Stocks Rise on GM's Cuts

Elena
21 Nov, 2005
New York City

Asian-Pacific markets closed mixed with the Nikkei up 0.4%, hitting a fresh five-year peak of over 14,800 points. European stocks largely gained at mid-day, led by the German DAX 30, up 0.3%. In corporate news, auto maker General Motors is expected to announce plant closures as part of its restructuring plan. J.P. Morgan downgraded NIKE from ''overweight'' to ''neutral''.

U.S. MARKET AVERAGES

U.S. stock futures are sitting near the unchanged mark, predicting a flat or slightly higher market opening on speculations that the world's largest automaker, General Motors Corp, may close factories. Little corporate or economic news is expected throughout the week and stocks will be largely controlled by market sentiment. On Friday stock markets closed with modest gains, adding to an upward trend which started in mid-October.

According to a report, General Motors ((GM)) will announce plans to close four U.S. assembly plants as part of a cost-cutting measures.

Other companies in the spotlight include Campbell Soup Co ((CPB)) which is due to report quarterly results, and plane maker Boeing ((BA)), which announced $4.6 billion worth of 787 midsized aircraft sales to leasing buyers. J.P. Morgan Securities downgraded the athletic shoe maker NIKE Inc ((NKE)) to ‘neutral’ from ‘overweight’ and the company’s share are expected to fall.

Pharmaceutical shares will be in the focus after Friday''s news that U.S. regulators have called for stronger warnings on popular asthma drugs, knocking shares in European producers such as GlaxoSmithKline ((GSKL)).

S&P 500 futures were up 0.50 point, slightly above their fair value. Dow Jones industrial average futures were up 1 point, and Nasdaq 100 futures were also up 1 point.

ECONOMIC NEWS

On the economic front, the U.S. index of leading indicators probably rose in October for the first time in four months. The report is due at 10 a.m. (1500 GMT) The index is seen rising 0.8 percent after a decline of 0.7 percent the previous month.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed on continuous decline of oil prices and solid U.S. markets gains Friday. In early trading the Nikkei hit a five-year high of over 14,800 to close up 0.4%, led by technology and automakers stocks, also supported by stronger dollar. Across the region, Hong Kong’s Hang Seng finished flat, South Korea’s Kospi fell 0.3%, and Singapore straits Times lost 0.5%.

European markets largely gained at midday, reflecting higher close of U.S. markets Friday and strong resources sector. Gains were limited by British drug maker GlaxosmithKline, which fell 0.4% on new labels for its asthma drugs, proposed by the FDA. The German DAX 30 added 0.2%, CAC 40 gained 0.2%, and London’s FTSE inched down 0.1%. The euro rose to $1.1818.

OIL, METALS, CURRENCIES

Crude oil prices advanced on snowy weather forecast. Light sweet crude for January delivery rose 66 cents to $57.87 a barrel. Heating oil rose 4 cents to $1.7337 a gallon. Gasoline added 2 cents to $1.4811. Natural gas gained 11 cents to $11.520 per 1,000 cubic feet. London Brent advanced 63 cents to $55.53.

European Gold hovered round an 18-year high, climbing close to $500 on renewed investor interest as rally in precious metal continues. In London the precious metal was fixed at $488 per troy ounce, up from $484.70. In Zurich gold advanced to $489.55 from $486.25. In Hong Kong gold fell $3.50 to close at $484.95. Silver traded at $8.10, up from $7.73..

The U.S. dollar lost ground against most major currencies. The euro was quoted at $1.1812, up from $1.1764. The dollar bought 118.86 yen, down from 119.15. The British pound traded at $1.7186, up from $1.7169.

EARNINGS NEWS

Perry Ellis International, Inc. ((PERY)), apparel company, reported Q3 net income of 80 cents per share, up from 72 cents per share in the year-ago period on 37% revenue growth.

G. Willi-Food International Ltd ((WILCF)), food products distributor, announced Q3 net income of NIS 0.41($ 0.09) per share, an increase of 52% year-over-year, and declared a cash dividend of 12 cents per share on 2% revenue growth. Gross margins for the latest quarter were 26.5% compared to 21.8% in the year-ago period.