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Stocks Head to Higher Open
Thursday February 21, 6:58 am ET
By Joe Bel Bruno, AP Business Writer
Wall Street Tips to Higher Open As Investors Await Economic Data, Hope for Rate Cut
NEW YORK (AP) -- Wall Street tipped toward a higher open Thursday as traders placed bets that further economic data will allow the Federal Reserve to cut interest rates at its March meeting.
Investors are awaiting two key reports due out during the session. The hope is that both are upbeat enough to reassure investors that the U.S. economy isn't falling into a recession, yet show enough weakness to motivate central bankers to implement when they meet March 18The Philadelphia Federal Reserve's February manufacturing index is expected to rebound from January's six-year low while still showing declining business activity. The index is scheduled for release at 10 a.m. EST.
Meanwhile, the Conference Board's gauge of leading economic indicators is expected to show a slight dip last month. The report to be issued at 10 a.m. EST is used to determine where the economy is heading over the next six months.
Stocks also are expected to benefit from a sharp rise in both European and Asian markets. Investors overseas were optimistic amid a rally in commodities and after U.S. stocks finished higher on Wednesday, with the Dow Jones industrial average up a little more than 90 points.
Dow futures on Thursday rose 76, or 0.61 percent, to 12,312. Standard & Poor's 500 index futures rose 5.70, or 0.42 percent, to 1,364.70, and Nasdaq 100 futures added 7.50, or 0.42 percent, to 1,796.75.
Investors will also keeping an eye on oil prices, which held near $100 a barrel after hitting a record overnight. Light, sweet crude for April delivery added 43 cents to $100.13 a barrel in pre-opening trading on the New York Mercantile Exchange.
Gold and platinum also jumped to record highs overnight.
In corporate news, there was further evidence that the global credit crisis is not near an end. French bank Societe Generale SA said a trading scandal and write-downs linked to the crisis led to a loss in the fourth quarter. The bank lost $4.91 billion, compared to a $1.73 billion profit during the same period of 2006.
Technology stocks might get a boost after Citigroup upgraded Cisco Systems Inc. The biggest U.S. maker of computer-networking equipment was upgraded to "buy" from "hold" because of attractive valuations and hopes that a slowdown this year won't be as steep as first expected.
Overseas, Japan's Nikkei stock average closed up 2.84 percent. In afternoon trading, Britain's FTSE 100 added 1.28 percent, Germany's DAX index rose 1.32 percent, and France's CAC-40 rose 1.36 percent.
Thursday February 21, 6:58 am ET
By Joe Bel Bruno, AP Business Writer
Wall Street Tips to Higher Open As Investors Await Economic Data, Hope for Rate Cut
NEW YORK (AP) -- Wall Street tipped toward a higher open Thursday as traders placed bets that further economic data will allow the Federal Reserve to cut interest rates at its March meeting.
Investors are awaiting two key reports due out during the session. The hope is that both are upbeat enough to reassure investors that the U.S. economy isn't falling into a recession, yet show enough weakness to motivate central bankers to implement when they meet March 18The Philadelphia Federal Reserve's February manufacturing index is expected to rebound from January's six-year low while still showing declining business activity. The index is scheduled for release at 10 a.m. EST.
Meanwhile, the Conference Board's gauge of leading economic indicators is expected to show a slight dip last month. The report to be issued at 10 a.m. EST is used to determine where the economy is heading over the next six months.
Stocks also are expected to benefit from a sharp rise in both European and Asian markets. Investors overseas were optimistic amid a rally in commodities and after U.S. stocks finished higher on Wednesday, with the Dow Jones industrial average up a little more than 90 points.
Dow futures on Thursday rose 76, or 0.61 percent, to 12,312. Standard & Poor's 500 index futures rose 5.70, or 0.42 percent, to 1,364.70, and Nasdaq 100 futures added 7.50, or 0.42 percent, to 1,796.75.
Investors will also keeping an eye on oil prices, which held near $100 a barrel after hitting a record overnight. Light, sweet crude for April delivery added 43 cents to $100.13 a barrel in pre-opening trading on the New York Mercantile Exchange.
