BEFORE THE BELL: US Stock Futures Higher
U.S. stock futures rose on Friday, with technology stocks in the spotlight after a mixed set of results from Oracle Corp. and Research In Motion Ltd.
Futures for the Dow Jones Industrial Average rose 47 points to 12163 and Standard & Poor's 500 index futures added 4.70 points to 1309.90. Nasdaq 100 futures were up 9 points at 2,317.50.
The move for futures came after strong gains for Wall Street on Thursday as U.S. markets posted their fifth gain in six sessions. The Dow Jones Industrial Average closed up nearly 85 points.
Oracle Corp. (ORCL) was one of the early gainers Friday, climbing 4% in premarket trading after rising software sales to new corporate customers helped it beat earnings expectations.
Mobile-device maker Research In Motion Ltd. (RIMM) , on the other hand, slumped nearly 13% in premarket action after its guidance for the current quarter fell short of expectations. The group said its guidance reflects a greater proportion of lower-end devices in its sales mix as well as additional spending related to its BlackBerry Playbook, a tablet computer intended to compete with Apple Inc.'s (AAPL) iPad.
On the economic front, the final revision to fourth-quarter gross domestic product will be released at 8:30 a.m., EDT, followed after the open by the University of Michigan's consumer sentiment survey for March.
The dollar held broadly steady against the euro and edged up 0.2% against the yen to Y81.196, while crude futures were also largely unmoved from Thursday's close. Crude for May delivery rose 6 cents to $105.66 a barrel in electronic trading on Globex.
Among other stocks in focus, Accenture PLC (ACN) late Thursday reported fiscal second-quarter earnings of 75 cents a share, beating the consensus forecast of 71 cents.
International markets were also mostly higher Friday. Japan's Nikkei Stock Average closed up 1.1% and in Europe, Germany's DAX 30 index rose 0.7% in late morning trading.
-Simon Kennedy; 44 207 842 9427; AskNewswires@dowjones.com
Among the companies whose shares are expected to actively trade in Friday's session are Accenture PLC (ACN), Research In Motion Ltd. (RIMM) and Wet Seal Inc. (WTSLA).
Accenture PLC's (ACN) fiscal second-quarter earnings jumped 26% amid a surge in new bookings and the company boosted its revenue outlook as it expects corporate spending to keep strengthening. Shares rose 5.3% to $54.73 after hours.
Research In Motion posted fiscal fourth-quarter earnings that slightly beat analyst expectations, but its guidance for the current quarter fell short, sending the stock 10.5% lower in after-hours trading to $57.35.
Wet Seal's fiscal fourth-quarter earnings dropped after the prior-year period booked a large tax benefit, but the teen-focused retailer's core profit rose above guidance. Shares were up 5% at $3.73 after hours, as the company also forecast revenue in the current quarter above analysts' expectations.
Oracle Corp.'s (ORCL) fiscal third-quarter profit surged 78% to top the business-software company's expectations, as Oracle experienced strength from its traditional software and new hardware businesses. Investors shrugged off a miss on hardware revenue to focus on strong margins and a surge in license revenue. The company's shares rose 4% to $33.44 after hours.
Acacia Research Corp. (ACTG) said it plans to sell at least five million shares of its common stock, as the developer and acquirer of patents seeks to raise money for general corporate purposes, which could include strategic acquisitions. Shares of Acacia slid 4.3% to $32.10 in after-hours trading.
Smart Modular Technologies (WWH) Inc.'s (SMOD) fiscal second-quarter earnings plunged as lower pricing and a restructuring charge hurt the bottom line and the company booked a gain in the year-earlier quarter. After hours, Shares declined 3.1% to $6.92.
Darden Restaurants Inc.'s (DRI) fiscal third-quarter earnings rose 13% to beat its own optimistic guidance, but the casual-dining chain had a promotional misfire at its Olive Garden chain late in the quarter. Shares were down 1.1% at $47.50 after hours.
HealthSpring Inc. (HS) said it plans to sell 7.5 million shares of its common stock in an underwritten public offering. The managed care organization said it expects to use at least half of the net proceeds from the offering for the repayment of indebtedness and the balance of net proceeds for general corporate purchases, which may include acquisitions. Shares fell 4.7% to $36.20 in extended trading.
Standard & Poor's said it would move maker of replacement heart valves Edwards Lifesciences Corp. (EW) to its S&P 500 index, replacing Qwest Communications International Inc. (Q), which is set to be acquired by CenturyLink Inc. (CTL). Shares in Edwards rose 2.5% to $87.50 in after-hours trading.
Body Central Corp. (BODY) fourth-quarter earnings surged 86% as the apparel company gave an upbeat outlook. Shares were up 11% at $20.61 after hours.
Watch List:
Cephalon Inc. (CEPH) on Thursday said the U.S. District Court in Delaware found Watson Pharmaceuticals Inc.'s (WPI) generic version of the biopharmaceutical company's pain drug Fentora infringed on a valid patent.
Finish Line Inc.'s (FINL) fiscal fourth-quarter profit jumped 12% as the athletic outfitter posted better-than-expected revenue growth on strong same-store sales.
Saba Software Inc. (SABA) swung to a slim loss in its fiscal third quarter, but the decline in its adjusted profit was not as steep as analysts expected. The company, which provides software to create and deploy global networks, again reduced its forecast for full-year results.
Synnex Corp.'s (SNX) fiscal first-quarter profit declined 14% on a year-ago gain on the sale of discontinued operations, although the information-technology distributor reported higher revenue and margins in the latest quarter.
Friday, March 11, 2011
Gold Price Steady Near $1,415
The gold price stabilized near $1,415 Friday morning, showing a muted reaction to an 8.9 magnitude earthquake that rocked Japan earlier today. While the price of gold moved marginally higher, silver came under heavy selling pressure – falling 2% to $34.51 per ounce. Both precious metals have moved off their record highs posted in recent weeks on the back of a stronger U.S. dollar.
This morning’s modest strength in the gold price follows yesterday’s $17 retreat, in which the yellow metal fell victim to widespread liquidation on Wall Street. A bevy of bad news hit the markets yesterday, including Moody’s downgrade of Spain’s credit rating, escalating violence in the Middle East and North Africa, and weak employment data in the U.S. The Dow Jones Industrial Average (DJIA) plunged 228.33 points, or 1.9%, to 11,984.76, its largest single-day decline since August 11, 2010.
Although the gold price suffered its worst day since January 27 of this year, it rebounded $10 from its intra-day low on reports that police in Saudi Arabia fired on protesters. Oil jumped alongside the gold price following the Saudi news, spiking from $100.62 to above $104 per barrel. The violence came one day ahead of planned anti-government protests, termed the “Day of Rage” in which Saudi citizens intended to voice their displeasure with economic and political restrictions. While the most substantial turmoil thus far has occurred in nations with smaller economies – such as Libya, Egypt, and Bahrain – the vast oil reserves of Saudi Arabia make it a more significant threat to the global financial system.
