Oil Jump Raises Concerns

Elena
22 Nov, 2005
New York City

Asian-Pacific benchmarks closed largely lower, led by the biggest decliner South Korean Kospi, down by 2%. The Nikkei edged up 0.2% on strong dollar and exporter issues. European stocks were steady at mid-day. In earnings news today, H.J.Heinz posted Q2 profit increase of 60 cents a share on sales growth, beating estimates. Tech Data reported Q3 income drop of 40 cents per share, missing expectations. Genesco beat estimates with a profit rise of 61 cents a share.

U.S. MARKET AVERAGES

U.S. stock futures are trading in the negative territory, pointing to a dip at the start of the session. Ahead of holiday with light and volatile trading expected, there are no significant market drivers in early going, but investors could turn to profit taking as oil prices jumped over $1 and renewed concerns about the impact of higher energy costs on corporate profits.

Target Corp. ((TGT)) may be in the spotlight after the retailer said late on Monday it expects November same-store sales to increase by 2% to 3%. It said while the pace of sales for the third week was somewhat improved, it lagged expectations.

Microsoft Corp. ((MSFT)) shares may be active after the launch of its new Xbox 360 video console in North America.

S&P 500 futures were down 2.6 points. Dow Jones industrial average futures were down 18 points, and Nasdaq 100 futures were down 6 points.

ECONOMIC NEWS

The release of minutes of the November 1 meeting of the Federal Reserve's rate-setting committee is due at 2 p.m.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mostly lower with South Korea’s Kospi being the most notable decliner, falling nearly 2% with pressure from chipmakers and the steel sector. The Nikkei advanced 0.2% supported by strong dollar, automakers and other exporter issues. Among other regional markets, Hong Kong’s Hang Seng finished flat and Australia’s All Ordinaries lost 0.6%.

European markets traded steady at mid-day. Higher U.S. markets close, gains in resource stocks, and upbeat earnings reports from Enterprise Inns and EasyJet limited losses. The German DAX 30 traded at the unchanged mark, the French CAC 40 declined 0.2%, and London’s FTSE 100 gained 0.3%.

OIL, METALS, CURRENCIES

Crude oil prices advanced, reflecting chilly weather forecast and expectations of higher heating oil demand. Light sweet crude for January delivery rose $1.01 to $58.71 a barrel. London Brent jumped $1.20 to $56.54.

European gold prices continued their bullish trend, almost reaching an 18-year high on U.S. inflation speculations, increasing the appeal of the precious metal. In London gold traded at $493 per troy ounce, up from $484.70. In Zurich gold advanced to $492.65 from $487.75. In Hong Kong gold jumped $8.70 to close at $493.25. Silver traded unchanged at $8.13.

The U.S. dollar climbed against other major currencies. The euro was quoted at $1.1708, down from $1.1720. The dollar bought 119.24 yen, up from 118.92. The British pound traded at $1.7120, down from $1.7178.

EARNINGS NEWS

Albertson''s Inc ((ABS)), supermarket operator, announced that Q3 net income dropped 30% to 21 cents a share, from 29 cents a share in the year-ago period as revenue slipped 0.2%. Earnings from continuing operations adjusted for the storms in both periods fell 22%. Adjusted for the storms, earnings from continuing operations amounted to 24 cents, down vs. 32 cents in the comparable period last year, missing on that basis the analysts’ forecasts of 27 cents a share.

H.J. Heinz Co ((HNZ)), sauces and packaged-food manufacturer, posted a Q2 of fiscal 2006 net income of 60 cents a share, up from 56 cents in the same period in fiscal 2005, beating analyst estimate of 54 cents a share. Outside special items, the company would have earned 62 cents a share from continuing operations. The company’s quarterly sales totaled nearly $2.34 billion from $2.2 billion. This 6.3% sales growth came primarily from acquisitions; volume increased 0.6%.

Tech Data Corp. ((TECD)), distributor of information technology products, reported that Q3 net income dropped to 40 cents a share, from $ 64 cents, a year ago, missing analyst expectations of 45 cents a share. Sales for Q3 advanced to $5.08 billion from $4.77 billion a year earlier.

Fred's Inc. ((FRED)), general merchandise retailer, posted Q3 earnings of 16 cents a share, down from a profit of 19 cents a share a year-earlier. If not for the impact of an accounting standard change, the company would have gained 19 cents a share in Q3, well within the range of its previous outlook, beating on that basis analyst expectations by a penny. Sales rose about 8%.

Brown Shoe Inc. ((BWS)), shoe retailer, announced that Q3 net profit advanced to $1.04 a share, up from $1 a share in the year-ago period on sales growth. Adjusted for charges related to close some of its Naturalizer stores, its earnings of $1.21 a share topped analyst expectations of $1.04 a share.