Gold and platinum also jumped to record highs overnight.
In corporate news, there was further evidence that the global credit crisis is not near an end. French bank Societe Generale SA said a trading scandal and write-downs linked to the crisis led to a loss in the fourth quarter. The bank lost $4.91 billion, compared to a $1.73 billion profit during the same period of 2006.
Technology stocks might get a boost after Citigroup upgraded Cisco Systems Inc. The biggest U.S. maker of computer-networking equipment was upgraded to "buy" from "hold" because of attractive valuations and hopes that a slowdown this year won't be as steep as first expected.
Overseas, Japan's Nikkei stock average closed up 2.84 percent. In afternoon trading, Britain's FTSE 100 added 1.28 percent, Germany's DAX index rose 1.32 percent, and France's CAC-40 rose 1.36 percent.
Govt approves Rs 500-cr relief package for exporters
New Delhi, Feb 21: Government on Thursday approved a fresh package of Rs 500 crore in the form of interest subvention for exporters to compensate for the reduction in their profits due to rupee appreciation against the US dollar.
The government has already announced Rs 300 crore under the interest subvention scheme for exporters.
"The measures will ensure mitigation of the effect of rupee appreciation across the export sectors, make them internationally competitive and will also enable them achieve export targets," the official spokesperson told reporters after the meeting of the Cabinet Committee on Economic Affairs (CCEA) here.
Under the scheme, exporters are given two per cent relief in pre-shipment and post-shipment credit in sectors such as leather and leather products, marine products, handicrafts, textiles and carpets.
The interest subvention is subject to the condition that rates will not fall below seven per cent, the rate applicable to the agriculture sector under priority sector lending scheme, the spokesperson added.
The scheme, she said, "will provide relief to exporters.. and mitigate (their) hardships on account of unanticipated and steep rupee appreciation."
The export of traditional items especially handicraft, textile and carpets have suffered on account of 15 per cent appreciation in the value of rupee against the dollar in the last 16 months.
The government has earlier announced various packages totalling Rs 5,200 crore to help the exporters.
Bureau Report
New Delhi, Feb 21: Government on Thursday approved a fresh package of Rs 500 crore in the form of interest subvention for exporters to compensate for the reduction in their profits due to rupee appreciation against the US dollar.
The government has already announced Rs 300 crore under the interest subvention scheme for exporters.
"The measures will ensure mitigation of the effect of rupee appreciation across the export sectors, make them internationally competitive and will also enable them achieve export targets," the official spokesperson told reporters after the meeting of the Cabinet Committee on Economic Affairs (CCEA) here.
Under the scheme, exporters are given two per cent relief in pre-shipment and post-shipment credit in sectors such as leather and leather products, marine products, handicrafts, textiles and carpets.
The interest subvention is subject to the condition that rates will not fall below seven per cent, the rate applicable to the agriculture sector under priority sector lending scheme, the spokesperson added.
The scheme, she said, "will provide relief to exporters.. and mitigate (their) hardships on account of unanticipated and steep rupee appreciation."
The export of traditional items especially handicraft, textile and carpets have suffered on account of 15 per cent appreciation in the value of rupee against the dollar in the last 16 months.
The government has earlier announced various packages totalling Rs 5,200 crore to help the exporters.
Bureau Report
Ranbaxy to challenge ITAT order in transfer pricing case
New Delhi, Feb 21: Pharma major Ranbaxy Laboratories will move the Delhi High Court against the Income Tax Appellate Tribunal order relating to an under-assessment of income to the tune of Rs 224.5 crore in a transfer pricing case.
The ITAT while rejecting the contention of Ranbaxy maintained that the company had under-assessed its income by the said amount during 2004-05 by not pricing appropriately goods and services sold to sister concerns abroad.
"Ranbaxy is appealing this judgment in the Delhi High court. No additional tax demand for the assessment year 2004-05 has been raised and therefore there is no impact on the current or future earnings of Ranbaxy", the company spokesperson said.
