MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING FRIDAY, MAY 15 1998 (2)
Walt Disney Co. (dis/nyse) accounted for almost one-quarter of the Dow's decline, falling US$5 1/2 to US$110 9/16. Analyst Jessica Reif Cohen, of Merrill Lynch & Co., cut her investment rating on the stock to "neutral" from "accumulate," citing concern over the cost of getting rights to air National Football League games on ABC and ESPN.
The pessimistic outlook from National Semiconductor, one of the biggest semiconductor companies in the U.S., followed unexpectedly weak earnings from personal computer maker Hewlett-Packard Co. National Semiconductor shares (nsm/nyse) fell US$3 3/16 to US$17 5/16 in the wake of Thursday's warning its earnings would be hurt by slowing sales of its chips to PC makers.
Intel Corp. (intc/nasdaq) fell US$4 1/4 to US$80 5/16, Texas Instruments Inc. (txn/nyse) slumped US$3 to US$59 1/8, Micron Technology Inc. (mu/nyse) lost US$2 1/8 to US$26 3/8 and KLA-Tencor Corp. (klac/nasdaq) slipped US$1 9/16 to US$38 7/16.
Concern that civil unrest in Indonesia will hurt U.S. exporters that do business in the region contributed to the decline. Indonesia's financial markets were paralyzed as most banks and businesses were closed as a wave of riots in Jakarta left more than 200 dead.
About 30% of the computer chip industry's sales are made to the Asia-Pacific region.
On Thursday, Hewlett-Packard shares tumbled US$11 5/16 after the company warned that its fiscal second-quarter profit would fall short of expectations because of price cuts on its PCs. The company Friday reported that it earned US65› a diluted share in the quarter ended April 30. Analysts had forecast a profit of US78› a share. H-P shares (hwp/nyse) fell 3/4 to US$69 9/16.
Microsoft Corp. (msft/nasdaq) continued to climb, gaining 1/2 to US$89 7/16. On Thursday, U.S. antitrust enforcers said they would negotiate with the software maker instead of suing the company as they had planned.
Mexican Stocks End Week Up, Bullish On Industry Data
MEXICO CITY, - Mexican stocks closed sharply higher Friday, rallying just before the market close on the release of favorable industrial data. The blue chip IPC index of 35 major stocks closed at 4,786.18 points, up 0.99 percent, or 47 points, after a light trading day. Only 51.78 million shares changed hands on the Mexican Stock Exchange during the day.
''The market continued to operate with very little volume and share prices were only lifted by bargain-hunters, but...it moved on the release of industrial production data,'' said analyst Jorge Gonzalez Gaitan of Valores Mexicanos. Share prices shot up on the Ministry of Finance's release of industrial production data for March, which showed activity growing 15.2 percent in real terms compared with the same period last year -- and sharply higher than 8.07 percent growth forecast in a Reuters survey of 11 Mexico City-based brokerages and banks. For the quarter as a whole, industrial output grew 9.9 percent compared with the first quarter of 1997, the finance ministry statement said.
Mexican publishing group Grupo Fernandez Editores was the day's biggest gainer. Its shares rose 9.38 percent to 1.40 peso ($0.16) per share, with a total of 410,000 shares traded.
Shares in financial firm Grupo Financiero Serfin shed 14.29 percent to 1.80 pesos ($0.21) per share, but volume was thin, with only 1,000 shares changing hands.
European Stocks Still Nervous. Frankfurt Nears Record But London Is Knocked Down By Dow And Rate Uncertainty
LONDON - European bourses closed mixed Friday as the Dow turned in a twitchy performance amid concerns over U.S. interest rates and the spiraling conflict in Indonesia.
Hit by the May futures expiration, London, Europe's biggest stock market, fell 0.52 percent, or 30.7 points, to end the day at 5,917.8. "The market is nervous ahead of the Fed meeting Tuesday and what they are going to say about interest rates," said a sales trader at a leading investment bank. "No one seemed to want to do much. I cannot remember a day when people showed such a lack of interest."
By the London close, the Dow was down 0.3 percent and dealers said they expected little improvement during the rest of the session. "Until we see stability in Indonesia, I think that is going to be a cloud overhanging the market," said Peter Cardillo, director of research at Westfalia Investments in the United States. "I doubt we will see investors rush to buy stocks ahead of the weekend."
The other key concern before the May 19 U.S. monetary policy meeting was interest rates. Although analysts thought rates would stay unchanged next week, the markets' rate jitters persisted.
"Any figure [next week] that shows strong economic growth is bound to make the market edgy," said Richard Jeffrey, group economist at Charterhouse. "The same goes for Wall Street." U.S. industrial production data released Friday showed a rise of 0.1 percent in April, compared with forecasts of a 0.2 percent decline, but analysts said they were not strong enough to spook policy makers.