Commenting on the multitude of recent global headwinds, Raoul Pal, author of The Global Macro Investor, contended that the excessive debt level is the key structural economic factor behind the challenges. Mr. Pal, who previously held positions at Goldman Sachs and hedge fund GLG Partners, noted that outstanding debt around the world has reached unprecedented levels. At 300% of total global debt to GDP, “that is simply and utterly mind-blowing and we are making next-to-zero progress in dealing with it.” While “governments around the world have tried their utmost to try and brush it under the carpet and hope it all goes away,” policymakers will eventually have to face the music of defaults or hyperinflation.
Pal went on to say that “The fiat currency system is at the root of this. Without anything of real value to back your currency except vast stores of the fiat debt-based currency of your major trading partners, currencies do not reflect true economic values.” He specifically pointed to export nations in Asia, which “can remain super-competitive for so long that they hole out entire economies, and weaker non-export countries can continue to buy the goods because their currencies remain unrealistically strong.”
“I am no great believer that a gold standard is the right answer but it would correct this issue almost overnight. Without doing something about this problem, the world remains incredibly at risk of a default by non-exporting, consumption-based economies, because that is the main support for the global economy. Sad, but true.”
While Pal did not go into more detail specifically on the gold price, his views suggest the global economy will continue to face significant challenges in the years ahead. Moreover, with the risk of sovereign defaults remaining high, in his opinion, faith in fiat currencies is likely to continue to decline. Historically, such an environment provides a robust recipe for higher gold prices.
The gold price stabilized near $1,415 Friday morning, showing a muted reaction to an 8.9 magnitude earthquake that rocked Japan earlier today. While the price of gold moved marginally higher, silver came under heavy selling pressure – falling 2% to $34.51 per ounce. Both precious metals have moved off their record highs posted in recent weeks on the back of a stronger U.S. dollar.
This morning’s modest strength in the gold price follows yesterday’s $17 retreat, in which the yellow metal fell victim to widespread liquidation on Wall Street. A bevy of bad news hit the markets yesterday, including Moody’s downgrade of Spain’s credit rating, escalating violence in the Middle East and North Africa, and weak employment data in the U.S. The Dow Jones Industrial Average (DJIA) plunged 228.33 points, or 1.9%, to 11,984.76, its largest single-day decline since August 11, 2010.
Although the gold price suffered its worst day since January 27 of this year, it rebounded $10 from its intra-day low on reports that police in Saudi Arabia fired on protesters. Oil jumped alongside the gold price following the Saudi news, spiking from $100.62 to above $104 per barrel. The violence came one day ahead of planned anti-government protests, termed the “Day of Rage” in which Saudi citizens intended to voice their displeasure with economic and political restrictions. While the most substantial turmoil thus far has occurred in nations with smaller economies – such as Libya, Egypt, and Bahrain – the vast oil reserves of Saudi Arabia make it a more significant threat to the global financial system.
Commenting on the multitude of recent global headwinds, Raoul Pal, author of The Global Macro Investor, contended that the excessive debt level is the key structural economic factor behind the challenges. Mr. Pal, who previously held positions at Goldman Sachs and hedge fund GLG Partners, noted that outstanding debt around the world has reached unprecedented levels. At 300% of total global debt to GDP, “that is simply and utterly mind-blowing and we are making next-to-zero progress in dealing with it.” While “governments around the world have tried their utmost to try and brush it under the carpet and hope it all goes away,” policymakers will eventually have to face the music of defaults or hyperinflation.
Pal went on to say that “The fiat currency system is at the root of this. Without anything of real value to back your currency except vast stores of the fiat debt-based currency of your major trading partners, currencies do not reflect true economic values.” He specifically pointed to export nations in Asia, which “can remain super-competitive for so long that they hole out entire economies, and weaker non-export countries can continue to buy the goods because their currencies remain unrealistically strong.”
“I am no great believer that a gold standard is the right answer but it would correct this issue almost overnight. Without doing something about this problem, the world remains incredibly at risk of a default by non-exporting, consumption-based economies, because that is the main support for the global economy. Sad, but true.”
While Pal did not go into more detail specifically on the gold price, his views suggest the global economy will continue to face significant challenges in the years ahead. Moreover, with the risk of sovereign defaults remaining high, in his opinion, faith in fiat currencies is likely to continue to decline. Historically, such an environment provides a robust recipe for higher gold prices.
Saturday, March 5, 2011
US Stocks Fall Friday But Eke Out Small Weekly Gains
Worries about the potential impact of oil's climb above $100 a barrel sent U.S. stocks lower Friday, but came short of wiping out gains recorded earlier in the week.
The Dow Jones Industrial Average fell 88.32 points, or 0.72%, to 12169.88, halting a two-day advance. Leading the drop, General Electric fell 1.8%, while Hewlett-Packard shed 1.4% and American Express declined 1.3%.
The Nasdaq Composite declined 14.07, or 0.50%, to 2784.67. The Standard & Poor's 500-stock index fell 9.82, or 0.74%, to 1321.15, with all its sectors in negative territory. The financial and industrial sectors posted the biggest drop.
Still, the measures managed to post modest weekly gains, with the Dow rising 0.33% on the week while the S&P 500 edged up 0.1% and the Nasdaq Composite added 0.13%, thanks to gains posted earlier in the week.
Friday's declines in U.S. stocks came as crude-oil futures topped $104 a barrel.
"The problem with higher oil prices is that it acts as an indirect tax on consumers and businesses," said Adam Sarhan, chief executive of Sarhan Capital. He noted that the rise in oil prices comes just as investors are also beginning to wonder how the economy will perform after the Federal Reserve winds down its stimulus program in June.
Sarhan added, "what we're seeing now is a confluence of two factors: Can the economy continue growing without the Fed's help, and how will the economy continue to grow if oil spikes higher?"
The rally in oil prices followed sporadic violence in Libya's capital, as a heavy clampdown on the city by Col. Moammar Gadhafi spread fear among residents. Meanwhile, more than 100,000 protesters gathered in the Bahraini capital, and Yemeni soldiers fired rockets on protesters in the restive northern province of Amran, killing three people and injuring seven others.
The escalating violence added to investors' worries heading into the weekend.
"There's concern going into a weekend with all that's going on in North Africa and the Middle East," said Owen Fitzpatrick, head of the equity strategy group at Deutsche Bank Private Wealth Management. "We're probably going to have to get used to these Fridays where maybe the market sells off a bit in reaction to the fact that in two days a lot can happen."
Investors were uninspired by government data showing nonfarm payrolls rose by 192,000 last month while the unemployment rate fell to 8.9%, the first time it has slipped below 9% since April 2009. The data also showed average hourly earnings of all employees increased by a penny to $22.87.
