VIENNA, Austria (AP) — Oil prices slipped further Wednesday, dipping below $54 on fears of global economic weakness that have sent crude down more than 60 percent in four months.
But analysts suggested that prices might be bottoming out as they moved closer to the psychologically significant $50 mark.
Light, sweet crude for December delivery was down 77 cents at $53.62 a barrel in electronic trading on the New York Mercantile Exchange by the afternoon in Europe. The contract Tuesday fell 56 cents to settle at $54.39, the lowest since January 2007.
"Market sentiment is still bearish, but not as bearish as a week ago," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. "Volatility has come down and the market is consolidating a bit."
Stock markets have served for the past few months as a barometer of investor perceptions about the health of the global economy. The Dow Jones industrial average rose 1.8 percent Tuesday as Hewlett-Packard Co. said fourth quarter and 2009 results will exceed analyst expectations.
Most Asian stocks, however, fell Wednesday. Japan's benchmark Nikkei index fell 0.7 percent, Hong Kong's Hang Seng index dropped 0.5 percent and the Korea Composite Stock Price Index slid 1.9 percent. European markets also opened lower.
Oil investors have already priced in a recession in developed countries and only evidence of an especially severe or prolonged slowdown may push prices down further, Chu said.
Prices have fallen 63 percent since reaching a record $147.27 a barrel in mid-July.
"I don't see oil falling below $50," Chu said. "It should be above $60 in a couple weeks."
Investors will be watching for signs of slowing U.S. demand in the weekly oil inventories report to be released Wednesday by the U.S. Energy Department's Energy Information Administration.
The report is expected to show that oil stocks rose 1.2 million barrels last week, according to the average of estimates in a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The Platts survey also projects that gasoline inventories rose 700,000 million barrels and distillates increased 900,000 barrels last week.
Trader and analyst Stephen Schork noted that past report patterns reflected supply outstripping demand.
"Over the last six reports stocks have bounced back by 7 1/2 percent," he wrote in his Schork Report. "Meanwhile, year-on-year demand for total oil products fell for the 41st week (out of 45) this year, i.e. 10 out of every 11 weeks."
The Organization of Petroleum Exporting Countries is holding an informal meeting later this month ahead of an official meeting next month. OPEC President Chakib Khelil has signaled the group may announce production cuts at the December meeting, but some members, such as Iran, have called for earlier cuts.
"Expect crude to nudge near $50 with moves below sure to inspire strong statements and calls for an early meeting by the hawkish OPEC members," brokerage Kim Eng said in a report.
In other Nymex trading, gasoline futures were slipped 1.51 cents to $1.1217 a gallon. Heating oil was unchanged at $1.7579, a gallon while natural gas for December delivery rose 2.8 cents to $6.544 per 1,000 cubic feet.
In London, January Brent crude fell 56 cents to $51.28 on the ICE Futures exchange.
Source: http://www.google.com/hostednews/ap/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD94I20M00
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Wednesday, November 19, 2008
Monday, November 17, 2008
Suzuki to buy back GM's 3 percent stake for $230 million
TOKYO, Nov 17, 2008 (Kyodo News International - McClatchy-Tribune Information Services via COMTEX) -- SZKMF | Quote | Chart | News | PowerRating -- Suzuki Motor Corp. said Monday it has agreed to buy back General Motors Corp.'s 3.02 percent stake in the Japanese automaker for 22.37 billion yen ($230 million) as the struggling U.S. auto giant is seeking to raise cash.
With the sale, GM, which used to own shares in Isuzu Motors Ltd.
and Fuji Heavy Industries Ltd. in addition to Suzuki, will break all of its capital ties with Japanese automakers.
GM will sell the whole stake, equivalent to 16.41 million shares, on the stock market Tuesday and the Shizuoka Prefecture-based automaker will buy back all of the shares the same day, Suzuki said.
Suzuki's purchase, to be made through the Tokyo Stock Exchange's ToSTNeT-2 system for purchasing treasury stock, will be implemented at 1,363 yen per share, the closing quote for Suzuki stock on the TSE's First Section on Monday, it said.
