US & World Daily Markets Financial Briefing 03-08-2007

The world's most trusted name in professional trader education. Click Here

Stocks open lower after jobs report

NEW YORK - Stocks opened moderately lower Friday after the government reported that fewer U.S. jobs were created in July than analysts anticipated.
   
Wall Street, coming off two straight days of triple-digit gains in the Dow Jones industrials, appeared disappointed that the Labor Department said nonfarm payrolls rose 92,000 last month, less than the 132,000 jobs created in June and below the average forecast of about 135,000. Also, unemployment ticked up to 4.6 percent -- a six-month high -- from 4.5 percent in June.
   
Investors, still uncertain about the effect of rising subprime mortgage defaults on the broader economy, have regarded the stable job market as a sign that the economy might hold up despite a tighter lending climate. That's because people with steady paychecks are more likely to keep spending -- and pay back their debt.
   
The stock market made late-day surges both Wednesday and Thursday, but trading has been nervous and wavering. Investors remain worried that problems in subprime mortgages -- mortgages to people with poor credit histories -- will force lenders to make credit less available. When people and companies can't borrow money, the economy tends to slow down.
   
In the first minutes of trading, the Dow Jones industrial average fell 13.17, or 0.10 percent, to 13,450.16.
   
Broader stock indicators fell. The Standard & Poor's 500 index slipped 1.81, or 0.12 percent, to 1,470.39, and the Nasdaq composite index fell 5.29, or 0.21 percent, to 2,570.69.
   
Bonds rose after the jobs report, and the 10-year Treasury note's yield slipped to 4.76 percent from 4.77 percent late Thursday.

VantagePoint's market forecasts are nearly 80% accurate.  Take a look at actual  forecasts and see the difference they can make in your trading. Click here to see two recent forecasts now.

Dollar suffers setback from weak US labour market report

LONDON - The dollar suffered a setback after a weak US labour market report raised further questions about the health of the world's biggest economy.

The much awaited non-farm payrolls rose by just 92,000 well short of the 135,000 expected, while data for the previous two months were revised down by a total 8,000. To make matters worse, the jobless rate rose to 4.6 pct.

The numbers are likely to fuel fears that problems in the weak US housing sector are spreading to the labour market, which has so far been underpinning consumer demand.

The dollar had started the day on the back foot after some semblance of normality returned to stock markets yesterday. Gains on European equities today suggest that the calm will continue today too.

Elsewhere, the euro stayed well bid after the final services sector purchasing managers' index for the region remained unchanged from June at 58.3 in July, an upward revision from the provisional estimate of 58.1 and above market expectations for no change from that estimate.

This is likely to boost already-firm expectations that euro zone interest rates will rise to 4.25 pct in September.

The euro had rallied overnight, rising above 1.37 usd following hawkish talk from the European Central Bank (ECB) yesterday and as risk appetite returned to financial markets, but it fell back on profit-taking.

At an impromptu press conference yesterday ECB president Jean-Claude Trichet used the phrase "strong vigilance", which markets took as a signal that euro zone interest rates will rise in September.

In television interviews this morning, Trichet has restated this stance, and also called for more flexibility in Asian currencies.

Today's return of calm to financial markets has also pushed the yen weaker, as investors return to the carry trade -- a risky strategy where they borrow in the low-yielding yen to invest in high yielding currencies elsewhere.

Finally, the pound was eased a touch after the UK service sector PMI, came in on the weak side. The headline index eased to 57.0 in July from June's 57.7.

Inflation picked up in September in Europe as both areas show fragile economic growth. Just as in the U.S., rising energy prices are to blame. Read free, daily market reports available only at CMS Forex and open your free demo trading account today. Click here

LONDON - Europe's leading exchanges were lower midday with investors in a waiting position ahead of the open on Wall Street and with fears over the subprime market exposure of European banks resurfacing.

At 11.55 am, the Dow Jones STOXX 50 fell 8.61 points or 0.23 pct to 3,762.32 as the STOXX 600 declined 0.72 points or 0.19 pct to 376.21.

