US & World Daily Markets Financial Briefing 07-10-2009

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

Stocks May Consolidate While Digesting Recent Gains

The major index futures are pointing to a mixed opening on Wednesday, with sentiment likely to be impacted by bargain hunters, who may look to take profit on some of the recent price gains. Commodity prices are holding up, although the price of oil may see some volatility amide the release of the EIA’s oil inventory data. The absence of any major economic data may fail to give direction to the markets.

U.S. stocks opened Tuesday’s session higher, encouraged by the firming up of recovery hopes, which strengthened following the Reserve Bank of Australia’s decision to begin tightening for the first since the recent downturn, and the strength in the prices of commodities in reaction to the weakening of the dollar. With the buying momentum slowing following an early rally, the markets began moving sideways before closing notably higher.

The Dow Industrials ended higher for the second straight session, rising 131.50 points or 1.37%. While the Nasdaq Composite Index advanced 35.42 points or 1.71% to 2,104, the S&P 500 Index gained 14.26 points or 1.37% at close at 1,055.

All thirty of the index components ended the session higher, with Alcoa (AA) rallying 3.50% and Pfizer (PFE), Merck (MRK), JP Morgan (JPM), Intel (INTC) and Hewlett Packard Co. (HPQ) gaining over 2% each.

Among the sector indexes, the Dow Jones U.S. Basic Materials Average rallied 2.30%, the NYSE Arca Oil Index gained 2.29%, the Philadelphia Oil Service Index moved up 2.35% and the NYSE Arca Gold Bugs Index jumped 7%. The S&P Retail Index rose 1.94% and the NYSE Arca Securities Broker/Dealer Index advanced 1.88%.

In the technology space, the Philadelphia Semiconductor Index gained 2.07%, the NYSE Arca Disk Drive Index rallied 1.55%, the NYSE Arca Software Index rose 1.32%, the NYSE Arca Internet Index moved up 2.70% and the NYSE Arca Networking Index added 1.15%.

Get our Daily Trade Signals and Grain Newsletter along with a copy of the CBOT Introduction to Agricultural Futures and Options Book for Free! The grain trading professionals at MF Global can guide you in the right direction with your trading. Click here to Get your Free Grain Trading Kit Today

Toronto Stocks Look To Hold Recent Gains

Amid growing optimism that the global economic recovery may be taking hold, Bay Street stocks will look to hold on to yesterday's notable gains Wednesday morning.

The market finished yesterday at a six-day high as resource stocks surged on US dollar weakness after Australia became the first G-20 nation to raise interest rates.

Gold prices held near $1,040 per ounce after earlier reaching a new intraday record of 1,049.70. Copper dropped about 1%.

Crude oil prices are up slightly near $71 per barrel as traders await the Energy Information Administration's weekly inventory report.

In corporate news, Cipher Pharmaceuticals said it has enrolled the first patient in its Phase III safety study of CIP-ISOTRETINOIN, the Company's novel, patented formulation of isotretinoin, which is used in the treatment of severe, nodular acne.
 
Gammon Gold announced a bought deal in which it will sell 11.24 million common shares at a price of US$8.90 per share for gross proceeds of US$100.04 million.

WestJet Airlines announced the appointment of Gregg Saretsky to the position of Executive Vice-President, Operations, effective immediately.

There is no major economic news on tap today in Canada. On Thursday, traders will watch for the housing starts report for August and on Friday, employment data will be released.

On Tuesday, the S&P/TSX Composite Index has rallied 145.35 points or 1.3% to move at 11,247.97. The market was up for a second straight day after losing 2.6% last week.

Currency, Commodity Futures

Crude oil futures are rising $0.34 to $71.22 a barrel after rising $0.47 to $70.88 a barrel in Tuesday’s session. Gold futures, which rallied $21.90 to $1,039.70 an ounce in the previous session, are rising $4.10 to $1,043.80 an ounce.

On the currency front, the U.S. dollar is trading at 88.16 yen compared to the 88.825 yen it fetched at the close of New York trading on Tuesday. Currently, the dollar is at $1.468 versus the euro.

Click Here

Asian Markets End Higher On Optimism About Recovery

The major Asian markets open for trading continued its northward march and ended higher on increasing optimism that the world economy is on the recovery path. Higher commodity prices amid weaker dollar and increasing optimism about better corporate results acted as positive catalysts.

In Japan, the benchmark Nikkei 225 Index gained 107.80 points, or 1.11% to 9,800, while the broader Topix index of all first section stocks was up 14.06 points, or 1.61%, to 886.

On the economic front, the Cabinet Office revealed that the country's leading index climbed to 83.3 in August from 82.5 in the previous month, in line with economists' expectations. The coincident index increased to 91.4 from 89.8 in July, remaining on a rising trend for the fifth consecutive month. Further, the lagging index increased to 83.8 from 82.8 in the previous month.

Separately, the Ministry of Finance revealed that the country's official reserve assets totaled 1.05 trillion yen in September, up 10.26 billion from August.

