Morning Market Update
Vanguard’s move into PE may change the landscape forever
Private equity has been growing in popularity in recent years as more and more big-name funds and institutional investors dive in. Now even indexing giant Vanguard is out to take a piece of the PE pie. During a panel at the Morningstar Investment Conference this year, Fran Kinniry of Vanguard, John Rekenthaler of Morningstar and Read More
• US: Dow: 13108.00 (0.41%), S&P 500: 1414.40 (0.48%), NASDAQ: 2658.00 (-0.04%)
• Europe: CAC: 3465.78 (0.18%), DAX: 7324.91 (0.55%), FTSE: 5834.82 (-0.26%).
• Asia-Pacific: Australia: 4517.00 (0.70%), China: 2068.88 (0.32%), Hong Kong: 21641.82 (0.99%), India: 5619.70 (0.39%), Japan: 8928.29 (0.97%).
• Metals: Gold: 1720.20 (0.40%), Silver: 32.26 (1.41%), Copper: 3.55 (1.20%)
• Energy: Crude Oil: 86.37 (0.81%), Natural Gas: 3.72 (0.92%)
• Commodities: Corn: 7.46 (0.51%), Soya Bean: 15.44 (0.38%), Wheat: 8.65 (-0.12%)
• Currency: EUR/USD: 1.2999 (0.32%), GBP/USD: 1.6112 (0.24%), USD/JPY: 79.8400 (0.26%)
• 10 year US Treasury: 1.723% (0.013)
Financial and Economic News Update
U.S. stock-index futures rise: U.S. stock-index futures are pointing to a higher open on Wednesday as Wall Street gears up to reopen after Hurricane Sandy caused the longest weather-related shutdown since 1888. Volatility is expected to be high on Wednesday, the final trading day of the month, due to pent-up demand from the unscheduled two-day closure.
European markets trading mostly higher: European markets are trading higher on Wednesday with the German DAX (INDEXDB:DAX) up 0.6 percent at 7324.91, the FTSE 100 (INDEXFTSE:UKX) was down 0.3 percent at 5834.82 and the CAC 40 (INDEXEURO:PX1) added 0.2 percent to 3465.78. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) was trading 0.5 percent higher.
Asian markets end higher: Asian markets closed higher on Wednesday with the HANG SENG INDEX (INDEXHANGSENG:HIS) up 1 percent on the day and 3.8 percent for the month at 21,641.8, while the SSE Composite Index (SHA:000001) (Shanghai Composite Index) rose 0.3 percent on the day, slipped 0.8 percent this month. Japan’s NIKKEI 225 (INDEXNIKKEI:NI225) closed up 1 percent to 8,928.29. The S&P/ASX 200 (INDEXASX:XJO) index rose 31 points to 4,517. The benchmark Indian 30-share BSE SENSITIVE (INDEXBOM:SENSEX) index closed up 0.4 percent.
Company News Update
• General Motors Company (NYSE:GM) posted third quarter earnings excluding one-time items of 93 cents a share that easily beat the average analysts’ estimate of 60 cents a share. Revenue rose to $37.6 billion from $36.7 billion a year earlier, also topping Street expectations for $35.7 billion.
• The Walt Disney Company (NYSE:DIS) announced late Tuesday that it has entered into a deal to buy George Lucas’s Lucasfilm Ltd and its “Star Wars” franchise for $4.05 billion in cash and stock.
• Swiss bank UBS AG (USA) (NYSE:UBS) is up 14 percent in pre-market trading after unveiling plans on Tuesday to fire 10,000 staff and shut its fixed income business.
• Eaton Corporation (NYSE:ETN) said third quarter earnings excluding items dropped to $1.07 per share from $1.08 per share in the year-ago quarter. Sales fell 4.2 percent to $3.95 billion. Analysts had forecast the diversified industrial manufacturer to earn $1.09 a share on revenue of $4.21 billion.
