23 - 29, 2000
West begins to open to North Korea
As North Korea prepares for Monday's historic visit
by the U.S. Secretary of State, Britain and Germany announced Thursday
they will open diplomatic relations with North Korea.
British Foreign Secretary Robin Cook revealed his
plans as he and Prime Minister Tony Blair were en route to Seoul for
an Asia-Europe summit. German Chancellor Gerhard Schroeder made his
announcement in the South Korean capital, where he was to attend the
ASEM (Asia-Europe Meeting) summit.
"It will happen," Schroeder told the
German television network ARD. "The basics have been decided. It
could go very quickly but there's no definitive timetable."
Cook said Britain would establish relations with
Pyongyang for the first time since the communist state was set up more
than 50 years ago.
"The opening of diplomatic relations is not in
any way an approval of the conduct of the regime," Cook said.
"But it may well be helpful in resolving ... the strong tension
between it and South Korea."
The U.S. State Department said it expects to follow
suit as it sees progress in talks on missiles and nuclear weapons.
U.S. State Department spokesman Richard Boucher,
speaking three days before Secretary of State Madeleine Albright
leaves Washington for Pyongyang, said the United States encouraged
openings toward the secretive communist state.
"We think it's good that North Korea is
establishing these relationships," he told a daily briefing.
Albright will be the first U.S. cabinet member ever
to visit North Korea, which fought U.S. troops in the Korean War of
1950-53. But the two countries have not established relations and
North Korea remains on the State Department's list of "state
sponsors of terrorism."
Asked when Washington would establish relations,
Boucher said it was part of a step-by-step process.
U.S. trade deficit narrows
The United States trade deficit narrowed
substantially to a six-month low in August as a surge in exports of
goods ranging from computer chips to airplane engines offset record
imports, government figures released Thursday showed.
The trade deficit, which measures the amount of
money spent on imports coming into the U.S. versus the amount received
from exports leaving the country, narrowed in August to $29.44
billion. That was $2.26 billion below July's revised $31.7 billion
deficit and the $31.8 billion gap expected by analysts polled by
All told, the shrinking trade deficit was welcome
news to analysts, investors and policymakers — a hopeful sign that
U.S. companies are still exporting their goods and services abroad,
even with the strong U.S. dollar. A strong dollar makes it more
expensive for people and companies in other countries to purchase U.S.
products and services.
Even so, analysts, economists and even Federal
Reserve Chairman Alan Greenspan cautioned that higher oil prices could
impact the trade deficit specifically and the economy in general as
the effects of oil prices at 10-year highs begin to appear in later
"For the moment, this appears extremely
favourable for the economy," said Pierre Ellis, an economist with
Primark Decision. "This is the second month out of three where
exports have increased substantially, which means that foreign
economies are perhaps strengthening enough to buy our stuff. Still,
the risk is for further oil price shock, which could push the deficit
Record trade imbalances have been a concern for
analysts and investors because they reflect, in part, the U.S.
consumers' uninhibited desire to buy, despite the fact that the Fed
has tried repeatedly to deter consumer spending by raising the cost of
borrowing by almost 2 per cent since May 1999.
Asia roars up after Nasdaq
Asia's top markets blasted higher Friday, with key
indexes across the region climbing after a bounce on Wall Street a day
earlier. Tech stocks led the way, driving Tokyo's Nikkei index up 2.6
per cent while leading benchmarks in Korea and Taiwan jumped 6 per
cent or more.
Tokyo's Nikkei index closed up 387.65 points at
15,198.73, with rallies for blue-chip technology companies ending a
three-day string of losses for the index.
In Hong Kong, the Hang Seng index rose 587.97
points, or 4.1 per cent, to reach 15,101 in the afternoon session.
In Singapore, the Straits Times index climbed 44.79
points, or 2.4 per cent, to 1,928.84, with Chartered Semiconductor
jumping nearly 12 per cent. In Sydney, the S&P/ASX index rose 43.1
points, or 1.35 per cent, to 3,235.8.
Other tech-rich indexes in Asia also rose. Korea's
KOSPI index rose 6 per cent and the Taiwan Weighted index in Taipei
tacked on 6.4 per cent.
Europe gets Nasdaq lift
European stock markets all opened in positive vein
Friday, boosted by a near-8 per cent revival in the Nasdaq composite,
bellwether U.S. technology index on Thursday.
In London the FTSE 100 index added 38 points, or
0.6 per cent, to reach 6,257.4, with software and computer services
firms leading the way higher.
