US & World Daily Markets Financial Briefing 01-02-2010

Watch us trade �Live�! Watch our Top Tier Traders make ($500 - $2000) a day
in �real time� and learn how to easily duplicate the process!� Click Here for more information -

Stocks Look to Data as They Attempt to Shake off Negative Sentiment

The major U.S. index futures are pointing to a higher opening on Monday, with sentiment getting a lift from the personal income and outlays report released earlier in the day. Personal income rose at a better than expected rate, while personal spending growth was a tad below what economists had expected, although it represented the third straight month of gains.

Commodities are rebounding from oversold levels and if the gains are sustained, they could lend support to the commodity space. Talks of additional stimulus spending should also remove some anxiety over the feeble nascent growth tapering off. All said and done, the direction of the day’s trading largely hinges on the results of the Institute for Supply Management’s purchasing managers’ index.

U.S. stocks extended their losses in the week ended January 29th, as economic data remained mixed. In the process, traders ignored some promising earnings numbers and harped on the intensifying uncertainty.

Last Monday, the major U.S. averages closed modestly higher following some bargain hunting, although the optimism was trimmed by the release of a disappointing housing market report. However, underlying fears came to the fore on Tuesday, as stocks ignored some fairly encouraging economic reports and declined in late trading to close modestly lower.

The Fed’s upbeat assessment relayed via the Federal Open Market Committee’s post-meeting policy statement helped the major averaged end a volatile session on a positive note on Wednesday. On Thursday, selling pressure re-emerged, as traders focused on a feeble increase in durable goods orders and disappointing forecasts from technology firms and sent stocks sharply lower. Consequently, the major averages closed notably lower.

After seeing strength for much of Friday’s session following the release of better-than fourth quarter GDP data, stocks declined in the afternoon. Anxiety triggered by poor state of fiscal affairs in some of the European nations made investors overlook some encouraging economic reports on the domestic front.

Consequently, the Dow Industrials ended down 1.04% and the S&P 500 Index receded 1.64%, while the Nasdaq Composite closed at its lowest level since November 27th at 2,147, down 2.63%. For the month, the Dow Industrials lost 3.46%, the S&P 500 Index receded 3.70% and the Nasdaq Composite Index ended off 5.37%.

Equities have undergone some degree of correction for the past two weeks and have pulled back between 3%-6% during the period. Danske Bank believes that there is still some way to go before risk appetite truly returns. The recent lackluster phase is mainly due to the markets already discounting healthy corporate profit growth.

Among the sector indexes, the Philadelphia Semiconductor Index lost 4.07% for the week, the NYSE Arca Airline Index slipped 6.23% and the NYSE Arca Gold Bug Index declined 7.39%. While the NYSE Arca Securities Broker/Dealer Index receded 3.05%, the NYSE Arca Oil Index and the Philadelphia Oil Service Index fell over 2% each.

TSX May Open Higher On Commodities, Value Buying

Canadian stocks may open higher on Monday as commodity prices appeared to have arrested their losing streak. While the price of oil was recovering from its 6-week low, the price of bullion edged up after hitting a three-week low. Moreover, bottom fishing after the main index hit a 2-month low in the previous session would also help Bay street to post gains.

The S&P/TSX Composite Index ended Friday losing 179.90 points or 1.60% to 11,094.31. The price of oil was up $0.42 to $73.31, a barrel and that of bullion edged up $3.30 to $1,086, an ounce.

Energy stocks may be in play ahead of earnings reports from major oil companies. Suncor Energy and Imperial oil that are scheduled to release their earnings Tuesday.

Blackberry maker Research In Motion could see some buying after a research report said that worldwide smart phones sales grew 30% in the fourth quarter.

Potash Corp. may be in action after BHP Billiton purchased a Canadian Potash project, setting aside speculation that BHP may bid for Potash Corp.
 
Among financial plays, Bank of Nova Scotia may be in play after Korea Development bak said that it will opt out from a bid for a stake in Thailand's Siam City bank. Reportedly, BNS was one among the bidder.

Online gaming software maker Chartwell Technology reported fourth quarter net income from continuing operations of C$0.01 per share, compared to net income from comparable operations of C$0.04 per share in the year ago period.

Mining operator Roca Mines reported a narrower first quarter net loss of C$0.02 per share, down from a loss of C$0.06 per share in the year-ago quarter.

