Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:40 AM ET
S&P 500: -4.25; 1,468.50
NASDAQ 100: -6.00; 1,987.50
Dow: -28; 13,293
NIKKEI 225: -0.50%; 15,797.60 (-80.07)
HANG SENG: +1.49%; 24,310.14 (+357.90)
SHANGHAI SE COMPOSITE: +1.15%; 5,172.63 (+58.66)
BSE SENSEX 30: -0.24%; 15,505.36 (-37.41)
FTSE 100: -0.74%; 6,234.00 (-46.70)
CAC 40: -0.20%; 5,468.03 (-10.91)
XETRA-DAX: -0.44%; 7,425.02 (-32.88)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.01%; $78.22 (-$0.01)
Gold: -0.21%; $719.60 (-$1.50)
Natural Gas: +2.63%; $6.09 (+$0.16)
Silver: -0.08%; $12.825 (-$0.01)
U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
Alcoa to Cash In Up to $2B of Chalco Shares
Alcoa intends to sell $1.64 billion of shares it owns of Aluminum Corp. of China [Chalco], according to a term sheet seen by Dow Jones Newswires. Alcoa could sell its entire 6.86% stake for as much as $2B to $2.1B, earning a profit of around $1.9B, if it exercises an option. Alcoa will reportedly sell the shares (listed on the Hong Kong exchange) for HK$17.26 to HK$18.27, a 10.4% to 15.4% discount to Wednesday's close of HK$20.40. "Alcoa is taking profit from Chalco shares, and the sale indicates that it is concerned about the commodities cycle, after the credit crunch in the U.S.," commented Liu Yang of Atlantis Investment Management in Hong Kong. Some analysts expect broad profit-taking in Chalco shares, but a Hong Kong-based DBS analyst said, "... any pullback will present a buying opportunity." Alcoa originally bought Chalco shares in its 2001 IPO at HK$1.37/share. Alcoa was untraded as of 8:00 a.m. in Wednesday's pre-market, after gaining 0.4% to $34.20 on Tuesday. ADRs of Chalco are down 10.8% to $59.00 in thin pre-market trading, erasing Tuesday's 8.9% jump to $66.18.
Sources: Bloomberg, MarketWatch, Reuters
Commentary: Six Ways to Invest in Aluminum: The Most Abundant Metal in the World • Billiton Considering Bid for Alcoa -- Report • Give Aluminum Corp. of China A Metal!
Stocks/ETFs to watch: AA, ACH. ETFs: PRFM, XLB, IYM, FNI, PGJ
Earnings call transcript: Alcoa Q2 2007
Buffett Sells More PetroChina Shares
World-famous investor Warren Buffett sold another $136 million (HK $1.1 billion / 92.66 million shares) of his large stake in top Chinese oil company PetroChina Inc., according to a late-August regulatory filing in Hong Kong. Buffett also sold 16.9 million shares in late July. The sale cuts the stake of Buffett-run Berkshire Hathaway to 9.72% of the company, down from an original 10.16%. Buffett paid $488 million for the stake in 2003, which was worth about $3.3 billion at the end of 2006. PetroChina shares are up about 35% over the last year amid rising oil prices and surging Chinese demand, but rivals CNOOC and Sinopec saw even more robust 56.5% and 76.5% gains over the same period, respectively. There have been calls by Berkshire shareholders to sell the entire stake, in protest of PetroChina's parent company China National Petroleum's operations in Sudan, a country accused of genocide. (full story).
Sources: Reuters, Bloomberg
Commentary: PetroChina's Growth Prospects May Attract Investors • The Only Way Is Up For Chinese Oil Company CNOOC
Stocks/ETFs to watch: PTR, BRK.A, CEO, SHI
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Today's Market (via Sam Collins, ChangeWave.com)
Recap of Yesterday's Action
Federal Reserve Chairman Ben Bernanke's big talk to the Germans came and went with little new information that could help investors discern the future direction of rates. The chairman stuck to the subject at hand -- global imbalances (he was talking to Bundesbank officials) -- and said nothing about U.S. growth, recession fears or interest rates.
Despite a lack of guidance, following the speech, the market gained steadily all the way to the close.
