US & World Daily Markets Financial Briefing 22-06-2007

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

Stocks Fall In Early Trading

NEW YORK - Stocks fell in early trading Friday as bond yields remained elevated and stocks fell overseas.
   
The pullback a day after sizable gains was characteristic of the type of erratic weeks Wall Street has seen lately as it has dealt with concerns about interest rates.
   
Friday's session, unusually devoid of economic or earnings data, did draw some attention with the initial public offering of a stake in the management arm of Blackstone Group LP. The most talked-about IPO since Google Inc. went public values the buyout shop at $33 billion. The company, which was priced at $31 a share late Thursday, was trading at $37 a share in electronic dealings even before its official opening on the floor of the New York Stock Exchange.
   
The session comes ahead of a busy week in which the Federal Reserve meets and in which investors will receive several readings on the housing sector and the final report on economic growth in the first quarter, with release of the gross domestic product.
   
In the first hour of trading, the Dow Jones industrial average fell 37.15, or 0.27 percent, to 13,508.69.
   
Broader stock indicators moved lower. The Standard & Poor's 500 index fell $5.40, or 0.35 percent, to 1,516.79, and the Nasdaq composite index fell 8.04, or 0.31 percent, to 2,608.92.  The Russell 2000 fell 1.57, or 0.19 percent, to 838.24.
   
In afternoon trading, Britain's FTSE 100 fell 0.21 percent, Germany's DAX index fell 0.21 percent, and France's CAC-40 rose 0.11 percent.
   
Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 5.19 percent from 5.20 percent late Thursday.
   
Light, sweet crude rose 52 cents to $69.17 per barrel in premarket electronic trading on the New York Mercantile Exchange.
   
Friday's session could see volatility as the Standard & Poor's 500 index and the Russell 2000 index of smaller companies make changes, adding and subtracting some names. The changes can stir some unusual trading activity as investments that track the index try to square their holdings with the change in the index.

The S&P 500 is dropping PMC Sierra Inc. and ADC Telecommunication Inc., so the companies could see their stock prices decline as investors try to exit positions.
   
The session comes ahead of a busy week in which the Federal Reserve meets and in which investors will receive several readings on the housing sector and the final report on economic growth in the first quarter, with release of the gross domestic product.
   
In corporate news, Jabil Circuit Inc., a contract electronics manufacturer, rose after its fiscal third-quarter profits excluding items like restructuring costs topped Wall Street's estimate.
   
Cognos Inc., a software maker and technology consultant, forecast a fiscal second-quarter profit that fell short of Wall Street's expectations.
   
Taser International Inc., the stungun maker, said a court dismissed a lawsuit alleging the company's product resulted in an accidental death.

VantagePoint's market forecasts are nearly 80% accurate. Take a look at actual forecasts, become eligible for a Complimentary VantagePoint Market ($750 value!) and see the difference they will make. Click here to see two recent forecasts now.

Swedish krona, Norwegian krone rise on higher interest rate prospects

LONDON - The Swedish krona and Norwegian krone were firmer, supported by the bullish tone for interest rates in both countries.
   
In Sweden, the Riksbank on Wednesday said it expects its key repo rate to continue to move higher, reaching 4.00 pct by the end of the year, after it raised interest rates by a quarter point to 3.50 pct.
   
The Riksbank also said in its assessment that while inflation is still low, cost pressures have increased, productivity growth has slowed, and wage costs risen. "The Riksbank's tone has changed dramatically since the beginning of the year, which had been dovish until just a few weeks ago," said Ian Stannard of BNP Paribas.
   
Prior to these comments, the Riksbank had come under pressure to raise its economic forecasts after the release of some unexpectedly stronger inflation figures recently.
   
Analysts said the market is now pricing in those potential rate hikes. Mikael Nilsson at RBS expects two consecutive quarter point increases in September and October, bringing borrowing rates to 4.0 pct.
   
"The risk for a hike in December is elevated, but in our main scenario we don't expect policy rates to reach 4.25 pct until the first quarter of 2008," said Nilsson.
   
In Norway, the tone is similarly bullish with interest rates also set to keep rising this year.
   
Earlier this month, the Central Bank said it could not rule out interest rates rising to beyond 5 pct after 2007, having raised them at the end of May by a quarter point to 4.25 pct in the face of a booming economy.
   