Specialized drug developer ConjuChem Biotechnologies reported narrower net loss for the year ended October 31, 2009 of C$0.06 per share, compared to a loss of C$0.16 per share, prior year.

Commerce Resources Corp. announced Saturday the resignation of its Chief Financial Officer Shaun Ledding and noted that he will remain as a consultant.

In brokerage updates, Scotia Bank trimmed Canadian Pacific Railway price target to C$61.50 from C$63.00.

From across the border, the U.S. Commerce Department's report revealed that real consumer spending rose a seasonally adjusted 0.1% in December, while the real after-tax income rose a seasonally adjusted 0.3% in the same period.

Crude oil futures are rising $0.65 to $73.54 a barrel after declining yet again in the week ended January 29th. In the previous week, the commodity fell $1.65 or 2.2% to $72.89 a barrel.

Last Monday, oil rose moderately, helped by an increase in risk preference following the rebound by the equity markets. However, oil futures receded on Tuesday and fell sharply on Wednesday, dropping over $1-a-barrel amid the release of the weekly inventory report showing a build up in gasoline and distillate stockpiles, but a drop in crude oil inventories.

Oil dipped marginally on Thursday and declined moderately on Friday, ending the week notably lower. The dollar’s strength following the fleeing of investors from risky assets helped exert downward pressure on most commodities during the week.

Significant downside for oil from current levels is unlikely, as the downside for oil is well protected at $70-a-barrel level. The markets seem to subscribe to the theory that oil prices below $70 are not compatible with the investment needs facing the oil sector going forward.

Gold futures are currently moving up $4.70 to $1,088.50 an ounce. In the week ended January 29th, the precious metal slid $5.90 or 0.54% to $1,083.80 an ounce.

The U.S. dollar gained ground against most currencies in the week ended January 29th due to its appeal as a safe haven in times of uncertainty and also supported by some positive U.S. economic data. The greenback rose 0.50% against the yen to 90.268 yen and rallied 1.95% against the euro to $1.3863.

The Greek debt worries were one of the reasons for the euro’s weakness last week along with a general increase in risk aversion, lower oil prices and the dissent among the FOMC members over the decision to keep interest rates low for an extended period. The euro depreciation is likely to continue if the euro zone governments fail to convince markets that they have credible plans to reduce deficits.

Currently, the dollar is trading at 90.245 yen and is valued at $1.3915 versus the euro.

You can now manage your positions directly from your web browser, whether you use PC or Mac.  Test-drive VT Trader™ Web with your free practice account! Click Here

Asian Markets End Mixed Amid Global Economic Concerns

Mixed trading was witnessed among the markets in Asia on Monday. While the markets in Hong Kong and South Korea managed to end in positive territory, the markets in Australia, China, Indonesia, Taiwan and Singapore ended in negative territory on concerns about global economic recovery. The markets in India and Japan ended mixed around the unchanged line. The weak closing on Wall Street in the previous session despite the positive advance fourth quarter GDP numbers impacted market sentiment.

In Japan, the benchmark Nikkei 225 Index rose 6.98 points, or 0.1%, to 10,205.02, but the broader Topix index of all First Section issues ended in negative territory with a loss of 2.51 points, or 0.3%, to 899.

On the economic front, a statement released by Japan Automobile Dealers' Association revealed that vehicles sales in the country, excluding mini vehicles, surged up 36.8% year-on-year to 238,362 units in January. The statement further noted that of the total sales, car sales rose 42.8%, while sale of trucks declined 9%.

Despite weak closing on Wall Street in the previous session and weak trading across other markets in the region, blue-chips stocks in the country advanced as traders opted for short-covering through adjustment of their portfolios by resorting to sale of blue chip stocks in other markets and short covering their exposure in Japanese market. The weakening of the local currency also contributed to some positive buying in select stocks. However, concerns about product recall among automotive stocks partially offset the gains.

Among the gainers, Sony Corp. gained 1.66%, Fanuc Ltd surged up 4.39%, Panasonic Corp. advanced 0.98%, Sharp Corp. rose 1.29%, Advantest Corp. added 0.36% and NEC Corp climbed 1.28%.
 
Banks ended in positive territory. Resona Holdings climbed 3.10%, Sumitomo Mitsui Financial added 0.55%, Mizuho Financial gained 1.14% and Mitsubishi UFJ Financial rose 1.07%.

