Business News Summary:
NEW YORK: US stock indexes touch new highs - Investors regain confidence: Long-term bond interest rates rose above 6% for the first time this year on Friday while stocks climbed new highs for the third day in a row as inflation fears were rekindled by upbeat economic news.
TREASURY BONDS: The benchmark 30-year Treasury bond's price fell nearly a full point early Friday, boosting its yield, which moves in the opposite direction, as high as 6.02%. The yield was at its highest level in US trade since the Dec 11 close. By 1:15 EDT, the long-bond price was off just 4/32 or, or $1.25 on a $1,000 bond, with a yield of 5.95% vs 5.94% at Thursday's close.
Bond yields initially dropped on news that fourth-quarter GDP was revised down to a 3.9% growth rate from the initial 4.3% estimate. However, the inflation-wary bond market was soon shocked by upbeat economic reports. Industrial purchasing manager in Chicago reported that prices paid for goods were higher than expected in February. Later the University of Michigan reported that its consumer confidence index rose in February. A bond trader who asked not to be named said that they "saw a lot of selling (of US bonds) out of Europe and heard rumors of some selling out of the Far East." A few big fund managers were large sellers, traders said. Investors have bought bonds at a healthy clip over the past few months, pushing yields lower amid expectations that Asian financial turmoil could slow the US economic expansion, Friday's reports disappointing some who had expected signs of a slowdown to turn up in the February data.
DOW JONES: The DJIA was up 72.49 points at 8,563.16, after briefly surpassing the 8,500 mark for the first time on Thursday. The blue chip index closed at record highs for the past two sessions. The Dow Jones found renewed confidence after tensions eased between Iraq and the United States, and ended the week at 8,545.72 - an increase of 131.78 points or 1.57% for the week.
NASDAQ: The Nasdaq also hit an all-time high of 1,783.74, before paring gains to 1,781.29, up 4.18.
S&P 500: The Standard & Poor's index of 500 stocks exceeded Thursday's close of 1,048.66, rising to 1,051.35, before trading at 1,051.31, up 2.64.
On Wall Street, investors were relieved by the relaxation of tensions with Iraq after Baghdad reached an accord with the United States over the inspection of restricted sites. The investment firm Painewebber said stock market should continue its advance over the next 15 years, as baby boomers save for retirement and their children's university education. Capital investment should rise from its current level of 13 trillion dollars to 25 trillion over the next 15 years, analysts said.
BANK STOCKS: Bank stocks gained substantially over the past week, with JP Morgan taking the lead, closing at 119-1/23 against 111-3/8 the previous week. Morgan Bank is preparing a massive restructuring, including layoffs of some1700 employees. Chase Manhattan Bank finished the week at 124-1/16 against 119-15/16, while Citibank closed at 132-1/2 against 127-7/8.
By contrast, computer stocks closed lower this week, with Motorola at 55-3/4 against 50-1/16 last week and Texan Instruments at 57-7/8 against 58-15/16.
DUBAI: Saudi, Tehran voice concern over quota busting, to stabilise prices - UAE urges end to Opec oil violations: Iran and Saudi Arabia on Saturday expressed willingness to work together towards correcting a sharp decline in oil prices but voiced their concern over quota busting by other member states. Saudi King Fahd said last week that protecting the market and restoring its stability was the responsibility of all exporting states inside and outside Opec. Iranian Oil Minister Bijan Zanganeh, who went with former Iranian president Hashemi Akbar Rafsanjani to Saudi Arabia, has held talks with Saudi officials on oil prices.
Crude prices have fallen recently following a decision by the 11-member Organisation of Petroleum Exporting Countries (Opec) last year to raise output by 10 per cent to 27.5 million barrels per day. Officials say Asia's financial crisis, a relatively mild winter in the northern hemisphere and Iraq's return to the world oil market have helped weaken prices further.
