Thursday, March 12, 2009

ADVFN World Daily Markets Bulletin - Mar 12, 2009

US Stocks at a Glance

Major Averages Bounce Firmly Into Positive Territory

While stocks showed a notable decline over the course of early trading on Thursday, the markets have shown a substantial turnaround since then. The major averages have bounced well off their lows for the session and moved firmly into positive territory.

The volatility that has been in morning trading comes following the release of some mixed economic data. While a Commerce Department report before showed a much smaller than expected drop in retail sales, the Labor Department reported a notable increase in weekly jobless claims.

Peter Boockvar of Miller Tabak said, "Some will argue that the retail sales upside is more relevant than the claims data, as employment is a lagging indicator, but its way to premature to assume a bottom in retail sales, especially with leverage levels that are still way above average."

In other economic news, the Commerce Department released its business inventories report for January, showing that inventories fell 1.1 percent during the month. The decrease was slightly steeper than the 1.0 percent decrease expected by economists.

On the corporate front, General Electric announced that S&P downgraded the company's long-term credit ratings to AA+ from AAA, with a "stable" outlook. GE stated that it does not anticipate any significant operational or funding impacts from this change.

The major averages have pulled back off their highs in the past few minutes, although they currently remain firmly positive. The Dow is currently up 48.18 at 6,978.58, the Nasdaq is up 3.72 at 1,375.36 and the S&P 500 is up 6.99 at 728.35.


Dollar falls as risk appetite returns
The dollar fell against major currencies as its safe haven appeal faded and traders turned attention to global equities and riskier currencies instead.

European, US and Asian stock markets all managed gains Wednesday on hopes that a global economic recovery is not too far away.

Economic data from China however poured cold water on some of that optimism. An official report showed a surprise 15% decline in February imports as demand from China continues to slow.

The dollar index fell to 87.719 from 88.627 in late US trading Tuesday. The dollar fell to 97.48 yen from 98.70 yen in the previous session.

The euro rose against the dollar, after a weak start to Wednesday’s session, as European stock markets settled in the blue. The euro was the main beneficiary of increased risk appetite Wednesday. The euro rose to $1.2828 from $1.2679 Tuesday.

Sterling meanwhile remained under pressure against the euro on ongoing concern about the outlook for the UK economy.

Traders were little moved by news that the Bank of England pumped almost £2bn of extra money into the financial system in the hope it will get banks to lend more money. The move is part of its £75bn programme of ‘quantitative easing’ to boost the British economy.

Sterling rose against the dollar to $1.3851 from $1.3743 while the euro rose 0.8% to 92.90p against the pound after hitting a high of 93.01p.


Oil settles below $43, gold above $900
US crude oil dropped 7% on Wednesday after a weekly government report showed US crude supplies rose by 700,000 barrels last week instead of the 1m barrel decrease expected by analysts.

US light crude oil for April delivery settled down $3.38 to $42.33 a barrel on the New York Mercantile Exchange. Concern about a continuing slump in demand weighed on crude prices after a separate report from China showed a surprise 15% decline in February imports as demand continues to slow.

Meanwhile the US government report showed gasoline inventories fell by 3m barrels more than double than the 1.2m barrels reduction expected.

Expectations that oil cartel OPEC will call for another round of output cuts had little effect. OPEC is scheduled in meeting 15 March in Vienna.

Among precious metals gold rose back above the key $900 an ounce level as the dollar boosted the yellow metal’s appeal as an alternative investment. COMEX gold for April delivery rose $14.80 to settle at $910.70 an ounce.

May silver rose 26 cents to $12.80 an ounce while May copper fell 6 cents to $1.63 a pound.

European Shares

Shares stuck in the red
Market Movers
techMARK 1,096.75 +0.24%
FTSE 100 3,647.16 -1.26%
FTSE 250 5,953.07 -1.22%

There is no shortage of cheery company news Thursday, but weakness in other sectors is offsetting this, keeping the leading share index firmly in the red.

Inmarsat, the satellite communications group, now leads the risers after a strong fourth quarter performance. Revenue grew 20.4% to $160.6m from $133.4m in the corresponding period of 2007, taking full-year revenue to $996.7m, up from $576.5m in 2007.

Standard Life is going well after putting in a “solid” performance in 2008, raising operating profit before tax by a better than expected 6%. Operating profit for the year on a European Embedded Value basis was up to £933m from £881m the year before, but a drop in total return on embedded value to 10.9% from 11.5% in 2007 came after a provision for customer payments to the Pension Sterling Fund.