Suzuki Chairman and Chief Executive Officer Osamu Suzuki said in a press release that the automaker decided to agree to GM's request because "this particular step to sell the shares it owns as a step toward strengthening its balance sheet is very understandable." Suzuki said he agreed in a telephone conversation with GM Chairman Rick Wagoner that the two automakers will continue a range of joint projects they have been implementing.
Suzuki said he and Wagoner confirmed "that all individual initiatives will be pursued as they are today." On Nov. 7, GM said in a statement that it had suffered a net loss of $2,542 million (250 billion yen) in the July-September quarter, attributing the poor performance to the impact of the "unprecedented economic and credit market turmoil." A Suzuki official said that "all individual initiatives" that the automaker's president referred to include joint development of hybrid vehicles and fuel cells as well as development of power trains.
Suzuki and GM have been cooperating under tie-up arrangements entered in 1981.
The Japanese automaker said the planned sale by GM of the Suzuki shares has been approved by the carmakers' respective boards.
Major U.S. automakers including GM and Ford Motor Co. have reported huge net losses, prompting President-elect Barack Obama to pledge to do all he can to turn around the ailing U.S. auto industry.
Obama, in his first media appearance in Chicago since the presidential election, said the auto industry's hardship "goes far beyond individual auto companies to the countless suppliers, small businesses and communities throughout our nation who depend on a vibrant American auto industry." Wagoner said in the Nov. 7 statement, "Consumer spending, which represents close to 70 percent of the U.S. economy, fell dramatically, and the abrupt closure of credit markets created a downward spiral in vehicle sales." U.S. congressional efforts to enact legislation to reinvigorate the automakers will shift to top gear in the coming months, industry watchers said.
To see more of Kyodo News International, go to http://www.kyodonews.com Copyright (c) 2008, Kyodo News International, Tokyo Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
Source: http://www.tradingmarkets.com/.site/news/Stock%20News/2029693/
With the sale, GM, which used to own shares in Isuzu Motors Ltd.
and Fuji Heavy Industries Ltd. in addition to Suzuki, will break all of its capital ties with Japanese automakers.
GM will sell the whole stake, equivalent to 16.41 million shares, on the stock market Tuesday and the Shizuoka Prefecture-based automaker will buy back all of the shares the same day, Suzuki said.
Suzuki's purchase, to be made through the Tokyo Stock Exchange's ToSTNeT-2 system for purchasing treasury stock, will be implemented at 1,363 yen per share, the closing quote for Suzuki stock on the TSE's First Section on Monday, it said.
Suzuki Chairman and Chief Executive Officer Osamu Suzuki said in a press release that the automaker decided to agree to GM's request because "this particular step to sell the shares it owns as a step toward strengthening its balance sheet is very understandable." Suzuki said he agreed in a telephone conversation with GM Chairman Rick Wagoner that the two automakers will continue a range of joint projects they have been implementing.
Suzuki said he and Wagoner confirmed "that all individual initiatives will be pursued as they are today." On Nov. 7, GM said in a statement that it had suffered a net loss of $2,542 million (250 billion yen) in the July-September quarter, attributing the poor performance to the impact of the "unprecedented economic and credit market turmoil." A Suzuki official said that "all individual initiatives" that the automaker's president referred to include joint development of hybrid vehicles and fuel cells as well as development of power trains.
Suzuki and GM have been cooperating under tie-up arrangements entered in 1981.
The Japanese automaker said the planned sale by GM of the Suzuki shares has been approved by the carmakers' respective boards.
Major U.S. automakers including GM and Ford Motor Co. have reported huge net losses, prompting President-elect Barack Obama to pledge to do all he can to turn around the ailing U.S. auto industry.
Obama, in his first media appearance in Chicago since the presidential election, said the auto industry's hardship "goes far beyond individual auto companies to the countless suppliers, small businesses and communities throughout our nation who depend on a vibrant American auto industry." Wagoner said in the Nov. 7 statement, "Consumer spending, which represents close to 70 percent of the U.S. economy, fell dramatically, and the abrupt closure of credit markets created a downward spiral in vehicle sales." U.S. congressional efforts to enact legislation to reinvigorate the automakers will shift to top gear in the coming months, industry watchers said.
