US & World Daily Markets Financial Briefing 05-12-2006

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

Stocks little changed in early trade

NEW YORK - Stock prices are mixed in early trading. The Dow Jones Industrial Average is down 1.5 points in today's early going. The Nasdaq Composite Index is ahead five points and the Standard and Poor's 500 Stock Index is up 1.5 points.
   
Before the opening bell, one of the day's key economic reports was released. The Labor Department says third-quarter worker productivity has been revised to a gain of two-tenths of one percent, at an annual rate. That is up from the previous estimate, but below expectations.
   
Unit labor costs rose at an annual rate of 2.3 percent, marking a downward revision. Still to come are reports on the services sector from the Institute for Supply Management and October factory orders from the government.
   
Home builder Toll Brothers reports its fourth-quarter profit dropped 44 percent from a year ago. On a per share basis, the results were slightly ahead of expectations. Perhaps the most interesting part of the Toll Brothers report was the comment from CEO Robert Toll who suggested that some markets may be bottoming.
   
Shares of Sirius Satellite Radio have come under pressure. A Bear Stearns analyst cut his rating of the company. Sirius reduced its outlook for new subscribers, citing slower-than-expected sales since Thanksgiving.
   
Crude oil futures have been moving higher, trading just under 63 dollars a barrel.

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.

Yen stays well bid on rate hike talk; dollar stays on back foot

LONDON - The yen stayed well bid at four-month highs against the dollar, buoyed by speculation that the Japanese central bank could raise interest rates again soon.
   
The yen's gains came after Bank of Japan board member Atsushi Mizuno hinted that the central bank need not wait for economic data to strengthen before hiking interest rates.
      
The Japanese unit's gains were most noticeable against higher yielding currencies such as the dollar and pound. In addition, the yen had already been rising ahead of Mizuno's comments.
       
Looking at matters from another point of view, the day's movements could also be expressed as widening in the dollar's weakness. The dollar had been benefiting from its status as a high yielding currency but the change in yield seeking behaviour at the end of the year will simply add to its woes.
   
Additionally, markets predict that US interest rates will soon have to come down.
       
Today's US data helped reinforce, rather than challenge, market expectation for easier Fed policy ahead. While US productivity was revised up it remained substantially lower than in the first half of the year. At the same time the cost of hiring new workers was revised down from the elevated levels estimated a month ago.
   
Elsewhere, the pound and the euro were unable to benefit from news of stronger-than-expected services sector PMI surveys out of the UK and the euro zone.
   
The purchasing managers index of UK services sector activity surged to 59.8, its highest level since January 2004. The news was offset, however, by a very disappointing retail sales survey from the British Retail Consortium released overnight.
   
A weak prices charged component within today's survey also potentially reduced the chances of further interest rate hikes by the Bank of England.
   
Equally, the euro failed to make any headway after the equivalent survey on the euro zone services sector also came in well above expectations.
   
The purchasing managers index of euro zone services activity jumped to 57.6 from 56.5 in October, well above analysts' forecast for a much more moderate rise to 56.6.
   
Weaker prices components within the survey, however, will ease the European Central Bank's concerns about rising inflationary pressures and may dampen the chances of further aggressive rate rises in 2007.
   
The ECB's governing council is scheduled to announce its latest interest rate decision on Thursday, with a quarter point rise in its key rate to 3.50 pct fully expected. Market players will therefore be looking to the accompanying press conference for any indications on the interest rate outlook going into next year.

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!

The European Markets at 13.30 GMT

London - Leading shares remained higher midday, but off peaks with a recovery in dollar sensitive issues helping to offset a weak retail sector after Tesco's results disappointed, and Woolworths issued a profit warning. At 12.00 pm, the FTSE 100 index was only 6.9 points ahead at 6,057.3, off an earlier high of 6,086.7, while the broader indices also remained positive.

Frankfurt - German shares were slightly higher in midday trade, with blue chips led by Linde as it rose after breaking a major resistance level, and Thyssenkrupp on positive reactions to Japanese steel shares and a positive recommendation from BHF bank, as the DAX followed gains on Wall street overnight. At 12.10 pm, the DAX 30 index was up 27.43 points or 0.44 pct at 6,322.66 having moved between a low of 6,300.46 and a high of 6,339.03 so far this session.

Paris - Share prices were higher in active trading at midday as investors took comfort from a rally on Wall Street overnight, with a raft of positive corporate news, boosting EDF and Sanofi-Aventis in particular, offsetting worries about the US economic slowdown. At 12.19 pm, the CAC-40 index was up 32.72 points at 5,328.80, on volume of 2 bln euro.

Milan - Share prices were slightly higher at midday buoyed by Autogrill and Luxottica. At 12.55 pm, the Mibtel index was up 0.2 pct at 30,970 points and the S&P/Mib gained 0.14 pct at 40,210.

Amsterdam - Shares in Amsterdam were up at midday as investors looked to higher Dow futures for guidance amid low-volume trading, while Philips lost ground following a business update. At 12.37 pm, the AEX was up 0.17 pct or 0.79 points to 474.54, after opening at 475.48 and reaching an earlier high of 476.54.

