Palm oil stocks rally on Indonesia biodiesel reforms

SINGAPORE (Feb 6): Shares of palm oil producers rallied on news that Indonesia will increase biofuel subsidies and revise the way it calculates biodiesel prices.

Subsidies for biodiesel will rise to IDR4,000 a litre from IDR1,500, while those for bioethanol will go up to IDR3,000 a litre from IDR2,000. The increases are still subject to parliamentary approval.

Meanwhile, Jakarta will introduce a new formula to calculate biodiesel prices, which will be based on palm oil prices instead of oil prices in Singapore.

" These revisions, if approved, will be a game changer for the biodiesel industry in Indonesia," CIMB analyst Ivy Ng wrote in a note today.

" The proposed revisions to the biodiesel subsidy and pricing formula for biodiesel in Indonesia will be able to revive the biodiesel industry in Indonesia, which has slowed down significantly following the sharp decline in crude oil prices," she said.

" The new biodiesel pricing formula, which is similar to that applied in Malaysia, is positive for Indonesia&rsquo s biodiesel producers. This is because they will now be able to enjoy a fixed profit margin and the pricing achieved for their biodiesel products will no longer be tied to diesel prices."

At 10:45am (0245 GMT), Golden Agri-Resources rose 4.7% to 44.5 cents, Indofood Agri Resources climbed 2.8% to 73 cents, Wilmar International put on 2.2% to $3.28 and First Resources jumped 4.3% to $1.955.  

 

DJIA 17,884.88  +211.86  +1.20%

S& P 500 2,062.52  +21.01 +1.03%

NASDAQ 4,765.10   +48.40 +1.03%

FTSE 100 6,865.93  +5.91 +0.09%

Nikkei 225 17,504.62  -174.12 -0.98%

Hang Seng 24,765.49  +85.73 +0.35%

ASX 200 5,810.98  +33.64 +0.58%

[NEW YORK] US stocks climbed on Thursday as energy shares bounced with oil prices, while news Pfizer would buy Hospira in a massive deal further boosted the market.

The S& P energy index jumped 1.5 per cent as oil prices rebounded sharply from a rout in the previous session. US crude rose 4.2 per cent to settle at US$50.48 following increased violence in producer Libya and on an expected boost in oil demand from China' s central bank easing.

Some euro zone concerns eased as well. Greece proposed a bridging program until the end of May to allow time for debt talks, vowing to do everything in its power to avoid default.

On Wednesday, the European Central Bank abruptly said it would stop accepting Greek bonds in return for funds. " The market' s trying to get its hands around what' s going on in Greece. There was an expectation it might blow up. Now, certainly in the short term, it looks like we won' t be seeing any fireworks," said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Mass

The day' s move put the S& P 500 back into positive territory for the year after days of volatile price action, largely driven by moves in oil.

Pfizer was among the biggest boosts to the S& P 500 after it said it would buy Hospira Inc for about US$15 billion to boost its portfolio of generic injectable drugs and copies of biotech medicines. Hospira shares rocketed 35.2 per cent to US$87.64 as the S& P 500' s biggest percentage gainer. Pfizer gained 2.9 per cent US$32.99.

The Dow Jones industrial average rose 211.86 points, or 1.2 per cent, to 17,884.88, the S& P 500 gained 21.01 points, or 1.03 per cent, to 2,062.52 and the Nasdaq Composite added 48.39 points, or 1.03 per cent, to 4,765.10.

Adding to the upbeat tone, weekly jobless claims rose less than expected last week. The report comes on the heels of a private payrolls report that fell short of expectations on Wednesday and ahead of a monthly employment report on Friday.

Other data showed the US trade deficit in December widened to its highest since 2012, which could dampen the fourth-quarter growth estimate, and nonfarm productivity fell more than expected in the fourth quarter.

After the bell, shares of LinkedIn rose 6.5 per cent to US$253.50 following a bigger-than-expected jump in quarterly revenue, while shares of Twitter were up 7.6 per cent at US$44.40 also as quarterly revenue surpassed analysts' expectations.

Michael Kors shares fell 2.3 per cent to US$69.77 after the luxury accessories retailer posted third-quarter results and forecast a lower-than-expected profit for the current quarter.

About 7 billion shares changed hands on US exchanges, below the 8.1 billion average for the last five sessions, according to BATS Global Markets.

NYSE advancing issues outnumbered declining ones 2,349 to 749, for a 3.14-to-1 ratio on the Nasdaq, 2,028 issues rose and 718 fell, for a 2.82-to-1 ratio favoring advancers.

The S& P 500 posted 43 new 52-week highs and 2 lows the Nasdaq Composite recorded 90 new highs and 36 lows.

 

[HONG KONG] Concerns about Greece' s plans to renegotiate its bailout rattled most Asian markets on Thursday and put pressure on the euro, but Shanghai and Hong Kong rallied after China cut the amount of funds banks must hold in reserve.

Traders mostly took their cue from New York, which was hit by news that the European Central Bank would not allow Greek lenders to use government bonds to borrow cash, cutting off much needed access to liquidity.

