US & World Daily Markets Financial Briefing 10-04-2008

Welcome to the Investors Hub World Daily Markets Bulletin; your daily e-mail guide to important Domestic, European and Global market events. Market Briefing is here to keep you informed and up-to-date on key financial developments.

If you have forgotten your password, click here.

Stocks waver after mixed retail data

NEW YORK - Stocks fluctuated Thursday as investors weighed mixed sales figures from major retailers and a drop in unemployment claims.

The Labor Department said initial claims for unemployment benefits fell by 53,000 to 357,000 last week, a better-than-expected reading. Still, the four-week average of claims, which helps the market look past week-to-week volatility, rose last week to 378,250, a two-and-a-half-year high.

Because of the shaky economy, retailers have been hurting. Gap Inc., Kohl's Corp., Saks Inc. and Nordstrom Inc. all reported drops in March sales on Thursday. The news came a day after home furnishings retailer Bed Bath & Beyond Inc. warned its first-quarter profit would come in below the average analyst estimate.

But some retailers -- particularly discounters that sell staples like food and gasoline -- are weathering the economic weakness. Wal-Mart Stores Inc. reported a strong rise in March sales at stores open for at least a year, and boosted its forecast for April sales and first-quarter profit. Warehouse club operator Costco Wholesale Corp. also witnessed a sharp rise in March sales.

Wal-Mart rose 61 cents to $54.76, while Costco rose 42 cents to $66.43.

In midmorning trading, the Dow Jones industrial average fell 5.04, or 0.04 percent, to 12,522.22. Broader stock indicators were mixed. The Standard & Poor's 500 index fell 1.19, or 0.09 percent, to 1,353.30, and the Nasdaq composite index rose 11.03, or 0.47 percent, to 2,333.15.

The Nasdaq got a big boost after Japanese drug maker Takeda Pharmaceutical Co. announced an $8.8 billion, all-cash bid for U.S. biotechnology company Millennium Pharmaceuticals. Millenium soared $8.06, or 49 percent, to $24.41.

Bond prices were little changed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was at 3.48 percent, the same as late Wednesday. The mixed readings on consumer spending arrived as oil prices trade near record highs and banks reveal more trouble with the credit markets.

Lehman Brothers Holdings Inc. disclosed in a regulatory filing Wednesday that it liquidated three funds because of the tight credit markets and bought the assets of those funds, valued at $1 billion, on Feb. 29. The investment bank said it also purchased deteriorated assets valued at $800,000 from other funds.

Lehman fell 86 cents, or 2.1 percent, to $39.68, along with other financial stocks. Light sweet crude fell 63 cents to $110.26 a barrel on the New York Mercantile Exchange, after surging above $112 a barrel during Wednesday's session. Gold prices rose, while the dollar fell. The Bank of England lowered its base lending rate by a quarter-point to 5 percent, the lowest level in 17 months, while the European Central Bank left its rates unchanged.

In other corporate news, Yahoo Inc. and Time Warner Inc.'s AOL are close to a deal to combine their Internet operations, The Wall Street Journal reported, citing unnamed sources. The deal is aimed at thwarting Microsoft Corp.'s effort to buy Yahoo, but Microsoft reportedly is talking with Rupert Murdoch's News Corp. about launching a joint bid for Yahoo.

The Russell 2000 index of smaller companies fell 0.26, or 0.04 percent, to 698.12. Overseas, Japan's Nikkei stock average dropped 1.27 percent. Britain's FTSE 100 fell 1.14 percent, Germany's DAX index fell 1.06 percent, and France's CAC-40 fell 1.17 percent.

Subscribers benefit from features such as: advanced search and reading functionality.
Click here for all the action.

Forex - Euro stays close to record highs as ECB keeps interest rate unchanged

LONDON  - The euro stayed within spitting distance of record highs against the dollar and pound as the European Central Bank lived up to expectations by keeping its base rate unchanged yet again. Attention now turns to the post rate verdict news conference where ECB chief Jean-Claude Trichet's every word will be scrutinised for any change in the central bank's so far hawkish rhetoric.

Today's much awaited ECB rate verdict brought no surprises with the base rate left unchanged at 4.00 percent and Jennifer McKeown at Capital Economics believes Trichet will continue to sound tough on inflation. "With inflation hitting a new series-high of 3.5 percent in March and inflation expectations still at high levels, we doubt that the Bank will be ready to signal rate cuts just yet," she said. Against this backdrop, it is hard to see the euro losing steam. It earlier set a record 1.5912 aginst the dollar.

Also today, the Bank of England reduced its base rate for the third time in five months despite ongoing concerns about rising inflationary pressures -- a factor which weighed on the pound. The rate cut decision was widely expected and had earlier led the pound to a record low of 0.8028 stg against the euro. Against the dollar though the pound was a touch higher.

Following the rate decisions, the market will also move to focus on this weekend's G7 meeting of finance ministers and central bankers, which takes place in the wake of the IMF's sharp global growth downgrades. "Speculation remains that some kind of sabre rattling will be seen amongst central bankers who are somewhat disgruntled with the weak dollar and volatile market conditions, so even once today's verdicts are clear there's going to be no let-up in the posturing," said James Hughes, analyst at CMC Markets.

