US & World Daily Markets Financial Briefing 15-01-2010

Watch us trade �Live�! Watch our Top Tier Traders make ($500 - $2000) a day
in �real time� and learn how to easily duplicate the process!� Click Here for more information -

Mixed Data and Earnings May Fail to Give Clear Direction to Markets

The major U.S. index futures are pointing to a lower opening on Friday notwithstanding the upbeat manufacturing data released earlier in the day. Intel’s (INTC) encouraging earnings point towards healthy corporate profit growth and JP Morgan (JPM), the first of the major Wall Street firms to report earnings, posted stellar bottom line results, although the top line left much to be desired.

Traders may also look ahead to the Federal Reserve’s industrial production report and the Reuters/University of Michigan’s consumer sentiment survey for additional cues. With the major averages holding up fairly well for much of the week in anticipation of strong evidence for recovery, some profit taking could not be ruled, especially ahead of the long weekend.

Notwithstanding disappointment on the jobs and consumer fronts, U.S. stocks managed to close Thursday’s session modestly higher. The major averages opened lower and saw some volatility in early trading, before they showed divergence. The Dow and the Nasdaq Composite Index recovered a few minutes into trading and advanced steadily to close higher.

While the Dow Industrials closed up 29.78 points or 0.28% to 10,711, the Nasdaq Composite Index advanced 8.84 points or 0.38% to 2,317. The S&P 500 Index languished below the unchanged line for the better part of the session before recovering in late trading to close at 1,149, up 2.78 points or 0.24%.

Nineteen of the thirty Dow components closed the session higher, with Intel (INTC), IBM (IBM), Merck (MRK), Microsoft (MSFT), JP Morgan Chase (JPM), American Express (AXP), Bank of America (BAC) and Cisco Systems (CSCO) rising notably. On the other hand, AT&T (T), Wal-Mart (WMT) and Alcoa (AA) slid over 1% each.

Among the sector indexes, the KBW Bank Index rose 1.64%. Software, hardware and networking stocks also showed some strength. However, the Dow Jones U.S. Basic Materials Average declined 0.90%.

On the economic front, the Commerce Department’s retail sales report for December came as a disappointment, with sales declining 0.3% compared to expectations for a 0.5% increase. Sales, excluding autos, slipped 0.2%, while economists had estimated a 0.3% increase. Stripping off autos and gasoline, retail sales were down 0.3%. Although on the face value, the numbers look weak, when November and December were taken together, sales were in line with expectations due to the upward revisions to the November data.

Meanwhile, initial jobless claims for the week ended January 9th totaled 444,000 compared to a revised reading of 433,000 for the previous week. The four-week average dropped to its lowest level since August 2008 to 441,000, suggesting that firings are slowing, although there was no clear indications of an increase in hirings.

Meanwhile, the Commerce Department’s business inventories report showed a 0.4% gain in November compared to the previous month, a tad better than the 0.3% increase expected by economists.

The previous month’s gains were revised up to 0.4%. The second straight month of growth following 13 months of declines show that we may have reached the inflection point. At the same time, business sales rose 2%, pushing the business inventories to sales ratio down to 1.28 compared to 1.30 in the previous month.

TSX May Slide At Open On Falling Commodity Prices

Resource heavy Bay Street may struggle to move up on Friday, as falling commodity prices could dampen sentiment. The Canadian market was unable to sustain any direction so far in this year, pulling back after hitting a 15-month high above 12,000 on Monday.

The S&P/TSX Composite Index ended Thursday losing 49.18 points or 0.41% at 11,804.38, having added just half-a-percent so far in 2010.

The U.S futures also point to a lower opening.

Energy and gold stocks may reel under pressure as the prices of commodities continued to display the weak trend of the past few days.

The price of crude oil was lingering around $79 a barrel, after hitting a 15-month high on Monday. Meanwhile, the price of bullion eased $9.8 to $1,132.8 an ounce.

In corporate news, Agrium will reportedly intensify its efforts to acquire CF Industries Holdings, now that CF has dropped its own bid for rival Terra.

Gold miner Kinross Gold Corp. said that its 2009 full-year production is expected to be about 2.23 million gold equivalent ounces, an increase of around 21% over 2008 production. Looking ahead for 2010, the company expects full year production to be approximately 2.2 million gold equivalent ounces.