In Frankfurt, the computer traded Xetra DAX rose to within 7 points of its all-time high, closing up 40.2 points, or 0.75 percent, at 5,414.31. Earlier, the floor DAX closed up 0.60 percent, 31.92 points, at 5,393.14.
Construction group Hochtief AG led gainers, rising 4 points to 84 ($47.29) after Hypo-Bank raised its recommendation on the stock to "outperformer" from "market performer."
In Paris, stocks on the blue chip CAC-40 index dipped 21.75 points, 0.54 percent, in thin trade to end at 3,990.23.
Featured French shares included Elf Aquitaine, which fell 1.8 percent after it reported a 12 percent drop in first quarter sales. Dassault group companies rose on restructuring news. Dassault Aviation was up 9.17 percent at 1,858 francs and Dassault Systemes was up 4.08 percent at 255 francs. The uptrend was set off by the government's announcement last night that the state's 46 percent in Dassault Aviation would be transferred to Aerospatiale.
In Zurich, Swiss shares closed moderately lower in directionless trade, shrugging off a welter of U.S. economic data and the crisis in Indonesia. The Swiss market index closed at 7,519.4, down 31.2 points, or 0.41 percent, a drop of 70.5 on the week.
In Warsaw, Polish stocks fell for the fourth straight day on Friday, but analysts said they would at least stop further losses after April monthly inflation came in at 0.7 percent, slightly better than recent forecasts. The main market's all-share WIG index fell 0.5 percent to 16,965.0 points and turnover edged up 3.2 percent to 159.0 million zlotys ($45.4 million) on all three markets. ''Good March results were confirmed despite poor food price figures...I view the short-term in fairly positive light,'' said Tomasz Berent of Paribas in London.
In Stockolm, Swedish shares made late session strides to reverse morning weakness and end higher on Friday with help from the drug sector. The all-share General index rose 0.63 percent to 3,621.89 and the top-30 share OMX index rose 0.80 percent to 761.39. Turnover was below average at 5.14 billion crowns. ''It's quite difficult to saying anything about the future these days as the development is too irregular. Indonesia and Asia will be in focus over the weekend,'' one broker said.
Drug company Astra rose 4.50 crowns to 158.50 and Pharmacia & Upjohn climbed 10 to 340. ''A lot of people are saying options expiries boosted Astra but I think it's more that sell recommendations have been taken away during the week,'' one broker said. Another broker said gains in P&U were because of sentiment the company was getting its product portfolio in order.
Ericsson managed to turn around early weakness and end 0.50 crown higher at 422.50. Information technology company Proslovia collapsed 53 crowns to 132 after swinging to a loss of 45.8 million crowns after financial items in the first quarter of 1998 compared to a 9.8 million crown profit a year ago. Defence industries group Celsius rose 10 crowns to 201.
In Helsinki, Finnish shares fell on Friday on jitters on other European bourses and early on Wall Street, but buoyant publishing stocks stole the show on a merger plan by the family-owned Sanoma camp and listed WSOY.
Sentiment was hurt by riots in Indonesia, and by uncertainty about the direction of interest rates ahead of a meeting of the policy-setting Federal Open Market Committee meeting in the U.S. on Tuesday next week, operators said. The HEX general index fell 0.50 percent to 4,919.4 points and the FOX derivatives and portfolio benchmark fell 0.46 percent to 1,633.3 points. Both main indices were slightly off for the week. Volume was a modest 797 million markka, with an unusually low 30 percent in bourse motor Nokia, which slightly underperformed the broad market.
In Madrid, shares reversed early gains to close a touch lower on Friday, with losses seeping in just after the expiry of May Ibex futures. There was little corporate news to spur trades as Friday was a local Madrid holiday. Dealers said the market outlook remained uncertain short term, and weakness could continue. ''After the adjustment period for the expiry the market lost strength and you can tell there's quite a lot of doubts about the short term,'' said one dealer.
The general index fell 0.38 points, 0.04 percent, to 847.74 and the Ibex-35 blue chip index down 18.0 points, 0.18 percent, to 9,836.9. Telefonica managed to buck the trend along with a handful of other stocks. It rose 0.14 percent to 6,960 pesetas, still benefitting from positive sentiment after rights issue and first quarter results, dealers said.
Paciufic Rim Markets On Hold. Tokyo, HK Slip While Investors Wait For Resolution Of Indonesian Turmoil
TOKYO - Major equities markets in the Pacific Rim hung separately again on Friday as traders pulled back from regional stocks ahead of possible developments in Indonesia's political situation and an upcoming Group of Eight leaders summit.