The bone of contention between Ranbaxy and the Income Tax Department was the method adopted by the company for valuing the goods and services sold to 17 overseas associated enterprises (AEs), including joint ventures and wholly-owned subsidiaries in more than dozen countries including the US, the UK, Germany and China.
The transfer pricing regulations require that goods and services sold to associated enterprises should be valued at arms' length price (ALP), a price which the company would charge from an unrelated entity.
Also, the companies are expected to adopt the most appropriate method prescribed by the Income Tax Act and the rules while assigning values to the goods sold to overseas AEs.
Bureau Report
New Delhi, Feb 21: Pharma major Ranbaxy Laboratories will move the Delhi High Court against the Income Tax Appellate Tribunal order relating to an under-assessment of income to the tune of Rs 224.5 crore in a transfer pricing case.
The ITAT while rejecting the contention of Ranbaxy maintained that the company had under-assessed its income by the said amount during 2004-05 by not pricing appropriately goods and services sold to sister concerns abroad.
"Ranbaxy is appealing this judgment in the Delhi High court. No additional tax demand for the assessment year 2004-05 has been raised and therefore there is no impact on the current or future earnings of Ranbaxy", the company spokesperson said.
The bone of contention between Ranbaxy and the Income Tax Department was the method adopted by the company for valuing the goods and services sold to 17 overseas associated enterprises (AEs), including joint ventures and wholly-owned subsidiaries in more than dozen countries including the US, the UK, Germany and China.
The transfer pricing regulations require that goods and services sold to associated enterprises should be valued at arms' length price (ALP), a price which the company would charge from an unrelated entity.
Also, the companies are expected to adopt the most appropriate method prescribed by the Income Tax Act and the rules while assigning values to the goods sold to overseas AEs.
Bureau Report
Govt approves issue of special securities for SBI rights offer
New Delhi, Feb 21: The government on Wednesday approved issuing special marketable securities worth Rs 9,995.99 crore to subscribe to State Bank of India's rights offer.
The cabinet, which met here today, gave its approval to modify an earlier decision to give SLR (Statutory Liquidity Ratio) status to the government securities. The issuance of such securities would have allowed SBI to meet a part of its SLR requirement.
Under SLR provisions, banks have to park 25 per cent of their deposits in government bonds.
"The government is likely to receive around Rs 1,449 crore additionally by way of dividend and taxes from the bank during 2008-09 as against an expenditure of around Rs 825 crore as interest to be paid to the bank for the proposed securities," an official statement said.
SBI has decided to raise Rs 16,736.31 crore by issuing about 10.5 crore shares on a rights basis. The issue, which opened on February 18, will close on March 18.
The government had earlier decided to invest about Rs 10,000 crore in SBI to maintain its stake of 59.7 per cent.
However, the Finance Ministry had to approach the cabinet to review its decision as the reserve bank declined to give SLR status to government bonds, to be offered to SBI for subscribing to the equity shares.
Sources said that although the Finance Ministry will continue to take up the matter with the RBI and request it to notify the proposed securities as SLR securities, due to time constraint, it had to ask the cabinet to amend its decision taken on November 29 last year.
Bureau Report
New Delhi, Feb 21: The government on Wednesday approved issuing special marketable securities worth Rs 9,995.99 crore to subscribe to State Bank of India's rights offer.
The cabinet, which met here today, gave its approval to modify an earlier decision to give SLR (Statutory Liquidity Ratio) status to the government securities. The issuance of such securities would have allowed SBI to meet a part of its SLR requirement.
Under SLR provisions, banks have to park 25 per cent of their deposits in government bonds.
"The government is likely to receive around Rs 1,449 crore additionally by way of dividend and taxes from the bank during 2008-09 as against an expenditure of around Rs 825 crore as interest to be paid to the bank for the proposed securities," an official statement said.
SBI has decided to raise Rs 16,736.31 crore by issuing about 10.5 crore shares on a rights basis. The issue, which opened on February 18, will close on March 18.
