US & World Daily Markets Financial Briefing 18-09-2009

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

Light Economic Calendar May Contribute To Choppy Trading Day

The major U.S. index futures are pointing to a higher opening on Friday, although there may not be much conviction behind any early moves amid a lack of significant news. Despite indications of a higher open, some traders may look to cash in on the market’s recent gains. Nonetheless, with no major economic data due to be released, a number of traders are likely to remain on the sidelines ahead of next week’s interest rate decision by the Federal Reserve.

While U.S. stocks ignored a weak start and moved into positive territory in early trading, on Thursday, capitalizing on upbeat data, they could not sustain the upward move, as profit taking following recent advances generated selling pressure in the afternoon. The major averages stayed below the unchanged line for most of the afternoon before closing modestly lower.

The Dow Industrials ended down 7.79 points or 0.08% at 9,784, the Nasdaq Composite Index fell 6.40 points or 0.30% to 2,127, and the S&P 500 Index dropped 3.27 points or 0.315 to end at 1,066.

After ending the previous session at an eleven-month closing high, the Dow pulled back modestly yesterday. Thus far this year, the index has gained 11.5%. If the Dow legs down further, we may have to watch for support levels around 9,639, 9,445 and 9,230.

The CBOE Volatility Index does not portend any serious reversal in the near term, with the index currently around 23.6, a level far from what can be called fear generating. The index has been trending sideways and has near term resistance around 29.57, while it has support around 23.

Sixteen of the thirty Dow components ended Thursday’s session lower, while the remaining fourteen closed in positive territory. Alcoa (AA) pulled back by about 3% after its recent gains, while American Express (AXP) (down 2.34%), Travelers (TRV) (down 2.35%), Verizon (VZ) (down 2.96%), Intel (INTC) (down 1.22%) and General Electric (GE) (down 1.42%) were among the other notable decliners. On the other hand, Bank of America (BAC), Caterpillar (CAT) and Coca-Cola (KO) advanced strongly.

Among the sector indexes, the Philadelphia Oil Service Index and the Dow Jones U.S. Basic Materials Average fell about 1% each, while the NYSE Arca Gold Bugs Index declined 2.93%. The NYSE Arca Securities Broker/Dealer Index and the KBW Bank Index fell 1.35% and 0.95%, respectively, and the Philadelphia Housing Sector Index ended down 2.11%. The Philadelphia Semiconductor Index fell 1.69% compared to a 2.43% drop by the NYSE Arca Disk Drive Index. However, the NYSE Arca Airline Index continued to gain, rising for the tenth straight session and closing up 1.83%.

On the economic front, the Commerce Department said housing starts rose 1.5% month-over-month in August to 598,000, with the increase mainly due to a 23.5% jump in multi-family units. At the same time, single-family starts slipped following five straight months of gains. Region-wise, starts were higher in the Northeast and Midwest and remained unchanged in the West, while they fell in the South. Building permits, an indicator of future housing activity, also increased in August to 579,000.

First Trust Advisors surmises that residential investment may show an increase in the third quarter, which would mean the first gain since 2005. Although inventory levels are still high, the rate of homebuilding is still far below the underlying demand for housing based on population growth and scrappage.

In another positive report, the Labor Department said first time claims for unemployment benefits fell to 545,000 in the week ended September 12th, although an upward revision to the previous week’s figures take some sheen off the positivism relayed by the drop in claims. Although the four-week average declined, continuing claims rose by 129,000.

Manufacturing activity continued to show improvement, according to the results of the Philadelphia Fed’s manufacturing survey. The manufacturing index rose to 14.1 in September from 4.2 in August, reaching its highest level since June 2007. The shipment index climbed about 8 points. Although the backlog orders index rose 2 points, it still remained in negative territory. The new orders index declined to 3.3 from 4.2 in August and the employment index declined 1.4 points to –14.3. Inventories continued to contract, as reflected by an 18 point-drop in by the inventories index to –18.1. The 6-month outlook index dipped 9 points but remained positive.