Trading companies advanced on higher commodity prices in the international market. Mitsubishi Corp. surged up 5.68%, Mitsui & Co., climbed 5.47%, Sumitomo Corp rose 5.18%, Toyota Tsusho Corp. advanced 2.85%, Itochu Corp. gained 2.75% and Marubeni Corp. increased 2.49%.

Machinery companies also gained on increasing optimism about global recovery. Daikin Industries gained 3.34%, Hitachi Construction Machinery surged up 5.03%, Komatsu Limited rose 3% and Kuboto Corp. climbed 4.90%.
 
Oil related companies also ended in positive territory on higher crude oil prices. Inpex Corp., gained 2.86%, Nippon Oil firm rose 3.16% and Showa Shell added 0.55%.

Mining and metals stocks, including steel, also advanced. Sumitomo Metals & Mining surged up 5.44%, Sumitomo Metal Industries gained 4.19%, Mitsui Mining and Smelting soared 6.97%, Mitsubishi Heavy Industries advanced 2.79% and Japan Steel Works rose 5.05%.

Large banks ended higher on increasing confidence about recovery. Sumitomo Mitsui Financial climbed 6.96%, Resona Holdings surged up 5.52%, Mitsubishi UFJ Financial soared 5.26% and Mizuho Financial advanced 1.63%.

In Australia, the benchmark S&P/ASX200 Index surged up 104.10 points, or 2.27% to close at 4,696, while the All-Ordinaries Index ended at 4,696, representing a gain of 98.60 points, or 2.14%.

On the economic front, results of a survey conducted by the Australian Housing Group and the Housing Industry Association revealed that the Performance of Construction Index rose a seasonally adjusted 8.4 points to 50.8 in September, well above the 42.4 reading in August, marking the first month of expansion after 18 months of contraction. A reading above 50 indicates expansion, while one below 50 suggests contraction.

In a separate statement, the Australian Bureau of Statistics revealed that the value of dwellings approved for construction in August increased 0.7% in seasonally adjusted terms. The report further noted that the number of permits for owner-occupied housing decreased 0.6% over the previous month. A total of 62,718 permits for owner-occupied homes were issued for the month.

In another report, the Department of Education, Employment and Workplace Relations revealed that the monthly leading indicator of employment rose for the fourth consecutive month in October, after falling for a revised 19 consecutive months. The leading indicator climbed to minus 0.934 in October from minus 1.104 in the previous month.

Metals and mining stocks surged up following the rise in commodity prices in the international markets. BHP Billiton gained 3.17%, Rio Tinto climbed 5.23%, Fortescue Metals soared 9.12%, Gindalbie Metals rose 3.41%, Minara Resources surged up 9.14% and Oz Minerals increased 6.43%.

Gold stocks soared following the sharp rise in bullion prices in the international market. Lihir Gold climbed 5.72%, Newcrest Mining surged up 6.74% and Sino Gold Mining soared 6.91%.
 
Oil stocks also ended higher. Santos gained 1.19%, Oil Search rose 1.27%, Origin Energy advanced 1.23% and Woodside Petroleum added 0.18%.

Banking stocks also ended in positive territory. ANZ Bank rose 2.36%, Commonwealth Bank of Australia rose 3.64%, National Australia Bank climbed 3.20% and Westpac Banking Corp. advanced 1.31%.

In Hong Kong, the Hang Seng Index continued its northward march and ended at 21,242, representing a gain of 430.06 points, or 2.07%, taking cues from Wall Street where the major indices ended higher for the second successive day on increasing confidence that the world's largest economy is on course for a recovery. Higher commodity prices spurred by weaker dollar and optimism about better corporate earnings helped lift market sentiment. All the forty-two components, except two, in the index ended in positive territory.

In South Korea, the KOSPI Index ended flat with a marginal drop of 0.44 points, or 0.03% at 1,598 as the gains in commodity related stocks was more than offset by drop in technology and automotive stocks. Traders preferred to lock in gains in the technology and automotive stocks following dollar weakness, while optimism about recovery prospects lifted the commodity related stocks. Volume was relatively moderate amid volatile trading. While the major gainers were Posco Steel and Korea Zinc, the top losers were the automotive stocks and technology stocks.

 Valuation concerns and fears that the U.S. economic recovery will spur inflation dragged down the Indian market on Wednesday. Profit taking following recent gains and caution ahead of the second-quarter corporate results season, beginning Friday, also weighed on market movement. The BSE Sensex pared most of its early gains and ended in the negative territory with a loss of 152 points, or 0.90% at 16,807 and the S&P CNX Nifty fell 42 points or 0.83% to 4,986.

Among the other major markets in the region, Indonesia's Jakarta Composite Index slipped 14.74 points, or 0.58% and ended lower at 2,513. However, Taiwan's Weighted Index gained 72.61 points, or 0.96% to close at 7,609, and Singapore's Strait Times Index added 22.74 points, or 0.87%, to close at 2,635. The market in Shanghai is closed for national holidays.

