US & World Daily Markets Financial Briefing 05-09-2006

Start trading successfully today
Click here  to find out more

Stocks directionless in morning trading

Wall Street drifted without direction Tuesday as traders got back to work from a three-day break to find oil prices retreating again but little other data to guide them.
   
The major indexes, all trading at three month highs, were again subject to low volume levels that aren't expected to return to normal until later in the week. Investors were largely adjusting their positions while they await the Federal Reserve's next meeting on Sept. 20.
   
Investors were unsettled after media and entertainment company Viacom Inc. said Tom Freston resigned as president and chief executive. Also hanging over the market was copper producer Phelps Dodge Corp.'s announcement it would cancel a planned $17.4 billion combination with Inco Ltd.
   
In the first hour of trading, the Dow Jones industrial average fell 23.13, or 0.20 percent, to 11,441.02.
   
Broader stock indicators also pushed lower. The Standard & Poor's 500 index was down 1.82, or 0.14 percent, to 1,309.19, and the Nasdaq composite index fell 4.78, or 0.22 percent, to 2,188.38.
   
Bonds were slightly weaker, with the yield on the benchmark 10-year Treasury note rising to 4.75 percent from 4.73 percent on Friday. The dollar was weaker against other major currencies, while gold prices were higher.

The Russell 2000 index of smaller companies was up 0.41, or 0.06 percent, to 721.97.

Stocks in focus
   
Phelps Dodge shares added $3.28, or 3.6 percent, to $94.03 after its deal with Inco was nixed. The company said it received a $125 million termination fee from Inco, whose shares fell 94 cents to $76.76.
   
Viacom Executive Chairman Sumner Redstone said the board ousted Freston because it wanted to see its share price trade higher, and hoped the media company would be more aggressive about acquisitions. Shares sank $2.10, or 5.7 percent, to $34.87.

VantagePoint's market forecasts are nearly 80% accurate. Take a look at actual forecasts, become eligible for a Complimentary VantagePoint Market ($750 value!) and see the difference they will make. Click here to see two recent forecasts now.

Pound lower after weak UK data; yen well-bid after robust figures
 
Early on the pound took a knock after news that the services sector growth in the UK came off the boil in August. Its falls deepened further after news that high street sales was soft during the same month.
   
The services sector PMI dropped to 56.7 in August from 57.9 in July, well below analysts' predictions for a reading of 57.6.
   
Meanwhile, the British Retail Consortium reported that high street sales in the UK slowed sharply in August as the colder weather. Like-for-like sales which excludes changes in floor space rose by 2.5 pct year-on-year in August, down from 3.4 pct in July.
    
The annual comparison was flattered by a weak reading in August last year when the London bombings the previous month led to a 1.0 pct decline.
   
Seen together with the fall in the manufacturing sector PMI released last week, today's data indicate a slight slowdown in quarterly GDP growth from the 0.8 pct seen in second quarter to around 0.7 pct in the third, said Vicky Redwood at Capital Economics.
   
The euro meanwhile, came back slightly after euro zone retail sales data for July, which beat analysts' expectations.
   
Retail sales in the region jumped by 0.6 pct in July from June for an annual increase of 2.5 pct, far exceeding forecasts for a month-on-month fall of 0.4 pct and an increase of 1.4 from a year earlier.
   
"We could see a correction (in retail sales) in August but for now private consumption appears healthy and supportive of growth in the third quarter," said Zaki Kada at Thomson IFR Markets.
   
The data helped the euro shrug off some of the effects of a weak services sector PMI survey.
   
The euro zone purchasing managers' index for the services sector slowed for the second month in a row, easing to 57.1 in August from 57.9 in July.
   
Elsewhere, the yen was well bid though off day highs, boosted by yesterday's strong Japanese corporate capital spending figures.
   
The yen had been sold off sharply in recent weeks as a series of weak Japanese data and warnings issued by Ministry of Finance officials prompted speculation that Japanese interest rates will not rise again by the end of the year.
   
Yesterday's figures, however, showing a record 16.6 pct year-on-year rise in corporate capex last month, cast doubt on this assumption.

The rouble was trading at 26.64 to the dollar on the Moscow foreign exchange compared with 26.76 per usd on Friday.
   
Against the euro, it was trading at 34.21, compared with 34.35 roubles yesterday.
   