Corporate America, however, delivered good news when General Motors (GM) said it was spending less on the development of "crossover vehicles," McDonald's (MCD) reported strong August sales and Ericsson (ERIC) issued a positive Q2 outlook. Not to mention that chain store sales for the week ended Sept. 8 rose by 2.9%, and the Commerce Department said that U.S. exports increased 2.7% in July which is the fastest growth in more than three years -- some recession!
At the close, the Dow Industrials gained 181 points to finish at 13,308. The S&P 500 was up 20 to 1,471, and the Nasdaq closed at 2,597, up 38. The Big Board traded just 1.3 billion shares, and the Nasdaq crossed nearly 1.8 billion with breadth a positive 3-to-1 on the New York and 2-to-1 on the Nasdaq.
Energy stocks were helped by another gain from crude oil. The October contract was up 70 cents and closed at a new record high for the spot month at $78.23. The Amex Energy SPDR (XLE) was up 99 cents and closed at $71.20 just below the resistance line at $71.55.
The U.S. dollar fell again -- this time to $1.3826 versus the euro, and the December gold contract rose $8.90, closing at $721.10 per troy ounce. The Philadelphia Gold/Silver Index [XAU] gained $4.20 to close at $155.48.
What the Markets Are Saying
Yesterday's rally was encouraging but it still doesn't resolve the current trading ranges of:
- Dow 13,000-13,600
- S&P 1,430-1,487
- Nasdaq 2,500-2,600
However, the Nasdaq briefly broke its pattern by closing last Tuesday at 2,630 before pulling back to 2,536 this week; over the last month or so, the Nasdaq has been the percentage leader of the major indices. But unless the techs retake the market leadership, as some predict, it is unlikely that the current mini-rally will amount to anything other than a failed test of the resistance at Dow 13,600.
Volume has been very light for the last several weeks and didn't even improve yesterday, so for traders and those looking to raise some cash for a better buying opportunity, now may be the time to cash in some chips. But the danger is that if you liquidate too much and the market breaks out you may find it difficult to get back in.
Today's Trading Landscape
Earnings are expected today from Charter PLC (CHTR), Gerber Scientific (GRB), Jos A. Bank (JOSB) and Sharper Image (SHRP), and crude oil inventories will be reported at 10:30 a.m.
The dollar hit new lows against the euro again today in anticipation of rate cuts in the United States. That and strong European economies (industrial production up 3.7% on year) should continue to drive investors into international stocks. Volume will more than likely stay on the lighter side for the remainder of the week in anticipation of the Federal Open Market Committee [FOMC] meeting on Tuesday.
Asian Headlines (via Bloomberg.com)
• Asian Mining, Energy Stocks Advance; Japanese Shares Slump After Abe Quits Asian mining and energy stocks rose, led by BHP Billiton (BHP) and PetroChina Co. (PTR), after copper prices jumped the most in three months and crude oil closed at a record. Japanese shares fell, wiping out earlier gains, following the resignation of Prime Minister Shinzo Abe.
• India's Industrial Production Grew at Slowest Pace in Nine Months in July India's industrial production grew at the slowest pace in nine months in July, easing pressure on the central bank to raise interest rates from a five-year high.
• Wheat Surpasses $9 a Bushel for First Time on Australian Harvest Outlook Wheat prices surpassed $9 a bushel for the first time as a drought in Australia cut production, pushing global stockpiles toward a 26-year low.
European Headlines (via Bloomberg.com)
• Bank of England's King Rejects Calls to Relax Money-Market Lending System Governor Mervyn King refused to relax the Bank of England's system for money-market lending, rejecting calls to provide commercial banks with more longer-term cash to reduce borrowing costs.
• London Financial Firms Hire More Bankers Amid Market Slowdown, Study Shows London's financial-services companies sought to hire more bankers in August even as rising borrowing costs prompted analysts to cut earnings estimates for European and U.S. firms, a recruitment company survey said.
• Novartis Predicts `Strong Growth' in Second-Half 2008 Following Setbacks Novartis AG, Europe's third-largest drugmaker, forecast a return to ``strong growth'' in the second half of next year after setbacks with some products.