US & World Daily Markets Financial Briefing 16-04-2009

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Stocks Mixed Following Weakness During Late Morning

Stocks have shown a notable move to the downside in recent trading on Thursday, with the Dow and the S&P 500 pulling back more firmly into negative territory and the Nasdaq moving well off its high for the session.

On the downside, gold and airline stocks are turning in some of the day's worst performances, with the Amex Gold Bugs Index down 4.1 percent and the Amex Airline Index down 3 percent.
 
Meanwhile, computer hardware and networking stocks are holding onto strong gains. The Amex Computer Hardware Index is currently up 1.7 percent, while the Amex Networking Index is up 1.2 percent.

Currently, the major averages are mixed with the Nasdaq up 2.94 at 1,629.74, while the Dow is down 60.06 at 7,969.56 and the S&P 500 is down 3.92 at 848.14.

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Toronto Stocks Slip Slightly In Early Trading

Bay Street stocks moved slightly lower in early trading on Thursday. Strength in the technology sector was outweighed by a drop for gold stocks.

The S&P/TSX Composite Index has slipped 10.47 points or 0.11% to 9,235.93. The index has seen minimal movement in recent days since closing at a three-month high on Monday.

Gold stocks have dropped 3.5% and materials stocks are down 2.2%. June-dated gold has declined $14.40 to $879.10 per ounce on the Comex. Seabridge (SEA.TO) has dropped 6.15%, Yamana (YRI.TO) has slipped 5.1%, Agnico-Eagle Mines (AEM.TO) is down 5.1% and Eldorado (ELD.TO) has slipped 4.9%.

Technology stocks are up 1.45%. Blackberry-maker Research in Motion (RIM.TO) is showing a 3.2% gain. In corporate news, AbitibiBowater (ABH.TO) has lost 1.6% as the company announced it will file for liquidation protection in the U.S. and Canada.
 
Tembec (TMB.TO) has rallied 1.475%. The company said its subsidiary, Tembec USA LLC, sold its idled coated paper mill located in St. Francisville, Louisiana to West Feliciana Acquisition, LLC. The mill was indefinitely idled in July 2007.

Cangene Corp. (CNJ.TO) has slipped 1.1% after the company said that the Chemical Biological Medical Systems Project Management Office of the United States Department of Defense has signed an agreement to purchase Cangene's Vaccinia Immune Globulin Intravenous (Human).

Novadaq Technologies (NDQ.TO) has added 3.4% after the company said it has received a $1 million payment from Intuitive Surgical (ISRG) for achieving the first pre-defined milestone outlined in the terms of their License and Development Agreement signed in January 2009.

Across the border, JPMorgan Chase & Co. (JPM) reported first-quarter net income of $2.14 billion, compared to net income of $2.37 billion in the first quarter of 2008. Earnings per share were $0.40, compared to $0.67 in the first quarter of 2008.

On the economic front, Canadian manufacturing sales increased 2.2% to $42.9 billion, the first increase since July 2008, according to Statistics Canada. Motor vehicle and motor vehicle parts industries in Ontario were behind most of the gains in February, following widespread slowdowns and shutdowns in January. Excluding motor vehicles and parts and accessories, manufacturing sales edged down 0.2%, the seventh monthly decline in a row.

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The major European markets are trading higher on Thursday. While the French CAC 40 Index is gaining 2.17%, the German DAX Index is rising 1.67%. The U.K.’s FTSE 100 Index is moving up about 1.60%.

On the economic front, the European Commission’s statistical arm, Eurostat today confirmed its preliminary estimate for a March annual inflation rate at 0.6% compared to a 1.2% rate in February. On a monthly basis, the inflation rate was 0.4%.

Another report released by the agency showed that the euro area’s industrial production fell by 2.3% month-over-month in February compared to a 2.4% decline in January. The decline represented a smaller decline when compared to expectations for a 2.5% drop. Annually, industrial production slid 18.4%.

U.S. Economic Reports

On the economic front, the Commerce Department said housing starts fell 10.8% month-over-month to a seasonally adjusted annual rate of to 572,000 in March. Economists estimated housing starts of 540,000 for the month.

On a year-over-year basis, housing starts declined 48.4%. Meanwhile, building permits, an indicator for future housing activity, fell 9% to a seasonally adjusted annual rate of 513,000. Annually, building permits were down 45%.

The U.S. Department of Labor revealed that initial jobless claims fell to 610,000 for the week ended April 11th, down 53,000 from the previous week's revised figure. The 4-week moving average for initial claims, a statistic that flattens out week-to-week fluctuations in the data, dipped 8,500 to a level of 651,000.

Conditions in the manufacturing sector in the region improved in March from February, although they remained extremely weak. The diffusion index of current activity rose to -35 in March from -41.3 in February, while the new orders index fell 10 points to -40.7, its lowest level since July 1980.

The inventories index tumbled to a record low of -55.6 from -24.3 in the previous month, while the current employment index declined 6 points to -52. The prices paid index fell to a record low of -31.3. Meanwhile, the future general activity index remained positive, but it edged down 1.4 points to 14.5.

Atlanta Federal Reserve Bank Dennis Lockhart is due to speak at an annual conference at Levy Economics Institute of Bard College in New York at 12:15 PM ET.

San Francisco Federal Reserve Bank President Janet Yellen is scheduled to deliver a dinner speech to an annual conference at Levy Economics Institute of Bard College in New York at 7:30 PM ET.