The UAE, one of the major producers within the Opec, said Saturday it backed an Indonesian call for Opec emergency talks to firm up tumbling oil prices, but said members exceeding their quotas must first cut production. UAE Oil minister Obaid Ibn Saif Al Nasiri indicated that the UAE was ready to lower output within an overall cut in the official ceiling of 27.5mbpd. But, he said, a commitment to adhere to Opec quotas should supersede any consideration of lowering Opec's current production ceiling.
Opec's lynchpin Saudi Arabia has also called on quota-busters to abide by their shares, a reference to Venezuela, Nigeria and Qatar. Venezuela has been blamed for most of the excess as it is pumping more than 800,000 bpd above its Opec-assigned quota of 2.58 million bpd. The Latin American country has rejected Gulf calls for lowering its production.
Gulf oil analysts said an Opec emergency meeting remained a remote possibility without firm commitments from those overproducers to return to their quotas.
BAGHDAD: Iraq needs spare parts to increase oil capacity: Iraq is currently exporting 1.2mbpd of crude oil and has a production capacity of 2.3mbpd, Oil Minister Amir Muhammad Rasheed told a news conference on Saturday. He said production capacity could be increased to 2.65mbpd in two to three months, and up to 3.5mbpd after one year to go back to their production capacity before the aggression (US-led Gulf War) if the United Nations agreed to supply Iraq with the spare parts its oil sector needed.
He said that Iraq was negotiating with the United Nations for the supply of spare parts and the costs would run to a "few hundred million dollars." He added that Iraq need "spare parts, chemicals, material required for wells' workover (and) for wet oil extraction treatment and demulsifiers."
JAKARTA: Suharto to back `IMF plus" plan - Broad-based economic reforms: The Architect of Indonesia's currency board plan, Steve Hanke, said on Saturday that President Suharto wanted more broad-based economic reforms than the rescue package agreed with the International Monetary Fund.
"The President precisely told me...we are moving ahead to prepare for the implementation of the IMF plus programme because he rejects the current programme as being a failure," Hanke told Reuters in a telephone interview from Zurich. "However if someone presents the President with a better plan than the IMF plus plan he will certainly consider that. So he hasn't closed off all options but at present the IMF plus plan is what we are preparing to do because it is the only plan that could stabilize the rupiah and restart the economy," Hanke said.
Hanke, who was on his return to Baltimore from Indonesia to prepare for the second phase of the "IMF plus" programme, said he expected to return to Jakarta after the presidential election in early March.
KUALA LUMPUR: Brunei vows to help Asia: The Sultan of Brunei, one of the world's richest men, plans to help Asian economies pull through a financial crisis with strategic investments, said Malaysia's prime minister. Mahathir Mohamad met Sultan Hassanal Bolkiah, who was on a one-day visit to Kuala Lumpur for lunch. He told reporters later that the Sultan had not specified any investments for the region but was concerned about the financial problems faced by the countries in Asean.
WASHINGTON: HP gets encryption services nod, teams with IBM: Hewlett-Packard Co said Friday it plans to cooperate with International Business Machines Inc on ways to expand global electronic commerce following US approval of HP's Internet technology that scrambles data for secure transmissions.
HP said the government has granted the company licence to export VerSecure, its technology for managing and providing strong encryption services, which ensure secure, global, Internet-based business transactions and communications. The licence gratned to HP gives users in Britain, Germany, France, Denmark and Australia access to strong cryptography - 128-bit and triple-DES encryption - limited only by local laws and regulations. More countries are expected to implement the VerSecure technology in the coming months, the company said.
IBM and HP intend to collaborate on HP VerSecure and IBM KeyWorks and cryptographic hardware technologies. Both companies are reviewing plans to include elements of VerSecure and KeyWorks in each others' products. In addition, both companies intend to work together to enable customers to use both HP VerSecure and IBM KeyWorks products.