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

The European Markets at 12.00 GMT

London - UK blue chips remained in the red at midday, partly weighed by Cairn Energy following the oil group's disappointing results, weak services sector data spurring negative investor sentiment, with Wall Street seen opening flat following yesterday's Labor Day break, dealers said.
   
At midday, the FTSE 100 was down 24 points at 5,962.6, off its daily low of 5,956.3, while the FTSE 250 index was 34.3 lighter at 9,725.7.

Paris - Share prices were lower midday on profit-taking after the index closed above 5,200 points yesterday for the first time in four months and as negative broker notes certain heavyweights, dealers said.
   
At 12.15 pm the CAC 40 index was down 39.98 points or 0.77 pct at 5,163.26.

Frankfurt - Shares were lower in midday trade, pulling back from last week's sharp gains and yesterday's positive close, amid profit-taking, following losses across Asia this morning and as investors await the Wall Street opening for direction, as US markets were closed for Labor Day yesterday, dealers said.
   
At 11.50 am, the DAX 30 index was 32.61 points or 0.55 pct lower at 5,877.11, having moved between 5,872.31 and 5,907.49 so far this session.

Amsterdam - Share prices were lower in early afternoon trade amid profit-taking, in line with losses on other European markets as investors awaited the start to trading on Wall Street for direction, dealers said.
    
At 12.54 pm, the AEX index was down 0.95 pct or 4.5 points at 469.08 after opening near its highs at 473.48.

Brussels - Shares were little changed in midday trading, as investors look for leads after the closure of US markets yesterday, with Omega Pharma rising after ING upgraded the healthcare group, analysts said.
   
At 12.44 pm, the Bel 20 was off 11.82 points or 0.30 pct at 3,916.50.

Madrid - Share prices were lower in moderate midday trade amid profit taking, with Iberia higher amid lower oil prices and Telefonica down after downgrades, dealers said.
   
At 12.36 pm, the IBEX 35 index was down 84.4 points at 12,194.2, after trading in a range of 12,187-12,272, on volume of 1.0 bln eur.

Milan - Share prices in Milan were lower at midday on profit-taking, while Pirelli rose sharply ahead of a meeting on Thursday between its affiliate Telecom Italia and News Corp to discuss a content deal.
   
At 12.14 pm, the Mibtel was down 0.35 pct at 29,205 point and the S&P/Mib lost 0.40 pct to 38,067.

Stockholm - Shares moved into negative territory in midday trade, on profit-taking after yesterday's strong gains, but with losses slight as traders waited for the US open for further leads, dealers said.
   
At 12.40 pm, the OMX Stockholm index was down 0.36 pct at 324.10 points, while the OMX Stockholm 30 index was down 0.28 pct at 1,008.75.

Helsinki - Helsinki shares were lower at light midday trade, led by Nokia, which shrugged off deals news and amid a lack of leads from Wall Street as US markets were closed yesterday for Labor Day, traders said.
   
At 11.46 am, the OMX Helsinki 25 was 0.45 pct lower at 2,564.51 and the OMX Helsinki was down 0.57 pct at 8,816.00, on 258 mln eur of turnover.

Get a Completely Free $50,000 FX Demo!
Instant execution with: no slippage, no partial fills and no debits � all Guaranteed. Click the bid or offer with instant fills. Zero commissions � Period! All at XPRESSTRADE.com

Asian stocks close mostly higher as optimists overtake profit-takers

HONG KONG - Shares across the Asia-Pacific region closed mostly higher as positive economic news encouraged buying, dealers said.
   
Tokyo share prices closed higher after optimism about the economy overcame profit-taking on yesterday's surge, dealers said.
   
The Nikkei 225 Stock Average closed 27.89 points or 0.2 pct higher at 16,385.96, off a peak of 16,403.90.  The broader TOPIX index of all first-section issues gained 2.03 points or 0.1 pct at 1,651.35, after touching a high of 1,654.27.
   
Toyo Securities strategist Ryuta Otsuka said the market remained solid despite an early sell-off, as data released yesterday showed a strong increase in capital investment.
   
Otsuka said buying by overseas investors had also lifted the market's mood. "Money such as hedge-fund money is again pouring into the Japanese market. When foreigners are buying, the Japanese market is boosted," he said.
   
Australian shares closed higher after trading in positive territory for most of the session, dealers said.
   