Get our Daily Trade Signals and Grain Newsletter along with a copy of the CBOT Introduction to Agricultural Futures and Options Book for Free! The grain trading professionals at MF Global can guide you in the right direction with your trading. Click here to Get your Free Grain Trading Kit Today

Bay Street Stocks Could See Little Direction In Early Trading

Toronto stocks could struggle to find direction on Friday morning. The market dropped yesterday for the first time in six sessions. U.S. futures are hovering near the unchanged line, while stocks in Europe and Asia were also little-moved.

Crude oil prices are down 44 cents to $72.03 per barrel and copper has dropped 5.6 cents to $2.84 a pound. Gold has inched slightly higher to move above $1,015 an ounce.

On the economic front, Statistics Canada reported Canadian wholesale sales were up 2.8% in the month of July. This is compared to a revised 0.75% increase in June. Economists expected a much more modest climb of 0.9%.

In corporate news, SXC Health Solutions Corp. announced the pricing of public offering of 4.50 million common shares at $41.50 per share. The offering was increased from the previously announced offering size of 3.50 million common shares.
 
Mitec Telecom said Thursday that it has entered into a letter of intent to purchase all of the issued and outstanding shares of a privately-held North American company, which provides wireless hardware components to major telecom equipment providers worldwide.

Brick Brewing Co. Limited said it received an amended statement of claim from Anheuser-Busch and Labatt Brewing Co. The revised claim removes claims that Brick has depreciated goodwill in the alleged trade-marks of the two companies, and also alters the claim of punitive damages.

Gluskin Sheff + Associates reported net income for the fourth quarter of C$5.79 million or C$0.20 per share, compared to C$11.03 million or C$0.38 per share in the year-ago quarter.

On Thursday, the S&P/TSX Composite Index lost 27.37 points or 0.23% to settle at 11,447.03. The index had extended its best level in almost a year on Wednesday.

Click Here

Most major Asian markets ended Friday’s session lower, as the apprehensions visible on Wall Street also made their appearance in the Asian markets following three straight sessions of gains.

Japan’s Nikkei 225 average opened lower and moved mostly sideways for the rest of the session before closing down 73.26 points or 0.70% at 10,371. The market largely ignored the Bank of Japan’s upward revision to its economic assessment.

A majority of stocks declined in the session, with technology, financial, construction, shipping, material and real estate stocks showing substantial weakness. On the other hand, automakers bucked the downtrend. Among individual stocks, Japan Airlines rallied after it was reported that U.S.-based airline AMR Corp. (AMR) is negotiating with other airlines to form an alliance to help the ailing Japanese carrier

A revised report released by Japan’s Cabinet Office showed that the leading indicators index was revised down slightly to 82.5 in July from the initially estimated reading of 83. The coincident index was revised up two-tenths of a point to 89.8, while the lagging index was also revised up to 82.8 from 82.4.

In the monthly report of recent economic and financial conditions, the Bank of Japan said Japan’s economic conditions are showing sings of recovery on the back of rising public investment and a rise in exports and production.

However, the bank identified business fixed investment and private consumption as weak points. The central bank expects the annual rate of consumer prices to moderate over time after accelerating somewhat in the near term.

Australia’s All Ordinaries opened unchanged, but it dipped sharply in early trading and began moving steadily lower till late afternoon trading. Thereafter, the index recouped some of its loss to close down 20.30 points or 0.43% at 4,694. Most sectors traded lower, with material stocks bearing the brunt of the selling pressure.

Miners Rio Tinto, BHP Billiton, Newcrest Mining and Lihir Gold all ended lower. In the banking space, Commonwealth Bank fell, but the remaining three major banks advanced.

After showing a notable decline at the open, Hong Kong’s Hang Seng Index staged a notable recovery attempt in morning trading, climbing back near the unchanged line. The index moved back to the downside in afternoon trading, however, ending the session down 145.06 points or 0.67% at 21,623.