Frankfurt's benchmark Xetra Dax climbed 28 points,
or 0.4 per cent, to 6,647.90, while in Paris the CAC 40 rose 1.1 per
cent to 6,135.16, and Zurich's SMI increased 0.6 per cent to 7,809.6.
Markets in southern Europe also rose, with Madrid
advancing 1.5 per cent.
The FTSE Eurotop 300, a broader measure of the
region's blue chips, rose 0.7 per cent, led by information technology
firms and telecom operators.
Nasdaq bounces back
The Nasdaq composite index rallied to its third
biggest gain on record Thursday after surprisingly strong earnings
from several technology firms eased some of the profit fears that
plagued Wall Street since Labor Day.
The Nasdaq Thursday surged 247.04 points, or 7.79
per cent, to 3,418.60 and its third largest gain. The advance is
outdone only by Friday's 7.87 per cent jump and May 30's record 7.94
per cent rally. Thursday's rise put the Nasdaq higher for the week, an
advance that — if its holds — would mark the indexes' first
positive week since August.
The Dow gained 167.96, or 1.7 per cent, to
10,142.98, narrowing its annual loss to 12 per cent. The S&P 500
leapt 46.63, or 3.5 per cent, to 1,388.76 but it is 6 per cent lower
More stocks rose than fell in heavy trading.
Advancing issues on the New York Stock Exchange beat declining ones
1,962 to 916, on volume of 1.2 billion shares. Nasdaq winners topped
losers 2,837 to 1,158, as more than 2.3 billion shares changed hands.
Mergers & Acquisitions
Time—Times-Mirror: The Time Inc. division of
Time Warner Inc. has agreed to buy Times Mirror Magazines for $475
million, according to a published report Friday.
insurer Allianz AG bought U.S. equity fund manager Nicholas-Applegate,
a privately owned San Diego-based investment management firm, in a
deal that could cost up to $2.2 billion in up-front payments and
later, performance-related bonuses.
ABN Amro NV—Alleghany Asset Management: Dutch
bank ABN Amro NV agreed to buy Alleghany Asset Management, a unit of
U.S.-based Alleghany Corp., for $825 million in cash.
Marvell—Galileo: Looking to strengthen its
position in the fast-growing market for communications chips, Marvell
Technology Group Ltd. agreed Tuesday to buy Israel's Galileo
Technology for $1.88 billion in stock — but Wall Street clearly had
trouble digesting the merger.
Dow components United
Technologies Inc. and Honeywell International Inc. are discussing a
possible merger that would create an international manufacturing titan
producing everything from jet engines to elevators, the companies
Microsoft: Software giant Microsoft Corp.
reported that its first-quarter net income, before an accounting
change, rose to 18 per cent to $2.58 billion, or 46 cents per share,
from $2.19 billion, or 40 cents per share, in the same quarter last
Union Pacific: Union Pacific Corp., the largest
U.S. railroad, reported a 17 per cent increase in third-quarter profit
Thursday. Income from continuing operations in the third quarter was
$256 million, or $1.00 per diluted share.
Exodus: Exodus Communications Inc. said it
earned $60.6 million, or 14 cents per share.
R.J. Reynolds: R.J. Reynolds Tobacco Holdings
Inc., parent of No. 2 U.S. cigarette maker R.J. Reynolds Tobacco Co.,
reported a 6 per cent rise in third-quarter profits Thursday. The
Winston-Salem, N.C.-based maker of Camel, Doral, Winston and Salem
cigarettes said quarterly profits rose to $117 million, or $1.16 per
diluted share, from $110 million, or $1.01, in the year-ago period.
McDonald: McDonald's Corp. Thursday reported
third-quarter profit rose 1 per cent. The world's largest restaurant
chain said net income rose to $548.5 million, or 41 cents a share,
from $540.9 million, or 39 cents, a year earlier.
USX-U.S.: USX-U.S. Steel Group, the largest
U.S. steel maker, said Thursday its third-quarter operating profits
tripled, topping analysts' expectations, as income from steel
operations rose to $23 million from $3 million a year earlier.
E*Trade: Online discount broker E*Trade Group
Inc. posted an unexpected profit for a rocky quarter in the markets.
The company earned $7.2 million, or 2 cents a share, from ongoing
operations in its fiscal fourth quarter.
eBay: Internet auctioneer eBay Inc. topped
third-quarter estimates by three cents and said online revenue rose
108 per cent. The San Jose, Calif.-based company posted net income,
excluding charges, of $19.1 million or 7 cents a diluted share,
compared to $3 million, or 1 cent a diluted share in the year ago
Eli Lilly: Eli Lilly and Co. said Thursday
profits from operations rose 15 per cent in the third quarter. The
Indianapolis-based drug maker said net income rose to $778.8 million,
or 71 cents a diluted share.