Traders said the market would have needed a stronger employment report in order to outweigh investors' concerns about rising energy prices.
Among stocks in focus, Marvell Technology tumbled 11%. The chip maker's fiscal fourth-quarter earnings rose 8.8% but came in at the low end of the company's projections, and it forecast disappointing first-quarter results on weakness in the mobile and wireless markets.
Citigroup slipped 3%, and Goldman Sachs Group shed 2.1%, after Bank of America Merrill Lynch downgraded its investment ratings on the stocks to "neutral" from "buy." The firm cited expected weakness in first-quarter results from the two banks.
Worries about the potential impact of oil's climb above $100 a barrel sent U.S. stocks lower Friday, but came short of wiping out gains recorded earlier in the week.
The Dow Jones Industrial Average fell 88.32 points, or 0.72%, to 12169.88, halting a two-day advance. Leading the drop, General Electric fell 1.8%, while Hewlett-Packard shed 1.4% and American Express declined 1.3%.
The Nasdaq Composite declined 14.07, or 0.50%, to 2784.67. The Standard & Poor's 500-stock index fell 9.82, or 0.74%, to 1321.15, with all its sectors in negative territory. The financial and industrial sectors posted the biggest drop.
Still, the measures managed to post modest weekly gains, with the Dow rising 0.33% on the week while the S&P 500 edged up 0.1% and the Nasdaq Composite added 0.13%, thanks to gains posted earlier in the week.
Friday's declines in U.S. stocks came as crude-oil futures topped $104 a barrel.
"The problem with higher oil prices is that it acts as an indirect tax on consumers and businesses," said Adam Sarhan, chief executive of Sarhan Capital. He noted that the rise in oil prices comes just as investors are also beginning to wonder how the economy will perform after the Federal Reserve winds down its stimulus program in June.
Sarhan added, "what we're seeing now is a confluence of two factors: Can the economy continue growing without the Fed's help, and how will the economy continue to grow if oil spikes higher?"
The rally in oil prices followed sporadic violence in Libya's capital, as a heavy clampdown on the city by Col. Moammar Gadhafi spread fear among residents. Meanwhile, more than 100,000 protesters gathered in the Bahraini capital, and Yemeni soldiers fired rockets on protesters in the restive northern province of Amran, killing three people and injuring seven others.
The escalating violence added to investors' worries heading into the weekend.
"There's concern going into a weekend with all that's going on in North Africa and the Middle East," said Owen Fitzpatrick, head of the equity strategy group at Deutsche Bank Private Wealth Management. "We're probably going to have to get used to these Fridays where maybe the market sells off a bit in reaction to the fact that in two days a lot can happen."
Investors were uninspired by government data showing nonfarm payrolls rose by 192,000 last month while the unemployment rate fell to 8.9%, the first time it has slipped below 9% since April 2009. The data also showed average hourly earnings of all employees increased by a penny to $22.87.
Traders said the market would have needed a stronger employment report in order to outweigh investors' concerns about rising energy prices.
Among stocks in focus, Marvell Technology tumbled 11%. The chip maker's fiscal fourth-quarter earnings rose 8.8% but came in at the low end of the company's projections, and it forecast disappointing first-quarter results on weakness in the mobile and wireless markets.
Citigroup slipped 3%, and Goldman Sachs Group shed 2.1%, after Bank of America Merrill Lynch downgraded its investment ratings on the stocks to "neutral" from "buy." The firm cited expected weakness in first-quarter results from the two banks.
Thursday, March 3, 2011
US HOT STOCKS: Amylin, Saks, US Airways, Wendy's/Arby's
U.S. stocks traded higher Thursday as the Dow Jones Industrial Average gained 1.5% to 12246, the Standard & Poor's 500 increased 1.6% to 1329 and the Nasdaq Composite rose 1.9% to 2799. Among the companies whose shares are actively trading in the session are Amylin Pharmaceuticals Inc. (AMLN), Saks Inc. (SKS) and US Airways Group Inc. (LCC).
A diabetes drug taken weekly and being developed by Eli Lilly & Co. (LLY, $34.42, +$0.14, +0.41%), Amylin Pharmaceuticals ($11.40, -$3.61, -24.05%) and Alkermes Inc. (ALKS, $12.39, -$1.71, -12.13%) suffered another setback as it failed to prove as effective as a different once-daily treatment.
Shoppers had a spring in their step during February, with retail sales for the month showing solid spending. High-end department stores continued to outperform, with Saks Inc.'s (SKS, $12.43, +$0.70, +5.97%) and Nordstrom Inc.'s (JWN, $44.95, +$0.74, +1.67%) February same-store sales topping Wall Street's expectations. Teen retailer Zumiez Inc. (ZUMZ, $27.45, +$1.51, +5.82%) saw gains in customer traffic and continued its strong sales performance. Fellow teen retailer Hot Topic Inc. (HOTT, $5.59, +$0.31, +5.87%) posted a smaller-than-expected drop in same-store sales.
US Airways ($8.49, +$0.52, +6.52%) said traffic rose 4.5% in February from a year earlier amid an "exceptionally strong" demand environment, as a key industry performance measure continued to improve. The metric of passenger revenue per available seat mile climbed about 10%.
Wendy's/Arby's Group Inc.'s (WEN, $5.07, +$0.33, +6.96%) fourth-quarter loss narrowed amid modest sales gains at both of its restaurant chains and lower overhead and interest costs. The quick-service company has plans to grow its Wendy's burger brand with new products and international development as it "explores strategic alternatives" for its Arby's sandwich chain, including a possible sale.
The U.K. government Thursday approved News Corp.'s (NWS, $18.55, +$0.40, +2.18%) proposed GBP7.8 billion takeover of British Sky Broadcasting Group PLC (BSYBY, $53.75, +$1.10, +2.09%) (BSY.LN) after the media giant agreed to spin off 24-hour news channel, Sky News, into a separate company to avoid a prolonged investigation by the nation's competition regulator. News Corp. owns Dow Jones & Co., publisher of this newswire.
Other Stocks In Focus:
Big Lots Inc.'s (BIG, $41.09, +$1.20, +3.01%) fiscal fourth-quarter earnings rose a better-than-expected 4.5% as the closeout retailer reported sales growth and gave a mostly upbeat view for the current quarter and fiscal year.
Clearwater Paper Corp.'s (CLW, $81.11, +$3.34, +4.29%) fourth-quarter earnings beat the Street's forecast as the producer of tissue and paperboard products' net sales increased 3.3% year-over-year.
Piper Jaffray raised its stock-investment rating on Cognex Corp. (CGNX, $29.10, +$2.29, +8.54%) to overweight from neutral, noting that its shares have pulled back 24% since it reported earnings in mid-February. The firm said it sees earnings growing more rapidly than revenue due to more opportunities for margin expansion.