Come Into the LIVE Online Trading Session and Watch Us Make at Least 1 Point ($500 - $2000 a Day). The LIVE Trading Session is Completely FREE! - Sign Up Now here!

The major European markets are showing a lack of direction after ending the previous session modestly higher. The French CAC 40 Index and the German DAX Index are currently just below the unchanged line, while the U.K.’s FTSE 100 Index is clinging to a modest gain.

The German Federal Statistical Agency released a report showing that the German producer price index fell 6.9% year-over-year in August compared to a 7.8% drop in July. Economists had expected a 7.2% drop. On a monthly basis, producer prices eased 0.5% following a 1.5% decline in the previous month.

Currency, Commodity Futures

Crude oil futures are trading down $0.26 at $72.21 a barrel after edging down $0.04 to $72.47 a barrel on Thursday.

Meanwhile, gold futures are currently edging up $1.40 to $1,014.90 an ounce. In the previous session, the precious metal closed down $6.70 to $1,013.50 an ounce after it made a move close to its all time high level of $1,032 an ounce.

Most factors such as the dollar weakness, low interest rates and a modest pick up in inflation, as reflected by both August wholesale and consumer price inflation reports, all seem to favor upside in gold prices, enabling it to overcome fundamental weakness.

On the currency front, the U.S. dollar is trading at 91.27 yen compared to the 91.0845 yen it fetched at the close of New York trading on Thursday. The dollar is trading at $1.47 versus the euro compared to yesterday’s $1.4741.

Here are 10 simple Dos and Don’ts any investor can follow which may contribute to potential for success in trading futures. This FREE guide can provide some of the basic principles that traders inherently live by.

Click Here to Request Your Free Guide!

Palm, Inc. moved lower in Thursday’s after hours session after it reported a first quarter loss after preferred dividends of $1.17 per share compared with a loss of 39 cents per share last year. On an adjusted basis, the company reported a loss of 10 cents per share, narrower than the loss of 24 cents per share expected by economists.

Unifi is likely to see some buying interest after it said it is raising its adjusted EBITDA guidance for the first quarter to $13 million to $14 million from its earlier estimate of $9 million to $11 million. The company attributed the upside to improving volume trends in the current quarter, both domestically and in Brazil. However, citing global economic uncertainty, the company said it is maintaining its 2010 EBITDA forecast unchanged at $4 0 million to $50 million.

Del Monte Foods could come under selling pressure after it announced that it has priced a private placement offering of $450 million in aggregate principal amount of senior subordinated notes. The interest rate on the notes is 7-1/2% per annum and the notes will fetch the company about $442.2 million.

Huntington Bancshares may also see weakness after it announced that it has commenced a public offering of $350 million of its common shares. The company also announced that its discretionary equity issuance program launched on September 9th, which resulted in the issuing of 35.7 million shares worth $150 million, is now complete.

Southwest Airlines could be in focus after it announced that the airline and its Pilot’s Association board has voted to send a proposed tentative agreement to full SWAPA membership for a ratification vote. The new proposal, which calls for rewarding SWAPA membership for the company’s past two years of profitability while also linking the next two years’ compensation to the company’s financial performance, is a 5-year agreement through August 31st, 2011.

Texas Instruments may move to the upside after it announced that it is raising its quarterly cash dividend by $0.01 per share to $0.12 per share, translating to an annual dividend payment of $0.48 per share.

Boston Private Financial Holdings traded higher in Thursday’s after hours after it announced that it would sell RINET Co. to the RINET management team. The company said the transaction would not have any material effect on the company’s earnings or its financial position.

SAIC is likely to gain ground after it announced that it has been awarded a prime contract by the Naval Undersea Warfare Center. The company noted that the contract has a 1-year base period of performance, four one-year options and a total value of more than $19 million if all options are exercised.

Our informative 24”x36” wall chart explores 40 years of historical market data on Crude Oil, Gold and S&P500 markets, and includes historical event call-outs. It’s a great trading and analytic tool for professional and beginner traders.

Sign up here to receive your chart today!

Investors Hub Services