Madrid - Shares were higher in midday trade, led by Gamesa and Acciona, with Ferrovial trailing as investors digested news of price cap proposals affecting its UK airport unit BAA. At 1.05 pm, the IBEX-35 index was up 65.2 points at 13,911.6, after trading in a range of 13,889-13,972, on volume of 2 bln eur.

Stockholm - Shares were slightly higher in early trade, on continued bargain hunting and mergers and acquisitions speculation and activity. At 9.40 am, the OMX Stockholm index was up 0.72 pct at 350.39 and the OMX Stockholm 30 was up 0.81 pct at 1,083.42. Turnover amounted to 4.03 bln skr.

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

Asian shares close mixed as currencies strengthen

HONG KONG - Shares across the Asia-Pacific region closed mixed, as Asian currencies continued to rise against the US dollar and Wall Street closed higher.
   
Tokyo shares ended lower after investors locked-in profits on gains made earlier in the day in tandem with the rally in US stock markets overnight.
   
The Nikkei 225 Stock Average finished 37.83 points or 0.23 pct lower at 16,265.76, off the day's low of 16,239.28. The broader TOPIX index of all first section issues dropped by 8.85 points or 0.55 pct to 1,598.89, off a low of 1,597.09.
   
Hiroaki Hiwada, a strategist at Toyo Securities, said investors had been reluctant to chase share prices higher before the settlement of the special quotations on futures and options contracts, the release of the revised GDP figures for the third quarter and the release of the machinery orders figures for October.
   
"The market succumbed to profit-taking after recent gains, and it seems to be in a position-squaring period. But market sentiment remains firm, considering that certain exporters posted gains despite a firmer yen against the dollar," Hiwada said.
   
Australian shares finished marginally up as investor sentiment was aided by the overnight rise in US shares. Resource stocks were in favor while gains were capped by losses in the banking sector.
   
The S&P/ASX 200 gained 1.6 points or just 0.03 pct to close at 5,426.5, the day's low and off a high of 5,465.7.
   
Hong Kong shares were higher in afternoon trade led by blue chips and China stocks, with investors encouraged by gains on Wall Street overnight.  At 3.30 pm the Hang Seng Index was up 179.56 points or 0.96 pct at 18,883.01.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on follow-through buying and a strong yuan with property developers and telecom companies gaining ground.
   
The Shanghai A-share Index rose 12.08 points or 0.53 pct to 2,283.89 and the Shenzhen A-share Index was up 3.66 points or 0.69 pct at 533.49, a 52-month high.
   
Seoul shares closed lower as the won continued its rally, rising through the 925/usd level and raising fears for exporters' profits. The Bank of Korea's forecast of slower growth next year and the upcoming triple witching also added to the downward pressure.
   
The central bank projected that the nation's GDP growth rate would ease to 4.4 pct in 2007 from a projected 5.0 pct this year, due to slower private consumption and facility investment and a modest recovery in construction.
   
The KOSPI index closed down 5.87 points or 0.41 pct at 1,420.59, off a low of 1,420.40 and a high of 1,436.69. The won finished up 0.36 pct at 924.3 against the dollar, its highest level since October 1997.

Follow the futures and FX markets with our trading experts and read their analysis.  Click here to sign up now!

Copper up after closing above 7,000 usd; nickel touches new record high

LONDON - Copper prices rose as traders were encouraged by yesterday's close above the critical 7,000 usd a tonne level, but gains were limited by continued worries over rising stocks and slowing US economic growth.
   
At 12.43 pm, LME copper for three month delivery edged up to 7,097.00 usd a tonne against 7,010.00 usd at the close yesterday.
       
Copper inched up by the close yesterday even though the metal had been under pressure for most of the day from yet another large rise in LME stocks and concerns over US economic growth.
   
Elsewhere, nickel surged to a new record high of 34,400 usd a tonne on continued concerns over prospects for a much tighter than expected nickel market in 2007 and 2008.
   
This follows recent announcements that key future projects like Ravensthorpe in Australia and Goro in New Caledonia will not start up as planned during 2007 but will be delayed to 2008.
   
"Larger deficits are forecast for the nickel market in 2007 and 2008 as a result (of the delays) and the prospect of tighter markets will underpin still high prices in this period," said UBS Investment Bank analyst Robin Bhar.
   
LME nickel for three month delivery shot up to 34,400.00 usd from 33,750.00 usd at the close yesterday.

Meanwhile three month lead rose to 1,747.50 usd from 1,740.00 usd. Analysts said lead was higher after finishing just short of its contract high at 1,755 usd a tonne yesterday on an upturn in seasonal demand from battery manufacturers.
     
Aluminium was up at 2,847.50 usd from 2,812.00 usd while zinc was up at 4,510.00 usd against 4,450.00 usd. Tin bucked the trend, trading down at 10,650.00 usd against 10,700.00 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.