Healthier Gain In Productivity

Elena
06 Dec, 2005
New York City

Asian-Pacific benchmarks finished in the red on profit-taking and higher oil prices. Hong Kong was the biggest decliner, down 1.1%, followed by the Nikkei, down 0.8%. European stocks advanced at mid-day, boosted by telecoms and financials with the German DAX 30 in the lead, rising 0.7%. In economic news, the Department of Labor released its revised reading for Q3 productivity with the measure now showing a 4.7% seasonally adjusted annual growth rate, above expectations of 4.5%.

U.S. MARKET AVERAGES

U.S. stock futures are pointing to a higher opening, holding above the unchanged mark as oil prices slipped below $60 a barrel after yesterday’s rally. Time Warner Inc. is expected to be in the focus on speculation about what it will do with its AOL division.

In corporate news, Time Warner Inc.'s talks with Microsoft Corp. and Google Inc about a number of possible deals largely don''t involve either company buying a stake in the AOL Internet-service unit. The deal ideas center on Web search, ad sales and possibly other fields. Time Warner plans to drop Google as its primary provider of Internet search and use Microsoft''s MSN instead. Microsoft and Time Warner are considering creating a joint advertising sales force to sell ads across AOL and MSN.

Cephalon Inc. said it'll pay around $360 million in cash to buy Zeneus Holdings to speed into entry in the European oncology market.

After a steady advance through the previous week, treasury yields are easing in the early going Tuesday. The 10-year yield is currently down 3 basis points to 4.537%.

ECONOMIC NEWS

The U.S. Department of Labor released its revised reading for third-quarter productivity on Tuesday, with the measure now showing a 4.7% seasonally adjusted annual growth rate. When the statistics were first reported in early November, the government said productivity increased by a rate of 4.1%. Unit labor costs were revised to a decline of 1%, compared to the previous-reported estimate of a 0.5% slide.

Meanwhile, factory orders data are due out after the start of trading. Economists expect the measure to increase by about 2% for October, reversing September's 1.7% decline.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed lower after the Nikkei retreated from five-year highs, losing 0.8% on profit taking. High-tech stocks declined on concerns that the sector gained rather fast during the rally, financial shares attracted investors. Among other regional markets, Hong Kong’s Hang Seng dropped 1.1% on rising oil, Australia’s All Ordinaries lost 0.2%, while South Korea’s Kospi gained 0.5%.

European markets gained ground at mid-day, shrugging off lower U.S. markets close Monday and supported by financials like British bank HBOS and telecom-equipment maker Ericsson. The German DAX 30 gained 0.7%, the French CAC 40 advanced 0.5%, and London’s FTSE 100 rose 0.3%. The euro slipped 0.2% to $1.1762.

OIL, METALS, CURRENCIES

Crude oil prices slipped below $60 a barrel after rally, despite cold weather forecast. Light sweet crude for January delivery fell 20 cents to $59.77 a barrel on the Nymex. Heating oil lost 2 cents to $1.7695 a gallon. London Brent dropped 25 cents to $57.48.

European gold surged to a 25-year high, driven by inflation worries and strong interest in commodity investment. In London the precious metal was fixed at $510 per troy ounce, up from $505.05. In Zurich gold traded at $508.03, up from $505.45. In Hong Kong gold rose $2.30 to close at $508.55. Silver traded at $8.64, up from $8.55.

The U.S. dollar advanced against other major counterparts. The euro was quoted at $1.1761, down from $1.1790. The dollar bought 121.16 yen, up from 120.79. The British pound traded at $1.7321, down from $1.7421.

EARNINGS NEWS

Kroger Co ((KR)), supermarket chain, announced that Q3 profit advanced to 25 cents a share, from 19 cents a year earlier, matching analysts' estimate. Sales rose to $14.02 billion from $12.85 billion in last year's third quarter. Identical supermarket sales rose 6.6% with fuel and 3.7% without fuel.

Brocade Communications Systems, ((BRCD)), server and storage company, posted Q4 earnings of 8 cents a share, breakeven on a per share basis in the same period a year earlier. If not for non-recurring items, earnings would have been 7 cents a share, topping the analysts’ estimate of 5 cents a share.

Sears Holdings ((SHLD)), retailer, announced that Q3 net income fell to 35 cents a share, from $5.45 a share in the same time last year, despite revenue growth. On a proforma basis Sears stated earnings dropped to 35 cents a share from 93 cents a share in the comparable period last year, with revenue down 5%. Analysts were waiting for earnings of 28 cents a share.