Fears over the impact of the problems experienced in the US subprime market were fuelled after rumours emerged that Hypo Real Estate's exposure may be larger than initially expected. The financial institution said it sees no negative effects ahead from the current US subrpime crisis. Shares fell 3.28 pct nonetheless.

Allianz was also under pressure after chief financial officer Helmut Perlet said the group's total exposure to the US subprime loan market amounts to 1.7 bln eur. Allianz does not foresee any "alarming developments" for its operations due to the US subprime crisis, Perlet said, but shares dropped 0.96 pct.

Meanwhile, over in the banking sector, Fortis was adding 0.38 pct. Rumours were resurfacing midday that it may be forced to pull out of the bid for ABN Amro on Monday.

RBS chief executive Sir Fred Goodwin said RBS would press ahead if shareholders in consortium member Fortis vote against the ABN bid."In the unlikely event that we need a contingency plan, we'll work something out," he said. Shares in RBS dropped 0.68 pct.

On earnings news also, British Airways gained 2.04 pct on the back of better than expected Q1 results with UBS maintaining its 'buy' stance and price target of 650 pence, market sources said.

Peer Vueling Airlines slumped 24.20 pct after a set of very weak first half results which showed the no-frills airline's failure to cope well with a very competitive domestic environment. Earlier, Vueling flagged that the impact on earnings of tariff pressures from increased competition was greater than it had expected in the second quarter, when average tariffs declined 23.4 pct from a year earlier.

Transport and mail group Deutsche Post climbed 1.37 pct as the company's second-quarter profit topped analyst expectations, thanks to earnings growth in the logistics and financial services divisions.

Elsewhere, Novo Nordisk gained 3.0 pct as the pharmaceuticals company posted a strong first half report with better-than-expected gross margins. It also raised its full year guidance for operating profit growth to 10 pct from a previous 6-8 pct.

Meanwhile, Norske Skog fell 3.87 pct after the Norwegian paper manufacturer disappointed analysts with its second quarter numbers and failed to offer any encouragement in terms of outlook.

Get a FREE $50,000 Forex demo.  Free streaming quotes, guaranteed executions, 1% margins, and zero commissions! Click Here.

Asian shares mostly close higher; China A-shares hit new high

MUMBAI - Shares across the Asia-Pacific region mostly closed higher encouraged by Wall Street's second straight day of gains, with China A-shares ending on a new record high as investors built strong positions in financial stocks on upbeat interim earnings.
   
The Shanghai Composite Index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, closed up 153.04 points or 3.5 pct at a record 4,560.77.
   
Hong Kong shares closed higher as select blue chips and China-related stocks rose, with sentiment buoyed by the record-breaking finish on the mainland market. The Hang Seng Index closed up 95.19 points or 0.4 pct at 22,538.44. For the week, the key index was down 31.97 points or 0.1 pct.
  
Australian shares ended slightly higher amid volatility, as investors remained wary after heavy losses earlier this week. The S&P/ASX 200 closed up 9.2 points or 0.2 pct at 6,021.0. Over the trading week, the key index shed 61.9 points or 1 pct. The All Ordinaries index added 5.6 points or just 0.1 pct to close at 6,055.9.
   
Tokyo shares closed flat, giving up gains made earlier in the day as investors showed concern about the possibility of further fallout from the problems in the US sub-prime loan market.
   
The blue-chip Nikkei 225 Stock Average slipped 4.25 points to close at 16,979.86. The broader TOPIX index inched up 3.21 points or 0.2 pct to finish at 1,672.54. Over the week, the Nikkei dipped 1.8 pct and the TOPIX was down 1.6 pct.
   
South Korean shares closed higher, recouping some of their steep losses over the past two sessions, as investors gained confidence from Wall Street's gains and as foreign investors reduced their liquidation activities. The KOSPI index closed up 23.73 points or 1.3 pct at 1,876.80. The index ended the week down 6.42 points or 0.3 pct.
      