The yuan, meanwhile, rose against the U.S. dollar on views the Chinese government will allow the nation's currency to appreciate to ease inflationary pressures. A strong yuan will lower the costs of imported goods such as oil. The nation's central bank, the People's Bank of China, freed the yuan from its peg to the dollar in favour of a trade-weighted basket of currencies in July 2005. The bank allows a trading band of 0.5 pct on either side of the central parity rate.

Since July 2005, the yuan has risen 15.5 percent versus the dollar. China's inflation rate is currently at the highest in nearly 12 years.

For stock market quotes, company information, stock charts, historical quarterly reports and historical annual reports, click here

Euroshares fall after overseas losses; ECB and BOE in focus

At 08:57 a.m., the STOXX 50 was down 9.21 points or 0.29 percent at 3,157.56. The STOXX 600 was down 0.93 points or 0.29 percent at 315.60 points.

Elsewhere, oil prices remained steady in Asian trade and New York's main oil contract, light sweet crude for delivery in May, rose 2 cents to $110.89 a barrel. The benchmark contract jumped $2.37 to close at $110.87 on Wednesday after an unexpected drop in U.S. crude inventories.

Brent North Sea crude for May was a penny higher at $108.48 a barrel. Turning to corporate news, British Energy climbed 3.78 percent after reports RWE, the German utility, has made an indicative all-cash offer of close to 700 pence a share for the UK's nuclear operator, valuing it at up to 11 billion pounds.

Shares in RWE fell 1.64 percent amid fears they could be drawn into a bidding war as EDF Energy, the UK arm of Electricite de France, is also conducting due diligence and others including Centrica and Iberdrola are widely expected to be interested in parts of the UK nuclear group.  

Turning to M&A news, British Energy rose 4 percent in early deals following reports that German utility RWE has made an indicative all-cash offer of close to 700 pence a share several weeks ago and is now conducting due diligence.

EDF Energy, the UK arm of Electricite de France, is also conducting due diligence, the FT said. It is understood to have initially made an offer to buy only part of British Energy, but competition from RWE will mean it would have to bid for the whole company.

One analyst said the offer is likely to trigger a competitive auction, with EDF, Centrica, Iberdrola and others likely to be interested. He calculates the company is worth 660 pence but says valuation is very sensitive to power prices. Staying in the sector, Iberdrola outperformed, up 0.4 percent, after daily Expansion reported that the new socialist government may favour a merger between the the group and peer Gas Natural.

Among financials, MLP is up 2.5 percent, on the back of a report on Boerse Online, which said Deutsche Postbank is one of several interested parties that may bid for the financial services group. Staying in the German market, reinsurer Munich Re is in the spotlight, adding 0.23 percent with traders pointing to reports that US billionaire investor Warren Buffett built up a small stake in the group.

In other news this morning, Yara jumped 4.77 percent in opening trade, on talk that China is about to impose a 135 percent export tax on all fertilisers. Carnegie, in a note to investors, said: "The new export tax level, expected to be a 100 percent increase to 135 percent, would remove the largest exporter of urea in Asia from the supply side of the equation for at least the reminder of the year."

And in the UK, staffing group Hays rose 3 percent after releasing third-quarter results which came in slightly ahead of expectations. Analysts noted however that the underlying results were mixed, with a weakness showing in banking, construction and property showing.

And Escada slumped 14.63 percent after the fashion group cut its forecasts for the fiscal year 2007/2008, citing worsening market conditions. "Escada still expects a positive net income, which we deem to be unlikely," analysts at Sal Oppenheim said.

In response, Deutsche Bank cut its target for the group to 14 euros from 20 euros and reiterated its 'hold' rating. On the economic front, the European Central Bank is expected to keep interest rates unchanged at today's Governing Council meeting in light of surging inflation.

Fast-loading, feature-rich and highly customizable interfaces for reading and posting messages. click here

Asian stocks mixed as Japan, Australia fall; Korea gets election boost

The blue chip Nikkei 225 closed 1.3 percent lower at 12,945.30, off a low of 12,898.49. The broader Topix shed 1.2 percent at 1,248.07. The benchmark S&P/ASX 200 closed down 1.3 percent at 5,446.4, after moving between 5,435 and 5,512.6. The All Ordinaries index fell 1.2 percent to 5,515.5.

Australia & New Zealand Banking Group dropped 1.9 percent to A$20.47 and Westpac Banking fell 2.6 percent to A$22.58. Commonwealth Bank of Australia lost 1.8 percent at A$41.11.

Late bargain-hunting, lifted stock markets in Hong Kong and Shanghai. The Hang Seng finished up 0.8 percent at 24,187.10. The Shanghai Composite gained 1.7 percent to 3,471.74. "The strong earnings forecast of ICBC helped to ease concerns somewhat over the earnings outlook for listed companies," said Cao Xuefeng, an analyst at West China Securities.

