US & World Daily Markets Financial Briefing 10-05-2007

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

Stocks slip after retail sales reports

NEW YORK - Stocks retreated Thursday after many of the nation's major retailers reported weak April sales, raising concerns about consumer spending in the coming months.
   
Wal-Mart Stores Inc., J.C. Penney Co. and Federated Department Stores Inc. all reported drops in business in April, and analysts said rising gasoline prices were a contributing factor in the downbeat results.
   
Investors were also disappointed to hear that the U.S. trade deficit rose to $63.9 billion in March, its highest level in six months. The trade deficit figure was wider than Wall Street's forecast of $60 billion.
   
In the first hour of trading, the Dow Jones industrial average fell 73.14, or 0.55 percent, to 13,289.73. The index hit its 21st record close of the year on Wednesday, after the Federal Reserve left interest rates unchanged and reiterated its firm stance that inflation remains the central bank's primary concern.
   
Broader stock indicators were also lower. The Standard & Poor's 500 index was down 5.57, or 0.37 percent, to 1,507.01, and the Nasdaq composite index declined 10.22, or 0.40 percent, to 2,566.12.
   
Bonds rose slightly after the weak economic data, with the yield on the benchmark 10-year Treasury note falling to 4.66 percent from 4.67 percent late Wednesday.
   
The Russell 2000 index of smaller companies was down 5.35, or 0.64 percent, to 829.42.
   
Overseas, Britain's FTSE 100 was down 0.13 percent, Germany's DAX index was down 0.20 percent, and France's CAC-40 was down 0.14 percent.

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.

Pound gets boost as BoE delivers rate hike and leaves door open for more

LONDON - The pound got a leg up after the Bank of England raised interest rates to a six-year high of 5.50 pct and left the door open to a further increase by highlighting that inflation may yet surprise on the upside.
   
Today's quarter point hike, was fully expected, and is the fourth since last summer, as the central bank attempts to tackle runaway inflation. Some sections of the market who had predicted a bigger half point rise were disappointed, however.
   
Bear Stearns analyst David Brown said disappointment that rate-setters did not opt for a half point rise may be seen as a negative for the pound, although the central bank's comments point to the possibility of a back-to-back hike in June.
   
"The statement that inflation risks are tilted to the upside means the market should expect a further back-to-back quarter point move in June as well," he said.
   
For Divyang Shah at Commonwealth Bank, the next hike may come in the summer. "One has to look at Aug as a possible date. "The hurdle rate for another rate hike is low but at this point the odds are 50/50 for a rate hike and we shall be keeping an eye to incoming data," he said.
   
Things were not so good for the pound earlier when UK data came in mixed. Manufacturing production data and trade deficit figures came in mixed, with industrial production rising 0.2 pct during March as against a forecast 0.5 pct rise, although the manufacturing element rebounded to a 10-month high. Meanwhile, the UK trade deficit for March came in at its worst level in 10 months.
   
In Europe, the euro held steady after the European Central Bank kept its base rate unchanged at 3.75 pct, much as expected. Attention will now fall on the post verdict news conference where ECB chief Jean-Claude Trichet's every word will be scrutinised for hints on future moves. A hike to 4 pct in June is
widely predicted.
   
The dollar meanwhile, stayed within recently established ranges after the Federal Open Markets Committee kept rates on hold overnight, expressing continued concern about inflation. Markets were forced to scale back US rate cut expectations.

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

London

FTSE 100 risers

Hammerson 1,679 up 111  Kohlberg Kravis Roberts reportedly in early stages of considering a bid

Yell Group 504-1/2 up 19-1/2  Vague private equity bid talk

BAE Systems 441-1/4 up 8-1/4  Rally after recent placing to fund Armor acquisition

Land Securities 2,016 up 36  Sector consolidation hopes

British Land 1,502 up 26  Sector consolidation hopes

Mitchells & Butlers 840 up 14-1/2  Goldman Sachs 'preferred pub pick', ups target to 880p vs 770, keeps 'buy'

FTSE 100 losers

Rio Tinto 3,540 down 120    Profit-taking after M&A-related gains yesterday

BHP Billiton 1,214 down 35    Profit-taking after M&A-related gains yesterday

Antofagasta 546 down 17   Profit-taking after M&A-related gains yesterday

British Airways 486-1/2 6-1/2   Awaiting bid developments; Logista indicates Iberia stake up for sale
   
Athens - Greek shares closed higher, led up by EFG Eurobank throughout the session and by the Bank of Cyprus, dealers said.
   