Come Into the LIVE Online Trading Session and Watch Us Make at Least 1 Point ($500 - $2000 a Day). The LIVE Trading Session is Completely FREE! - Sign Up Now here!

The major European markets are seeing lackluster sentiment on Wednesday after they ran up in the previous sessions. Currently, the French CAC 40 Index is down 0.18% and the German DAX Index is edging down 0.21%, while the U.K.’s FTSE 100 Index is moving down 0.41%.

A report released by the British Retail Consortium said shop prices in the U.K rose 0.1% in September compared with the previous month, while they edged down 0.1% from the year-ago period.

At the same time, the Nationwide Building Society said today that consumer confidence in the U.K. rose to its highest level in 17 months in September. The consumer confidence index rose to 71 in September from 65 in August.

A report released by Eurostat showed that the euro zone economy contracted at a faster than initially estimated rate in the second quarter. GDP declined at a 0.2% sequential rate compared to the 0.1% drop estimated initially.

U.S. Economic News

A report released earlier in the day showed that mortgage applications rose to their highest level since mid-May, with the mortgage applications index rose a seasonally adjusted 16.4% to 756.3. The increase reflects a rush by prospective homeowners to take advantage of the prevailing low interest rates.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended October 2nd at 10:30 AM ET.

The inventory report for the week ended September 25th showed that crude oil inventories rose by 2.8 million barrels from the previous week to 338.4 million barrels. Crude oil stockpiles remained above the upper boundary of the average range.

Distillate fuel inventories rose by 0.3 million barrel, remaining above the upper boundary of the average range, while gasoline stockpiles fell by 1.6 million barrels, but were still above the upper limit of the average range. Refinery capacity utilization averaged 86.1% over the four-weeks ended September 25th compared to 86.7% in the previous week.

The U.S. Federal Reserve is expected to release its monthly consumer credit report at 3 PM ET. Consumer credit for August is likely to show a decline of $9.5 billion.

Consumer credit fell by $21.6 billion to $2.47 trillion, a bigger decline compared to the $4 billion drop expected by economists. The previous month's decline was revised to $15.5 billion from the initially estimated $10.3 billion drop. Both revolving as well as non-revolving credit declined.

Here are 10 simple Dos and Don’ts any investor can follow which may contribute to potential for success in trading futures. This FREE guide can provide some of the basic principles that traders inherently live by.

Click Here to Request Your Free Guide!

Family Dollar Stores could be in focus after it said its first quarter earnings rose 24.7% to $2.07 per share. The company confirmed its pre-announced sales growth of 2.6% to $1.811 billion. The consensus estimates had called for earnings of 41 cents per share on revenues of $1.81 billion. The company expects 2010 net sales to rise 5%-7% and earnings per share to come in at $2.15-$2.35 per share. Analysts estimate earnings of $2.05 per share on 6.1% growth in revenues to $1.81 per share.

Yum Brands may gain ground after it reported that its third quarter earnings rose to 69 cents per share from 58 cents per share in the year-ago period. On an adjusted basis, the company reported earnings of 70 cents per share. Revenues fell 2% to $2.78 billion. Analysts estimated earnings of 58 cents per share on revenues of $2.79 billion.

Boston Properties is likely to be in focus after it said it has agreed to sell $700 million worth of 5.875% senior unsecured notes due 2019 in an underwritten public offering. The company said the notes were priced at 99.931% of the principal amount.

Sunoco receded in Tuesday’s after hours session after it announced that it is indefinitely idling all process units at its Eagle Point refinery located in Westville, New Jersey as it attempts to reduce losses in its refining business. The company said tt will shift current production at Eagle Point to its two nearby refineries in Marcus Hook and Philadelphia.

The company also announced that it is halving its quarterly dividend to 15 cents per share, beginning in the first quarter of 2010. The idling of the plant will result in the furloughing of 400 employees and a reduction of pre-tax expense by about $250 million per year. Additionally, a $70 million annualized cash savings are likely as the results of the reduction in dividend.

Amazon may also be in focus after it announced that it is reducing the price of its Kindle electronic-book reader once again to $259. The company also said it would launch an international version of the e-book that would be priced at $279 and work in 100 countries.

Atmos Energy is likely to gain ground after Standard & Poor’s said the company would replace Sepracor in the S&P MidCap 400 Index. Monro Muffle Brake will replace Atmos in the S&P SmallCap 600. Additionally, USA Mobility and BJ’s Restaurants will replace Cascade Bancorp. and Frontier Financial, respectively.

Costco Wholesale is likely to react to its announcement that its fourth quarter net sales fell 3% to $21.89 billion. The company’s net income fell to 85 cents per share from 90 cents per share in the year-ago period. The company noted that it benefited from a LIFO credit amounting to 2 cents per share after-tax. Analysts estimated earnings of 76 cents per share on revenues of $22.31 billion.

Our informative 24”x36” wall chart explores 40 years of historical market data on Crude Oil, Gold and S&P500 markets, and includes historical event call-outs. It’s a great trading and analytic tool for professional and beginner traders.

Sign up here to receive your chart today!

Investors Hub Services