But they added investors remained reluctant to make major changes to portfolios ahead of tomorrow's decision by the Reserve Bank of Australia on interest rates.
   
Dealers said the interest rate environment remains unsettled, with a further rate rise likely before the end of the calendar year because of continuing strong economic data.
   
The S&P/ASX 200 closed up 21.4 points at 5,150.6 points, off its high for the session of 5,155.1 but above a low of 5,137.6.
   
Hong Kong shares were weaker in afternoon trade on mild profit-taking after the market's gains over the past five sessions, dealers said.
   
Trade was also cautious due to a lack of lead from Wall Street as the US markets were closed yesterday for the Labor Day holiday. At 3.23 pm the Hang Seng Index was down 55.13 points or 0.13 pct at 17,458.75.
   
In mainland China, A-shares in Shanghai and Shenzhen closed mixed with banks and telecom stocks supported but with profit taking seen weighing on Shenzhen prices, dealers said.
   
The Shanghai A-share Index rose 6.94 points or 0.40 pct to 1,749.55 while the Shenzhen A-share Index was down 0.73 points or 0.17 pct at 438.40.
   
Seoul shares closed slightly higher as foreign investors continued to buy financials and other blue chips amid hopes that the Seoul bourse may be upgraded to developed market status in the FTSE Global Equity Index Series, dealers said.
   
The FTSE Committee will determine the exchange's status on Thursday.  Expectations that the Bank of Korea will this week maintain its call rate target for September also supported the market, they added.
   
The KOSPI index closed up 2.18 points or 0.16 pct at 1,361.24, rising for a fourth session. The index traded between 1,356.29 and 1,362.47.

Asian Bourse Round-Up

For a full list of closing figures, click here

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 gains; silver, platinum hit more than 3 month highs; base metals higher

LONDON - Gold prices rose while silver and platinum hit their highest levels in more than 3 months as dealers expected the re-opening of the US market after a long weekend will boost the market.
   
At 12.16 pm, spot gold, which is trading at two week highs today, was quoted at 631.50 usd, up from 626.75 usd at the time of the COMEX market close in New York yesterday.
   
Spot silver was quoted at 13.20 usd an ounce against 12.93 usd yesterday while platinum was at 1264.50 usd against 1,246.00 usd. Both metals are trading at their highest levels since May 31.
   
"Silver has edged above 13 usd overnight and could trigger follow through buying from US traders later today," said TheBullionDesk.com analyst James Moore.
   
Turning to gold, Moore said he foresees buying interest over the next couple of months as the market "enters a period of traditional strong physical interest".
   
He added while soft oil prices are curbing some of gold's price potential, "recent rallies in platinum and silver suggest sentiment is gradually moving back towards 645 usd once resistance around the 100 day moving average at 633.60 is cleared".

Oil prices have fallen sharply in recent days as geopolitical tensions over Iran's nuclear ambitions were seen to have receded after the EU agreed at the weekend to give Iran two more weeks to clarify its nuclear stance.
   
This was after Tehran defied an Aug 31 UN deadline to halt uranium enrichment activities or face sanctions.
   
Gold benefits from geopolitical tensions as well as from a weak US dollar as the precious metal is seen as both a safe haven asset and a hedge against inflation.
 
Base metals were higher across the board as buyers returned to the market after a quiet trading day yesterday, and as traders looked ahead to the higher physical activity that traditionally follows the end of the quiet summer period.
   
At 12.59 pm, LME copper for three-month delivery was at 7,885.00 usd a tonne, up from 7,650.00 usd at the close yesterday, while nickel was up at 28,675.00 usd a tonne against 27,600.00 usd.
   
Other metals also gained.
   
Zinc was at 3,608.00 usd against 3,475.00 usd, lead was at 1,282.00 usd against 1,258.00 usd, aluminium was at 2,555.50 usd against 2,490.00 usd and tin was at 9,100.00 usd against 9,050.00 usd.

Base metals were higher across the board as buyers returned to the market after a quiet trading day yesterday, and as traders looked ahead to the higher physical activity that traditionally follows the end of the quiet summer period.
  
At 2.26 pm, LME copper for three-month delivery was at 8,005.00 usd a tonne, up from 7,650.00 usd at the close yesterday, while nickel was up at 28,550.00 usd a tonne against 27,600.00 usd.

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.