Supermarket chain Wm. Morrison saw pre-tax profits rise 7% and hiked its dividend by 21% as its strategy of expansion pushed revenue higher and improved margins. The group also said the capital originally earmarked for share buy-backs in the 2009/10 financial year should be retained for future investment opportunities.

In mining, Vedanta Resources, Antofagasta, Xstrata and BHP Billiton are the early pace setters amongst the fallers.

Aviva is down nearly 15% after Citigroup raised concerns it may have to recapitalise. Fellow insurer Prudential is also lower. Thomas Cook leads travel stocks down after the head of its German business said late bookings will be needed if it is to meet summer sales targets.

AMEC hailed another year of record performance as the engineer and project management firm’s 2008 results came in ahead of management expectations. Reported profit before tax, which includes a £109m profit on business disposals and closures, doubled to £306.6m from £151.6m. Revenue rose to £2,606.4m from £2,356.2m the year before.

Argos and Homebase owner Home Retail continued to see like-for-like (LFL) sales fall at both companies during the last eight weeks of its financial year, although the catalogue business did better than feared. LFL sales fell 1.6% at Argos in the eight weeks ended 28 February, but had tumbled 7.5% in the 18 weeks to January. Homebase’s LFL sales dropped 10.2%.

Simon Henry will be the new chief financial officer at Royal Dutch Shell. He will move up from his current role as Executive Vice President Finance in Shell International Exploration on 1 May to replace Peter Voser, who will be the new chief executive as of 1 July.

Oil producer Venture Production said Jon Murphy, chief operating officer, has given notice to step down from his role in May.

Funeral services provider Dignity saw profits rise 17% and said all three of its businesses are continuing to perform well in the first quarter of 2009. Pre-tax profit for the year rose to £35.4m from £30.2m previously on turnover that increased 10% to £175.8m.

Cinema chain Cineworld said annual pre-tax profit more than doubled as cinema goers flocked to see films such as Mamma Mia despite the weak consumer climate. Pre-tax profit came in better than expected at £27.6m for the 52 weeks ended 25 December 2008 from £12.4m the year before.

Newspapers and magazines wholesaler Smiths News has agreed new five year contracts with magazine distributors Frontline and Seymour worth an extra £84m in revenue each year.

Engineer Fenner expects to report an underlying operating profit for the first half approximately 10% below the same period last year due to lower industrial volumes.

Mixed phase catalyst technology firm Catalytic Solutions propelled forward after it won a $9m contract with a North American contracting organisation.

Asia Markets

Indian market rallies after 2-day break

Thursday, the Indian market bounced back sharply in line with the rally in the other global markets in the past two days following some positive comments from the chief executive of Citigroup. Nevertheless, the market pared some of its gains in the last hour amid a weak trend in the other Asian markets and the European markets. The Indian market was shut for trading on Tuesday and Wednesday on account of festival holidays.

In economic news, the inflation rate rose 2.43% in the 12 months to February 28 compared to a rise of 3.03% a week earlier and 6.21% during the corresponding week last year. On the other hand, the index of industrial production contracted 0.5 percent in January as against the revised 0.6 percent contraction in the previous month.

Both the numbers came in line with market expectations. In fact, the upward revision of the December IIP data from -2.2 percent to -0.6 percent raised hopes that the worst phase is over. Analysts now look forward to some improvement in the February and March IIP numbers.

The BSE Sensex opened higher at 8,275 and rose to a high of 8,440 before finishing the day at 8,344, up 183 points or 2.25%. Meanwhile, the S&P CNX Nifty rallied 44 points or 1.72% to 2,617.

The broad-based BSE 500 index moved up 1.75%, while the small-cap and the mid-cap indexes rose a modest 0.40% each. On the BSE, the market breadth was slightly negative, with decliners outnumbering advancers by 1262 to 1162.

Stocks of auto, banking, oil/gas, metal and IT companies showed sharp gains, while select consumer durable stocks such as Blue Star, Rajesh Exports, Videocon Industries and Titan Industries closed in negative territory.

Among the top gainers, ICICI Bank surged up 8.10%, Sterlite Industries jumped 7.26%, Tata Motors soared 6.77%, Maruti Suzuki climbed 5.83% and Sun Pharma rallied 4.78%.

Reliance Communication, Reliance Industries, ACC, Hindustan Unilever, Hindalco Industries, Mahindra & Mahindra, BHEL, Wipro, TCS and Infosys were the other prominent gainers.

However, Bharti Airtel, Tata Power, NTPC, DLF and Ranbaxy Laboratories ended in the red.

