U.S. Indexes Struggle; Oil Races to $82

123jump.com Staff
08 Mar, 2010
New York City

U.S. stocks struggled in the morning after AIG completed the delayed agreement of $15.5 billion to sell its life insurance division to MetLife. The dollar edged down after fears of Greece default recede. Crude oil futures race to $82 a barrel.

[R]10:40 AM New York – U.S. stocks struggled in the morning after AIG completed the delayed agreement of $15.5 billion to sell its life insurance division to MetLife. The dollar edged down after fears of Greece default recede. Crude oil futures race to $82 a barrel.[/R]

U.S. stocks and commodities in early trading gained after MetLife agreed to acquire its life insurance division, American Life Insurance for $15.5 billion from the troubled AIG.

AIG plans to use $9 billion of the sale to repay Federal Reserve. After the deal AIG still owes $40 billion to U.S. Treasury and $25 billion in credit line to the Fed.

MetLife and AIG completed the agreement after weeks of delay that involved tax liabilities and future of several joint ventures across Asia.

The deal will transform the domestic life insurance giant MetLife to a global player with presence in more than fifty countries including Japan, China and several countries in Europe and Latin America and Caribbean.

MetLife plans to raise $2 billion through stock offering and $3.1 billion in senior debt offering and fund the rest with 78.2 million of its common stocks valued at $3 billion and $5.7 billion in convertible preferred stocks and $3 billion in equity units.

Markets in Asia closed higher and in Europe traded up after Dubai prepares to offer debt renegotiation plan this week and European leaders offer a strong support to Greece.

French President Nicholas Sarkozy after a meeting with Greek Prime Minister George Papandreou said that Greece does not need emergency funds but Europe is prepared to help Greece if needed. Papandreou is scheduled to meet U.S. President Barack Obama in Washington tomorrow.

Currencies, Bonds and Commodities

Crude oil futures gained on the global market optimism. Futures of the immediate months increased 36 cents to $81.86 a barrel and natural gas decreased 10 cents to $4.49 per mBtu.

Gold futures decreased $8.90 to $1,126 an ounce.

Yields on 10-year U.S. Treasuries increased to 3.71% and on 30-year bonds traded at 4.67%.

The dollar edged lower after the fears of Greece debt default receded. The dollar traded at $1.3665 to a euro and at 90.39 yen.

Stock Movers

American International Group Inc ((AIG)) agreed to sell its life insurance division to MetLife Inc for $15.5 billion. The company recently agreed to sell its Asian insurance division to Prudential Plc of the U.K. for $35.5 billion.

MetLife, Inc ((MET)) added 5.1% or $1.99 to $40.88 plans to pay $6.8 billion in cash and $8.7 billion in equity linked securities.

Hewlett-Packard Co. ((HPQ)) lowered its earnings per share by 3 cents after it estimated higher legal costs for a UK lawsuit against its division Electronics Data Systems.

Imax Corp ((IMAX)) surged 5% after the weekend revenues for 3-D movie “Alice in Wonderland” generated record $12 million in revenues at company owned theaters according to Hollywood.com.

Xyratex Ltd soared after it revised higher its fiscal first quarter estimate between 77 cents a share and 87 cents a share.

YRC Worldwide Inc said that it will do a reverse stock split to avoid delisting from the Nasdaq Stock Market.

Earnings Review

Ebix, Inc ((EBIX)), a provider of software and e-commerce solutions reported fourth quarter revenues rose 54.7% to $31.1 million from $20.1 million a year ago. Net income in the quarter rose 53% to $12.1 million or 92 cents per diluted share compared to net income of $7.9 million or 66 cents per share a year ago.

Willis Lease Finance Corporation ((WLFC)), a lessor of commercial aircraft engines reported fourth quarter revenues rose 3.7% to $38.8 million from $37.4 million a year ago. Net income in the quarter fell 93% to $245,000 or 3 cents per diluted share compared to net income of $3.6 million or 41 cents per share a year ago.