Pinetree Capital Ltd. said it upped its stake in Silver Spruce Resources Inc to 15.6% by acquiring 4 million common shares and 4 million common share purchase warrants.
 
First Capital Realty Inc. announced that the size of the public offering of Series H senior unsecured debentures has been increased by C$25 million, to C$125 million.

Pure Energy Services Ltd. announced that its Board of Directors has approved an initial capital expenditure budget for 2010 of about C$6 million.

Pacific Rim Mining announced that it has closed its C$2.355 million private placement financing. Ivanhoe Mines denied a Dow Jones news service report that it chairman is selling his stake in the company.

Oil and gas producer Anderson Energy plans to sell at least 19.2 million shares at C$1.45 a share to part finance its debt repayment and expansion.

In a similar move, Extendicare Real Estate Investment Trust said it will sell 8 million units at C$9.35.

Healthcare provider DiagnoCure Inc. reported that its fourth-quarter net loss narrowed to C$0.07 per share from C$0.09 per share last year.

Technology and engineering service provider Rutter Inc. reported net earnings for the first quarter of C$0.003 per share, compared to C$0.002 per share in the same quarter a year-ago.

Sporting goods retailer Forzani Group said sales dropped 1.8% in the key holiday season.

Eastman Kodak filed complaint with the U.S. International Trader Commission claiming Apple and Research In Motion are infringing a patent related to ways to preview images.

In brokerage updates, RBC ups Potash Corp price target to $150 from $125. UBS trims Kinross Gold to $25 from $26.
 
In economic news, Statistics Canada said today New Motor Vehicle sales dipped 6% to 124,764 units in November, after moving up for the past four months.

From across the border, the U.S. Department of Labor said Consumer Price Index rose 0.1% in December, against the consensus estimate of a rise of 0.2%.

The Survey of manufacturers in New York conducted by the Federal Reserve Bank of New York revealed that conditions for New York manufacturer improved for the sixth month in January. It said its general business condition index climbed 15.9 in January, against the widely estimated jump of 12.

Commodity, Currency Markets

Crude oil futures are receding $0.61 to $78.78 barrel after retreating $0.26 to $79.39 a barrel on Thursday. In the previous session, the black gold came under selling pressure after the disappointing retail sales and jobs report dampened hopes of a pick up in demand.

According to Commerzbank, demand in developed countries will remain weak, although emerging economies will serve as the main driver of demand growth. The firm is of the view for oil to come under sustained selling pressure, market sentiment will have to deteriorate significantly so that financial investors’ influence fades and weak fundamental data regains importance.

Gold futures, which rose $6.20 to $1,143 an ounce in the previous session, are currently slipping $9.20 to $1,133.80 an ounce in the previous session.

Among currencies, the U.S. dollar is trading at 91.124 yen compared to the 91.2098 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is trading at $1.4419.

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

Asian Markets End Mixed; Profit Taking Limits Gains

Mixed trading was witnessed among the markets in Asia on Friday as traders, having digested the positive results from chip-maker Intel, preferred to exercise caution, locking gains from recent rally, and move to the sidelines ahead of extended weekend in the U.S, looking for further direction on global economic recovery. While Japanese market gained on foreigners buying, Hang Seng index in Hong Kong ended in negative territory on profit taking.

In Japan, the benchmark Nikkei 225 Index advanced 74.42 points, or 0.68% to 10,982, while the broader Topix index of all First Section issues was up 7.39 points, or 0.77%, to 966.

Foreign buyers evinced fresh buying interest in stocks that have a strong presence in global markets. Positive results from Intel and increasing confidence that the US market and the global economy is on recovery path led foreign buyers to pick up blue-chip stocks in Tokyo.

Banks ended in positive territory on increasing optimism about economic recovery. Sumitomo Mitsui Financial surged up 5.24%, Resona Holdings soared 8.94%, Mizuho Financial climbed 3.76% and Mitsubishi UFJ Financial rose 3.48%.

Retail stocks also ended higher. Fast Retailing climbed 2.85%, Seven & I Holdings rose 3.23%, Takashimaya & Co., soared 5.88% and Isetan Mitsukoshi Holdings gained 3.11%.

Real estate stocks also ended in positive territory. Mitsubishi Estate advanced 1.88%, Sumitomo Realty and Development rose 1.37%, Mitsui Fudosan added 1.02% and Tokyu Land Corp. climbed 3.45%.
 
