US & World Daily Markets Financial Briefing 08-11-2007

Can you identify the Next Major CURRENCY Trend? ...
with the Electronic Currency Trading System (ECTS) Help You Can! Click Here

Stocks extend losses after big sell-off

NEW YORK (AP) - Stocks extended their losses Thursday, a day after tumbling amid concerns about continuing credit woes, a weakening dollar and rising oil prices.
   
Some investors hunted for bargains in the first minutes of trading, but the gains soon evaporated. Good news, including a narrower-than-expected third-quarter loss at Ford Motor Co. and word of a buyout offer in the mining sector, was unable to sustain higher prices.
   
The market had fresh reason for concern about toxicity within the credit markets. Morgan Stanley issued a detailed accounting of its exposure to subprime debt, eliminating some of the uncertainty that has wracked Wall Street to varying degrees in recent months. But Morgan said late Wednesday its fourth-quarter profit could be reduced by $2.5 billion in write-downs related to troubles in the credit market, a reminder of the widespread damage from soured loans.
   
In the first hour of trading, the Dow Jones industrial average fell 35.20, or 0.26 percent, to 13,264.82. Broader stock indicators also fell. The Standard & Poor's 500 index fell 2.94, or 0.20 percent, to 1,472.68, and the Nasdaq composite index fell 23.16, or 0.84 percent, to 2,725.60.

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 rises after BoE leaves rates unchanged

LONDON - The pound rose in relief, briefly setting a fresh 26-year high, after the Bank of England left interest rates on hold for the fourth month running.
   
Although the BoE's decision to keep the key benchmark rate on hold at 5.75 pct was expected by most analysts, financial markets were pricing in about a 30-40 pct chance of a quarter point cut, with the pound weakening as a result before the announcement.
   
"The market had become more nervous about a pre-emptive rate cut in recent weeks. The nervousness was driven largely by the weaker-than-expected data in business surveys," said Alan Castle at Lehman Brothers.
   
Thus, the pound jumped as high as 2.1086 usd just after the decision, marking a new 26-year high. It also gained against the euro, pushing it to 0.6957 stg from 0.6975 stg.
   
Elsewhere, the euro was stable against the dollar after the European Central Bank left its interest rates on hold at 4.00 pct.
   
This decision was expected by analysts, and most believe that the central bank will keep rates unchanged for some time as it tries to balance increasing euro zone inflation pressures with slowing growth.
   
Focus is now turning to the press conference being held by ECB president Jean-Claude Trichet, and markets will be looking for any indication of whether the central bank is more worried about inflation or growth.
   
"We doubt that Trichet will deviate much from the last statement, however," said Mitul Kotecha, head of forex strategy at Calyon.
   
Elsewhere, the dollar will come into focus when Federal Reserve chairman Ben Bernanke testifies before Congress later today.
   
Comments out of China yesterday suggesting that the country could be set for further reserve diversification on account of the dollar's weakness sent the US currency tumbling across the board, with the euro surging to record highs above 1.47 usd and the pound above 2.1 usd.
   
It is unlikely, however, that Bernanke will be able to say anything that will stem this trend. He will have to balance out the fact that recent US data have pointed to a resilient economy with mounting concerns about a growing credit crisis and growing confidence that the Fed will deliver more rate cuts.

Trade Energy contracts? Get your FREE research. Click here.

Euroshares off lows midday, Wall St seen opening up; Siemens and EADS rise

LONDON - Europe's leading exchanges were off lows in midday trading with earnings news form the likes of Siemens and EADS providing some excitement and as Wall Street is set to recover some of the losses seen yesterday.
   
The banking sector under performed amid ongoing fears over the banks' true exposure to the ailing subprime mortgage market.  At 12.01 pm, the Dow Jones STOXX 50 was 4.24 points or 0.11 pct lower at 3,754.64, while the STOXX 600 fell 1.08 points or 0.29 pct to 374.68.
   
Looking ahead, Wall Street is headed for a higher open, making up some of the ground lost yesterday after the dollar hit a new record low against the euro and on ongoing credit concerns. According to IG Index, the Dow Jones Industrial Average is expected to open some 70 points higher at 13,370.
   
Back in Europe, earnings results from Siemens and EADS boosted their respective indices as the two giants provided some excitement with better-than-expected quarterly earnings results.
   
Shares in the German conglomerate surged 5.94 pct. Over in France, EADS impressed -- up 3.58 pct -- after the aerospace and defence group's third-quarter results prompted relief among investors. Raymond James analysts said EADS' sales at 9.27 bln eur in the period beat their estimates by a full billion eur and that the 776 mln eur net loss was lower than their estimate of 1.15 bln eur loss.
   