The bank's Deputy Governor Jarle Bergo said rates could rise "in the area of 5.25 to 5.5 pct". As a result, BNP Paribas's Stannard said rate increases out of Norway could exceed those from Sweden. This is likely to keep the Norwegian currency buoyant in the intermediate future, analysts said.
   
The market is widely expecting Norges Bank to raise borrowing rates by a quarter point to 4.5 pct at its next rate setting meeting on Wednesday.
   
At 1.30 pm BST, the Swedish krona was trading at 6.8579 per dollar, compared with a low of 6.8844 yesterday, and had eased against the euro to 9.2373, after trading in a range of 9.2166-9.2702, though this is still at high levels.
   
The Norwegian krone was trading at 5.9334 per dollar, against a low of 5.9587 yesterday, and at 7.9839 per euro, from a low of 7.9855.

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

Euroshares down as Ifo index adds to general unrest

LONDON - Europe's leading exchanges were lower midday following a disappointing Ifo business climate index, which failed to impress investors and added to the general nervousness observable in the market this morning.
   
At 12.26 pm, the STOXX 50 was down 0.09 pct or 3.67 points to 3,930.31, as the STOXX 600 dropped 0.14 pct or 0.57 points to 393.13.
     
The Ifo business climate index fell to 107.0 from 108.6 in May, the first decline in the index since February. Economists polled by Thomson Financial News had forecast a more modest decline to 108.3.
   
A Frankfurt-based trader noted that the trading floors were generally nervous. "There is a largely positive newsflow, and the disappointing Ifo Index only ever accounts for 15 points, up or down, but there is a general nervousness and the market lacks transparency."
       
M&A chatter pushed several stocks higher, with Unilever gaining amid speculation that US food group Kraft Foods is building a stake in the group.
   
Analysts did not consider the rumours to have any substance however, and one London-based analyst called any stake-building by Kraft in Unilever "deeply implausible" and "grade A lunacy".
   
"If Kraft are building a stake in Unilever, they'll have to explain why, at the recent strategy presentation, they suggested M&A activity would be bolt-on and the cash would be used for buying back shares," he said. Nevertheless, investors reacted and the stock gained 1.60 pct.
   
Meanwhile, Pearson gained 2.24 pct following news that exploratory talks with General Electric ended and that it decided not to pursue a joint bid for Dow Jones.
   
Swiss Bank Julius Baer lost momentum, down 5.62 pct after UBS said last night that it is selling its 20.7 pct stake - 5.47 pct back to Julius Baer and 15.23 pct via an accelerated bookbuilding.
    
Another decliner was engineering group Aker Kvaerner, which fell 0.33 pct on market concerns about the amount of control the Norwegian government may wield over the company following the recent ownership changes.
   
Earlier this morning, industrial conglomerate Aker announced it is to transfer ownership of its 40.1 pct stake in Aker Kvaerner into a new holding company called Aker Holding, which will be 60 pct owned by Aker and 30 pct owned by the Norwegian government. The remainder of Aker Holding will be owned by Swedish technology company SAAB, which will have 7.5 pct, and Swedish investment company Investor AB, which will have 2.5 pct.
   
Elsewhere, Alstom gained 0.45 pct after the market welcomed news of Scandinavian CO2 capture contracts and a major high-speed rail order in Argentina.
   
Alstom last night announced a joint development contract with EON to build a 5 MW CO2 capture demonstration plant at Karlshamn Power Plant in southern Sweden saying they plan to introduce the technology in other Swedish power plants after technical evaluation.
   
It also struck a deal with Statoil, to test its chilled ammonia technology for CO2 capture from flue gases. Oddo Securities called the announcements "excellent news" that showcase the group's new techniques.
   

Get a FREE $50,000 Forex demo.  Free streaming quotes, guaranteed executions, 1% margins, and zero commissions! Click Here.

Asian shares close lower on profit-taking, fears of tightening in China

HONG KONG - Shares across the Asia-Pacific region closed lower, with China A-shares falling sharply on persisting concerns that the government will tighten credit over the weekend.
   
Tokyo shares finished lower as investors locked in gains from yesterday when the benchmark Nikkei 225 rose to its best level in seven years, with some participants also wary about whether the market has enough steam left to continue rising.
       
The Nikkei 225 Stock Average ended down 51.67 points or 0.28 pct at 18,188.63, off the day's low of 18,092.36. The blue-chip index gained 1.2 pct over the trading week.
   