Trading companies ended in negative territory on concerns about global economic recovery. Mitsubishi Corp. lost 2.15%, Mitsui & Co., fell 2.93%, Sumitomo Corp. slumped 3.04%, Toyota Tsusho Corp. declined 1.74% and Marubeni Corp. shed 3.04%.

Automotive stocks also ended weaker on concerns about the impact of product recalls. Honda Motor lost 2.47%, Toyota Motor fell 1.85%, Nissan Motor shed 2.04%, Mazda Motor plunged 3.67% and Mitsubishi Motor declined 2.40%.

Shipping stocks declined on concerns about economic recovery. Nippon Yusen lost 2.24%, Mitsui OSK Lines fell 2.30% and Kawasaki Kisen Kaisha plunged 5.30%.

In Australia, the benchmark S&P/ASX 200 Index declined 45.50 points, or 1.00% to close at 4,524, while the All-Ordinaries Index ended at 4,545, representing a loss of 52.10 points, or 1.13%.

On the economic front, results of a survey conducted by the Australian Industry Group revealed that and index measuring manufacturing activity in the country rose 2.5 points in January to 51.0 from a downwardly revised 48.5 reported for December. A reading above 50 indicates expansion while the reading below 50 indicates contraction.

A report released by the Australian Bureau of Statistics revealed that the asking price for a home in Australia rose 5.2% in the fourth quarter of 2009, higher than a revised 4.4% increase in the previous quarter. Analysts expected the asking price to rise by 3.5% for the fourth quarter. The report further revealed that housing prices surged up 13.6% during the quarter, higher than economists expectation for a 11% rise for the quarter. In the third quarter, prices rose 6.6% on annual basis.

The Housing Industry Association (HIA), in a statement, revealed that new home sales in the country declined 4.6% month-on-month during December, attributing higher interest rates and waning of the impact from first home-owner boost as the primary reasons. Of the new home sales, detached new home sales declined 6.2% while the volatile apartment sector rose 10.4% during the month, the report revealed.

The Reserve Bank of Australia reported that commodity prices, in SDR terms, increased 1.8% month-on-month in January, following a revised 2.1% rise in the previous month. The RBA attributed prices of sugar, copper and oil as primary reasons for the rise in prices. In Australian dollar terms, commodity prices were estimated to have fallen 0.8% month-on-month, the central bank revealed.
 
Resource stocks declined on lower commodity prices in the international market. BHP Billiton declined 0.51%, Rio Tinto dropped 0.87%, Fortescue Metals fell 2.87%, Gindalbie Metals lost 3.68%, Iluka Resources slipped 0.61%, Murchison Metals plunged 7.24% and Oz Minerals shed 2.35%.

Gold stocks also ended weaker on lower bullion prices. Lihir Gold declined 2.17% and Newcrest Mining fell 1.84%.

Oil stocks also ended in negative territory. Woodside Petroleum declined 1.75%, Santos fell 2.96%, Oil Search edged down 0.19% and Origin Energy shed 1.56%.

Bank stocks ended mixed. ANZ Bank managed to end in positive territory with a gain of 0.32%. However, Commonwealth Bank of Australia slipped 0.47%, National Australia Bank lost 1.02% and Westpac Banking fell 1.38%.

Mixed trading was also witnessed among retail stocks. David Jones added 0.63%, Harvey Norman advanced 0.82% and JB Hi-Fi Ltd edged up 0.05%. However, Wesfarmers slipped 0.84% and Woolworths lost 1.35%.

In Hong Kong, the Hang Seng Index snapped the recent losses and ended in positive territory on Monday, posting a gain of 121.76 points, or 0.61%, to close at 20,244. Fresh buying interest at lower levels, especially in property stocks, lifted the index into the positive territory in late trading session, as market recovered early loss on weak opening taking cues from Wall Street where the major averages declined on Friday despite better-than-expected advanced Q4 GDP numbers. Concerns about sustaining global economic recovery and weaker commodity prices also impacted market sentiment. However, bargain hunting at lower levels lifted the markets at close with property, china-related resource stocks leading the recovery and gains.

In South Korea, the KOSPI Index managed to end in positive territory with a modest gain of 4.01 points, or 0.25%, at 1,606, lifted by automotive stocks as traders perceived gains for the Korean automakers after Japanese automakers Honda and Toyota recalled vehicles from market on complaints of defects. Automotive stocks in Japan declined on concerns about the impact of recall in the market. Despite weakness across other markets in the region amid concerns of global economic recovery, automotive stocks advanced lifted the market index to end in the green with marginal gains.
 