Stifel Nicolaus raised its view on three health insurers based on a mix of improving fundamentals and 2011 guidance that looks beatable. It upgraded its stock investment ratings on Coventry Health Care (CVH, $32.46, +$1.89, +6.18%), UnitedHealth Group Inc. (UNH, $44.69, +$1.26, +2.89%) and WellPoint Inc. (WLP, $68.98, +$2.17, +3.25%) to buy from hold. Stifel says insurers set a low bar for earnings estimates amid worries about claims-cost regulations, which now appear manageable. "We believe that 2011 is shaping up as a 'beat-and-raise' year across the industry."
The owner of the Applebee's and IHOP restaurant chains DineEquity Inc.'s (DIN, $56.71, +$1.30, +2.35%) fourth-quarter loss widened sharply as revenue fell more than expected and a $111.6-million charge on the extinguishment of debt and preferred stock weighed on the bottom line.
Intel-GE Care Innovations LLC, the newly-formed joint venture from General Electric Co. (GE, $20.83, +$0.51, +2.51%) and Intel Corp. (INTC, $21.82, +$0.33, +1.54%), received U.S. Food and Drug Administration market clearance for its virtual care coordination platform.
Gerber Scientific Inc.'s (GRB, $9.09, +$1.26, +16.09%) fiscal third-quarter's results slightly beat analysts' expectations as its profit increased on higher volume and a higher mix of apparel and industrial sales. The company lifted its 2011 fiscal year forecast, citing its strong quarterly performance and more stable outlook.
Global Defense Technology & Systems Inc. (GTEC, $24.15, +$8.07, +50.19%) agreed to be acquired by private-equity firm Ares Management LLC in a deal valued at $223.1 million, the latest in a series of companies being taken private in recent months. Shareholders of Global Defense, which went public in November 2009, will receive $24.25 a share, a 51% premium over Wednesday's close.
Goldman Sachs added Hologic Inc. (HOLX, $21.04, +$1.06, +5.31%) to its Americas Conviction list, noting that the market underappreciates Hologic's new product cycle in tomosynthesis, which represents a major advance in breast-cancer detection.
KeyCorp (KEY, $9.32, +$0.28, +3.10%) shares are up on some murky takeover speculation. To be sure, the bank is often discussed as a possible takeover it's still holding TARP money and KBW listed it as a potential seller just last month. But many analysts stopped expecting a sale in November when long-term Chief Executive Henry Meyer said he plans to step down May 1. That group of analysts doubt the bank's CEO would leave during negotiations. More so, they doubt President and Chief Operating Officer Beth Mooney would take the reins only to sell.
KongZhong Corp.'s (KONG, $8.08, +$1.01, +14.20%) fourth-quarter earnings more than doubled, beating analysts' consensus estimate, as the Chinese game company predicted revenue would return to sequential growth.
Kroger Co.'s (KR, $23.03, +$0.51, +2.26%) fiscal fourth-quarter profit rose 9.2% as identical supermarket sales climbed and fuel boosted the top line. The core results beat Wall Street's views and the company's board authorized it to buy back $1 billion in shares.
LHC Group's (LHCG, $28.04, -$2.01, -6.69%) fourth-quarter earnings missed consensus estimates and its projected fiscal year 2011 revenue also fell short of expectations. Jefferies cut its stock-investment rating on LHC to hold from buy following the results, noting that it expects LHC to lag its nursing home peers given the deceleration in its growth outlook.
MakeMyTrip Ltd. (MMYT, $26.54, -$0.73, -2.68%) said it and its selling shareholders plan to offer 6 million shares, with the company using some of its proceeds to expand the India-based online travel agency's operations by acquiring or investing in various businesses or assets. The offering would increase the number of shares outstanding.
Midas Inc.'s (MDS, $8.20, +$0.76, +10.21%) shares were up 10% before being halted ahead of the announcement of an arbitration decision. The company's chief executive revealed at end of conference call to discuss the company's fourth-quarter results that the auto-shop chain just received the ruling in a spat with its master licensee in Europe. A statement is due later today with specifics of the ruling.
Motorola Mobility Holdings Inc.'s (MMI, $27.05, -$1.33, -4.69%) time in the spotlight with its Xoom tablet faded pretty quickly. While MMI was seen as the first true competitor to the iPad, Apple Inc. (AAPL, $358.51, +$6.39, +1.82%) one-upped it with its iPad 2, which will come out sooner than expected. Cowen downgraded its stock-investment rating on MMI to neutral from outperform, saying the window of opportunity to establish the Xoom is narrowing more rapidly than expected.
Biopharmaceutical and diagnostics company Opko Health Inc. (OPK, $4.27, -$0.33, -7.17%) said it plans to offer at least $100 million in common stock, saying it plans to use proceeds for general corporate purposes, which could include research and development expenses, clinical trials and acquisitions.
Perry Ellis International Inc. (PERY, $27.65, -$1.17, -4.06%) said it boosted the size of a planned debt offering and its sale of at least 2 million shares priced at $28 a share, a 2.8% discount to its Wednesday close.
Phillips-Van Heusen Corp. (PVH, $61.31, +$2.13, +3.60%) on Wednesday said it amended and restated a senior secured credit facility it entered into in May in connection with the company's $3 billion acquisition of Tommy Hilfiger.
Standard & Poor's Ratings Services upgraded data-storage company Quantum Corp. (QTM, $2.54, +$0.09, +3.67%) by a notch, citing improved performance of late despite declines in its core tape business.
Sigma Designs Inc. (SIGM, $12.04, -$1.66, -12.12%) swung to a fourth-quarter profit as the company's sales and margins improved and it booked fewer charges than a year earlier. But adjusted profit declined and Chairman and Chief Executive Thinh Tran noted that the company saw sequential revenue declines because of lower revenue in three of its market segments.
Standard Motor Products Inc.'s (SMP, $12.32, +$0.62, +5.30%) fourth-quarter results easily topped analysts' estimates. The automotive replacement parts manufacturer and distributor said its strong results were aided by an aging car population and the closing of car dealerships.
Taser International Inc. (TASR, $4.04, +$0.15, +3.86%) said its board of directors has approved a stock buy-back program that authorizes the company, which develops, assembles and markets nonlethal protection systems, to purchase up to $12.5 million of the company's common stock.
Business-data storage company Teradata Corp. (TDC, $49.76, +$2.19, +4.60%) said it has agreed to acquire the 89% of Aster Data it doesn't already own for $263 million, a move it said will increase its customers' ability to analyze large volumes of diverse data.
United Natural Foods Inc.'s (UNFI, $45.39, +$3.70, +8.88%) fiscal second-quarter earnings rose 20% as the wholesale distributor reported revenue that beat analysts' expectations. For the year, the company raised the low end of its earnings guidance and raised its net sales view based on solid performance during the first half of its fiscal year.