Tokyo tumbled 1.00 per cent despite a surge of more than 10 per cent in Sony, while Sydney, which has risen for the past 10 sessions, was 0.15 per cent higher. Seoul shed 0.76 per cent and Taipei lost 0.32 per cent, while Singapore dipped 0.50 per cent.

However, Shanghai surged 2.45 per cent and Hong Kong added 1.01 per cent.

Under the terms of its bailout Greece' s banks had been given a waiver to use government bonds - which have a junk rating - as collateral as long as Athens stuck to its obligations. The anti-austerity Syriza party last month won a general election on a promise to renegotiate the terms of its debt repayments.

The announcement came hours after new Greek finance minister Yanis Varoufakis held talks with ECB chief Mario Draghi, in his latest stop during a Europe-wide charm offensive looking to drum up support for a new deal.

It also comes as Varoufakis prepares to meet his German counterpart Wolfgang Schaeuble Thursday.

The meeting will be closely monitored as Germany, the eurozone' s main paymaster, is the strongest opponent of any easing in the bailout terms.

However, Athens said the move will have " no adverse impact" on its financial sector, saying it would be " fully protected" , with other liquidity channels still available.

Nevertheless, traders were spooked. The Dow, which had surged during the day, ended flat, while the S& P 500 fell 0.42 per cent and the Nasdaq lost 0.23 per cent.

The euro ended Wednesday at US$1.1334 and 132.81 yen in New York, from US$1.1470 and 135.00 yen earlier in Asia.

On Thursday in Tokyo the single currency bought US$1.1335 and 132.80 yen.

The dollar was 117.30 yen on Thursday against 117.18 yen.

Shanghai and Hong Kong surged after the People' s Bank of China on Wednesday cut the percentage of cash lenders must keep in reserve to kickstart the mainland economy. It was the first across-the-board cut since May 2012.

Official data last week showed the economy in 2014 grew at its slowest pace in 24 years, while two separate gauges indicated manufacturing activity shrank in January.

It is also the latest move by authorities to juice the economy after the bank in November unveiled a surprise cut in interest rates.

" This is very positive for the stock market," Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Asia Ltd., told Bloomberg News.

" We should see a continuation of interest rate and reserve-ratio cuts in the next six to 12 months. Financials and cyclical sectors will benefit the most." On oil markets US benchmark West Texas Intermediate for March delivery was up 51 cents at US$48.96 a barrel in morning trade, and Brent crude for March gained 76 cents at US$54.92.

Gold fetched US$1,267.80 an ounce, against US$1,267.80 on Wednesday.

 

5 Feb  9:54 AM

Overview Americas Europe Asia

 

[NEW YORK] The S& P 500 and Nasdaq ended lower on Wednesday, snapping a two-day rally as energy shares slid with oil prices and as investors' anxiety about the euro zone returned in the closing minutes of trading.

The benchmark index added to losses late in the session after the European Central Bank abruptly cancelled its acceptance of Greek bonds in return for funding. The move means the Greek central bank will have to provide its banks with tens of billions of euros of additional emergency liquidity in coming weeks. " It' s kind of reconfirming what we' ve thought for a while, which is that there is going to be a liquidity crunch if they don' t resolve this Greek situation," said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston. " They make a little bit of progress and then they kind of fall back." Shares of the Global X FTSE Greece 20 exchange-traded fund dropped 10.4 per cent, with volume spiking late in the session. The euro also fell on the news, while the S& P financial index turned lower and ended down 0.3 per cent.

The Dow ended in positive territory, lifted by shares of Walt Disney, up 8 per cent to US$101.64 (S$137.13) after quarterly profit topped analysts' expectations.

The S& P 500 energy index was off 1.6 per cent as oil prices declined after a four-day surge of nearly 20 per cent. US crude sank 8.7 per cent to settle at US$48.45 following a new build in US crude stockpiles.

The Dow Jones industrial average rose 6.62 points, or 0.04 per cent, to 17,673.02, the S& P 500 lost 8.52 points, or 0.42 per cent, to 2,041.51 and the Nasdaq Composite dropped 11.04 points, or 0.23 per cent, to 4,716.70.

The day' s dip followed a two-day gain of 2.8 per cent for the S& P 500, driven largely by the rebound in energy shares.

Big biotechnology names declined. Leading them lower was Gilead Sciences, whose stock dropped 8.2 per cent to US$98.43, a day after the drugmaker said it is offering steeper-than-expected discounts on its hepatitis C drugs.

The news fueled concerns the sector would face increasing price pressure. The Nasdaq Biotech Index was down 1.8 per cent. Gilead was also the biggest drag on the S& P 500 and Nasdaq.

About 7.8 billion shares changed hands on US exchanges, below the 8.1 billion average for the last five sessions, according to BATS Global Markets.

Declining issues outnumbered advancing ones on the NYSE by 1,993 to 1,079, for a 1.85-to-1 ratio on the Nasdaq, 1,677 issues fell and 1,054 advanced for a 1.59-to-1 ratio.

The S& P 500 was posting 37 new 52-week highs and 3 lows the Nasdaq Composite was recording 79 new highs and 34 lows.