Wall St. looks to Iraq deal
As U.N. Secretary General heads home, bonds and dollar rally higher
February 23, 1998: 8:09 a.m. ET
ÿ NEW YORK (CNNfn) - High-flying U.S. markets hovered in a state of anxious limbo Monday, waiting to see how a tentative U.N. deal with Iraq would play with the Clinton administration and watching debt markets stiffen after a weekend G7 meeting failed to extract hoped-for economic pledges from Japan.
ÿ ÿ ÿ The absence of cheering news from the G7 summit sent the dollar and government bonds higher. The yen slumped to a low of 129 against the dollar overnight, pulling down other Asian currencies with it.
ÿ ÿ ÿ The S&P 500 futures index for March delivery was up 6.60 on the Globex trading system, pointing to an initial market upswing of just over 50 points. Each point on the S&P futures equals roughly 8 points on the Dow Industrial average.
ÿ ÿ ÿ The benchmark 30-year U.S. Treasury bond rose 5-22/32 to yield 5.820, as investors sought sanctuary from gyrating Asian markets and an uncertain outlook for the Japanese economy.
ÿ ÿ ÿ European stock markets proved feisty, as British, German and French indices hit new highs.
ÿ ÿ ÿ Meanwhile, the apparent deal brokered by the U.N. Secretary General Kofi Annan with Saddam Hussein over inspections of sensitive weapons sites remained subject to approval by the U.N. Security Council. U.S. reaction to the tentative deal is believed to be key to winning the council's blessing.
ÿ ÿ ÿ An approval would remove the so-called "war premium" on oil prices that some analysts believed could have ensued from a cut-off in Iraqi oil exports prompted by a U.S.-sponsored military action.
ÿ ÿ ÿ On the home front, several stocks, Oxford Health Plans Inc. chief among them, seemed poised for a choppy market ride. Oxford's chairman, Stephen Wiggins was reported ready Monday to relinquish his post as part of a $700 million equity and debt rescue plan of the ailing managed-care company he built from scratch.
ÿ ÿ ÿ Oxford (OXHP) is also expected to report fourth-quarter losses of $200 million, far outstripping initial estimates of a $120 million loss, according to published reports.
ÿ ÿ ÿ The United Auto Workers Union, meanwhile rejected a contract with Caterpillar Inc., (CAT) the Aurora, Ill.-based company that ranks as the world's largest maker of construction equipment. The company. Which represents about 12,000 workers, has been locked in a protracted with the UAW over issues of wage and pension increases, among others.
ÿ ÿ ÿ Comcast Corp., (CMCSA) the cable operator and cellular phone service provider, is expected to report a 22 cent loss per diluted share in its current fiscal quarter. Microsoft shares, by contrast will open at half price Monday - not to worry, however, since the software giant is entering its first full trade day after a two-for-one stock split following Friday's close.
ÿ ÿ ÿ A Mobile phone trade group is also expected to ask the Federal Communications Commission to enact uniform billing standards across the industry, so that senders of calls, rather then receivers receive the bills.
ÿ ÿ ÿ A host of retailers, including Liz Claiborne Inc. (LIZ) and Nordstrom Inc. (NOBE), are expected to issue earnings reports this week.
ÿ ÿ ÿ Donald Ratajczak, the director of economic forecasting at Georgia State University, said the easing of the Iraqi crisis augurs well for the American economy. The U.S., he noted gets 60 percent of its oil from abroad, and consumes 18 million barrels a day, which means that any drop in oil prices "is like a tax cut."
ÿ ÿ ÿ "It's one of those win-win things for all but the oil producers," he said.
ÿ ÿ ÿ Crude oil futures prices in Asia slumped sharply after news that an agreement had been reach with the Iraqi leader. But concerns still hovered over Japan, which has proved intransigent in the face of Western requests to enact tough fiscal measures to boost its stumbling economy.
ÿ ÿ ÿ Gold prices suffered losses, dipping to $295.20 ounce, down from Friday's fix of $296.70, as silver softened further. ÿ
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