Valero Energy Corp. (VLO, $28.86, +$1.96, +7.29%) said it expects its first-quarter earnings to fall within the range of 15 cents to 30 cents a share, including a loss from closing out hedges that totaled about 10% of its annual production. Credit Suisse said in a note that closing the hedges removes a negative for the company, calling them a "near-term overhang."
Oil refiner and retailer Western Refining Inc. (WNR, $16.91, +$1.02, +6.42%) posted a surprise fourth-quarter loss despite improving margins and sharply lower write-downs as low volumes led to slower-than-expected sales growth. Though the company posted a loss, Chief Executive Jeff Stevens said he saw "an extraordinary refining margin environment during a time of year when we traditionally experience seasonally weaker margins."
Zagg Inc. (ZAGG, $8.18, +$1.11, +15.70%) shares rebounded Thursday after the company said some of its main products will work alongside a new cover that Apple Inc. (AAPL, $358.54, +$6.42, +1.82%) announced Wednesday for the iPad 2
U.S. stocks traded higher Thursday as the Dow Jones Industrial Average gained 1.5% to 12246, the Standard & Poor's 500 increased 1.6% to 1329 and the Nasdaq Composite rose 1.9% to 2799. Among the companies whose shares are actively trading in the session are Amylin Pharmaceuticals Inc. (AMLN), Saks Inc. (SKS) and US Airways Group Inc. (LCC).
A diabetes drug taken weekly and being developed by Eli Lilly & Co. (LLY, $34.42, +$0.14, +0.41%), Amylin Pharmaceuticals ($11.40, -$3.61, -24.05%) and Alkermes Inc. (ALKS, $12.39, -$1.71, -12.13%) suffered another setback as it failed to prove as effective as a different once-daily treatment.
Shoppers had a spring in their step during February, with retail sales for the month showing solid spending. High-end department stores continued to outperform, with Saks Inc.'s (SKS, $12.43, +$0.70, +5.97%) and Nordstrom Inc.'s (JWN, $44.95, +$0.74, +1.67%) February same-store sales topping Wall Street's expectations. Teen retailer Zumiez Inc. (ZUMZ, $27.45, +$1.51, +5.82%) saw gains in customer traffic and continued its strong sales performance. Fellow teen retailer Hot Topic Inc. (HOTT, $5.59, +$0.31, +5.87%) posted a smaller-than-expected drop in same-store sales.
US Airways ($8.49, +$0.52, +6.52%) said traffic rose 4.5% in February from a year earlier amid an "exceptionally strong" demand environment, as a key industry performance measure continued to improve. The metric of passenger revenue per available seat mile climbed about 10%.
Wendy's/Arby's Group Inc.'s (WEN, $5.07, +$0.33, +6.96%) fourth-quarter loss narrowed amid modest sales gains at both of its restaurant chains and lower overhead and interest costs. The quick-service company has plans to grow its Wendy's burger brand with new products and international development as it "explores strategic alternatives" for its Arby's sandwich chain, including a possible sale.
The U.K. government Thursday approved News Corp.'s (NWS, $18.55, +$0.40, +2.18%) proposed GBP7.8 billion takeover of British Sky Broadcasting Group PLC (BSYBY, $53.75, +$1.10, +2.09%) (BSY.LN) after the media giant agreed to spin off 24-hour news channel, Sky News, into a separate company to avoid a prolonged investigation by the nation's competition regulator. News Corp. owns Dow Jones & Co., publisher of this newswire.
Other Stocks In Focus:
Big Lots Inc.'s (BIG, $41.09, +$1.20, +3.01%) fiscal fourth-quarter earnings rose a better-than-expected 4.5% as the closeout retailer reported sales growth and gave a mostly upbeat view for the current quarter and fiscal year.
Clearwater Paper Corp.'s (CLW, $81.11, +$3.34, +4.29%) fourth-quarter earnings beat the Street's forecast as the producer of tissue and paperboard products' net sales increased 3.3% year-over-year.
Piper Jaffray raised its stock-investment rating on Cognex Corp. (CGNX, $29.10, +$2.29, +8.54%) to overweight from neutral, noting that its shares have pulled back 24% since it reported earnings in mid-February. The firm said it sees earnings growing more rapidly than revenue due to more opportunities for margin expansion.
Stifel Nicolaus raised its view on three health insurers based on a mix of improving fundamentals and 2011 guidance that looks beatable. It upgraded its stock investment ratings on Coventry Health Care (CVH, $32.46, +$1.89, +6.18%), UnitedHealth Group Inc. (UNH, $44.69, +$1.26, +2.89%) and WellPoint Inc. (WLP, $68.98, +$2.17, +3.25%) to buy from hold. Stifel says insurers set a low bar for earnings estimates amid worries about claims-cost regulations, which now appear manageable. "We believe that 2011 is shaping up as a 'beat-and-raise' year across the industry."
The owner of the Applebee's and IHOP restaurant chains DineEquity Inc.'s (DIN, $56.71, +$1.30, +2.35%) fourth-quarter loss widened sharply as revenue fell more than expected and a $111.6-million charge on the extinguishment of debt and preferred stock weighed on the bottom line.
Intel-GE Care Innovations LLC, the newly-formed joint venture from General Electric Co. (GE, $20.83, +$0.51, +2.51%) and Intel Corp. (INTC, $21.82, +$0.33, +1.54%), received U.S. Food and Drug Administration market clearance for its virtual care coordination platform.
Gerber Scientific Inc.'s (GRB, $9.09, +$1.26, +16.09%) fiscal third-quarter's results slightly beat analysts' expectations as its profit increased on higher volume and a higher mix of apparel and industrial sales. The company lifted its 2011 fiscal year forecast, citing its strong quarterly performance and more stable outlook.
Global Defense Technology & Systems Inc. (GTEC, $24.15, +$8.07, +50.19%) agreed to be acquired by private-equity firm Ares Management LLC in a deal valued at $223.1 million, the latest in a series of companies being taken private in recent months. Shareholders of Global Defense, which went public in November 2009, will receive $24.25 a share, a 51% premium over Wednesday's close.
Goldman Sachs added Hologic Inc. (HOLX, $21.04, +$1.06, +5.31%) to its Americas Conviction list, noting that the market underappreciates Hologic's new product cycle in tomosynthesis, which represents a major advance in breast-cancer detection.
KeyCorp (KEY, $9.32, +$0.28, +3.10%) shares are up on some murky takeover speculation. To be sure, the bank is often discussed as a possible takeover it's still holding TARP money and KBW listed it as a potential seller just last month. But many analysts stopped expecting a sale in November when long-term Chief Executive Henry Meyer said he plans to step down May 1. That group of analysts doubt the bank's CEO would leave during negotiations. More so, they doubt President and Chief Operating Officer Beth Mooney would take the reins only to sell.