Malaysia shares closed mixed as investors continued to adopt a cautious stance ahead of the weekend amid lingering concerns over the US credit crunch. Gains in construction, technology and consumer stocks helped the key index stay in positive territory. The Kuala Lumpur Composite Index (KLCI) rose 2.14 points or 0.2 pct at 1,335.42. For the week, it lost 19.96 points or 1.5 pct.
   
Taiwan shares closed higher as optimism about company earnings provided additional momentum to a market initially driven by sustained gains on Wall Street overnight. The weighted index closed up 107.25 points or 1.2 pct at 9,057.82.
       
Singapore shares closed flat after a volatile session, erasing gains made earlier in the day with losses in banking shares. The Straits Times Index inched up 0.58 points to 3,436.04. For the week, the index lost 56.66 points or 1.6 pct.
   
Philippine shares extended losses for the third straight session, with nearly 5 pct of the market's value wiped out at the end of an extremely volatile week, as investors weighed in the depth of the US sub-prime loan problems.
       
The composite index fell 6.78 points or 0.2 pct to 3,352.24, its lowest level since May 10. It fell 4.7 pct from last week. The all-share index fell 23.50 points or 1.1 pct to 2,150.18.   

Indonesian shares closed slightly lower in volatile trade as quick profit taking emerged in the afternoon session which sent the main index to negative territory after a firm opening. The composite index closed down 1.06 points, or 0.1 pct, at 2,269.79. For the week, the main index fell 28.61 points or 1.2 pct.

Indian shares rose on strong blue-chip buying, tracking overnight Wall Street gains but worries over fallout of the US subprime lending crisis negated some of the day's gains. The Bombay Stock Exchange's benchmark Sensex closed up 1.02 pct, or 152.70 points, at 15,138.40 while the National Stock Exchange's S&P CNX Nifty was up 1.04 pct, at 4,401.55 points.

Trade with RCG fxtrader ™, the platform offering instant access to 12 major FX trading pairs with low spreads (2 pips EURUSD, USDJPY) and global news from 3 major sources.  Trade with a registered and regulated company in business for 80 years. Smart money trades here. Get your FREE Trial Today!

Gold edges up as the dollar falls on weak labour report

LONDON - Gold edged up as the dollar weakened against the major currencies after US payrolls data showed the country's unemployment rate rose in July to its highest level in half a year.
   
The Labor Department said US unemployment rose to 4.6 pct in July from 4.5 pct in June - its highest level since January. At the same time, the US economy added just 92,000 jobs in July, sharply below the 135,000 jobs economists had expected from the survey of employer payrolls.
   
The dollar fell sharply in response, as players worried the report will prompt a further dip in the financial market's risk appetite because it suggests the problems in the US housing market are spreading.
   
Gold often moves counter to the US dollar as it is seen as an alternative investment to the US currency.
   
At 1.55 pm, spot gold was trading at 667.10 usd an ounce, compared to 665.78 usd before the data release. The metal was quoted at 665.45 usd in late New York trades yesterday.
   
Gold was steady in earlier trades as a slightly stronger opening on the major European bourses and a firmer performance from the Asian markets overnight helped add some stability to the market.
   
Bullion has come under pressure recently as volatility in global equity markets led investors to shift out of risky assets like commodities and into safer assets like currencies and bonds.
   
The volatility in the equity markets, which might renew itself following the weak labour report, is linked to concerns that the problems in the US housing market might crimp economic growth.
   
Among other metals, platinum edged up to 1,283 usd per ounce against 1,279 usd in late New York trades yesterday, while its sister metal palladium dipped to 361 usd an ounce against 362 usd. Silver was flat at 12.96 usd per ounce.

Increase the odds for Forex Trading success with this free online course. Learn to build a solid Forex Trading foundation and discover proven strategies for continued success.  Access this wealth of knowledge here absolutely free.

Online Trading Academy - Learn more to earn more.