To see more of Kyodo News International, go to http://www.kyodonews.com Copyright (c) 2008, Kyodo News International, Tokyo Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
Source: http://www.tradingmarkets.com/.site/news/Stock%20News/2029693/
US Market Update
US indices opened weaker this morning, weighed down by confirmed large job cuts at Citigroup, a gloomy outlook from the Philly Fed and soft Empire manufacturing data. Traders are fretting over the Philly Fed survey is particular, as it indicates a Q4 GDP figure of -2.9%, well below its prior view of +0.7%. The survey noted that the US recession began last April and was expected to last about 14 months. The dark outlook has kept the pressure on Treasury yields. The 10-year note future has rallied half a point sending the cash yield back below 3.7%. Front-month NYMEX crude traded up towards $59 after reports that a Saudi oil tanker was hijacked off Somalia, but has since drifted back into negative territory. Adding to the uncertainty this morning, Senate Democrats plan to introduce legislation today to direct part of the TARP to help prop up the Big Three automakers.
- Citigroup fulfilled expectations for big job cuts at its company-wide town hall meeting this morning, while rumors are circulating that the board is discussing a plan to break the group into several companies. Reports on Friday and over the weekend anticipating cuts of around 10,000 jobs, while just ahead of the meeting CNBC's Charlie Gasparino bid this figure up to around 50,000 jobs, or 14% of the banking giant's global workforce. In the event, CEO Pandit said that the bank's near-term headcount target is about 300K, down from 352K employees on Sept 30. Pandit reiterated the usual boilerplate, noting that "revenues are strong, the underlying business remains solid" and that Citi has a "very strong capital position." Rival Goldman Sachs's seven top executives, including the CEO, pledged to give up their bonuses for 2008. In the meantime, a Sanford Bernstein analyst lowers his FY08 EPS target for Goldman to $8.92 from $11.65. CIT launched its exchange offers for notes and equity units in connection with its application to become a bank holding company. Citgroup, Morgan Stanley, Goldman Sachs and Bank of America are all trading down 5-6%.
- Retail powerhouses Lowe's and Target released their third-quarter results before the open. LOW came in ahead of earnings and revenue estimates, and guided earnings for the full year in line with consensus. Lowe's CEO expects pressure on the home improvement retailing sector to continue into 2009, although he believes that housing turnover seems to be bottoming. TGT met consensus EPS targets, missed revenue estimates by a hair and suspended its stock buyback program. The company's credit card profitability fell 83% to $35M v $202M y/y, due to a decline in overall portfolio performance, reduced investment in the portfolio, and a decrease in interest rates. LOW+9% is surging while TGT is well off its best levels in negative territory. In other equity news, price targets for smartphone rivals AAPL and RIMM were both cut at Barclays, while Merrill cut its FY09 and FY10 earnings estimates for AAPL on declining Mac and iPod sales growth. Las Vegas Sands said that it believes it has resolved the “substantial doubt about its ability to run as going concern” via its recent $2.1B capital raise.
- It appears that European governments are looking to aid the struggling auto manufacturing industry, including GM, after the White House stressed again that it opposes drawing funds from TARP for US automakers. A German government spokesperson said that Germany would do “everything in its power” to aid GM's European subsidiary Opel. The German state of Hesse raised its OPEL guarantee to €500M. Automakers with operations in the UK said they would ask the government for assistance. Back in the USA, the president of the UAW said the auto industry cannot survive at current sales levels and warned that the bankruptcy of one automaker could bring down others. Speaking of bankruptcy, the New York Times reported overnight that it believes foreign automakers would pick up the slack if a US car maker goes into bankruptcy, noting that if one or more of Detroit's Big Three declared Chapter 11 it would put a huge initial dent in American manufacturing but in time foreign car companies would pick up the slack by stepping up production at plants in the US. All this comes after Nikkei reported that it expects Japanese domestic car production to decline for the first time since 2003 and Toyota told a local Japanese paper that it is set to announce 2009 production cuts of around 7%.
