US & World Daily Markets Financial Briefing 05-10-2009

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Stocks May Regain Some Ground Following Recent Weakness

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Bargain Hunting May Contribute To Higher Open On Wall Street - U.S. Commentary
Stocks are poised to open Monday's session moderately higher, as some traders may go bargain hunting following the recent pullback by the broader markets. The major index futures are all in positive territory, with the Dow futures up by 30 points.

On the economic front, traders will be presented with the Institute of Supply Management's service sector index for September at 10:00 a.m. ET. Economists expect the service sector index to come in at 50, slightly higher than August's reading of 48.4.
Traders may also be positioning themselves for the start of third quarter earnings season, set to begin later this week with the release of results from aluminum producer Alcoa (AA) Wednesday after the close of trading on Wall Street.

Banking stocks may be in focus following reports that Bank of America (BAC) might appoint a CEO on an emergency basis if legal issues force the present CEO Kevin Lewis to leave the company before his scheduled departure at year's end.

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Bay Street Stocks Drop To Lowest Level In Nearly A Month -

The S&P/TSX Composite Index has lost 79.81 points or 0.72% to move at 10,991.93. The index is on pace for its lowest close since September 3.

Financials are down 1.4% to lead the way. Scotiabank (BNS.TO) has dropped 3.2%, Toronto-Dominion (TD.TO) has dropped 2.4% and Bank of Montreal (BMO.TO) has declined 1.8%.

In corporate news, CanWest Global Communications (CGS.TO) has surged 40% as the National Post has landed financial backing to purchase of struggling CanWest newspapers, according to the Globe and Mail.

Pengrowth Energy Trust (PGF.UN.TO) has dropped 6.8% after being downgraded to Hold from Buy at Canaccord Adams.
Oncolytics Biotech (ONC.TO) soared more than 20% after announcing it will work with the FDA on Phase III trial of its cancer treatment, Reolysin.

Enbridge (ENB.TO) has inched up 0.2% after announcing it has reached a deal to acquire a 20 megawatt solar energy project that First Solar has developed and is constructing near Sarnia, Ontario.

Bombardier (BBD.B.TO) has dropped 1.8% as rival Mitsubishi Heavy Industries has received an order for up to 100 regional planes from Trans States Holdings, according to reports.

In economic news, the U.S. Labor Department reported non-farm payrolls dropped 263,000 in September. Economists had expected a decline of 170,000 jobs.

Commodities: US crude settles below $70, gold gains

Oil prices finished below $70 a barrel on Friday after worse than expected jobs data sparked concern about the strength of the economic recovery.

US crude for November delivery fell 87 cents to settle at $69.95 a barrel on the New York Mercantile Exchange. Earlier in the session the contract hit a low of $68.27.

Friday's Labor Department nonfarm payrolls report showed employers cut 263,000 jobs in September while the unemployment rate rose to 9.8%, a sixteen year high. Most economists had predicted around 180,000 jobs losses.

A weaker dollar helped cap a bigger fall in oil prices however and despite Friday's decline, crude managed gains of 6% over the week after the previous week's 8% decline.

Among precious metals gold settled above the $1,000 mark as the dollar eased against major currencies. The greenback was pressured by renewed fears about the economic recovery following Friday's jobs data.

COMEX gold for December delivery climbed $3.60 to settle at $1,004.30 an ounce.

The yellow metal hit a record closing high of $1,020.20 a fortnight ago but has since struggled to reclaim such highs.

Silver for December delivery fell 21 cents to $16.23 an ounce while December copper futures declined 5.55 cents to $2.6815 a pound.

FX round-up: Jobs data weighs on greenback


The dollar fell against most major currencies on Friday as traders winced at bigger than expected job losses in US.

Sentiment went downhill on Wall Street as the US Labor Department showed US non-farm payrolls fell 263,000 in September, up from a downwardly revised 201,000 the month before. Economists had predicted a loss of 180,000.

The unemployment rate of 9.8% was as expected, but that's still the highest since June 1983. The widely watched jobs report triggered fresh concern about the global recovery.

The dollar index, which measures the US currency against a basket of six others, fell 0.3% to 76.940 on Friday.

The euro rallied on Friday, after a poor week, breaking support of $1.45 and rising to a session high of $1.4642 following the US jobs report.

The greenback managed to inch higher against the Japanese yen at 89.66 yen after earlier weakness.

The pound fell against the dollar and the euro on Friday. Sterling came under pressure despite a survey showing UK house prices continue to recover in a quiet market.