The banking sector fell an aggregate 2 pct with Fortis shedding 5.38 pct after the Belgo-Dutch bancassurer posted third-quarter results which were at the low end of analysts' forecasts. While the group assured investors over the extend of its subprime exposure, analysts at Rabobank noted the inclusion of fair value changes on the balance sheet as one of the negative aspects of today's earnings report.
   
BNP Parbibas managed a small advance, however, up 0.27 pct, following better-than-expected net profit figures for the third quarter. The bank reported a 21 pct rise in quarterly net profit to 2.027 bln eur from 1.675 bln a year earlier, and said the impact of the summer's credit crisis was limited during the quarter.
   
Elsewhere, Deutsche Telekom climbed 1.99 pct following the release of its third-quarter results, which unveiled a strong performance at its T-Mobile unit.  But shares in engineering group Alstom retreated 5.71 pct as the French engineering group failed to surprise investors, who had hoped it would widely exceed consensus. Citigroup, in a note to clients, reiterated its 'hold' rating and 140 eur target on the stock, noting the results were in line but "probably not enough".
   
In Brussels, InBev plummeted 16.35 pct after the brewer posted a below-forecast rise in third-quarter net profit and disappointing sales and volume growth. The poor performance prompted brokers KBC Securities and Exane BNP Paribas to downgrade the stock.
   
In the tech-sector, shares of GPC Biotech AG nosedived 20.24 pct lower as investors worried about the group's prospects after it said its third-quarter net loss widened to 19.97 mln eur from 18.69 mln, after its costs jumped on expenses related to drug candidate satraplatin.
  
Other earnings news in focus today include Deutsche Post, up 2.96 pct; Deutsche Postbank, up 4.48 pct, Petroplus, up 5.41 pct and Soitec, down 5.68 pct as well as Repsol, down 0.26 pct and TUI, up 3.97.
   
In other corporate news, miners are in focus, after BHP Billiton PLC said it approached the board of Rio Tinto about a possible combination of the two companies, but Rio Tinto has rejected the proposal. Shares in Rio surged 19 pct, while BHP Billiton was 8.20 pct higher.  Analysts noted however that a potential merger would likely encounter regulatory hurdles.
  
TomTom outperformed today with traders noting that it has probably won the bidding war for Dutch rival Tele Atlas. TomTom announced a 30 eur per share offer for Tele Atlas yesterday, topping Garmin's 24.5 eur bid, and has since built up a 28.27 pct stake in the digital mapmaker.
   
In broker action, ING fell 3.03 pct after Exane BNP Paribas downgraded the stock to 'underperform' from 'neutral' following its disappointing third quarter results yesterday. Bear Stearns also downgraded to 'peer perform' from 'outperform,' saying the Dutch bank and insurance group's shares are likely to
suffer from general investor scepticism.

In economic news, the interest rate setting decisions of the European Central Bank and the Bank of England hit the spotlight.  The Bank of England already announced that it will leave rates unchanged at 5.75 pct, as expected, while the decision by the ECB is due at 12.45 pm London time. 
   

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

Asian markets tumble with Wall Street as subprime fears resurface

SINGAPORE 

Stock markets across Asia tumbled Thursday, sending major indices down more than 2.5 pct, after Wall Street suffered its fifth-biggest point decline of the year as the dollar hit fresh record lows against the euro and GM reported its biggest-ever quarterly loss.
   
Adding to the gloom, Morgan Stanley announced 3.7 bln usd in writedowns on subprime-related securities, and the big mortgage lender Washington Mutual warned that its 2007 credit losses could be as high as 2.9 bln usd. That's almost double the amount estimated back in July when the subprime crisis was at
its peak.
   
The greenback sank to fresh record lows against the euro on speculation that China might diversify its foreign exchange reserves beyond the dollar and into the euro and other strong currencies.
   
The Sydney, Shanghai and Hong Kong were among markets that took the worst hit. The Hang Seng closed down 3.2 pct at 28,760.22 and the Taiex fell 3.9 pct to 8,937.58. The Shanghai Composite ended down 4.9 pct at 5,330.02. The KOSPI index closed down 3.1 pct at 1,979.56.
   
The S&P/ASX 200 was down 2.6 pct at 6,521.6 and the All Ordinaries was off 2.4 pct to 6,568.5 as resource giants BHP Billiton Ltd and Rio Tinto Ltd fell as oil prices pulled back from record levels. The Australian market has rallied more than 15 pct from August 17 when the credit crisis sent shock waves through international financial markets.
   
Crude for December delivery closed down 33 cents at 96.37 usd a barrel on the New York Mercantile Exchange, easing from a record of 96.70 usd after the US government reported a bigger-than-expected build in inventories in the latest week.
   
The contract dropped 1.05 usd to 95.32 usd a barrel in Asian trade although analysts said it could still march toward the 100-dollar level due to tight global supplies and strong demand. Meanwhile, Roadley said not even gold stocks could escape the selloff even though the price of gold rose to fresh 27-year highs overnight.
   