The Indian market ended mixed with BSE Sensex having ended in negative territory with a marginal loss of 1.94 points, while the NSE managed to end in positive territory with a gain of 17.65 points. Fresh concerns about global economic recovery, weak trading across other markets in the region and weakness among IT stocks in the country impacted market sentiment.

Among other major markets open for trading in the region, Indonesia's Jakarta Composite Index slipped 23.25 points, or 0.89% to close at 2,588, Taiwan's Weighted Index lost 115.77 points, or 1.52% to close at 7,525, Strait Times Index in Singapore shed 9.18 points, or 0.33%, to close at 2,736 and China's Shanghai Composite Index declined 47.93 points, or 1.60%, to close at 2,941.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European markets are trading higher on Monday after showing volatility earlier in the session. The French CAC 40 Index and the German DAX Index are moving up 0.25% and 0.30%, respectively, while the U.K.’s FTSE 100 Index is trading 0.37% higher.

Among the economic reports released, French Statistical Office INSEE reported that French domestic producer prices rose 0.2% month-over-month in December, the same rate as in November. Economists had estimated a more modest 0.1% increase. Total producer prices, including prices of exports, edged up 0.1% month-over-month, although they declined 2.4% year-over-year.

House prices in the U.K. rose 0.1% in January compared to the previous month, according to a report released by Hometrack. The increase was in line with expectations. However, annually, prices were down 0.8%.

Among the manufacturing PMIs released from the region, the index for Germany showed that manufacturing activity expanded in January. The seasonally adjusted Markit/BME manufacturing Purchasing Managers' Index or PMI rose to 53.7 in January from 52.7 in December, slightly ahead of 53.4 consensus estimate. Meanwhile, the Markit / CDAF France Manufacturing Purchasing Managers' Index stood at a seasonally adjusted 55.4 in January, up from 54.7 in December. Manufacturing output rose for the seventh straight month in January and at its fastest pace in almost nine-and-a-half years, driven by greater volumes of incoming business.

Manufacturing activity in the U.K. expanded for the eighth straight month, with the pace of output accelerating to its fastest since June 2006. The CIPS / Markit U.K. Manufacturing Purchasing Managers' Index stood at a seasonally adjusted 56.7 in January, up from 54.6 in the previous month.

U.S. Economic Reports

Some of the previous week's encouraging economic data may have lent some hopes of the recovery taking on an element of sustainability. Therefore, the unfolding week's economic calendar is likely to be closely watched by traders for confirmation that the strong fourth quarter growth is not transitory, but an indicator that conditions are slowly and steadily improving.

The Labor Department's January non-farm payrolls report, the weekly jobless claims report and the ADP private non-farm employment survey are among the economic reports that will shed some light on how the labor market is panning out. Additionally, the results of the ISM's manufacturing and non-manufacturing surveys for January, the National Association of Realtors' pending home sales index for December, monthly auto sales and chain store sales could have some impact on the markets.

Also on tap are the Bureau of Economic Analysis' personal income & outlays report for December, the construction spending report for December, the fourth quarter productivity & costs report, the factory goods orders report for December and the Federal Reserve's consumer credit report for December. The Treasury is set to make announcements regarding details of the auctions of 3-year notes, 10-year notes and 30-year bonds on Wednesday.

Economists expect the monthly non-farm payroll numbers to suggest a continuation of the stabilization trend. Some of the temporary factors such as unfavorable seasonality in retail holiday hiring and cooler than normal weather reducing construction hiring that marred the December report may have reversed, boosting January's payroll numbers. At the same time, the unemployment rate is likely to remain stuck at 10% or could even tick up slightly.

The ISM's manufacturing index is likely to remain above the cut off '50' mark for the sixth straight month. The regional surveys, namely the Empire State, Philadelphia Fed and the ISM-Chicago manufacturing survey results were all upbeat. Manufacturing activity is receiving support from increasing foreign sales and efforts by both domestic and foreign manufacturer's to boost productivity.

Personal income and spending both continued to show modest growth in the month of December, according to a report released by the Commerce Department, with the personal income growth outpacing the increase in personal spending.

The report showed that personal income increased by 0.4% in December following an upwardly revised 0.5% increase in November. Economists had expected income to increase by 0.3%compared to the 0.4% growth originally reported for the previous month.

