 85 declined, and 4 were unchanged. Of the stocks in the index, 5 stocks fell more than 3% and 59 gained more than 3%.

Electronic Data Systems led the gainers in the S&P 500 index with a rise of 27% followed by gains in Tesoro of 9.9%, in Clear Channel of 9.4%, in Computer Sciences of 7%, in Vulcan Materials of 6% and in Alcoa of 6%. Valero Energy, GameStop and MBIA added more than 5%.

Hewlett Packard led the decliners in the S&P 500 index with a fall of 4.2% followed by losses in Network Appliance of 3.6%, in Nvidia of 3.5%, in Transocean of 3.3%, and in AIG of 3.2%. Sprint Nextel, Humana, Nabors Industries and BJ Services fell more than 2.5%.

South American Markets Indexes

Brazil led gainers in the Latin American markets with a rise of 1.11% followed by increases in Argentina and Peru of 0.52% and in Colombia of 0.48%. Venezuela led the decliners in the index with a loss of 1.1% followed by losses in Chile of 0.6% and in Mexico of 0.12%.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 88.02 or 0.64% to 13,743.36, in Australia ASX 200 index higher 56.70 or 0.98% to close 5,828.50. In Malaysia KL Composite index increased 7.82 or 0.61% closed to 1,293.09. Market of Hong Kong was closed today.

In Thailand SET index closed lower 4.49 or 0.53% to 842.22 and Indonesia JSE Index edged increased 2.98 or 0.13% to 2,378.00. Sensex index in India increased 123.90 or 0.74% to 16,860.90. Market of South Korea was closed today.

Commodities, Metals, and Currencies

Crude oil decreased $1.28 to close at $124.68 a barrel for a front month contract, natural gas decreased 22 cents to $11.31 per mBtu, and gasoline futures decreased 4.19 cents to close at 315.93 cents per gallon.

Gold decreased $0.90 in New York trading to close at $884.90 per ounce, silver closed up 32 cents to $17.23 per ounce, and copper for front month delivery increased 3.30 cents to $3.75 per pound.

Wheat futures increased 1 cent in Chicago trading and closed at $8.05 per bushel. Sugar increased 1 cent to $11.62 per pound. Soybean future closed down 15.50 cents to $13.42 a bushel.

Dollar edged lower and traded near record low against euro to $1.5531 and edged higher against yen to 103.90.

Yields on U.S. bonds increased to 3.79% with 10 years of maturities and increased to 4.53% with 30-year of maturities.