Computer giant IBM will help Intel's biggest rival, Advanced Micro Devices (AMD), manufacture the K6 computer chip, according to a statement out Friday. Actual manufacturing should start in the third quarter of 1998, most likely in Burlington, Vermont, said IBM spokesman Tom Beermann. The K6 chip is the only competitor to Intel's market-leading Pentium chip, and some experts consider it superior. It is, however, considerably cheaper, and is in tremendous demand by computer-makers who want to push prices below $1,000.
On rumors of the agreement, AMD share prices rose 15% to $25. Friday, it shed 9/16 to 24-7/16 dollars. IBM is unchanged at 105-9/16. On the electronic Nasdaq exchange, Intel dropped 5/8 to 91-11/16.
Meanwhile, Apple Computer Inc. said Friday it will stop development work on the Newton handheld computer and the eMate 300 laptop for kids, another step in redirecting its resources to its Macintosh computers. Apple said it will continue to market and sell its current inventory of the Newton and eMate machines and will continue to provide technical support to customers and developers.
News in brief:
MIAMI: Pan Am seeks to fly again soon - Airline gets $10m: Pan Am Corp, whose main airline units halted flights and filed for bankruptcy Thursday, said Friday it had a tentative agreement on $10 million in new financing and could start flying again within days. At a bankruptcy court hearing late Friday, Pan Am said it had reached a tentative pact with an investor group, Rothschild Recovery Fund, for the financing. Pan Am CEO David Banmiller said it would be enough to put the airline back in operation. The subsidiaries filed for bankruptcy protection from creditors in US Bankruptcy Court in Miami late Thursday leaving passengers stranded and employees out of work, the same fate that befell its famous predecessor in 1991.
WASHINGTON: US tech firms seek foreign workers: US computer companies are using recruiting scouts, big salaries and signing bonuses to lure scarce information technology workers, Congress was told Wednesday. The shortage of home-grown talent, attributed to the recent boom in the industry and apathy among American students, has led Microsoft Corp and other high-tech companies to ask for an increase in the number of foreign professionals allowed into the United States each year.
Executives from Cypress Semiconductor, Texas Instruments and Sun Microsystems also bemoaned the scant pickings in the US and recommended eliminating the 65,000 cap on hiring foreigners set by the federal government. Despite the sellers' market, American youth appeared to be unimpressed with computer science or engineering as careers, they said.
JAKARTA: Aid sought to tackle crisis - Asean to set up surveillance body with the help of ADP: The ASEAN on Saturday pledged to step up cooperation to face the currency crisis ravaging regional economies and called for more international support for its efforts. In a statement issued at the end of a one-day meeting here, Asean finance ministers called on the international community "to recognise and respond to these initiatives," citing the structural and financial reforms which the Asean countries have undertaken to strengthen their economies. The ministers urged the G7 group of advanced nations to open their markets further to products from Asean and adopt a more "proactive" approach to enable the affected countries to overcome the financial crisis. They called on Japan "to take the lead in bringing the region out of the present crisis."
The ministers also agreed to immediately set up an Asean surveillance mechanism with the assistance of the Asian Development Bank. The surveillance body - which was first decided at during their meeting in December in Kuala Lumpur - would provide early warnings on future crisis. ADB Vice President Peter Sullivan said the bank "will provide technical assistance...inputs" to Asean for such surveillance body.
PARIS: A group of French deputies asked the government Friday to block an European Union initiative aimed at easing anti-dumping regulations for China and Russia. The EU delegation of French deputies said in a statement that the French government should oppose an European Commission proposal to ease regulations blocking China and Russia from selling their products at a low price in Europe. On December 12, the commission asked the 15 member states to slacken the anti-dumping rules for the two countries so as to take into account their evolution into free-market economies and to encourage them in their efforts.
SHANGHAI: China's state planning commission will adjust the country's price control schedule and give enterprises more freedom to set prices of commodities and services, it was reported Saturday. The China Securities daily said the price of some goods would remain under state control, but others could be determined by provincial departments with the approval of the state council price control department.
Samira |