The Industrial and Commercial Bank of China (ICBC), which projected over 50 pct growth in first-quarter net profit, advanced 2.8 percent to 6.18 yuan. The stronger yuan, which breached the 7.0 yuan per US dollar for the first time, also supported bargain-hunting activities.

The KOSPI index closed 9.93 points or 0.6 percent higher, at the day's high of 1,764.64, after the election. Separately, the Bank of Korea left rates unchanged for an eighth straight month as widely expected. The Taiex was up 1.9 percent at 8,829.40. Among tourism-related shares, Leofoo Development was up 7 percent at T$30.10, Ambassador Hotel was up 7 percent at T$56.20 and Formosa International Hotels surged 6.24 percent to T$545.00.

The Singapore Straits Times was down 0.6 percent at 3,071.84 as investors shrugged off stronger-than-expected first-quarter economic growth figures. Economists said growth is unlikely to continue at that pace, given the slowdown in the U.S.

"The market looks forward, but the indicators are not as strong, coupled with (concerns about) inflationary pressures," said Song Seng Wun, regional economist and Singapore research head at CIMB-GK Research.

The Monetary Authority of Singapore (MAS) is tightening its foreign exchange policy to curb inflation. It announced Thursday that it is re-centering its foreign exchange policy band at the current strong level of the Singapore dollar nominal effective exchange rate. 

In another example of the pressure being exerted by rising energy prices, budget carrier Oasis Hong Kong Airlines on Wednesday announced it is going into liquidation after just 18 months of operation, unable to cope with jet fuel prices. The news weighed on Cathay Pacific Thursday, sending its shares down 2.2 percent to HK$15.38.

"Oasis has accumulated losses of as much as HK$1 billion and is losing more than HK$1 million per flight, primarily due to high jet fuel costs. In our view, this highlights the difficult operating environment Cathay Pacific is in," said Goldman Sachs analyst Matthew Chan.

Goldman Sachs is keeping its "sell" call on Cathay Pacific stock. Other Asian airlines were also lower. Qantas slipped 3.7 percent to A$3.69. The airline said it believes it is entitled to compensation for delays in the delivery of Boeing Co.'s new B787 Dreamliner aircraft.

In Tokyo, All Nippon Airways lost 1.9 percent to 414 yen and Japan Airlines fell 2.3 percent to 255 yen. Oil stocks gained with the rise in crude prices. Inpex added 1.7 percent to 1.17 million yen and Woodside Petroleum rose 2.8 percent to A$56.55.

The most traded market in the world; 24 hr market platform with the latest news, prices and charts gives you the knowledge to invest in this exciting and fast moving market.
Click here

Metals - Copper steadies after earlier highs but supply fears, dollar support

LONDON - Copper steadied midafternoon as the market took a breather after its earlier highs, but prices are expected to resume their upward march as fears over tightening supply, dollar weakness and strength in other commodities all continue to lend support.

The red metal came within $2 of its all-time high of $8,820 a tonne this morning, as investors were forced to cover short positions amid expectations tightening supply and demand fundamentals could send prices higher still. Copper producers speaking at the CESCO copper conference in Santiago are suggesting mine output may be unable to keep up with demand this year, further pressuring already depleted stockpiles, analysts said.

Meanwhile fears are growing that supply could be disrupted in South America after Peru's biggest federation of mine working unions called for a nationwide strike on May 12. Peru is the world's second largest producer of copper. A one-day strike at Codelco's Norte smelter in Chile was resolved yesterday without production being affected, according to reports.

At 2:37 p.m., London Metal Exchange copper for three-month delivery was quoted at $8,720 a tonne against $8,730 at the close yesterday. Earlier the red metal touched an intraday high of $8,818, close to its all-time peak of $8,820.

"News streaming from the CESCO copper conference in Chile is decidedly bullish, with fears that mining supply could under perform again this year being galvanised," said analysts at Barclays Capital in a note. "Labour issues have also resurfaced with a national mining sector strike in Peru and a strike at Codelco Norte's... Chiquicamata smelter in Chile."

More broadly, prices are also taking support from weakness in the U.S. dollar. Copper, which is priced in dollars, becomes cheaper for holders of other currencies as the greenback softens The market is also being underpinned by wider buying of commodities as a hedge against rising inflation. Oil hit new all-time highs on both sides of the Atlantic yesterday, and precious metals prices remain firm.

Elsewhere, aluminium remained firm, trading at $3,115 per tonne against $3,100, also supported by expectations for tight supply. "Predictions... of a tightening of the market will no doubt favour prices, as does news of serious shortage of scrap announced at a recycling industry conference in the US," said Commerzbank analysts. "Almost one fifth of the entire aluminium market is accounted for by what is known as secondary aluminium."

Among other metals, lead for delivery in three months was steady at $2,955 a tonne against $2,958, while zinc edged down to $2,385 per tonne from $2,374 at the close yesterday.

Three-month tin was little changed at $20,700 per tonne against $20,675, while nickel edged up to $29,550 a tonne from $29,350.

The latest streaming prices and news on major commodities from precious metals to crude oil, so you can keep up-to date and never miss a trading opportunity again.
Click here

Investors Hub Services