KongZhong Corp.'s (KONG, $8.08, +$1.01, +14.20%) fourth-quarter earnings more than doubled, beating analysts' consensus estimate, as the Chinese game company predicted revenue would return to sequential growth.
Kroger Co.'s (KR, $23.03, +$0.51, +2.26%) fiscal fourth-quarter profit rose 9.2% as identical supermarket sales climbed and fuel boosted the top line. The core results beat Wall Street's views and the company's board authorized it to buy back $1 billion in shares.
LHC Group's (LHCG, $28.04, -$2.01, -6.69%) fourth-quarter earnings missed consensus estimates and its projected fiscal year 2011 revenue also fell short of expectations. Jefferies cut its stock-investment rating on LHC to hold from buy following the results, noting that it expects LHC to lag its nursing home peers given the deceleration in its growth outlook.
MakeMyTrip Ltd. (MMYT, $26.54, -$0.73, -2.68%) said it and its selling shareholders plan to offer 6 million shares, with the company using some of its proceeds to expand the India-based online travel agency's operations by acquiring or investing in various businesses or assets. The offering would increase the number of shares outstanding.
Midas Inc.'s (MDS, $8.20, +$0.76, +10.21%) shares were up 10% before being halted ahead of the announcement of an arbitration decision. The company's chief executive revealed at end of conference call to discuss the company's fourth-quarter results that the auto-shop chain just received the ruling in a spat with its master licensee in Europe. A statement is due later today with specifics of the ruling.
Motorola Mobility Holdings Inc.'s (MMI, $27.05, -$1.33, -4.69%) time in the spotlight with its Xoom tablet faded pretty quickly. While MMI was seen as the first true competitor to the iPad, Apple Inc. (AAPL, $358.51, +$6.39, +1.82%) one-upped it with its iPad 2, which will come out sooner than expected. Cowen downgraded its stock-investment rating on MMI to neutral from outperform, saying the window of opportunity to establish the Xoom is narrowing more rapidly than expected.
Biopharmaceutical and diagnostics company Opko Health Inc. (OPK, $4.27, -$0.33, -7.17%) said it plans to offer at least $100 million in common stock, saying it plans to use proceeds for general corporate purposes, which could include research and development expenses, clinical trials and acquisitions.
Perry Ellis International Inc. (PERY, $27.65, -$1.17, -4.06%) said it boosted the size of a planned debt offering and its sale of at least 2 million shares priced at $28 a share, a 2.8% discount to its Wednesday close.
Phillips-Van Heusen Corp. (PVH, $61.31, +$2.13, +3.60%) on Wednesday said it amended and restated a senior secured credit facility it entered into in May in connection with the company's $3 billion acquisition of Tommy Hilfiger.
Standard & Poor's Ratings Services upgraded data-storage company Quantum Corp. (QTM, $2.54, +$0.09, +3.67%) by a notch, citing improved performance of late despite declines in its core tape business.
Sigma Designs Inc. (SIGM, $12.04, -$1.66, -12.12%) swung to a fourth-quarter profit as the company's sales and margins improved and it booked fewer charges than a year earlier. But adjusted profit declined and Chairman and Chief Executive Thinh Tran noted that the company saw sequential revenue declines because of lower revenue in three of its market segments.
Standard Motor Products Inc.'s (SMP, $12.32, +$0.62, +5.30%) fourth-quarter results easily topped analysts' estimates. The automotive replacement parts manufacturer and distributor said its strong results were aided by an aging car population and the closing of car dealerships.
Taser International Inc. (TASR, $4.04, +$0.15, +3.86%) said its board of directors has approved a stock buy-back program that authorizes the company, which develops, assembles and markets nonlethal protection systems, to purchase up to $12.5 million of the company's common stock.
Business-data storage company Teradata Corp. (TDC, $49.76, +$2.19, +4.60%) said it has agreed to acquire the 89% of Aster Data it doesn't already own for $263 million, a move it said will increase its customers' ability to analyze large volumes of diverse data.
United Natural Foods Inc.'s (UNFI, $45.39, +$3.70, +8.88%) fiscal second-quarter earnings rose 20% as the wholesale distributor reported revenue that beat analysts' expectations. For the year, the company raised the low end of its earnings guidance and raised its net sales view based on solid performance during the first half of its fiscal year.
Valero Energy Corp. (VLO, $28.86, +$1.96, +7.29%) said it expects its first-quarter earnings to fall within the range of 15 cents to 30 cents a share, including a loss from closing out hedges that totaled about 10% of its annual production. Credit Suisse said in a note that closing the hedges removes a negative for the company, calling them a "near-term overhang."
Oil refiner and retailer Western Refining Inc. (WNR, $16.91, +$1.02, +6.42%) posted a surprise fourth-quarter loss despite improving margins and sharply lower write-downs as low volumes led to slower-than-expected sales growth. Though the company posted a loss, Chief Executive Jeff Stevens said he saw "an extraordinary refining margin environment during a time of year when we traditionally experience seasonally weaker margins."
Zagg Inc. (ZAGG, $8.18, +$1.11, +15.70%) shares rebounded Thursday after the company said some of its main products will work alongside a new cover that Apple Inc. (AAPL, $358.54, +$6.42, +1.82%) announced Wednesday for the iPad 2
Tuesday, March 1, 2011
U.S. Stocks Decline Amid Concern About Rising Crude-Oil Prices
U.S. stocks declined, sending the Standard & Poor’s 500 Index down for the first time in three days, amid concern rising energy prices will threaten the economic recovery.
Titanium Metals Corp. and AK Steel Holding Corp. fell at least 2.8 percent as materials companies retreated. Crude rose above $98 a barrel. Fifth Third Bancorp dropped 6 percent after receiving a subpoena from the Securities and Exchange Commission. Boston Scientific Corp. climbed 5.6 percent after RBC Capital Markets raised its stock rating for the second- biggest maker of heart devices.
The S&P 500 fell 0.5 percent to 1,320.29 at 10:36 a.m. in New York. The benchmark gauge climbed 1.6 percent over the previous two days. The Dow Jones Industrial Average dropped 44.50 points, or 0.4 percent, to 12,181.84 today.
“There’s geopolitical concern even as we don’t see an oil supply disruption from the situation in the Middle East,” said Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group, which oversees $9.5 billion. “Anyone who thinks that a year from now we’re going to look at the Middle East and see nothing but candy and roses, that’s not going to happen. Manufacturing, the overall U.S. economy is doing well. Still, that geopolitical situation will be an overhang.”
February Gain
The S&P 500 rose 3.2 percent in February, extending this year’s gain to 5.5 percent, amid government measures to stimulate the economy and higher-than-estimated corporate earnings. Per-share profit topped estimates at 71 percent of the 463 companies in the S&P 500 that have reported results since Jan. 10, according to data compiled by Bloomberg.