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The major markets across the Asia-Pacific region witnessed mixed trading on Thursday. After opening strongly in early trading on positive cues from Wall Street, the markets retreated after a government report revealed that the Chinese economy expanded at a slower pace of 6.1% during the first quarter. While the markets in Japan, Australia, South Korea and Taiwan managed to end in positive territory, the markets in China, Hong Kong, and Singapore reversed their early gains and ended in negative territory.

In Tokyo, the benchmark Nikkei 225 Index added 12.30 points or 0.14% to close at 8,755, while the broader Topix Index of all First Section Issues slipped 0.38% or 3.21 points to close at 832.

Banking stocks declined the most, limiting the market gains. Mitsubishi UFJ, Japan's biggest bank, lost 3.07%, Sumitomo Mitsui declined 1.84% and Resona Holdings edged down 0.08%. Brokerage Nomura Holdings fell 2.51%. However, Mizuho Financial ended unchanged from the previous close. Exporters also came under selling pressure, while oil stocks showed mixed sentiment.

Drug maker Takeda Pharmaceutical Co.'s consolidated operating profit for the year ended March 31, 2009 is expected to have fallen 31%, which is an improvement over its earlier projections, the Nikkei business daily said. The company's shares edged up 0.28%.

In Sydney, the benchmark S&P/ASX 200 index added 28.2 points or 0.75% to close at 3,776 and the broader All Ordinaries index added 31.7 points or 0.86% to end at 3,726.

Telecommunications stocks advanced, with Telstra gaining 1.55% and Singapore Telecommunications rising 1.68%. Media stocks also ended in positive territory. Consolidated Media added 0.50% and News Corp edged up 0.17%. Fairfax remained unchanged from the previous close.

Banking and resource stocks ended mixed. In the retail sector, David Jones fell 0.91% and Harvey Norman lost 0.71%. However, Coles' owner Wesfarmers advanced 3.32%, and Woolworths edged up 0.35%.

In South Korea, the benchmark KOSPI Index ended the trading session with a modest gain of 3.63 points or 0.27% to close at 1,337. Market heavyweight Samsung Electronics ended down 0.68%, giving back part of Wednesday’s gains. Among the other technology stocks, Hynix Semiconductor declined 1.49% and LG Display edged down 0.32%, but LG Electronics advanced 0.97%.

Banking stocks acted as drags on the market. KB Financial Group declined 1.33%, Shinhan Financial fell 1.68% and Woori Finance lost 5.32%. Shipbuilding stocks moved to the upside, while auto stocks receded.

In Hong Kong, the benchmark Hang Seng Index reversed all of its early gain and ended the day lower at 15,583, down 86.63 points, or 0.55%.

China-related stocks led the declines in the market. China Resources lost 1.91%, China Overseas fell 1.34%, China Mercantile Holdings declined 4.42%, and China Shenhua shed 4.36%. Resource stocks ended on a mixed note. While Aluminum Corporation of China, or CHALCO, slipped 0.91%, CNOOC lost 3.20% and PetroChina fell 2.29%. However, financial stocks saw weakness.

Among the other major markets, China's Shanghai Composite Index ended lower by 0.08% or 1.92 points, at 2,534 and Singapore's Strait Times slipped 14.24 points, or 0.75% to 1,892. Indonesia's Jakarta Composite Index added 1.97% or 31.42 points to close at 1,625 and Taiwan's Weighted Index gained 121.98 points, or 2.08%, to close at 5,997.

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Gold Slip Slightly In Early Trading

Gold prices inched slightly lower again on Thursday, continuing to linger near the $890 mark. Prices have struggled to find direction throughout this week.

May-dated gold fell to $891.60, down $1.90 for the session. Prices fell as low as $889.50 in the opening hour of trading.

The U.S. Department of Labor revealed that initial jobless claims fell to 610,000 for the week ended April 11th, down 53,000 from the previous week's revised figure. The 4-week moving average for initial claims, a statistic that flattens out week-to-week fluctuations in the data, dipped 8,500 to a level of 651,000.
 
Meanwhile, a Commerce Department report showed that housing starts fell 10.8 percent to an annual rate of 510,000 in March from the revised February estimate of 572,000. Economists had expected starts to slip to 540,000 from the 583,000 originally reported for the previous month.

Gold settled Wednesday at $893.50 per ounce, up $1.50 for the session. Earlier, gold touched as low as $886.20.

Crude oil futures are currently advancing $0.17 to $49.42 a barrel. On Wednesday, oil dipped $0.16 to $49.25 a barrel. Wednesday’s retreat came following the release of crude oil inventories report that showed that crude oil stockpiles rose by 5.6 million barrels to 366.7 million barrels in the week ended April 10th.

However, gasoline and distillate fuel inventories declined by 0.9 million barrels and 1.2 million barrels, respectively. Refinery capacity utilization averaged 81.5% over the four weeks ended April 10th compared to 81.9% in the previous week. Notwithstanding the declines, inventory levels of both classes of fuels were above the upper limit of the average range. The demand side of the equation showed that gasoline demand over the four weeks ended April 10th declined 0.4% from the same period last year. Meanwhile, average distillate fuel demand over the four weeks ended April 10th was down 6.9% year-over-year.

On the currency front, the U.S. dollar is trading at 99.092 yen, slightly weaker than the 99.3655 yen it was worth at the close of New York trading on Wednesday. Currently, the U.S. dollar is valued at $1.3220 versus the euro.

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