The ASE general index closed 0.4 pct higher to 4,767 while the blue chip index gained 0.5 pct to 2,526.1. Mid caps rose 0.6 pct to 6,113.1 and small caps outperformed, up 1.1 pct to 977.7. Advancers outnumbered decliners 176 to 87 while 56 were unchanged.

Frankfurt -  At 3.22 pm, the DAX was 19.42 points or 0.26 pct lower at 7,456.57, after trading between 7,435.68 and 7,494.18 earlier today.  The MDAX gained 9.78 points or 0.09 pct to 10,766.42, while the TecDAX lost 1.87 points or 0.22 pct to 862.76. DAX futures dropped 55.50 or 0.74 pct to 7,485.00, while bund futures were up 0.13 or 0.11 pct at 113.56.
   
Volkswagen led blue chips lower, falling 1.83 eur or 1.70 pct at 104.98 as traders said it followed the rollercoaster motion that has typified the share since Porsche launched a mandatory takeover offer at 100.92 eur per ordinary share in late April.
   
DAX Heavyweight EON and peer RWE both fell as traders said investors were fearing a read across from unimpressive first-quarter figures unveiled today by UK-based International Power. EON was down 1.61 eur or 1.43 pct at 110.89. RWE lost 1.19 eur or 1.50 pct at 77.14 as the worst performer.
   
Zurich - At 2.20 pm, the Swiss Market Index was 40.13 points lower at 9,387.36, while the Swiss Performance Index followed it down 6.67 points at 7,619.62.
   
Focus here was on the insurance sector, fuelled by M&A speculation surrounding Zurich Financial, which was also lifted by upgrades of its target rate at Bear Sterns and Merrill Lynch. The shares were the top climber on the SMI, up 9.50 sfr or 2.6 pct at 374, following newspaper reports linking US investor Warren Buffet and others with a takeover of the insurance group. Zurich earlier today successfully placed hybrid securities totalling 1.5 bln usd.
   
Swiss Re maintained its morning gain of 0.50 sfr at 113.90 sfr, after Credit Suisse hiked its price target to 125 sfr, from 120 sfr, while maintaining its 'neutral' recommendation. Baloise shed 0.7 sfr at 126.5 sfr, hit by profit-taking.
  

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!

Source: Thomson Financial News

Asian shares close mixed; Tokyo falls on profit-taking, China up on fund inflows

HONG KONG - Shares across the Asia-Pacific region closed mixed, with the Tokyo market down but China stocks continuing to rise on fund inflows.
   
Tokyo shares ended marginally lower as profit-taking outweighed selective buying in stocks that had reported strong earnings results or given upbeat earnings outlooks. Market players also exercised caution ahead of the fixing tomorrow of the special quotation for stock index options for May, they said.
   
The Nikkei 225 Stock Average closed down 11.16 points or 0.06 pct at 17,736.96, off a high of 17,827.48 and a low of 17,712.89. The TOPIX index of all first-section issues dropped 8.02 points or 0.46 pct to 1,736.99, off a high of 1,753.65 and a low of 1,736.99.
   
Dealers said earlier gains sparked by Wall Street's advance overnight were wiped out by the close of trade as players took profit on stocks that announced conservative earnings outlooks.
   
Australian shares finished higher at a fresh record, with the wider market making up for falls in Rio Tinto as takeover speculation from BHP Billiton waned. Investor sentiment recovered after data showed the jobless rate fell to a record low of 4.4 pct in April from the previous record of 4.5 pct in March on a strong 49,600 rise in employment.
   
The S&P/ASX 200 closed up 14.5 points or 0.23 pct at a record 6,355.5, beating yesterday's record finish of 6,341.0.
   
Hong Kong shares were weaker in afternoon trade led by property stocks after the US Federal Reserve said it remains concerned over inflation, dampening hopes for an early interest rate cut. The Fed kept its key rate unchanged at its policy meeting last night as expected, while signalling no change in its economic assessment.
   
