Business Blog Posts

Investors kept trading to a minimum this week in anticipation of next Wednesday's announcement. Activity the last several weeks has been heavily influenced by hopes for a large round of asset buying.

While earnings have largely taken a back seat to macroeconomic data, Microsoft Corp's (MSFT.O) stock rose 1.5 percent to $$26.67 a day after its profit beat estimates on higher sales of its flagship software.

Investors are betting on volatility to rise after Wednesday's announcement and have been hedging against unexpected outcomes from the Fed meeting, as well as Tuesday's midterm elections. The CBOE Volatility Index .VIX climbed about 13 percent this week, even as stocks rose marginally.

"There's no getting around how big of a week next week is, and it could be an inflection point either up or down," said Max Bublitz, chief investment strategist at SCM Advisors in San Francisco.

The midterm elections have also garnered investor attention, with polls indicating a Republican takeover of the U.S. House of Representatives.

On the downside, Dow components Chevron Corp (CVX.N) and Merck & Co (MRK.N), fell after posting quarterly results. Chevron fell 2.2 percent to $82.61 on a weaker-than-expected profit, while Merck lost 1.8 percent to $$36.28 after its sales disappointed investors.

The Dow Jones industrial average .DJI added 4.54 points, or 0.04 percent, to 11,118.49. The Standard & Poor's 500 Index .SPX shed just 0.52 of a point, or 0.04 percent, to 1,183.26. The Nasdaq Composite Index .IXIC edged up just 0.04 point, or 0.00 percent, to 2,507.41.

For the week, the Dow dipped 0.1 percent while the S&P 500 edged up only 0.02 percent and the Nasdaq added 1.1 percent.

A HEALTHY OCTOBER

For the month of October, though, it was a solid upswing, with the S&P 500 gaining 3.7 percent, while the Dow advanced 3.1 percent and the Nasdaq jumped 5.9 percent.

U.S. economic growth edged up as predicted in the third quarter, but not enough to chip away at high unemployment or change expectations of more monetary easing from the Federal Reserve next week.

In another snapshot of the economy, the Thomson Reuters/University of Michigan's survey showed that consumer sentiment weakened slightly in October, dropping to its lowest level in almost a year.

The week of November 1 marks the final peak week of the third-quarter earnings season, as 94 S&P 500 companies and two Dow components are expected to report.

With 335 S&P 500 companies having reported so far, some 77 percent have beaten earnings estimates. That is just shy of the record beat rate of 79 percent in the third quarter of 2009, according to Thomson Reuters data.

The conglomerate, India's largest listed company, has been investing overseas in shale gas assets and has been looking to widen its businesses beyond petrochemicals, refining, oil and natural gas exploration, and retail.

"Improved refining margins and high operating rates at all our manufacturing facilities led to a record quarter," Chairman Mukesh Ambani said in a statement.

"We are focused on identifying opportunities that leverage India's unique demographic and market potential," he said.

Controlled by Ambani, the world's fourth-richest man according to Forbes magazine, the company has struck three shale gas joint ventures with U.S. firms so far this year.

The company also made a dramatic return to the telecoms business with a $1 billion acquisition of Infotel Broadband, the only company to win a nationwide license for broadband wireless spectrum in a government auction this year.

Reliance is pumping about 55-60 million cubic meters of gas a day from KG D6, off India's east coast, and the country's oil secretary said in July the company would be able to pump gas at full capacity during the year to March 2013.

Gross refining margin at Reliance's flagship refining business in the September quarter was $7.9 per barrel, up from $7.3 per barrel in April-June and in line market estimates of $8 per barrel.

The margins, a key measure of profitability, stood at $6 a barrel in the year-earlier quarter. The refining margins have been trending higher after having halved in the December 2009 quarter.

Reliance said net profit rose 28 percent to 49.23 billion rupees ($1.1 billion) in the fiscal second-quarter ended September 30 from 38.52 billion a year earlier. The profit was the company's highest since the December 2007 quarter.

A Reuters poll had forecast quarterly net profit of 48.3 billion rupees.

Shares in Reliance, valued at nearly $81 billion, have risen 0.6 percent so far in 2010, lagging a nearly 15 percent gain in the main BSE index .BSESN.

(Additional reporting by Devidutta Tripathy and Manasi Phadke; Editing by Muralikumar Anantharaman and Tony Munroe)

Saskatchewan, where fertilizer producer Potash Corp is based, wants Ottawa to reject the Anglo-American mining giant's $39 billion offer, the largest takeover bid of 2010.

It says a deal would rob Canada of a key strategic resource, as well as cutting jobs, Saskatchewan's tax take and its royalty payments, and it says the provinces of Alberta, Manitoba, New Brunswick and Quebec also oppose the bid.

Alberta, Manitoba and Saskatchewan alone account for 48 of the 142 seats the ruling Conservatives hold in the House of Commons, and the minority government needs those seats to stay in power.

"How do you overcome the strategic concern? ... This is more important going forward for the country than maybe it ever has been because the world is prizing food security and energy security," Saskatchewan Premier Brad Wall said in Toronto.

"Isn't it time that we maybe got a little bit circumspect about deals that involve this size of a reserve and this size of a company? I guess that's our position."

Potash Corp is the world's biggest producer of its namesake crop nutrient, demand for which is soaring as food prices climb and demand for fertilizers rise. It has flatly rejected BHP's $130 a share offer as inadequate.

Potash Corp stock was up just over 2 percent at $145.75 on the New York Stock Exchange. The shares spiraled above BHP's the offer price in August, when BHP launched its bid, and have stayed above that level, signaling that investors expect a higher offer to emerge.

POLITICAL CHALLENGE

The issue of whether to approve the offer has become a huge political challenge for the federal Conservative government, which has said it would meet a legal deadline of midnight on November 3 (0400 GMT November 4) to approve or block it.

In comments that appeared to make a delay highly unlikely, federal Industry Minister Tony Clement said a decision would come "sometime between a minute from now and midnight November 3."

If the government blocks the bid, it risks damaging Canada's reputation as a country that's open to foreign investment.

But accepting it might drive voters in Saskatchewan and in other provinces to other parties, jeopardizing the Conservatives' chances of staying in power after a federal election widely expected in the first half of 2011.

Speaking later to CPAC television, Clement said foreign investment had traditionally been a net benefit to Canada, bringing jobs, competition, innovation and production.

"We can't close our borders, and nor would we want to, because different companies may want us to export to other countries, or invest in other countries," he said.