Q3 Current Account Deficit Near Record

Elena
16 Dec, 2005
New York City

The deficit in the U.S. current account narrowed in the third quarter to a total of $195.8 billion, down 1% from the deficit in the April-June quarter of $197.8 billion. Asian benchmarks closed mixed with the Nikkei down 0.5%, falling for a third straight day on profit-taking and weaker dollar. European stocks rose at mid-day on utility stocks. General Motors raised 2006 revenue. Oracle reported 16% increase in Q2 earnings of 19 cents a share on higher revenue, met estimates.

U.S. MARKET AVERAGES

U.S. stock futures pointed to a higher market opening, following a lackluster Thursday session with a close below the flat line. The pre-market sentiment was lifted after the chief executive of General Motors Corp. forecast improved revenue in 2006. Support was also provided by a decline in the crude oil price to below $60 a barrel.

The U.S. Commerce Department reported that the current account deficit narrowed in the third quarter to $195.8 billion, compared to the second-quarter revised $197.8 billion. Economists had expected the deficit to widen to more than $200 billion.

In earnings news, after the closing bell Thursday, Oracle ((ORCL)) reported a 16% increase in Q2 non-GAAP earnings of 19 cents per share vs. last year, meeting analyst estimate. The software firm said total revenue advanced to $3.29 billion, up from $2.76 billion last year.

In corporate news, BellSouth ((BLS)), phone company, announced after Thursday's close that it will cut its management ranks by 1,500 employees. BellSouth stated that it will record an after-tax charge of about $95 million related to the cuts, including about $50 million in the fourth quarter of 2005.

Standard & Poor's 500 futures were up 5.2 points, above fair value. Dow Jones industrial average futures were up 6 points, and Nasdaq 100 futures were up 40 points.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks ended mixed with the Nikkei falling for a third straight day. The 0.5% decline of the Japanese bellwether reflected a decline in U.S. markets, weaker dollar against the yen and profit-taking. Across the region, South Korea’s Kospi dropped 1.2%, Hong Kong’s Hang Seng fell 0.2%, while Taipei’s Weighted index climbed by 1.5%, followed by Australia’s All Ordinaries, up 0.3%.

European stocks advanced at mid-day dealings, boosted by utility stocks and the expiration of key futures and options contracts. Averages were also supported by positive German economic data which sent the euro higher by 0.2% to $1.1988. The German DAX 30 rose 0.7%, the French CAC 40 gained 0.7%, and London’s FTSE 100 climbed 0.9%.

OIL, METALS, CURRENCIES

Crude oil prices declined on warm weather forecasts after Christmas. Light sweet crude for January delivery fell 48 cents to $59.51 a barrel in electronic trading on the Nymex. Heating oil fell to $1.77. Natural gas dropped to $13.466 per 1,000 cubic feet. London Brent declined 66 cents to $58.74.

Gold prices in Europe declined still keeping above $500. In London gold slipped to $502.50 per troy ounce from $507.60. In Zurich the precious metal was fixed at $503.15, down from $507.20. In Hong Kong gold dropped $2.45 to $499.65. Silver fell to $8.43 from $8.51.

The U.S. dollar fell against its major counterparts. In European trading the euro was quoted at $1.2000, up from $1.1968. The dollar bought 116.24 yen, down from 116.29. The British pound stood at $1.7702, up from $1.7647.

EARNINGS NEWS

Scholastic Corp ((SCHL)), children’s book publisher, reported that Q2 net income fell to $1.59 a share, 8% down from the comparable period last year despite 2% revenue growth, missing analyst estimate of $1.80 a share. The company stated that the profit decline was due to its international operations and modestly lower results in children's book publishing and distribution.

Oracle ((ORCL)), software firm, reported a 16% increase in Q2 non-GAAP earnings of 19 cents per share compared with the year-ago period. The quarterly results met analysts’ estimate. The company said that total revenue advanced to $3.29 billion, up from $2.76 billion last year.