Airline stocks ended in negative territory. Japan Airlines continued to be attracting huge volumes amid speculative trading. The stock shed 11%. The other airline, All Nippon Airways declined 1.02%.

In Australia, the benchmark S&P/ASX Index added 1.60 points, or 0.03% to close at 4,900, while the All-Ordinaries Index ended flat at 4,929, albeit showing a gain of a mere 0.10 points, or 0.00%.

Light sweet crude oil futures for February delivery ended at $79.03 a barrel in electronic trading, down $0.36 per barrel from previous close at $79.39 a barrel in New York on Thursday.

The market, having opened unchanged from previous close, moved slightly higher in early trading in reaction to quarterly results from Intel, but changed direction and drifted into negative territory, and continued to trade in the red in narrow range until the last few minutes of the trading session.

Market was taken by surprise by the guidance from Commonwealth Bank of Australia which revealed that it expects profit for the first half to rise by as much as 44%. Reacting to the news, bank stocks rallied and lifted the market indices into the black in final minutes of trading session.

Commonwealth Bank of Australia gained 2.31%, ANZ Bank edged up 0.13%, National Australia Bank rose 0.92% and Westpac Banking advanced 0.47%. Investment banker Macquarie Group added 0.36%.

Mixed trading was witnessed among mining and metal stocks as traders preferred to lock-in gains. BHP Billiton slipped 0.30%, Iluka Resources lost 2.19%, Macarthur Coal fell 1.39%, Murchison Metals edged down 0.39%, Oz Minerals shed 1.24% and Rio Tinto declined 0.67%. However, Fortescue Metals rose 1.89%, Gindalbie Metals added 0.41% and Mincor Resources advanced 0.81%.

Gold stocks ended weaker on profit taking. Lihir Gold lost 1.50% and Newcrest Mining slipped 0.85%.

Oil stocks also ended in negative territory following drop in crude oil prices. Woodside Petroleum lost 1.59%, Santos fell 1.39%, Oil Search slipped 0.82% and Origin Energy edged down 0.17%.
 
Retail stocks ended mixed. David Jones and JB Hi-Fi Ltd remained unchanged at previous close. Harvey Norman fell 1.03% and Woolworths shed 0.68%. However, Wesfarmers ended in positive territory with a gain of 0.10%.

In Hong Kong, the Hang Seng Index ended in negative territory with a loss of 62.79 points, or 0.29%, at 21,654, as traders preferred to lock in gains from recent highs on the last day of trading for the week. Strong results from Intel after the markets closed on Wall Street in the previous session and positive closing in U.S regular trading session failed to enthuse traders who exercised caution ahead of more earnings and economic data in the U.S. China-related resource stocks dragged the indices lower on concerns that recent tightening means by Chinese central bank might impede economic growth. Property stocks also ended in negative territory on profit taking.

In South Korea, the KOSPI Index ended in positive territory with a gain of 16.03 points, or 0.95%, at 1,702, lifted by technology related stocks and shipbuilders on optimism that U.S earnings will be better for the quarter and the global economy will sustain the recovery path in the first quarter of 2010. Select buying in technology stocks that have global presence and market in the U.S. were the major gains as foreign investors evinced fresh buying interest in technology stocks. Shipping stocks also gained on expectation of higher demand.

The Indian market ended in negative territory as traders booked in profits from recent gains ahead of 3-day weekend in the U.S markets. The benchmark Sensex finished at 17,554, down 30.57 points, or 0.17%, while the Nifty Index slipped 7.70 points, to end at 5,254. Mixed trading in other markets, drop in European markets after initial gains on Intel results and weak futures for US markets also impacted market sentiment.

Among other major markets open for trading in the region, Taiwan's Weighted Index gained 66.91 points, or 0.81% to close at 8,357, Indonesia's Jakarta Composite Index added 1.91 points, or 0.07% to close at 2,647, and China's Shanghai Composite Index rose 8.60 points, or 0.27%, to close at 3,224. The Strait Times Index in Singapore, however, ended in negative territory with a marginal loss of 1.10 points, or 0.04%, at 2,908.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European markets trading mixed, with the French CAC 40 Index and the German DAX Index declining 0.52% and 0.70%, respectively, while the UK’s FTSE 100 Index is advancing 0.15%.

On the economic front, Eurostat released a duo of economic reports, which showed acceleration in the inflation rate in December, although in line with expectations, and a decline in the trade surplus.