Financials were also hit hard even though most banks in Asia and Australia have limited exposure to the US subprime sector and few have large holdings of securities that include subprime debt. The Financial Times reported Thursday that writeoffs in the US may reach as much as 70 bln usd, about 40 bln usd more than banks have booked so far.
   
The Philippines Composite ended down 2.5 pct at 3,692.10. The Jakarta index closed down 1.3 pct at 2,678.22. The Nikkei 225 lost 2 pct to 15,771.57, its lowest since September 10. The broader Topix was down 2.6 pct to 1,516.94.
  
The Singapore and Malaysian markets were closed for a public holiday. In Hong Kong, Bank of China, which has the biggest exposure to subprime-related securities among Chinese lenders, fell 3.1 pct to 4.63 hkd. China Construction Bank, the third-biggest bank by assets in China, lost 3.4 pct to 7.76 hkd.
   
HSBC Holdings, Europe's largest bank, fell 1.9 pct to 142.40 hkd. Stock market operator Hong Kong Exchanges and Clearing Ltd was down 3.5 pct at 245.4 hkd. PetroChina, was down 7.4 pct at 16.0 hkd.
   
In Japan, oil stocks led the decliners after a profit warning by Nippon Mining. Nippon Mining plunged 13.9 pct to 914 yen. The holding company for oil refiner Japan Energy and non-ferrous metals producer Nippon Mining & Metals said its profit margin narrowed in the fiscal first half as it failed to keep pace with crude oil price rises by raising product prices.
   
"The company's share price reacted to its weak petroleum processing business. It was dragged down further by the weak sentiment in the stock market overall," said Yoshihisa Miyamoto, research analyst at Okasan Securities.
  
Among other oil stocks, Nippon Oil lost 4 pct at 942 yen, Cosmo Oil fell 3 pct to 482 yen and Showa Shell Sekiyu dropped 1.4 pct to 1,301 yen.
   
Toyota Motor shares fell 4.2 pct to 6,170 yen. Toyota said Wednesday its operating profit grew 16.3 pct in the first half as strong overseas sales of key models and the weak yen offset rises in expansion and procurement costs, allowing it to hike full year profit forecasts.

Honda Motor plunged 2.9 pct to 4,000 yen while Nissan Motor shed 2.5 pct to1,228 yen. In the financial sector, Mitsubishi UFJ Financial Group lost 3.2 pct to 966 yen, while Mizuho Financial Group fell 3.4 pct to 563,000 yen. 
 

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

Copper continues lower as rising inventories weigh on sentiment

LONDON - Copper prices continued lower in early London trade, as rising inventories of the red metal heightened fears of slowing demand during the current uncertain economic climate.
   
With equities falling sharply in London this morning, following heavy losses on Wall Street overnight on further credit woes and slowdown fears, the base metals complex has followed equities south. Slowing economic growth should spell lower demand for industrial metals.

"Right now, copper is suffering," said Alex Heath, head of base metals trading at RBC Capital Markets. He added that rising warehouse stocks in London, and the view that the Chinese market is currently in surplus was weighing on prices for the moment. At 10.07 am, LME copper for three-month delivery was down at 7,170 usd a tonne against 7,315 usd at yesterday's close.
    
Copper inventories monitored by the London Metal Exchange rose 1,700 tonnes this morning to 170,875 tonnes, almost 30 pct higher than they were a month ago. Rising stockpiles are helping to alleviate previous supply concerns.
   
The market has been underpinned, however, by investors bargain hunting on the dips, and weakness in the US dollar which makes commodities traded in greenbacks cheaper for overseas buyers. A nationwide mine workers strike in Peru is also keeping supply concerns simmering. However, the mining chamber in Peru has claimed that output has been already unaffected so far.
       
Tin was trading at 16,700 usd against 16,950 usd, after profit taking knocked the top off prices following yesterday's contract high of 17,225 usd. Possible limitations on both Chinese and Indonesian exports continue to support the market, with supply fears fuelling yesterday's highs, according to analysts.
   
Indonesia, the world's second-biggest tin producer after China, is considering setting tin export quotas to stop tin prices falling, with the quota for 2008 in the range of 90,000-100,000 tons, an official of the Energy and Mineral Resources Ministry said yesterday.

Meanwhile in China, the export quota is to be reduced by 3,700 tonnes from this year, analysts said. Among other metals, nickel was down at 31,650 against 32,300 usd at the close yesterday. Further gains in stockpiles are pushing prices lower. Nickel stocks have risen to 40,536 tonnes since hitting a record low of 2,982 tonnes in February.
   
Aluminium eased to 2,621 usd a tonne against 2,625 usd at yesterday's close. Lead was trading down at 3,430 usd against 3,590 usd yesterday, while zinc fell to 2,725 usd against 2,765 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.