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Asian Markets End Lower On Growth Concerns

The major Asian markets open for trading ended lower on Monday as investors locked in gains and moved to the sidelines amid concerns about growth prospects after job losses in the world's largest economy unexpectedly rose sharply in September and unemployment rate inched further to 9.8%. Comments from Professor Nouriel Roubini that global stocks rose too much, too fast and too quick and are due for correction also impacted market sentiment. The market in China is closed for national holidays and bargain hunting in late-trading session helped Hang Seng Index buck the trend and close in positive territory.

In Japan, the benchmark Nikkei 225 Index ended at a 11-week low at 9,674, representing a loss of 57.38 points, or 0.59%, while the broader Topix index of all first section stocks down 7.39 points, or 0.84%, to 867.

On economic news, a report released by Markit Economics revealed that the Nomura Japan Services Purchasing Managers' Index stood at a seasonally adjusted 46.0 in September, down from 48.1 in the previous month. A reading above 50 indicates expansion, while one below 50 suggests contraction.

Automakers ended weaker on concerns about consumer demand in the U.S following more-than-expected job losses and higher unemployment rate. Honda Motor declined 2.81%, Hino Motors slumped 4.94%, Toyota Motor slipped 0.89%, Nissan Motor edged down 0.17% and Mitsubishi Motor shed 0.71%.

Real estate stocks also ended weaker. Mitsui Fudosan Co., lost 2.76%, Mitsubishi Estate fell 1.83%, and Sumitomo Realty & Development slipped 0.70%. However, Tokyu Land Corp. remained unchanged from previous close.
Precision machinery stocks also ended in negative territory on demand concerns. Terumo Corp. declined 3.70%, Nikon Corp. plunged 6.97%, and Konica Minolta Holdings lost 3.45%.

Trading companies ended in the red on stronger local currency. Mitsubishi Corp. lost 2.87%, Mitsui & Co lost 3.38%, Toyota Tsusho Corp. fell 2.01%, and Sumitomo Corp declined 2.02%.

Retail stocks ended higher after Fast Retailing reported a 31% surge in same-store sales year-over-year during September. The stock surged up 14.86%. Among other retailers, Seven & I Holdings added 0.71%, J Front Retailing rose 1.17% and Aeon Limited gained 1.36%.

Nomura Holdings soared up 10.86% as worries over its equity financing plan were largely priced in after recent sharp losses. Large bank stocks also ended in positive territory, limiting the overall losses in the index. Mitsubishi UFJ Financial gained 2.25%, Mizuho Financial rose 2.87%, Resona Holdings advanced 0.99% and Sumitomo Mitsui Financial Group climbed 2.87%.

In Australia, the benchmark S&P/ASX200 Index slipped 0.33% or 15.00 points to close at 4,587, while the All-Ordinaries Index ended at 4,592, representing a loss of 13.80 points, or 0.30%.

On the economic front, a report released by the Australian Industry Group revealed that an index measuring growth in the services sector inched up to 49.3 in September from 48.0 posted in August. However, the services sector is still in contraction, as a score above 50 only indicates growth.

Separately, a report released by the Australia-New Zealand Banking Group revealed that total job advertisements rose a seasonally-adjusted 4.4% during September, following a 4.1% rise in the previous month.

Banks dragged the indices lower amid volatile trading as traders preferred to lock in gains. ANZ Bank declined 2.16%, Commonwealth Bank of Australia slipped 0.64%, National Australia Bank fell 2.18% and Westpac Banking Corp. lost 1.71%.

Mixed trading was witnessed among the metals and mining stocks. BHP Billiton added 0.33%, Gindalbie Metals rose 2.34% and Oz Minerals advanced 1.36%. However, Rio Tinto shed 0.59%, Fortescue Metals fell 1.10% and Mincor Resources lost 0.86%.
Energy stocks also ended mixed. While Santos managed to end in positive territory with a gain of 1.08%, Woodside Petroleum edged down 0.18%, Oil Search lost 1.43% and Origin Energy slipped 0.19%.

Gold stocks ended in positive territory following news that the Australian regulators approved the proposed tie-up between Sino Gold Mining and Canada's Eldorado Gold. Sino Gold Mining gained 1.68%. Lihir Gold rose 1.40% and Newcrest Mining advanced 1.74%.

In Hong Kong, the Hang Seng Index recovered from early losses and ended in positive territory with a modest gain of 53.58 points, or 0.26% at 20,429 lifted by positive trading in the European markets. Bargain hunting at lower levels in the afternoon session, especially in resource stocks and china-related stocks, helped erase the earlier losses. Cosco Pacific gained 3.72%, CNOOC advanced 2.54% and China Resource Power Holdings rose 2.42%. Retailer Li & Fung slumped 4.70% on concerns about weak demand in the U.S.