Euro zone’s trade surplus narrowed to 4.8 billion euros in November from 6.6 billion euros in October. Economists had forecast a surplus of 7 billion euros. The decline reflected a 0.4% decline in exports and a 0.3% increase in imports. A separate report released by the agency showed a 0.8% increase in the consumer price index in December, up from the 0.5% rate in November.

U.S. Economic Reports

The Labor Department’s consumer price inflation report showed a 0.1% month-over-month increase in December, slower than the 0.4% increase in November and the 0.2% increase expected by economists. The core consumer price index also rose at the same 0.1% rate, in line with economists’ expectations.

The slowdown was due to the easing in the rate of increase in energy prices to 0.1% from 4.1% in the previous month. However, food price inflation accelerated to 0.2% from 0.1%.

Meanwhile, the New York Fed survey revealed that conditions among manufacturers in the New York region improved for the sixth straight month in January. The headline general business conditions index for January rose 11 points to 15.9, ahead of economists’ estimate of 12.

The new orders and shipment indexes also increased and the unfilled orders index rose above zero. The prices paid and received indexes increased notably, with the prices received index rising above 0 for the first time in more than a year. The future indexes also suggested optimism.

The Federal Reserve’s industrial production report is due out at 9:15 AM ET. Economists estimate that industrial production rose 0.6% in December, while capacity utilization is expected to come in at 71.8%.

In November, industrial output showed a 0.8% month-over-month increase compared to the 0.5% growth forecast by economists. Capacity utilization rose to 71.3% from the month-ago's 70.6%. The increase in output was helped by a 1.8% surge in production by the motor vehicle/parts sector. Machinery and electronics production as well as mining output improved from the month-ago levels.

The preliminary report of the Reuters/University of Michigan's consumer sentiment survey for January is scheduled to be released at 9.55 AM ET. The consumer sentiment index is expected to rise slightly to 74 from December's 72.5.

Watch us trade “Live”! Watch our Top Tier Traders make ($500 - $2000) a day
in “real time” and learn how to easily duplicate the process!  Click Here for more information

JP Morgan (JPM) could move in reaction to its announcement that its fourth quarter earnings rose to 74 cents per share from 6 cents per share in the year-ago period. Analysts had estimated earnings of 61 cents per share for the quarter. Revenues climbed 32% to $25.2 billion but missed the consensus estimate of $26.8 billion.

Intel (INTC) may see buying interest after it reported that its fourth quarter sales rose 29% to $10.6 billion. The company’s earnings rose to 40 cents per share from 4 cents per share in the year-ago period, reflecting a surge in its gross margin to 64.7%. The consensus estimates had called for earnings of 30 cents per share on revenues of $10.2 billion. For the first quarter, the company expects revenues of $9.3 billion to $10.1 billion compared to the consensus estimate of $9.3 billion.

Shuffle Master (SHFL) is likely to move to the upside after it reported a profit of 12 cents per share compared to a loss of 28 cents per share in the year-ago period. The year-ago results included a charge of 41 cents per share. Revenues rose 2% year-over-year to $54.6 million. Analysts estimated earnings of 9 cents per share on revenues of $47.21 million.

CDC Software (CDCS) is likely to be in focus after it said it has withdrawn its offer to acquire Chordiant Software (CHRD) following the latter’s rejection of the offer. CDC also said it has sold its entire holdings in the company, representing 1.3% of Chordiant’s 30.4 million shares outstanding.

Manitowoc (MTW) is expected to see some activity after the company announced that it is planning to refinance a portion of its term loans under its senior secured credit facility with senior unsecured notes to improve the balance and flexibility of its capital structure. The company also said the amount of the offering is tentatively fixed at $400 million. Manitowoc noted that it has surpassed its targeted full year 2009 debt reduction target of $450 million by about $20 million.

Scientific Games (SGMS) may gain ground after it said it has been awarded a contract by Germany’s Sachsische LOTTO-GmbH to supply instant tickets and co-operative services. The contract is scheduled to begin in January 2010.

South Financial Group (TSFG) could be in focus after it announced that its subsidiary Carolina First Bank has been approved as a preferred lender under the U.S. Small Business Administration Preferred Lender Program.

Integrated Device Technology (IDTI) may move in reaction to its announcement that it has acquired Mobius Microsystems in an all cash transaction. The company noted that the deal closed on January 14, 2010.

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

Investors Hub Services