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Overnight MarketWatch
By SHAW Stockbroking
US stocks gained ground as investors re-entered the market following the previous session’s sell off. However, gains were tentative as investors attempted to form a macro economic diagnosis based on April sales data and a record breaking run in energy prices.
Early economic data helped prop equities markets after the government said that the number of laid-off workers filing for benefits fell by 18,000 to 365,000 last week.
But the positive jobs numbers were somewhat offset by another economic report released later in session that showed wholesale inventories had slipped 0.1 per cent in March, missing forecasts for growth of 0.5 per cent. February's reading was revised down to growth of 0.9 per cent from an initial reading of 1.1 per cent.
The Dow Jones climbed 52.43, or 0.41 per cent to 12866.78, while the S&P 500 added 5.11, or 0.37 per cent to 1397.68. The NASDAQ gained 12.75, or 0.52 per cent to 2451.24.
All eyes were on the retail sector, with April sales showing some strength after a downbeat March result. Sales benefited from warmer weather in the first half of the month and an extra day of sales due to a calendar shift in Easter.
However, higher sales readings didn’t necessarily translate to higher share prices.
Wal-Mart Stores reported that April sales at stores open a year or more topped expectations. However, the world's largest retailer was wary about the overall consumer spending outlook. Shares closed 0.6 per cent higher.
Costco reported an 8 per cent increase in sales versus forecasts for an increase of 6.1 per cent but shares ended 1.2 per cent lower.
Apparel sales suffered as consumers tightened their belts when it came to discretionary spending.
Target shares fell 2 per cent after it said April same-store sales rose 3.1 per cent, missing forecasts for a rise of 4.5 per cent. The company said sales were weakest in regions getting hit the hardest by the housing market collapse.
Meanwhile, Gap posted a worse than expected sales decline of 6 per cent, sending its shares 2.2 per cent lower.
On the upside, shoe retailer Crocs reported higher than expected quarterly revenue late Wednesday, and said that second-quarter and full-year 2008 profit was on target to meet previous forecasts, despite slowing US retail trends. Crocs jumped 14.5 per cent in unusually active NASDAQ trading.
In other earnings related movement, Unilever advanced 5.8 per cent after reporting a better than forecast 34 per cent profit rise. The company also raised its annual sales outlook.
Toyota fell 4.2 per cent in US trade after reporting a 28 per cent fourth quarter profit drop. The company said year-to-date profits would fall due to a weak dollar and tough US auto market.
In other corporate activity, Best Buy said it was going to pay US$2.1 billion for half of Carphone Warehouse’s stores in Europe. Its shares closed 3.2 per cent weaker.
Metal, mining and oil services stocks rose in line general uptrend in the underlying commodity prices. Exxon Mobile, Chevron and Schlumberger added 1.3 per cent, 2.3 per cent and 3.5 per cent respectively.
NYMEX crude for June delivery rose 16c to settle at a record US$123.69 a barrel.
Meanwhile, COMEX gold for June delivery rose US$11.10 to US$882.30 an ounce. Among metal plays, Freeport-McMoRan Copper & Gold picked up 3.2 per cent, while Alcoa jumped 4.1 per cent.
Looking to the financial sector, Fannie Mae fell 4.9 per cent, Washington Mutual dropped nearly 4 per cent and Bank of America shed 1.8 per cent. Wachovia let go of 3.1 per cent despite being upgraded by Credit Suisse First Boston to neutral from underperform.
Dow component AIG fell 2.1 per cent ahead of the company’s quarterly report. After the close AIG reported a steeper than expected quarterly loss and said it would look to raise US$12.5 billion in capital.
UK
m
arkets
British stocks ended a fraction higher on Thursday as M&A speculation in the mining sector gave the market a boost. However, gains were limited by falls from financials after the Bank of England left interest rates unchanged.
Britain’s benchmark FTSE 100 gained 9.80, or 0.16 per cent to 6270.80.
The decision by the BoE to leave rates at 5 per cent was largely anticipated, however, banks and financials reacted poorly.
HBOS shares were down 1.2 per cent, Barclays lost 2.5 per cent and Lloyds TSB slipped 1.3 per cent.
Many economists predict that rates will be cut to 4.75 per cent in June.
Meanwhile, the mining sector was in demand amid speculation that Eurasian Natural Resources would launch a 25.50 pounds a share offer for Kazakhmys ahead of a mid-month deadline. Kazakhmys surged 10.2 per cent and ENRC rose 5.9 per cent.