In South Korea, the KOSPI ended in negative territory with a loss of 37.73 points, of 2.29% at 1,607, as foreign institutional investors preferred to offload shares of blue-chip technology stocks and banking stocks on concerns that the growth could falter or hit road blocks. Weak trading across other markets in the region also impacted market sentiment. Among the major stocks, Samsung Electronics slumped 5.68%, LG Electronics lost 5.56% and Hynix Semiconductor fell 4.33%.

The stock market in India ended in negative territory on weak global cues and concerns that the pace of economic recovery in the world's largest economy, the U.S., might hit road blocks after job losses rose more than expected and the unemployment rate inched up to 9.8%. Weak trading across the other markets in the region amid caution also impacted market sentiment. The BSE Sensex lost 268.14 points, or 1.56% to close at 16,866, and the broader Nifty Index shed 80.20 points, or 1.58% to close at 5,003.

Among the other major markets in the region, Indonesia's Jakarta Composite Index closed flat with a marginal gain of 0.56 points, or 0.02% at 2,480 and Taiwan's Weighted Index gained 26.10 points, or 0.35% to close 7,438. Singapore's Strait Times Index ended in negative territory with a loss of 20.80 points, or 0.80%, at 2,584. The market in Shanghai is closed for national holidays.

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European Stocks Poised For A Slightly Higher Open

European stock index futures point towards a slightly positive opening on Monday, as stocks may see a technical rebound following four days of negative closing.

A survey released by the Confederation of British Industry in association with consulting firm PriceWaterhouse Coopers revealed that 32% of the respondents revealed that overall business volume in the financial services industry witnessed growth in the three months ended September, while 24% of the respondents said they witnessed decline in the said period.

The stock markets across Asia are trading in negative territory, as they digested a weaker-than expected jobs report from the U.S and comments from Professor Nouriel Roubini, who said that stocks rose too much in a relatively quicker period across the markets and opined that they are due for a correction.

On the economic front, traders await a slew of economic data including services sector surveys and retail sales data from the Eurozone.

The National Statistics Institute is set to release Spain's industrial production numbers for August at 3.00 a.m. ET. At the same time, Slovakia is slated to release retail sales numbers for August.

The Markit/ADACI Purchasing Managers' Index for Italy, the Markit/CDAF France Services PMI and German Services PMI for the month of September will be released by the respective countries between 3.45 a.m ET and 3.55 a.m. ET.
At 4.00 a.m.ET, the Composite and Services PMI for September for the Eurozone region are due for release. In the previous month the Composite PMI stood at 50.8 and the Services PMI came in at 49.9.

In the U.S., stocks posted modest losses following disappointing news on the labor market driving the day's selling pressure. The major averages were able to moderate their initial pullback but still closed lower for a fourth straight session. The Dow fell by 21.61 points or 0.2% to 9,488, the Nasdaq lost 9.37 points or 0.5% to close at 2,048 and the S&P 500 slid by 4.64 points or 0.5% to 1,025.

In Asian trading, crude oil prices ended below the $70 a barrel at $69.90, down 5 cents having recovered some of the early losses.

In corporate news, Telenor ASA announced that it would merge its stake in OAO VimpelCom and ZAT Kyivstar with Russia's second largest mobile company, Altimo, paving way for the creation of a new compay VimpelCom Ltd.

German drugmaker Boehringer Ingelheim GmbH said that on approval of its first medicine for diabetes, it might face a tough task competing in the market that includes drug giants such as AstraZeneca, Merck & Co., and Bristol-Myers Squibb.

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PepsiCo. could react to its announcement that it plans to form a new entity comprising its bottling businesses, effective the closing of its mergers with its bottlers Pepsi Bottling Group and PepsiAmericas. The company also noted Eric Foss, the current CEO of Pepsi Bottling, will be the CEO of the new unit.

Deere & Co. is likely to be in focus after it said it has been notified by the UAW that the UAW-represented employees at 15 Deere locations have ratified a new 6-year master agreement. The company noted that the new agreement takes effect from October 5, 2009 until the first day of October 2015.

AT&T may also be in focus after it said its core wire-line employees covered under the Communications Workers of America Communications and Technologies contract have voted to ratify a three-agreement, covering 7,000 employees.

IBM may also be in focus after it announced that it has completed the acquisition of SPSS, an analytics software maker. IBM earlier announced an agreement to buy SPSS in late July for $1.2 billion.

Brocade Communications System is expected to see some activity after a Wall Street Journal report said that the company has put itself on the block. The Journal also reported that Hewlett-Packard and Oracle were among the potential suitors.

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