- The greenback was weaker against the European pairs on a combination of recent- profit taking and higher crude prices. GBP/USD rose over 350+ pips as dealers noted good interest from far eastern names from the start of the European session. GBP/JPY is firmer by 400+ pips above 145.00. EUR/GBP surrendered its all-time highs of 0.8660 from last week to move back toward the 0.84 handle. The profit-taking theme was reinforced after ECB's hawk Weber noted that Euro Zone CPI provided leeway for monetary policy easing and added that he did not rule out further interest rate cuts. Other ECB members reiterated that view today, but noted the final decision would not be made until after the receipt of the new ECB staff projection figures. Commodity related currencies firmed up on higher energy prices.
Source: http://forexdistrict.com/node/4570
- Citigroup fulfilled expectations for big job cuts at its company-wide town hall meeting this morning, while rumors are circulating that the board is discussing a plan to break the group into several companies. Reports on Friday and over the weekend anticipating cuts of around 10,000 jobs, while just ahead of the meeting CNBC's Charlie Gasparino bid this figure up to around 50,000 jobs, or 14% of the banking giant's global workforce. In the event, CEO Pandit said that the bank's near-term headcount target is about 300K, down from 352K employees on Sept 30. Pandit reiterated the usual boilerplate, noting that "revenues are strong, the underlying business remains solid" and that Citi has a "very strong capital position." Rival Goldman Sachs's seven top executives, including the CEO, pledged to give up their bonuses for 2008. In the meantime, a Sanford Bernstein analyst lowers his FY08 EPS target for Goldman to $8.92 from $11.65. CIT launched its exchange offers for notes and equity units in connection with its application to become a bank holding company. Citgroup, Morgan Stanley, Goldman Sachs and Bank of America are all trading down 5-6%.
- Retail powerhouses Lowe's and Target released their third-quarter results before the open. LOW came in ahead of earnings and revenue estimates, and guided earnings for the full year in line with consensus. Lowe's CEO expects pressure on the home improvement retailing sector to continue into 2009, although he believes that housing turnover seems to be bottoming. TGT met consensus EPS targets, missed revenue estimates by a hair and suspended its stock buyback program. The company's credit card profitability fell 83% to $35M v $202M y/y, due to a decline in overall portfolio performance, reduced investment in the portfolio, and a decrease in interest rates. LOW+9% is surging while TGT is well off its best levels in negative territory. In other equity news, price targets for smartphone rivals AAPL and RIMM were both cut at Barclays, while Merrill cut its FY09 and FY10 earnings estimates for AAPL on declining Mac and iPod sales growth. Las Vegas Sands said that it believes it has resolved the “substantial doubt about its ability to run as going concern” via its recent $2.1B capital raise.
- It appears that European governments are looking to aid the struggling auto manufacturing industry, including GM, after the White House stressed again that it opposes drawing funds from TARP for US automakers. A German government spokesperson said that Germany would do “everything in its power” to aid GM's European subsidiary Opel. The German state of Hesse raised its OPEL guarantee to €500M. Automakers with operations in the UK said they would ask the government for assistance. Back in the USA, the president of the UAW said the auto industry cannot survive at current sales levels and warned that the bankruptcy of one automaker could bring down others. Speaking of bankruptcy, the New York Times reported overnight that it believes foreign automakers would pick up the slack if a US car maker goes into bankruptcy, noting that if one or more of Detroit's Big Three declared Chapter 11 it would put a huge initial dent in American manufacturing but in time foreign car companies would pick up the slack by stepping up production at plants in the US. All this comes after Nikkei reported that it expects Japanese domestic car production to decline for the first time since 2003 and Toyota told a local Japanese paper that it is set to announce 2009 production cuts of around 7%.
- The greenback was weaker against the European pairs on a combination of recent- profit taking and higher crude prices. GBP/USD rose over 350+ pips as dealers noted good interest from far eastern names from the start of the European session. GBP/JPY is firmer by 400+ pips above 145.00. EUR/GBP surrendered its all-time highs of 0.8660 from last week to move back toward the 0.84 handle. The profit-taking theme was reinforced after ECB's hawk Weber noted that Euro Zone CPI provided leeway for monetary policy easing and added that he did not rule out further interest rate cuts. Other ECB members reiterated that view today, but noted the final decision would not be made until after the receipt of the new ECB staff projection figures. Commodity related currencies firmed up on higher energy prices.
Source: http://forexdistrict.com/node/4570
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