Oil surged 1.7 percent to $98.64 a barrel as unrest threatened to spread from Libya to Iran, OPEC’s second-largest producer. Concern that higher energy costs will hurt consumer spending and corporate profits overshadowed a report showing that American manufacturing expanded in February at the fastest pace since 2004.
Materials companies declined the most of 10 industries in the S&P 500. Titanium Metals retreated 4.3 percent to $18.18, while AK Steel fell 2.8 percent to $15.54.
Fifth Third Bancorp dropped 6 percent to $13.73. Ohio’s largest lender said it received a subpoena from the SEC requesting information regarding accounting on certain commercial loans.
Factories
The Institute for Supply Management’s factory index increased to 61.4 in February from 60.8 a month earlier, the Tempe, Arizona-based group said today. Readings greater than 50 signal growth, and economists projected a gain to 61, according to the median forecast in a Bloomberg News survey. Estimates of the 77 economists ranged from 58.7 to 63.3.
Stocks are likely to gain in the first five trading days of the month, according to a report from Cleve Rueckert, analyst at Birinyi Associates Inc. Since July 2010, the S&P 500 has gained on average 2.9 percent during the first five days of each month, the Birinyi data show. The index has rallied 83 percent of the time since April 2009 during that same five-day period, the report said.
Federal Reserve Chairman Ben S. Bernanke, testifying before Congress today, reiterated that policy makers are concerned about the pace of recovery and the time it’s taking to reduce unemployment even as manufacturing prospers. Tomorrow, he will testify before the House Financial Services Committee.
Commodities Beat Stocks
Metals, crops and fuel beat stocks, bonds and the dollar for a third straight month, the longest stretch since June 2008, as inflation lifted cotton and cocoa and investors speculated violence in the Middle East and northern Africa will restrain energy supplies.
The S&P GSCI Total Return Index of 24 commodities gained 3.8 percent in February and rose for a sixth consecutive month, the longest streak since 2004, data compiled by Bloomberg show. The MSCI All-Country World Index of equities in 45 nations returned 3 percent including dividends, while corporate and government bonds rose 0.13 percent, according to Bank of America Merrill Lynch’s Global Broad Market Index through Feb. 25. The U.S. Dollar Index, a gauge of the currency against six counterparts such as the euro and yen, fell 1.1 percent.
“These commodity price increases are staggering,” said Kevin Rendino, a money manager at New York-based BlackRock Inc., which oversees $3.45 trillion. “Each commodity is different, but there is a supply issue for oil. There has been real economic demand for these commodities since the economy began recovering.”
AutoZone Inc. gained 3.7 percent to $267.39. The auto-parts retails said second-quarter earnings excluding some items of $3.34 a share beat the average analyst estimate in a Bloomberg survey of $3.06.
Boston Scientific climbed 5.6 percent to $7.56. RBC Capital Markets raised its stock recommendation to “outperform” from “sector perform.” The 12-month share-price estimate is $8.
U.S. stocks declined, sending the Standard & Poor’s 500 Index down for the first time in three days, amid concern rising energy prices will threaten the economic recovery.
Titanium Metals Corp. and AK Steel Holding Corp. fell at least 2.8 percent as materials companies retreated. Crude rose above $98 a barrel. Fifth Third Bancorp dropped 6 percent after receiving a subpoena from the Securities and Exchange Commission. Boston Scientific Corp. climbed 5.6 percent after RBC Capital Markets raised its stock rating for the second- biggest maker of heart devices.
The S&P 500 fell 0.5 percent to 1,320.29 at 10:36 a.m. in New York. The benchmark gauge climbed 1.6 percent over the previous two days. The Dow Jones Industrial Average dropped 44.50 points, or 0.4 percent, to 12,181.84 today.
“There’s geopolitical concern even as we don’t see an oil supply disruption from the situation in the Middle East,” said Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group, which oversees $9.5 billion. “Anyone who thinks that a year from now we’re going to look at the Middle East and see nothing but candy and roses, that’s not going to happen. Manufacturing, the overall U.S. economy is doing well. Still, that geopolitical situation will be an overhang.”
February Gain
The S&P 500 rose 3.2 percent in February, extending this year’s gain to 5.5 percent, amid government measures to stimulate the economy and higher-than-estimated corporate earnings. Per-share profit topped estimates at 71 percent of the 463 companies in the S&P 500 that have reported results since Jan. 10, according to data compiled by Bloomberg.
Oil surged 1.7 percent to $98.64 a barrel as unrest threatened to spread from Libya to Iran, OPEC’s second-largest producer. Concern that higher energy costs will hurt consumer spending and corporate profits overshadowed a report showing that American manufacturing expanded in February at the fastest pace since 2004.
Materials companies declined the most of 10 industries in the S&P 500. Titanium Metals retreated 4.3 percent to $18.18, while AK Steel fell 2.8 percent to $15.54.
Fifth Third Bancorp dropped 6 percent to $13.73. Ohio’s largest lender said it received a subpoena from the SEC requesting information regarding accounting on certain commercial loans.
Factories
The Institute for Supply Management’s factory index increased to 61.4 in February from 60.8 a month earlier, the Tempe, Arizona-based group said today. Readings greater than 50 signal growth, and economists projected a gain to 61, according to the median forecast in a Bloomberg News survey. Estimates of the 77 economists ranged from 58.7 to 63.3.
Stocks are likely to gain in the first five trading days of the month, according to a report from Cleve Rueckert, analyst at Birinyi Associates Inc. Since July 2010, the S&P 500 has gained on average 2.9 percent during the first five days of each month, the Birinyi data show. The index has rallied 83 percent of the time since April 2009 during that same five-day period, the report said.
Federal Reserve Chairman Ben S. Bernanke, testifying before Congress today, reiterated that policy makers are concerned about the pace of recovery and the time it’s taking to reduce unemployment even as manufacturing prospers. Tomorrow, he will testify before the House Financial Services Committee.
Commodities Beat Stocks
Metals, crops and fuel beat stocks, bonds and the dollar for a third straight month, the longest stretch since June 2008, as inflation lifted cotton and cocoa and investors speculated violence in the Middle East and northern Africa will restrain energy supplies.
The S&P GSCI Total Return Index of 24 commodities gained 3.8 percent in February and rose for a sixth consecutive month, the longest streak since 2004, data compiled by Bloomberg show. The MSCI All-Country World Index of equities in 45 nations returned 3 percent including dividends, while corporate and government bonds rose 0.13 percent, according to Bank of America Merrill Lynch’s Global Broad Market Index through Feb. 25. The U.S. Dollar Index, a gauge of the currency against six counterparts such as the euro and yen, fell 1.1 percent.
“These commodity price increases are staggering,” said Kevin Rendino, a money manager at New York-based BlackRock Inc., which oversees $3.45 trillion. “Each commodity is different, but there is a supply issue for oil. There has been real economic demand for these commodities since the economy began recovering.”