At 3.20 pm the Hang Seng Index had fallen 92.27 points or 0.44 pct at 20,752.51.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on sustained fund inflows amid bullish sentiment, with steel and telecom stocks gaining ground. The Shanghai A-share Index was up 37.68 points or 0.89 pct to 4,249.72 and the Shenzhen A-share Index was up 11.95 points or 1.03 pct at 1,171.28.
   
Seoul shares closed higher, with the index breaching the 1,600 level at one stage, as investors felt relieved by rate freeze decisions both in the US and at home.
   
Solid consumer expectations data also boosted sentiment, with firmer Chinese markets adding to the positive tone, they noted. The National Statistical Office said the consumer expectations index, which measures sentiment six months in advance, rose to 100.1 in April from 97.8 in March.
   
It is the first time the indicator has risen above the benchmark 100 level since April 2006, indicating that those optimistic about the economy outnumber the pessimists.
   
The main index closed at its low for the day, however, as program buying weakened in late trade, analysts said. The KOSPI index closed up 6.26 points or 0.39 pct at the day's low of 1,599.68, still a record closing level. It set an intraday record of 1,616.06.

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

Oil holds onto gains midday as players see yesterday's falls as overdone

LONDON - Oil held onto earlier gains in a rebound from yesterday's falls, as market players took the view the 65 usd level for Brent crude is more or less fair value in the short-term.
   
US gasoline stocks rose by 400,000 barrels last week, after 12 consecutive weeks of falls, according to data out yesterday from the US Energy Information Administration.
   
The news weighed on crude oil prices yesterday, especially as the agency also reported a much larger than expected 5.6 mln barrels increase in crude oil stocks last week.
   
But Lasserre said the downside in crude is limited. "Overall demand is still quite robust and if you look at the supply side OPEC is quite disciplined in terms complying with the (output cut) quotas ... and on non-OPEC supply front its still disappointing," he said.
  
At 12.51 am, London Brent crude for June delivery was up 72 cents at 65.92 usd. Meanwhile, New York crude for June delivery was up 52 cents at 62.07 usd a barrel.
   
Prices were underpinned also by continued worries over supply disruptions in Nigeria, where gunmen yesterday kidnapped four US oil workers, a day after blowing up three oil pipelines operated by Eni. "The market remains well supported by continuing violence in Nigeria," said Sucden analyst Michael Davies.
   
Nigeria is Africa's largest oil producer and a key supplier of crude oil to the US. Attacks by militants demanding a greater share of the country's oil wealth have to date shut more than a quarter of the country's output.
   
Copper down on technical factors, lower cancelled warrants

LONDON - Copper eased on technical factors and as the LME reported a dip in cancelled warrants, which represent pledges to take delivery of the metal.
   
At 1.39 pm, LME copper for three-month delivery eased to 7,869 usd per tonne against 8,050 usd at the close yesterday. Sentiment was also dampened as Chinese imports seem likely to fall. Earlier today reports said China's imports of refined copper in March rose 148 pct year-on-year to 202,995 tonnes, according to Customs data.
   
Hayes said the March numbers have stoked concerns China has an adequate amount of copper.
   
Copper prices have gained 36 pct since the start of the year, however, and are relatively close to year highs hit last week of 8,335 usd. Demand in the second quarter is traditionally stronger as Western European countries tend to process higher volumes of metal before they embark on long summer vacations.
   
Weaker commodities prices also failed to spark enthusiasm towards the metals, added Hayes at BaseMetals.Com. Gold was down on the day and oil down 1.7 pct since last week. Most other metals also came off strong gains made last week.
   
Elsewhere, nickel inventories fell 12 tonnes. While the fall was modest, stocks of the metal, used mostly for stainless steel production, are so low they would not satisfy one day's worth of global consumption. Nickel was up at 49,800 usd against 49,295 usd yesterday.
   
In other metals, aluminium was down at 2,840 usd from 2,886 usd yesterday, zinc was lower at 4,020 usd against 4,090 usd while lead was down at 2,050 usd compared with 2,065 usd at the close. Tin fell to 13,600 usd against 14,250 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.