The TOPIX index of all first-section issues fell 11.39 points or 0.64 pct to settle at 1,777.99, off a low of 1,767.00. It rose 0.28 pct for the week.
   
Housing market indicators and the FOMC meeting are due next week in the US while in Japan, forthcoming data include industrial production and consumer inflation data for May.
      
Australian shares closed lower as investors decided to sell certain stocks following the record highs reached by the major indexes on Wednesday.
   
Speculation that the federal government's Future Fund is conducting its first investments within the Australian share market limited further downside. The fund is worth over 41 bln aud and was set up to fund pensions for public servants.
   
The S&P/ASX 200 closed down 4.4 points or just 0.07 pct at 6,382.6, widening the gap with the Wednesday record close of 6,397.0. The index ended off the low of 6,349.0. The high was 6,391.6. Over the trading week the key index climbed 88.7 points or 1.41 pct.
   
Hong Kong shares were flat in afternoon trade, pulling back after breaking the historic 22,000 points level as investors turned cautious on falls in mainland China markets and fears the government might move over the weekend to tighten credit. At 3.15 pm the Hang Seng Index was down 3.45 points or 0.02 pct at 21,951.22.
   
In mainland China, A-shares in Shanghai and Shenzhen closed sharply lower on profit-taking and renewed fears that the government may announce credit-tightening measures. The Shanghai A-share Index was down 145.40 points or 3.28 pct to 4,293.71 and the Shenzhen A-share Index was down 60.35 points or 4.63 pct at 1,243.33.
   
Seoul shares closed sharply lower, wiping out all gains from the previous session, as investors responded belatedly to government measures to reduce liquidity amid concerns over possible overheating in stock markets.
   
The Bank of Korea said yesterday it will lower the pool of loans it allocates for small- and medium-sized firms to 6.5 trln won in the third quarter of 2007, compared with 8 trln in the second quarter, a move seen as part of a campaign to reduce liquidity.
   
On Monday, the main index touched 1,800 points for the first time after booking weekly gains for 15 consecutive weeks.  The KOSPI index closed down 23.26 points or 1.30 pct at 1,770.98, after moving between 1,759.95 and 1,802.43. It ended the week with a decline of 1.28 points or 0.07 pct.

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!

Robusta coffee strikes fresh 9-year high on strong EU demand

LONDON - Robusta coffee futures struck a fresh nine-year high in London as strong European consumption continued to outweigh healthy Vietnamese production.
   
"Demand for robusta is still strong and there is a lack of stock in Europe," an analyst said, adding Eastern European consumption was particularly robust.  "Funds see Robusta as being more positive than New York and they're making good money," he added.
   
Robusta, the lower grade bean, is traded in London while arabica, the higher quality coffee, is traded in New York.
   
At 1.13 pm Robusta coffee for September delivery was up at 1,935 usd a tonne on the Euronext Liffe against 1,929 usd at the close yesterday. Earlier in the session prices hit 1,945 usd, exceeding last week's nine-year high of 1,940 usd. Analysts said the gains also brought out speculative buyers.
   
European Robusta inventory has fallen 12 pct so far this year, said the Euronext Liffe yesterday.
   
"An increase in the demand for robustas combined with a relative shortage of this type of coffee ... are the underlying factors determining this upward trend, exacerbated by the speculative activities of investment funds," said Nestor Osorio, head of the International Coffee Organisation in his latest monthly report.
   
Output in Vietnam, the world's top robusta producer was up 15 pct in 2006/07 to 15.5 mln bags. Each bag weighs 60 kg. Vietnamese production in crop year 2007/08 will not exceed output in 2006/07 but problems with quality may affect exports, noted Osorio.
   
Elsewhere, cocoa was up slightly amid thin trading which exaggerated any movement.
   
Traders kept an eye on strike developments in Nigeria, one of Africa's biggest producers, where a nationwide protest could potentially disrupt exports.
   
"Volumes continued to be light with spreads serving to keep volumes ticking along," said Sucden analyst, Michael Davies. "We continue to fancy the upside in the medium term."
   
The International Cocoa Organisation forecasts the market to swing into a global deficit of 145,000 tonnes in 2006/07 from a surplus of 192,000 tonnes in the previous season.
   
September Cocoa was up at 1,058 stg a tonne on the Euronext Liffe against 1,056 stg at the close yesterday.
   
Meanwhile, white sugar for October delivery was also up at 315 usd a tonne on the Euronext Liffe exchange, against 313.20 usd at the close yesterday.

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.