Japan's key 225-stock Nikkei stock index, lacking more concrete macro-economic factors to move prices, ended down 0.42 percent, or 64.83 points, at 15,242.86.
First section turnover was 405 million shares against 378 million shares on Thursday.
The fall in the benchmark 182nd 10-year Japanese government bond (JGB) yield to a record low of 1.285 percent shortly before the stock market closed added to lingering worries over the Japanese economy, brokers said. The dollar's rise above 134 yen following the drop in JGB yield further worsened stock market sentiment.
"Investors were reluctant to actively trade due to increasing worries over Indonesian politics and caution over the G8 summit," asecond tier securities house trader said. "While shares of some firms attracted investors, movement in indices was dull."
Brokers said that investors were waiting to see the outcome of the G8 summit to be held on Friday in Britain but many added that they do not expect any new, concrete steps for Japan's economic recovery to be announced there. The G8 leaders are expected to discuss Asia's problems, such as the worsening Indonesian situation and India's nuclear tests, as well as the sluggish Japanese economy.
Hong Kong stocks ended Friday lower as lingering worries about unrest in Indonesia kept cautious investors on the sidelines. The Hang Seng Index lost 53.56 points, or 0.56 percent, to end at 9,538.39 after hitting a low of 9,499.02. Turnover shrank to a modest HK$4.86 billion against Thursday's HK$8.32 billion.
"The entire region is just held at bay until we have figured out what is happening in Indonesia," said Glenn Lesko, head of sales at ABN-Amro Hoare Govett Asia Securities. Indonesia remained under the spotlight as riots and speculation about the country's political development continued. At least 110 people, most believed to be looters, were reported killed in a Jakarta shopping mall fire.
"Technically there should be some support," said Miles Remington, sales trader at SocGen-Crosby Securities. "The problem is that sentiment has been dragged into new depths by what is happening in Jakarta."
On the Seoul Stock Exchange, shares tumbled on worries that foreign investors would pull out of Asia amid escalating turmoil in Indonesia. Concerns of labor unrest also weighed on the South Korean market following news reports that the country's labor unions would go ahead with its planned strikes later in the month. The Korea Composite Stock Price Index fell 10.11 points, or 2.8 percent, to 352.83.
In Taipei, Share prices closed lower as most investors continued to stay on the sidelines amid concerns over the violence in Indonesia. The market's key Weighted Stock Price Index fell 26.00 points, or 0.3 percent, to 8,167.50.
Singapore's key share index rose 1.56 percent on Friday as buyers mopped up blue chip casualties of Thursday's heavy selling.
"I think government-linked companies could well be in the market buying up the stocks that are being sold off. Someone is doing it and there are no big foreign buy orders out there," a dealer with a local firm said.
The 30-stock Straits Times Industrials Index (STII) gained 20.25 points to 1,322.03, edging the index back up from its key 1,300 support base. On Thursday the STII shed 2.27 percent on volume of 201 million shares as violent unrest in neighboring Indonesia sent shivers down the spine of the Singapore share market for a second day.
In Shanghai, stock trading dropped early this week, but rebounded for a sharp increase. Today's Shanghai comprehensive stock index closed at 1,368.09 points, up 0.77 percent over the previous week. This week's turnover of stocks in Shanghai reached 43.87 billion yuan, up 15 percent over last week. Among the 440 listed stocks, 234 soared and 201 fell.
B-Shares on the Shanghai Stock Exchange today closed at 50.62 points, up 2.26 percent over last week. A total of 233 million yuan of B-Shares, 1.5 times last week's figure, changed hands this week. Among the 17 listed funds in Shanghai, only one closed at a lower price for the week, but the total turnover was slightly lower than last week. The turnover for securities in the Shanghai market this week was 42.97 billion yuan, up 5.89 percent over last week.
On the Kuala Lumpur Stock Exchange, Malaysian share prices closed higher, buoyed by the firmer ringgit and with local and foreign fund buyings on bluechips lifting the Composite Index by 1.13 percent.
A stable ringgit which touched its firmest of 3.75-level, was a contributing factor to the day's uptrend. Besides, locals were supporting the market while foreign funds were nibbling at selected bluechips, dealers said.
Trading remained cautious as foreign funds were still jittery over the region and would rather park their money somewhere safer. At the close, the 100-quality stocks Composite Index rose 6.35 points to 566.85, the all-share Emas Index added 0.95 of a point to 142.94, the Industrial Index was 15.72 points higher at 1,095.32 while the Second Board Index gained 3.05 points to 123.78. Gainers led losers by 501 to 154 while 122 counters were unchanged and 140 untraded.