The government had earlier decided to invest about Rs 10,000 crore in SBI to maintain its stake of 59.7 per cent.
However, the Finance Ministry had to approach the cabinet to review its decision as the reserve bank declined to give SLR status to government bonds, to be offered to SBI for subscribing to the equity shares.
Sources said that although the Finance Ministry will continue to take up the matter with the RBI and request it to notify the proposed securities as SLR securities, due to time constraint, it had to ask the cabinet to amend its decision taken on November 29 last year.
Bureau Report
Govt approves Rs 1,000 cr for two financial inclusion funds
New Delhi, Feb 21: The government Thursday cleared Rs 1,000 crore for setting up two funds of Rs 500 crore each to provide low-cost credit facilities to weaker sections under its financial inclusion programme.
The cabinet approved constitution of a Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF) as announced by Finance Minster P Chidambaram during budget 2007-08, an official statement released after the cabinet meeting said.
The funds would have an initial corpus of Rs 25 crore each. The government and the reserve bank would contribute 40 per cent each to the funds, while the National Bank for Agriculture and Rural Development (NABARD) would finance 20 percent.
FIF would be used for training inputs especially to business facilitators and correspondents, who would ensure institutional credit as representatives of banks, particularly among weaker sections and low-income groups.
The FITF would be used for providing "user-friendly" technology to ensure affordable financial services to the disadvantaged sections, the statement added.
The fund would also be utilised for creating a common technology infrastructure with comprehensive credit information, and providing viability gap funding for unproven, but potential technological interventions.
The financial inclusion programme would be implemented and monitored by NABARD and an advisory board would be set up to provide guidance on aspects relating to the funds.
Bureau Report
New Delhi, Feb 21: The government Thursday cleared Rs 1,000 crore for setting up two funds of Rs 500 crore each to provide low-cost credit facilities to weaker sections under its financial inclusion programme.
The cabinet approved constitution of a Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF) as announced by Finance Minster P Chidambaram during budget 2007-08, an official statement released after the cabinet meeting said.
The funds would have an initial corpus of Rs 25 crore each. The government and the reserve bank would contribute 40 per cent each to the funds, while the National Bank for Agriculture and Rural Development (NABARD) would finance 20 percent.
FIF would be used for training inputs especially to business facilitators and correspondents, who would ensure institutional credit as representatives of banks, particularly among weaker sections and low-income groups.
The FITF would be used for providing "user-friendly" technology to ensure affordable financial services to the disadvantaged sections, the statement added.
The fund would also be utilised for creating a common technology infrastructure with comprehensive credit information, and providing viability gap funding for unproven, but potential technological interventions.
The financial inclusion programme would be implemented and monitored by NABARD and an advisory board would be set up to provide guidance on aspects relating to the funds.
Bureau Report
No FTA with India for now: US
Chicago, Feb 21: Not willing to tread the path taken by EU and ASEAN for market-opening trade pacts with India, the US said on Thursday that it is not ready for a free trade deal with the world`s second-fastest growing economy as it cannot fully open agricultural imports from American farmers.
"Quite honestly, it would be quite difficult, at this point of time for India to imagine doing that kind of a deal with the United States considering its sensitivities in agriculture," US Trade Representatives Susan Schwab said on the sidelines of India-US Summit for Small and Medium Enterprises in Chicago.
India is at advanced stages of negotiations on economic cooperation agreements with the EU, its largest trading partner, and ASEAN.
Commerce Secretary Gopal K Pillai said India`s free trade agreement with the European Union encompasses "substantial" trade, but Schwab said the US wants "almost 100 per cent" coverage.
This means, if India desires to have an FTA or economic cooperation agreement, it has to allow a zero duty market for everything, including highly-sensitive agriculture products.
Protecting its subsistent farming from cheap imports has been one of the key areas of concerns for India under the Doha Round of multilateral negotiations for a global trade deal.
Schwab said there was no comparison between her country and the EU when it comes to a free trade pact with India. "EU is not a major agriculture producer, although they do a lot of export of value-added (products). Same thing is with a lot of ASEAN countries," she said.