• Personal-navigation-devices maker Garmin Ltd. (NASDAQ:GRMN) reported third quarter earnings excluding one-time items of 74 cents per share that easily beat the average analysts’ estimate of 61 cents per share. Revenue rose 1 percent to $672 million, also topping estimates of $660.9 million. The company also raised its full-year earnings outlook.
• Real-estate investment trust Macerich Co (NYSE:MAC) said third quarter profit surged to $43.9 million or 33 cents a share, from $12.9 million, or 10 cents a share, in the same period last year. Adjusted funds from operations for the quarter came in at 78 cents, topping analysts’ expectations for adjusted FFO of 60 cents.
• Opnet Technologies, Inc. (NASDAQ:OPNT) soared 30 percent in early morning trade after network gear maker Riverbed Technology, Inc. (NASDAQ:RVBD) announced a deal to buy Opnet for around $1 billion in cash and stock on Monday.
• International Business Machines Corp. (NYSE:IBM) said that its board has authorized an additional $5 billion for its share repurchase program.
• Managed-care services provider WellCare Health Plans, Inc. (NYSE:WCG) posted third quarter earnings excluding one-time items of $1.05 per share, on revenue of $1.82 billion. Analysts were looking for earnings of $1.47 a share on $1.83 billion in revenue. The company announced plans to acquire UnitedHealth Group Inc. (NYSE:UNH)’s South Carolina Medicaid business for an undisclosed sum.
• Market index company MSCI Inc (NYSE:MSCI) will buy IPD Group Limited, a London-based provider of real-estate performance analysis, for $125 million in cash.
• Power network installer Quanta Services Inc (NYSE:PWR) said third quarter earnings excluding certain items rose to 48 cents a share from 29 cents a share. Revenue came in at $1.69 billion. Analysts had projected earnings of 36 cents per share on revenue of $1.65 billion. The company also raised its full-year outlook.
• Clothing maker PVH Corp (NYSE:PVH) will acquire lingerie and sportswear maker Warnaco Group Inc (NYSE:WRC) in a cash-and-stock deal worth about $2.9 billion.
• Online brokerage TD Ameritrade Holding Corp. (NYSE:AMTD) reported fourth quarter earnings of 26 cents per share, one cent above estimates. The firm also raised its quarterly dividend by 50 percent to 9 cents a share.
• Bayer AG (ETR:BAYN) (FRA:BAYN) has agreed to acquire vitamin maker Schiff Nutrition International Inc (NYSE:SHF) for $1.2 billion, or $34 a share.
• Video game maker Electronic Arts Inc. (NASDAQ:EA) reported second-quarter earnings of 15 cents per share, four cents above estimates, but provided current quarter outlook that fell well short of Street estimates.
• Environmental services company Clean Harbors Inc (NYSE:CLH) will buy privately held Safety-Kleen for $1.25 billion in cash.
• CNH Global NV (ADR) (NYSE:CNH), the world’s second-largest seller of farm equipment, reported an 18 percent rise in third quarter profit to $323 million, or $1.34 a share, from $274 million, or $1.14 a share, in the year-ago period. Net sales increased 4.8 percent to $4.83 billion. Analysts were expecting earnings of $1.17 a share on revenue of $4.57 billion.
• Barclays PLC (ADR) (NYSE:BCS) (NYSE:BARC) reported a 29 percent rise in third-quarter pretax profit to 1.73 billion pounds ($2.8 billion), but revenue was below market expectations. The British bank also said it would be subject to two new U.S. regulatory investigations.
• ArcelorMittal (ADR) (NYSE:MT) (AMS:MT), the world’s largest steelmaker, said third quarter earnings before interest, taxes, depreciation and amortization fell to $1.34 billion from $2.41 billion in the year-ago period. The company said it would cut its dividend and focus on cutting debt amid the challenging economic conditions
• German airline Deutsche Lufthansa AG (ETR:LHA) (FRA:LHA) reported a 6.2 percent rise in third-quarter operating profit to 648 million euros and said it would intensify cost-cutting measures. Analysts had expected earnings of 522 million euros. Revenues increased 6.2 percent to 8.31 billion euros, also topping estimates of 8.22 billion.