AutoZone Inc. gained 3.7 percent to $267.39. The auto-parts retails said second-quarter earnings excluding some items of $3.34 a share beat the average analyst estimate in a Bloomberg survey of $3.06.
Boston Scientific climbed 5.6 percent to $7.56. RBC Capital Markets raised its stock recommendation to “outperform” from “sector perform.” The 12-month share-price estimate is $8.
WORLD FOREX: Euro Holds Gains Vs Dollar
The euro held onto recent gains against the dollar in Asian trading Tuesday on expectations that euro-zone economic data due later in the global day could reinforce the growing view that the European Central Bank will raise its key interest rate sooner than its U.S. counterpart.
Meanwhile, the greenback got a lift against the yen as buoyant equity markets and a retreat in oil prices prodded investors and traders to dump the safe-haven yen against higher yielding currencies like the euro, sterling and the Australian dollar. Japanese importers also stepped in to pick up the dollar against the yen during the morning, dealers said.
Traders are keeping a close eye on euro-zone inflation data due at 1000 GMT for clues on likely monetary policy direction ahead of the ECB's policy-setting meeting on Thursday. The consumer price index for February is expected to rise 2.4% from a year earlier, according to the median forecast of economists surveyed by Dow Jones Newswires.
Another key event is testimony by U.S. Federal Reserve Chairman Ben Bernanke before the U.S. Senate Banking Committee at 1500 GMT.
If the euro-zone inflation data come in stronger-than-expected, "that would mean it will open the way for the ECB to prepare for a rate hike as early as June," Kazuo Kitazawa, FX sales director at Credit Suisse Securities in Japan. On the other hand, "Mr. Bernanke will probably take a positive stance to maintain the present quantitative credit easing, " Kitazawa said, adding "this won't work in favor of the dollar".
For the rest of the global trading day, Kitazawa expects the euro to stay within a $1.3750-$1.3850 range, with no sharper rises expected unless the inflation data deviate from the forecast. At 0450 GMT, the euro was at $1.3806 compared with $1.3805 late Monday in New York, according to trading platform EBS via CQG. The dollar was at Y82.16 from Y81.79, while the euro was at Y113.43 from Y112.90.
Bank of Japan Gov. Masaaki Shirakawa said the strong yen is "not working as an additional risk factor" for the economy, with business sentiment remaining strong and the currency's strength curbing import costs. In an interview with The Wall Street Journal and Dow Jones Newswires, Shirakawa said he won't rule out further easing if needed, saying the BOJ is assessing the effectiveness of its bank lending facility and may look to expand it.
Masamichi Adachi, economist at J.P. Morgan Securities Japan said, "The BOJ appears a little bit less concerned on the pressures to the downside" as data show the export-driven recovery is trickling through to improvement in the jobs market.
"They're deliberately balancing concerns over oil price rises and other negatives with pressure from the outside to ease further. They can stay on hold and wait to see how conditions develop," Adachi added.
The ICE Dollar Index, which tracks the U.S. dollar against a trade-weighted basket of currencies, was at 76.913 from about 76.898.
Meanwhile, the Australian dollar weakened against the dollar after the Reserve Bank of Australia signaled it is unlikely to hike interest rates in the coming months. RBA Governor Glenn Stevens said in a statement after a regular policy-setting meeting, at which the central bank left its cash rate target at 4.75%, that inflation is currently "consistent with the medium-term objective of monetary policy."
The Australian dollar dropped to $1.0160 at 0450 GMT following the statement, down from an earlier high of $1.0199.
Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow, said that the selling came as "the RBA policy statement fell a bit short of expectations for a more hawkish tone."
The euro held onto recent gains against the dollar in Asian trading Tuesday on expectations that euro-zone economic data due later in the global day could reinforce the growing view that the European Central Bank will raise its key interest rate sooner than its U.S. counterpart.
Meanwhile, the greenback got a lift against the yen as buoyant equity markets and a retreat in oil prices prodded investors and traders to dump the safe-haven yen against higher yielding currencies like the euro, sterling and the Australian dollar. Japanese importers also stepped in to pick up the dollar against the yen during the morning, dealers said.
Traders are keeping a close eye on euro-zone inflation data due at 1000 GMT for clues on likely monetary policy direction ahead of the ECB's policy-setting meeting on Thursday. The consumer price index for February is expected to rise 2.4% from a year earlier, according to the median forecast of economists surveyed by Dow Jones Newswires.
Another key event is testimony by U.S. Federal Reserve Chairman Ben Bernanke before the U.S. Senate Banking Committee at 1500 GMT.
If the euro-zone inflation data come in stronger-than-expected, "that would mean it will open the way for the ECB to prepare for a rate hike as early as June," Kazuo Kitazawa, FX sales director at Credit Suisse Securities in Japan. On the other hand, "Mr. Bernanke will probably take a positive stance to maintain the present quantitative credit easing, " Kitazawa said, adding "this won't work in favor of the dollar".
For the rest of the global trading day, Kitazawa expects the euro to stay within a $1.3750-$1.3850 range, with no sharper rises expected unless the inflation data deviate from the forecast. At 0450 GMT, the euro was at $1.3806 compared with $1.3805 late Monday in New York, according to trading platform EBS via CQG. The dollar was at Y82.16 from Y81.79, while the euro was at Y113.43 from Y112.90.
Bank of Japan Gov. Masaaki Shirakawa said the strong yen is "not working as an additional risk factor" for the economy, with business sentiment remaining strong and the currency's strength curbing import costs. In an interview with The Wall Street Journal and Dow Jones Newswires, Shirakawa said he won't rule out further easing if needed, saying the BOJ is assessing the effectiveness of its bank lending facility and may look to expand it.
Masamichi Adachi, economist at J.P. Morgan Securities Japan said, "The BOJ appears a little bit less concerned on the pressures to the downside" as data show the export-driven recovery is trickling through to improvement in the jobs market.
"They're deliberately balancing concerns over oil price rises and other negatives with pressure from the outside to ease further. They can stay on hold and wait to see how conditions develop," Adachi added.
The ICE Dollar Index, which tracks the U.S. dollar against a trade-weighted basket of currencies, was at 76.913 from about 76.898.
Meanwhile, the Australian dollar weakened against the dollar after the Reserve Bank of Australia signaled it is unlikely to hike interest rates in the coming months. RBA Governor Glenn Stevens said in a statement after a regular policy-setting meeting, at which the central bank left its cash rate target at 4.75%, that inflation is currently "consistent with the medium-term objective of monetary policy."
The Australian dollar dropped to $1.0160 at 0450 GMT following the statement, down from an earlier high of $1.0199.
Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow, said that the selling came as "the RBA policy statement fell a bit short of expectations for a more hawkish tone."
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