Raj Television Network jumped 4.26% after it launched 'Raj Musix Kannada', a 24X7 television channel devoted to Kannada music lovers. Voltas moved down 1.06% after the company obtained shareholder approval for transferring its Chemicals Trading Business to DKSH India Pvt Ltd.

Gateway Distriparks rallied 2.56% after Allcargo Global Logistics acquired about 60.95 lakh shares, or nearly 6% stake in the company. Fulford (India) surged up 14.30% on speculation of a possible open offer from Merck & Co Inc.

Bharat Heavy Electricals gained 3.22% after it secured a new order worth Rs.81 crore. After falling over 15% in the past few sessions due to a foreign brokerage downgrade, Hindustan Unilever ended up over 4%.

Nagarjuna Construction closed flat despite bagging three new orders aggregating Rs.263 crore. Similarly, Aurobindo Pharma finished unchanged even as it received a tentative approval for Lopinavir/Ritonavir tablets 100/25 mg and 200/50 mg from the U.S. Food and Drug Administration.

Bharti Airtel plunged 6.37% after the company's CEO and Joint Managing Director Manoj Kumar Kohli sold his entire stake of 70,000 equity shares through open market transactions. Concerns about the likely loss in revenue following a reduction in the termination fee by the Telecom Regulatory Authority of India also weighed on the stock.

At the same time, CDMA operators such as Reliance Communication and Tata Teleservices rose sharply amid expectations that the latest move by TRAI would benefit these companies.

Tata Communications rose 1.65% after it raised $350 mls in the form of debt and bonds. TVS Motor gained 1.55% after its board took a decision to invest Rs.18.50 crore in its subsidiary company Sundaram Auto Components by way of a rights issue.

Tech Mahindra closed flat after it registered its interest in participating in the bidding process for the beleaguered Satyam Computers. Mercator Lines fell 2.73% after it took delivery of its premium Jack-up Rig through its subsidiary in Singapore.

ORG Informatics was locked in the 20% upper circuit limit after it bagged a new order worth Rs.19.70 crore from the IT Department of Meghalaya.

Reliance topped the traded value with a turnover of Rs.223.53 crore followed by ICICI Bank, Satyam, Bharti Airtel and Reliance Capital. Satyam topped the traded volume with trades of around 3.76 crore shares followed by IDFC, Rolta, ICICI Bank and Cals Refineries.

Canadian Market

TSX Rises Above 8,000 With Second Straight Surge

Bay Street stocks finished in positive territory again Wednesday, led by a strong performance from the gold sector. The gains added to a sharp surge in yesterday's session.

The S&P/TSX Composite Index added 130.61 points or 1.65% to 8,011.02. This marks the highest close for the index in the month of March.

Gold stocks soared 6% and materials gained 5% as the precious metal closed higher for just the third time in 13 sessions.

Agnico-Eagles Mines jumped 7.3%, Kinross surged 7% and Goldcorp added 5.9%. April gold jumped to $910.70 an ounce, up $14.80 on the session. The metal reached as high as $913.80 for the session.

Mining stocks closed up 3.1%, led by a 12.5% surge for Teck Cominco. Technology stocks are up 2.2%. Research on Motion is 1.8% up as it has announced BlackBerry App World, an online applications store.

Also on Wednesday afternoon, Certicom Corp. said that independent firm RiskMetrics Group recommended accept Research In Motion's offer to acquire all of the company's common shares for C$3.00 per share in cash.

Financials closed a choppy session with a 2.2% gain. National Bank added 3.5%, Toronto-Dominion jumped 3.3% and CIBC closed up 2%.

In corporate news Bombardier Aerospace rose 4.3%. The company said that Deutsche Lufthansa has signed a firm purchase agreement for 30 CSeries model CS100 single-aisle aircraft. Industrials are up 1.5%.

Travel operator Transat has dropped 9.9% after the company reported a first quarter net loss of C$29.4 mln or C$0.90 per share, compared to a net loss of C$7.9 mln on or C$0.23 per share in the year ago quarter. Transat also said it was suspending its quarterly dividend

Sirit surged 23.1% after the company announced that its fourth quarter net income was C$2.12 mln, compared to a net loss of C$835,000 in the year ago quarter.

Bicycle company Dorel Industries rallied 10% after the company reported reported net income for the fourth quarter of US$19.2 mln or US$0.57 per share, down from US$22.3 mln or US$0.72 per share in the year-ago quarter.

On the economic front, new home prices decreased 0.6% between December and January, a slightly faster pace than the 0.1% decline observed the previous month. This resulted in a New Housing Price Index of 156.4.

Speaking to reporters in Ottawa, said Canada has the best economic fundamentals of the Group of Seven member countries.

No comments: