US & World Daily Markets Financial Briefing 14-03-2006

U.S. stocks edge higher on Goldman earnings

NEW YORK - U.S. stocks edged higher Tuesday, buoyed by better-than-expected quarterly results out of Goldman Sachs, but shares of Procter & Gamble tumbled on its lowered third-quarter sales outlook.
   
The Dow Jones Industrial Average was up 6 points at 11,083.
   
The Nasdaq Composite Index rose 6 points to 2,272 while the S&P 500 Index gained 2 points to 1,286.
    
Stocks on the move
   
Goldman Sachs kicked off the earnings season for the banking sector on a positive note.
   
Goldman shares rallied 3.8% to $146.09 as it posted a forecast-beating first quarter and raised its quarterly dividend.
   
Dow industrials component Procter & Gamble fell 2.9% to $60.20 after it said it now expects organic sales growth - excluding the impact of acquisitions, divestitures and foreign exchange - of 5% to 6%, at the low end of its earlier forecast of 5% to 7% growth.
   
Cincinnati-based P&G, maker of Cover Girl cosmetics, Tide laundry and Pepto-Bismol, said its revised view reflects recent customer-inventory reductions and tempered quarterly outlooks for Asia and Eastern Europe.
   
"With the stock trading at its post-Gillette acquisition high and at a 30% premium to the peer group, we believe the market is pricing in earnings and revenue upside rather than any sign of softness," said analysts at Lehman Bros.
   
American International Group, tacked on 42 cents to $68.50 after broker Merrill Lynch reiterated its buy rating on the insurer, and added it to its "Focus 1" list.
   
Continuing the Dow theme, Walt Disney Co. is in talks to sell the remainder of its E! Entertainment Television Inc. unit to Comcast Corp., according to a report in The Wall Street Journal. Disney shares were off 9 cents at $28.48.
   
Elsewhere, S&P 500 component Anheuser-Busch was up 1.6% at $43.30 in early trading after Bear Stearns upgraded the beer company to peer perform from underperform, citing the positive impact of recent brand acquisitions and improving volume trends.
   
Chipotle Mexican Grill Inc. rose 6.6% to $46.29 after the recent McDonald's spin-off posted a forecast-beating fourth-quarter.

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Dollar mixed after record deficit data

NEW YORK - The dollar was lower against the yen, but higher against the euro early Tuesday, showing a limited reaction to a report that showed the U.S. current account deficit widened to a new record.
   
The U.S. current account deficit widened by 21.3% to a record $224.9 billion in the fourth quarter, the Commerce Department said. The deficit amounted to 7.0% of the nation's gross domestic product, also a record.
   
Economists had expected the current account deficit to reach about $218.0 billion in the fourth quarter.
   
For all of 2005, the current account deficit grew to a record $804.9 billion, totaling a record 6.4% of GDP. It's the ninth annual record in the past ten years.
   
In early New York trading, the U.S. dollar remained mixed. The euro was up 0.01% at $1.1963. Against the Japanese yen, the greenback was off 0.6% at 117.94. 

In a separate release, the Commerce Department said U.S. retail sales fell 1.3% in February, the biggest decline in six months, dragged down by weak auto sales. Excluding autos, retail sales decreased 0.4%, the biggest drop since April 2004.
   
Economists were not expecting such a large decline in retail sales. The average forecast in a MarketWatch survey called for a 0.8% decline. 
   
Earlier, the euro took a hit on an unexpectedly weak German ZEW number. German economic sentiment eased to 63.4 points in March, from a reading of 69.8 points in February, according to the ZEW monthly indicator released Tuesday. Economists had forecast the figure to rise to 71.
   
Overnight, the yen made gains against the dollar and euro following some encouraging economic data from Japan. January industrial production was revised up to 0.4% from a previous estimate of 0.3%. The euro dropped 0.6% to 141.09 yen.
   
Chinese Premier Wen Jiabao said there would be no additional yuan revaluation. "There will be no more surprises," Wen said at a press conference after the end of the annual session of parliament.
   
China, last summer, revalued the yuan by 2.1% and allowed the yuan to trade within a narrow daily bank against a basket of currencies.
   
The New Zealand dollar fell sharply today, reaching 20-month lows against the US dollar and 13-month lows against the yen following the release of weaker-than-expected New Zealand retail sales numbers overnight.
   
Statistics said retail sales figures for January were unchanged from December, well below analysts' forecasts for a rise of around 0.6 pct.
   
At 13.23 GMT, the New Zealand dollar was trading at 0.6864 against its US counterpart, off an earlier low of 0.6321, and at 75.27 against the yen, after earlier reaching a low of 75.00.

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The European Markets at 12.00 GMT

London - Leading shares remained firmer in midday trade, but off highs, as expectations of a dull start on Wall Street dampened ongoing M&A speculation with electrical retailer Kesa the latest bid target, dealers said.
   
At 12.05 am, the FTSE 100 index was 8.2 points higher at 5,961.0, off a midmorning peak of 5,978.6, mirroring the positive wider market sentiment.

Frankfurt - Shares were lower in midday trade following a mixed performance on Wall Street overnight and as oil prices spiked in the US, with lower-than-expected ZEW German economic expectations data further dampening sentiment, dealers said.
   
At 11.40 am, the DAX 30 index was 22.67 points or 0.39 pct lower at 5,832.49, having moved between 5,828.82-5,854.11 so far this session.

Paris - Shares were flat midday as the CAC-40 fell back slightly from yesterday's four-and-a-half year high, while AGF surged on forecast-busting full-year results, dealers said.
   
At 12.58 pm the CAC-40 was down 9.79 points or 0.19 pct at 5,097.68, on volume of 1.68 bln eur.

Amsterdam - Share prices were slightly lower in quiet early afternoon trade amid a lack of major corporate news, dealers said.
   
At 1.18 pm, the AEX was down 0.03 points or 0.01 pct at 461.64, after opening at 461.02, reaching a high of 462.93 and falling to a low of 460.40.

Madrid - Share prices were lower midday, following a mixed overnight showing on Wall Street amid higher crude prices, with most of the blue chips seeing light profit-taking, dealers said.
   
At 12.28 pm, the IBEX-35 index fell 57.2 points to 11,788.3, after trading in a range of 11,773-11,839, on turnover of 1.02 bln eur.

Milan - Share prices were slightly down midday, as losses in Mediaset, which reports its 2005 results today, and profit-taking in other blue chips offset gains among oils and Luxottica, which was supported by a loan renegotiation news, dealers said.
   
At 12 noon, the Mibtel index was off 0.15 pct at 29,278 and the S&P/Mib lost 0.34 pct at 38,065, while volumes were 1.54 bln eur.

Stockholm - Share prices were little changed in midday trade, giving up earlier gains on profit-taking, with Tele2 still outperforming in the wake of an upgrade from Nordic investment bank Carnegie, dealers said.
   
At 12.20 pm, the OMX Stockholm index was down 0.02 pct at 324.56, while the OMX Stockholm 30 index was down 0.13 pct at 1,017.02. Turnover was 7.99 bln skr.

Helsinki - Share prices were slightly higher in midday trade, led by forestries, as investors eyed the potential outcomes of M-real's strategic review, which could include a merger with another paper group, dealers said.
   
At 12.17 pm, the OMX Helsinki 25 index was 0.65 pct higher at 2,686.52. The OMX Helsinki index was up 0.43 pct at 9,322.57, while the Helsinki CAP portfolio index was 0.65 pct higher at 5,002.487.

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Asian shares close lower, Tokyo slides on profit-taking

HONG KONG - Share prices across the Asia-Pacific region ended lower with Tokyo sinking as investors took profits after three straight days of gains that had pushed up the benchmark Nikkei index by more than 730 points, dealers said.
   
The Nikkei 225 Stock Average closed down 123.15 points or 0.75 pct at 16,238.36, the day's low.
   
The broader-based TOPIX index of all first-section shares lost 8.87 points or 0.5 pct at 1,665.79, just above its intra-day low of 1,664.46.
   
"The market is in upward trend but investors are taking profits for now after such a sharp rise in such a short period of time," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
   
Share prices in Australia closed lower as investors sold resource stocks on mixed base metal prices overnight, dealers said.
   
They said the energy sector was supported after oil prices rose on renewed concerns that the dispute between Iran and western nations could lead to supply disruptions in the oil market.
   
Dealers said media stocks Fairfax and Ten Network were bought after reports the Federal government is set to relax ownership restrictions on the nation's media industry, opening the sector to acquisitions and mergers.
   
The S&P/ASX 200 fell 19.1 points or 0.39 pct to close at 4,932.2.
   
Share prices in Hong Kong were trading lower in the afternoon led by the property sector amid persistent worries about the interest-rate environment, dealers said.
   
A sharp rise in crude oil prices overnight added to the cautious tone, while many investors also stayed on the sidelines ahead of China Mobile's 2005 results on Thursday and Cheung Kong and Hutchison Whampoa's results next week.
   
At 3:31 pm, the Hang Seng Index was down 50.49 points or 0.32 pct at 15,491.58.
   
In mainland China, A-shares in Shanghai and Shenzhen closed lower in rangebound trade amid investor caution with lenders and airlines losing ground in particular, dealers said.
   
The Shanghai A-share Index fell 0.57 point to 1,320.66 on turnover of 7.06 bln yuan and the Shenzhen A-share Index was down 0.03 point at 317.16 on turnover of 3.62 bln yuan.
   
In Seoul, share prices ended lower as institutional investors cut their positions, ending a two-day advance, with large cap IT stocks, POSCO and KT&G leading the decline, dealers said.
   
Korea Exchange Bank fell after three groups seeking to buy Lone Star's controlling stake, including Development Bank of Singapore, filed their bids.
   
Higher oil prices and a decline in major Asian markets also weighed heavily on sentiment.
   
The KOSPI index closed down 11.98 points or 0.90 pct at 1,326.30

Asian Bourse Round-Up

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NEW YORK - Gold futures were off $2 at $545.50 an ounce.
   
On the bond market, long-term Treasury prices were higher, sending yields lower after the weak retail sales data raised hopes of a more rapid end to the current cycle of interest-rate hikes out of the Fed.
   
The benchmark 10-year note was up 5/32 at 98 3/32, with its yield at 4.74%.
   
Also on the data front, January inventories are slated for release at 10 a.m. Eastern time.
   
Crude-oil futures extended a more than 3% gain seen in the prior session. Concern over potential supply disruptions out of the oil-rich Iran due to political tensions outweighed a lowered outlook for world demand from the International Energy Agency.
   
Crude for April delivery was last up 26 cents at $62.03 a barrel.

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