The UK Takeover Panel has given ENRC until 1600 GMT on 16 May to make an offer for Kazakhmys.
Antofagasta strengthened 5.5 per cent, BHP Billiton added 2.9 per cent and Xstrata gained 1.9 per cent. Rio Tinto added 2.2 per cent.
Lonmin climbed 6.1 per cent after posting a 63 per cent jump in first-half profit on strong platinum prices, but withdrew a long-term output target due to South African power problems.
In earnings related activity, Unilever advanced 5.4 per cent after the food and consumer goods group beat forecasts with a 7.2 per cent rise in first-quarter underlying sales and said it expected sales in the year to beat its target range.
Next rallied 6 per cent on news it had seen improved trading over the past couple of weeks, but Carphone Warehouse fell 3.4 per cent as traders took the view that Best Buy had taken control of Carphone’s core retail business without paying a premium.
British Airways was off 1.5 per cent after a Cazenove downgrade to underperform.
European
m
arkets
European shares ended slightly lower on Thursday, weighed down by financials after the central banks kept rates on hold at 4 per cent as expected. The bank said its current policy stance would help it achieve price stability, although inflation was likely to remain high for some time amid turbulent markets.
France’s CAC 40 dropped 19.73, or 0.39 per cent to 5055.58, while Germany’s DAX slipped 4.35, or 0.06 per cent to 7071.90.
Swiss bank UBS fell 5.1 per cent, while Societe Generale slipped 2.5 per cent. Austrian bank Raiffeisen tumbled 7.8 per cent to top European losers after its first-quarter earnings disappointed investors.
Elsewhere, shares of Italian banking group UniCredit declined 2.9 per cent after it reported profit dropped 51 per cent to 1 billion euros.
Shares of Swedish mining firm Boliden jumped 16.4 per cent after it reported 44 per cent growth in first-quarter net profit to 1.3 billion Swedish krona and a 9 per cent increase in sales to 9.3 billion krona.
Other prominent risers included Denmark's Vestas Wind Systems, which jumped 12 per cent to top European gainers after it said it could charge higher prices and run operations more effectively.
Japanese
m
arkets
Japanese stocks slid more than 1 per cent on Thursday on profit-taking and renewed fears over inflation in line with soaring global oil prices. Toyota also brought the market down ahead of its quarterly earnings.
The Nikkei 225 lost 159.22, or 1.13 per cent to 13943.26.
Toyota fell 1.8 per cent ahead of its earnings results. After the close of trading Toyota posted a bigger-than-expected 28 per cent decline in net income for the January to March quarter from a year earlier, owing to a stronger yen, weaker US auto sales and higher input costs.
Other exporters were also troubled, with Sony Corp down 3.6 per cent.
Financial giant Mitsubishi UFJ Financial Group dropped 3.7 per cent and Mizuho Financial Group fell 5.2 per cent.
Shares of drugmaker Astellas Pharma fell 2.3 per cent after the company reported delays in approval for its transplant drug following a statement from US authorities that the drug was not approved for liver transplants.
Hong Kong
m
arkets
The Hong Kong bourse shed 0.6 per cent on Thursday, its second consecutive fall, on thin trading and surging oil prices. Oil refiners Sinopec and PetroChina led the retreat, with record crude prices putting pressure on profits.
The benchmark Hang Seng Index fell 160.42, or 0.63 per cent to 25449.79.
Sinopec dropped 3.3 per cent after crude prices struck a new record, further squeezing its margins as domestic fuel prices are regulated. China's second-largest oil refiner, PetroChina, slid 2.4 per cent.
CITIC Resources Holdings, China's fourth-largest oil producer, jumped almost 8 per cent and the country's top offshore oil specialist CNOOC rose 1 per cent.
Airlines also felt the squeeze as flag carrier Air China fell as much as 5 per cent before closing down 2.2 per cent. China Southern and China Eastern slumped 2 per cent and 2.6 per cent respectively.
China Mobile fell almost 1 per cent after saying it was interested in entering the South African market, which is currently the subject of a takeover by India’s Bharti Airtel.
Ping An Insurance fell 3.5 per cent after it said it had not changed its plan to offer local currency A shares while rival China Life fell 2.5 per cent in heavy trading.
The Overnight MarketWatch report is provided by SHAW Stockbroking's egoli - simple but informative market news for the everyday investor.
egoli news: A view of the Australian market, from your perspective, as it happens. For more information go to http://www.egoli.com.au/egoli/egolihome.asp
9 May 2008
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