Additionally, the Commerce Department said that personal spending edged up by 0.2% in December after an upwardly revised 0.7% increase in the previous month. While the increase in spending was slightly below economist estimates of 0.3% growth, the November growth was upwardly revised from the previously reported 0.5% growth.

The results of the manufacturing survey of the Institute for Supply Management, which are based on data compiled from purchasing and supply executives nationwide, are due out at 10 AM ET. Economists expect the index to show a reading of 55.2 for January.

Conditions in the sector improved in December. The manufacturing index rose to 55.9 in December from 53.6 in November, climbing to its highest level since April 2006. Economists had expected a more modest improvement. While the new orders index surged up 5 points to 65.5, the order backlogs index declined 2 points. The production index rose 2 points to 61.8. Inventories were still lean, as the inventories index rose 2 points but remain below the cut-off mark of '50' at 43.4. The employment index was above the '50' mark for the second straight month, advancing 1.2 points to 52.

The Commerce Department's construction spending report to be released at 10 AM ET is expected to show a 0.5% decline in spending for December.

The construction spending report for November showed a 0.6% month-over-month decline in spending. Private construction spending fell 0.7% compared to a more modest 0.4% slippage in public construction spending. In the private category, non-residential construction spending remained unchanged, while multi-family home construction spending declined 4.1%, offsetting a 1.3% increase in single-family home construction spending.

Watch us trade “Live”! Watch our Top Tier Traders make ($500 - $2000) a day
in “real time” and learn how to easily duplicate the process!  Click Here for more information

Amazon (AMZN) could be in focus after it announced that it may have to accept e-book publisher Macmillan’s terms of switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers. Earlier, expressing its discontent, Amazon had temporarily ceased the sale of Macmillan titles.

SCBT Financial (SCBT) is likely to react to its announcement that it has entered into a purchase and assumption loss sharing agreement with the FDIC to assume all the deposits and certain other liabilities and purchase certain assets of Georgia-based Community Bank & Trust.

GlaxoSmithKline (GSK) may see some activity after it announced that the U.S. FDA has granted accelerated approval for a new combination regiment using TYKERB as a first-line all-oral treatment for women with metastatic breast cancer. TYKERB is currently used in combination with letrozole for the treatment of post-menopausal women with hormone receptor metastatic breast cancer. Separately, the company said the FDA has approved Lamictal extended release tablets as once-a-day add on therapy for epilepsy in patients 13 years and older with primary generalized tonic-clonic seizures.

Adaptec (ADPT) may also be in focus after it reported that its third quarter net revenues fell to $16.9 million from $28.2 million last year. The company reported a non-GAAP loss from continuing operations of 1 cent per share compared to break-even results in the year-ago quarter. Analysts estimated a loss of 4 cents per share on revenues of $17.61 million.

Urban Outfitters (URBN) is expected to gain ground after Standard & Poor’s announced that the company would replace Affiliated Computer Services (ACS) in the S&P 500 Index. Affiliated’s place in the S&P MidCap 400 Index will be taken by Intrepid Potash (IPI).

Earnings

Humana (HUM) reported that its fourth quarter earnings rose to $1.48 per share from $1.03 per share last year. Revenues rose 2% to $7.63 billion. Analysts estimated earnings of $1.48 per share on revenues of $7.78 billion. The company now expects fiscal year 2010 earnings of $5.10-$5.35 per share, higher than its earlier estimate of $5.05-$5.25 per share. Analysts estimate earnings of $5.40 per share.

Hewitt Associates (HEW) said its first quarter net revenues remained almost unchanged at $770.1 million. On an adjusted basis, the company reported underlying net income of 71 cents per share. The consensus estimates had called for earnings of 74 cents per share on revenues of $763.04 million. For the full year, the company estimates net revenue growth in the low to mid-single digit and earnings per share of $2.85-$2.95, while analysts estimate earnings of $2.93 per share.

Exxon Mobil (XOM) reported fourth quarter earnings of $1.27 per share, while analysts estimated earnings of $1.19 per share.

Gannett (GCI) said its fourth quarter adjusted of 72 cents per share, lower than 85 cents per share in the year-ago period. Net operating revenues fell 14.4% to $1.49 billion. Analysts estimated earnings of 64 cents per share on revenues of $1.46 billion.

You can now manage your positions directly from your web browser, whether you use PC or Mac.  Test-drive VT Trader™ Web with your free practice account! Click Here

Investors Hub Services