In Jarkata, dealers saw a calmer tone as a temporary respite, as tensions remained high and further downward moves were expected next week. "The pressure is clearly there for more selling," a dealer at a brokerage said. Malaysian stocks also gathered strength, adding 6.35 points, 1.13 percent, to close at 566.85. Indonesia's stock market remained steady in razor-thin trade, adding 2.23 points to close at 405.93.
In Bangkok, Thai share prices closed mixed. The Stock Exchange of Thailand index edged up 0.61 point, or 0.2 percent, to 369.43.
In Manilaq, Philippine share prices closed slightly lower as major foreign investors shied away from the market because of the civil unrest in Indonesia. The Philippine Stock Exchange Index of 30 selected issues slipped 1.40 points to 2,128.60.
In Sydney,a firing futures market lifted the Australian stock market to a firmer finish on Friday while golds shone as the bullion price bounced back above the US$300 mark in Asian trade.
The benchmark All Ordinaries index added 6.4 points or about 0.2 percent to 2,765.8, having bottomed out 13.8 points lower at 2,745.6 in the first 15 minutes of trade, while it peaked 13.4 points higher at 2,772.8 mid-afternoon.
A short covering squeeze sparked bullion interest offshore, pushing the price of gold back above US$300 and pulling the gold sector index off its lows to finish 2.4 percent higher. Heavyweight Normandy Mining ended up 3.3 percent at A$1.58 (US$0.99), number two ranked Lihir Gold added 2.5 percent to A$2.48, while Acacia climbed 4.3 percent to end at A$2.43.
"It's been an odd day's business," said a dealer at a Sydney-based brokerage, noting the day's yo-yo trade. "There was no real clue from overseas but gold staged a big comeback in the afternoon."
In Wellington, the New Zealand sharemarket drifted lower at the close on Friday, with little reaction to Thursday's budget. The NZSE40 Index ended 7 points lower at 2229 with a turnover of nearly 85 million N.Z. dollars (45 million U.S. dollars).
Among the leaders, Fletcher Building remained unchanged at 320 cents. Air New Zealand was the only gainer, rising 2 cents to 205 cents after the company said it had joined the Star alliance of airlines. At the other main leaders all fell. Brierley Investment and Carter Holt Harvey each lost 2 cents to 99 cents and 226 cents respectively. Fletcher Energy dived 8 cents to 652 cents. Lion Nathan eased 1 cent to 459 cents. Telecom dipped 5 cents to 850 cents.
And Elsewhere
In Casablanca the stock exchange closed the week on Friday 4.5 percent higher, marked by a surge in prices of leading stocks, notably ONA Group and its subsidiaries, brokers said. The all-share index rose to 833.35 points from 797.47 points last week.
''Good prospects for leading companies and strong demand boosted the prices,'' a Casablanca-based broker said. The CFG25 index, which tracks the country's 25 biggest and most liquid stocks closed up 5.0 percent to 13,234.04 points, Casablanca Finance Intermediation brokerage said. Oil refinery Samir advanced 8.10 dirhams to 398.10 dirhams.
The total traded volume on both the official and over the counter (OTC) markets was 294.9 million dirhams, compared with 354.1 million dirhams last Friday. OTC market trade was 218 million dirhams from 316.5 million dirhams last Friday. Trade on the main market this week was in more than 226,000 Banque Nationale pour le Developpement Economique shares.
In Zagreb - stocks lost more ground on Friday with both indices dipping amid poor business, and traders expected no sure boost in the coming days. The official Crobex index lost 0.80 percent to end at 921.5 points, with the independent ZSI General index down 1.3 percent to 75.50 points as major issues fell or ended flat. Five stocks fell, three rose and three held their ground.
Podravka was by far the most active issue with 3,239 shares sold, but lost 1.42 percent to 173 kuna.
''Maybe the government's amendments to the refugee return plan will help, but it remains to be seen,'' said Velimir Zelimorski of brokerage Fima. ''In the short term, I would not bet on much activity except for three stocks: Pliva , Zagrebacka Banka and (food group) Podravka,'' he added. Other traders also agreed that the absence of buyers would likely prolong the depression at least until fresh issues from a voucher privatisation scheme reach the market.
In Joannesburg - South African stocks had a late flurry to close firm after a mixed day as local buyers hunted for bargains at lower price levels following the futures arbitrage which earlier characterized the cash market. The All-share index closed at 8,071.7, up 52.4 points, or 0.65 percent, up 14.9 on the week. The All-Gold index closed at 1041.8, up 18.9 points, or 1.85 percent, a rise of 36.7 on the week. The Industrial index closed at 9,802.8, up 29.9 points, or 0.31 percent, a rise of 57.8 over the last five days.
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