Chinese PM in South Korea
Chinese Premier Zhu Rongji arrived in South Korea
on Tuesday to pursue an Asian tour after leaving Japan, where his
six-day stay got mixed reviews.
Zhu's first visit to South Korea will include talks
with President Kim Dae-Jung and the third Asia-Europe Meeting summit
in Seoul later this week, officials said.
The talks and the summit of 25 Asian and European
leaders will be dominated by North Korea and the reconciliation
between the two Koreas.
Treasurys slightly higher
U.S. Treasurys were flat to higher on Thursday as
resurgent Middle East violence and signs of further weakness in U.S.
manufacturing kept investors in the shelter of low-risk government
debt. 10-year Treasury notes gained 7/32 to 100-20/32, yielding 5.67
per cent. The 30-year long bond rose 4/32 to 107 even, yielding 5.75
per cent. Two-year notes gained 1/32 to 100-8/32, yielding 5.86 per
cent. Five-year notes dipped 1/32 to 104-9/32, yielding 5.67 per cent.
Fixed mortgage rates dip
Long-term mortgage rates stayed below 8 per cent
for the 10th consecutive week as the housing market remained stable, a
newly released survey by Freddie Mac shows.
The benchmark 30-year fixed-rate mortgage (FRM)
averaged 7.83 per cent for the week ending Oct. 20.
The average this week for a 15-year fixed-rate
mortgage was 7.5 per cent.
One-year adjustable-rate mortgages (ARMs) this week
averaged 7.25 per cent.
German confidence slides
A closely watched indicator of German business
confidence sounded warning bells Thursday, when it declined for the
fourth straight month, and more than analysts had anticipated.
The IFO Institute's monthly survey of business
confidence The IFO Institute's monthly survey showed the western
German economic index edged down to 98.0 from a revised 98.9 reading
in August, the lowest since October 1999. The index reached a
nine-year high of 102.0 in May.
Economists had anticipated a figure of around 98.6,
as lofty oil prices caused concern in sectors such as transport and
ECB holds key rate steady
The European Central Bank left its key interest
rate unchanged at 4.75 per cent Thursday, as expected, deciding the
weakness of the euro and high oil prices didn't pose enough of an
inflationary threat to the economy of the euro zone to justify another
rate increase yet.
Many economists expected the bank to leave its
short-term rate target untouched, just two weeks after the ECB
unexpectedly lifted rates by a quarter per centage point.
Jobless claims drop
The number of Americans filing new claims for
unemployment benefits were reported at 307,000 for the week ended Oct.
14, up from a revised 314,000 the week before, the government reported
Economists polled by Briefing.com had forecast U.S.
jobless claims of 303,000 for the period.
Senate votes to lift Cuba trade sanctions
The Senate has approved a compromise spending bill
for agriculture that eases trade sanctions on Cuba for the first time
in 40 years.
Reflecting changing U.S. attitudes toward the
Caribbean island, the legislation, which was approved 86-8, allows the
sale of food and medicine to Cuba but prohibits U.S. public or private
financial institutions from financing those sales.
Havana will be allowed to purchase food and
medicine from the U.S. with the help of third-party financiers. Under
certain humanitarian circumstances, the U.S. president may waive the
ban and allow direct U.S. financing.
The bill also codifies a ban on U.S. travel to
Cuba, which takes away a presidential prerogative to determine the
Euro hits record low
The euro plunged 2.5 per cent to record lows
against the dollar Wednesday, less than a month after Group of Seven
central banks stepped into foreign exchange markets to support the
ailing European currency.
Increasingly bearish market sentiment has loomed
over the euro this week since European Central Bank President Wim
Duisenberg appeared to downplay the likelihood that central banks are
ready to step in with another bout of buying.
Its losses initially were limited by the markets'
steep declines but, as stocks pared their sharp losses, the euro's
buttress disappeared and the currency spiraled lower. It hit a low of
83.28 cents, more than a cent below the previous record low, set last
The euro had recovered slightly to 83.82 cents but
still was below Tuesday's close of 85.4 cents. The dollar was at
107.64 yen, down from Tuesday's close of 107.99 yen.
Qualcomm gets China deal
In a major boost for Qualcomm Inc., China Unicom
Group confirmed Thursday it plans to build a current generation
wireless network using the San Diego-based company's technology.
China's No. 2 telecom company said it had not yet
decided the scale of the network or when construction would begin.