Bureau Report
Chicago, Feb 21: Not willing to tread the path taken by EU and ASEAN for market-opening trade pacts with India, the US said on Thursday that it is not ready for a free trade deal with the world`s second-fastest growing economy as it cannot fully open agricultural imports from American farmers.
"Quite honestly, it would be quite difficult, at this point of time for India to imagine doing that kind of a deal with the United States considering its sensitivities in agriculture," US Trade Representatives Susan Schwab said on the sidelines of India-US Summit for Small and Medium Enterprises in Chicago.
India is at advanced stages of negotiations on economic cooperation agreements with the EU, its largest trading partner, and ASEAN.
Commerce Secretary Gopal K Pillai said India`s free trade agreement with the European Union encompasses "substantial" trade, but Schwab said the US wants "almost 100 per cent" coverage.
This means, if India desires to have an FTA or economic cooperation agreement, it has to allow a zero duty market for everything, including highly-sensitive agriculture products.
Protecting its subsistent farming from cheap imports has been one of the key areas of concerns for India under the Doha Round of multilateral negotiations for a global trade deal.
Schwab said there was no comparison between her country and the EU when it comes to a free trade pact with India. "EU is not a major agriculture producer, although they do a lot of export of value-added (products). Same thing is with a lot of ASEAN countries," she said.
Bureau Report
Stocks Cling to Gains After Data
Thursday February 21, 10:22 am ET
By Joe Bel Bruno, AP Business Writer
Wall Street Held on to Slim Gains After Weak Economic Data, Concerns About Recession
NEW YORK (AP) -- Wall Street held on to narrow gains Thursday as traders digested another round of reports that indicate the U.S. economy continues to weaken.
The Philadelphia Federal Reserve's February manufacturing index was much lower than expected. Meanwhile, the Conference Board's gauge of leading economic indicators for January, used to predict which direction the economy is headed, posted its fourth straight drop
Investors had been hoping that data would be upbeat enough to reassure them that the economy isn't falling into recession, yet still show enough weakness to motivate the U.S. Federal Reserve to implement further rate cuts when it meets March 18.
Traders are already pricing in another interest rate cut -- perhaps by up to half a percentage point -- after minutes from the Fed's last policy-setting meeting indicated central bankers will remain vigilant about the economy. The Fed's own forecast was for slower growth and continued risks to the economy from housing and credit markets.
In the first hour of trading, the Dow Jones industrial average rose 37.94, or 0.31 percent, to 12,465.20.
Broader indexes also edged higher. The Standard & Poor's 500 index added 3.62, or 0.27 percent, to 1,363.65, while the Nasdaq composite rose 22.54, or 0.97 percent, 2,349.64
Thursday February 21, 10:22 am ET
By Joe Bel Bruno, AP Business Writer
Wall Street Held on to Slim Gains After Weak Economic Data, Concerns About Recession
NEW YORK (AP) -- Wall Street held on to narrow gains Thursday as traders digested another round of reports that indicate the U.S. economy continues to weaken.
The Philadelphia Federal Reserve's February manufacturing index was much lower than expected. Meanwhile, the Conference Board's gauge of leading economic indicators for January, used to predict which direction the economy is headed, posted its fourth straight drop
Investors had been hoping that data would be upbeat enough to reassure them that the economy isn't falling into recession, yet still show enough weakness to motivate the U.S. Federal Reserve to implement further rate cuts when it meets March 18.
Traders are already pricing in another interest rate cut -- perhaps by up to half a percentage point -- after minutes from the Fed's last policy-setting meeting indicated central bankers will remain vigilant about the economy. The Fed's own forecast was for slower growth and continued risks to the economy from housing and credit markets.
In the first hour of trading, the Dow Jones industrial average rose 37.94, or 0.31 percent, to 12,465.20.
Broader indexes also edged higher. The Standard & Poor's 500 index added 3.62, or 0.27 percent, to 1,363.65, while the Nasdaq composite rose 22.54, or 0.97 percent, 2,349.64
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