• Finnish phone maker Nokia Corporation (ADR) (NYSE:NOK) will begin shipping its new high-end Lumia 820 and 920 smart phones this week, according to a Reuters report.
• French oil major Total S.A. (ADR) (NYSE:TOT) (EPA:FP) said third quarter profit increased 20 percent, beating analyst estimates as profit margins at its refineries increased. The company’s adjusted net profit rose to 3.35 billion euros ($4.34 billion), from 2.80 billion euros a year earlier, topping the average analysts’ estimate of 3.1 billion euros.
• Spanish bank Banco Bilbao Vizcaya Argentaria SA (ADR) (NYSE:BBVA) (MCE:BBVA) reported an 82 percent drop in third quarter profit to 146 million euros ($189.2 million), trailing estimates for 166 million euros. However, net interest income was slightly higher than analysts’ expectations.
• Air France – KLM (EPA:AF), Europe’s largest airline reported a 27 percent rise in third-quarter operating profit to 506 million euros ($656 million) as improved summer traffic offset higher fuel costs.
• British oil and gas explorer BG Group plc (LON:BG) tumbled 19 percent after agreeing to sell certain interests in the Queensland Curtis LNG project in Australia to CNOOC Limited (ADR) (NYSE:CEO) (HKG:0883) for $1.93 billion. The energy group further warned that 2013 production will likely be flat.
• Taiwan’s Hon Hai Precision Industry Co., Ltd. (TPE:2317), which assembles iPhones and iPads for Apple Inc. (NASDAQ:AAPL), ended 0.8 percent higher after reporting a sharp rise in quarterly net profit, boosted by strong demand for Apple products. Third-quarter profit jumped 58 percent to $30.3 billion New Taiwan dollars ($1 billion), topping estimates for 23.4 billion New Taiwan dollars.
• Industrial and Commercial Bank of China (HKG:1398) (SHA:601398), the country’s biggest lender, jumped 2 percent in Hong Kong after posting late on Tuesday a better-than-expected 14.9 percent rise in third quarter net profit to 62.42 billion yuan ($9.91 billion), helped by higher net interest and fee income.
• National Australia Bank Ltd. (ASX:NAB), the country’s fourth-largest bank by market value, reported a 22 percent drop in full-year profit as its struggling U.K. businesses dragged earnings lower for the first time in three years.
• Chinese oil giant PetroChina Company Limited (ADR) (NYSE:PTR) (HKG:0857) (SHA:601857) closed 2.2 percent lower in Hong Kong after third-quarter profit tumbled 33 percent amid refining losses and higher natural-gas import costs
• Japanese electrical machinery maker Hitachi, Ltd. (TYO:6501) hit a one-week high in Tokyo trading after it reaffirmed its full-year earnings guidance, easing concerns it would cut its outlook.
• Australian steelmaker Arrium Ltd (ASX:ARI) rejected a sweetened 1.2 billion Australian dollar ($1.24 billion) takeover offer from a consortium including South Korean steel producer Posco (ADR) (NYSE:PKX) and commodities trader Noble Group, saying the offer undervalued the firm.
• Aluminium Corp. of China Limited (ADR) (NYSE:ACH) (HKG:2600), the country’s top aluminum maker, swung to a third quarter loss, hurt by low aluminium prices and rising costs.
• Construction machinery maker Komatsu Ltd (TYO:6301) jumped 3.2 percent after reporting half-year profit that topped estimates. The company also reiterated its full-year earnings guidance, allaying investor fears of a cut in outlook.
Economic Calendar for Wednesday, October 31, 2012:
07:00 A.M. ET: MBA Purchase Applications (Week ending Friday, October 26, 2012)
08:30 A.M. ET: Employment Cost Index (Q3)
09:00 A.M. ET: Treasury Refunding Announcement
09:45 A.M. ET: Chicago Purchasing Managers’ Index (October)
12:45 P.M. ET: San Francisco Federal Reserve President John Williams speaks.
03:00 P.M. ET: Farm Prices (October)