STOCKS
Nike Sales and Profit Rise: On Thursday, after the close of trading, Nike Inc. reported
that its sales rose 4.8 percent during the quarter ended in May. Added to this,
the athletic-gear maker also recorded growth in revenue across most of its
markets worldwide. However, as a result of the stronger U.S. dollar (USD),
future orders and revenue growth were negatively impacted. After the release of
the earnings results which beat expectations, the shares of Nike traded at
$107.95, up 2.6 percent. For the period ended May 31, Nike’s revenue increased
from $7.43 billion a year earlier to $7.78 billion, while sales improved 13
percent, excluding the impact of a stronger greenback. According to analysts
polled by Thomson Reuters, there were expectations that Nike’s revenue would
increase to $7.69 billion, up 4 percent. Nike derives most of its income from
footwear as well as North America yet more than half of its sales are derived
from around the world and with foreign exchange pressures as well as economic
pressures globally, this could impact the company’s revenue and margins in the
long run. Overall, Nike reported a profit of 98 cents a share, or $865 million,
which is up from a year ago at 78 cents a share, or $698 million. Analysts were
expecting the company to report profit per share of 83 cents. Meanwhile, gross
margin rose from 45.6% to 46.2% as a result of an increase in the company’s
higher margin direct to consumer business as well as higher prices. In the
latest period, Nike also used expensive sponsorships in order to increase its market
share in sports such as basketball and soccer.
INDICES
On Thursday, U.S. stocks ended the volatile trading session
lower. Losses were led by energy and industrials companies which weighed on
broader indexes which declined for the 2nd straight session. Added to this, the
chief investment officer at Tower Bridge Advisors, James M. Meyer, stated that
a weakness in transportation stocks is also weighing on markets. The Dow
Transportation index (DJT) declined to 8,239.58, down 0.9% and this index is
now down more than 10 percent from its peak that it reached on the 28th of
November last year. The transport index is important as it is often considered
to be a barometer of the health of the overall economy. At the close of
trading, the Dow Jones Industrial Average (DJIA) declined 0.4%, or 75.37
points, to 17,890.360. Also on the downside was the Nasdaq Composite index
(COMP) which dropped 0.2%, or 10.22 points, to 5,112.19 while the S&P 500
index (SPX) declined 0.3%, or 6.27 points, to 2,102.31.
CURRENCIES
In forex trading on Thursday, the U.S. dollar pared gains in
quiet trading. This came after positive economic reports out of the U.S. while
investors continued to monitor the ongoing negotiations around the Greek debt
crisis. According to a report by the Commerce Department, in May, personal
spending rose by 0.9%. This beat expectations for a gain of 0.7 percent while
personal spending in April rose by only 0.1%. Added to this, the report also
showed that in May, personal income rose by 0.5% which was in line with
forecasts. Meanwhile, in a separate report, the U.S. Department of Labor said
that the number of people filing for jobless benefits for the first time in the
week ending on the 20th of June, increased to 271,000, up 3,000. The previous
week’s total was at 268,000. The EUR/USD traded steady at 1.1200 while the
GBP/USD traded at 1.5744, up 0.24%. Against the Japanese yen and the Canadian
dollar, the greenback traded lower with USD/JPY down 0.21% at 123.58 and with
USD/CAD down 0.31% and trading at 1.2347. Also, the U.S. dollar index was
steady at 95.39.
COMMODITIES
On Friday, crude oil prices declined in early Asian trade.
This comes as investors focus on the oil rig count by Baker Hughes expected
today, which is a key gauge of production intentions in the U.S. as well as the
scope for demand while the economy shows clear signs of growth. Expectations
are that the oil services firm could report a draw in oil rigs for the 29th
consecutive week, after reporting last week that the oil rigs in the U.S.
declined by 4 to 631 for the week ending on the 19th of June. Meanwhile, WTI
crude for delivery in August traded at $59.64 a barrel, down 0.09% on the
NYMEX. On Thursday, Brent crude oil for delivery in August traded at $63.25 a
barrel, down 0.38%, or $0.24, on the Intercontinental Exchange (ICE) in London.
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