US & World Daily Markets Financial Briefing 23-01-2009

...For only $29.99 on Investorshub.com NOW! Be one of the first to sign up for this fantastic new service from Investors Hub -- for only $29.99 a month you will gain access to Level 2 Pink sheet and OTCBB data. Click here or call 1-888-99-ADVFN to upgrade your account today.

US Stocks Decline Amid Tepid Earnings

Stocks' volatile run continued Friday amid a new round of tepid earnings reports and worries about whether major indexes' bear-market lows will hold up.

The Dow Jones Industrial Average, which has posted triple-digit moves in each day of trading this week, was recently down 140 points, or 1.7%, at 7983.02. Its component General Electric fell 7% after reporting fourth-quarter results that were in line with expectations and at the bottom end of the company's guidance.

The S&P 500 fell 1.2% to 817.37. As has been the case through most of the week during both rallies and the more frequent declines, its sectors all moved in the same direction. All fell on Friday, led by declines of about 2% each in energy, industrials, and the consumer-discretionary group.

Elsewhere, Xerox shares fell 13% after it issued a disappointing outlook. Advanced Micro Devices slumped 3% after its results missed expectations. Harley Davidson dropped by 18% after the motorcycle maker said it plans to cut jobs and production.

The financial sector, which has often led the market's violent swings lately, also came under renewed pressure after credit-card issuer Capital One Financial said after the close of trading Thursday that it expects its losses will worsen this year based on its view that the U.S. unemployment rate will hit 8.7% -- it's now 7.2% -- and that home prices will decline another 10%. Capital One shares fell 13%.

The market's early slump followed a rocky U.S. session on Thursday and losses in key stock markets overseas. In the U.K., government data showed fourth-quarter 2008 growth fell 1.5%, the deepest contraction since 1980 and confirmation the country has entered its first recession since 1991.

Technology stocks led the way down in Asia after Japan's Sony forecast its first annual loss in 14 years and Korean chip maker Samsung Electronics posted its first-ever quarterly loss Friday. The Nikkei closed down 3.8%.

Other major U.S. measures were lower in recent action. The tech-focused Nasdaq Composite Index was down 0.6% at 1456.60. The Russell 2000 fell 1.3% to 436.99.

Commodity prices were mixed. Crude-oil futures fell $2 to $41.67 a barrel in New York. Gold contracts gained $20.70 to trade at $879.50 per ounce. The Dow Jones-AIG Commodity Index slipped 0.5%.

The dollar strengthened against major rivals. One euro coast $1.2815, down from $1.3005. One dollar fetched 89.12 Japanese yen, up from 88.71 yen.

Treasury prices fell. The two-year note was down 2/32 to 0.777%. The 10-year note fell 8/32 to yield 2.628%. The 30-year bond fell 1-22/32 to yield 3.342%.

Subscribers benefit from features such as: advanced search and reading functionality.
Click here for all the action.

Pound To New 23-Yr Low Vs Dollar, Euro Weakens Again

The U.K. pound fell Friday to its lowest level versus dollar since Sept 1985 after worse-than-expected gross domestic product data showed the U.K. has officially entered a recession.

Sterling's fall came with a general sell-off of riskier currencies as equities across Asia and Europe slumped. The euro also declined to more than a six-week low versus the dollar.

The dollar is considered a safe-haven asset because it is the world's reserve currency. The yen benefits on similar flight-to-safety flows due to Japan's large foreign-exchange reserves and current account surplus. It strengthened overnight versus the euro as well.

"Although the euro is a liquid currency, the market is no longer treating the euro zone as a single entity, but as a collection of nations, each of which merit individual scrutiny in a time of stress," said Geoffrey Yu, a currency strategist at UBS.

"The euro zone lacks an institutional framework to act as decisively as individual states on matters such as fiscal stimulus and quantitative easing. Investors acknowledge this weakness and this will hurt the euro up ahead," he said.

In an interview with The Wall Street Journal, Lorenzo Bini Smaghi, a European Central Bank Governing Council and Executive Board member, said that without evidence of deflation - a prolonged fall in prices and price expectations - "there is little room left to reduce the nominal interest rate" below its current 2%.

No major U.S. data is scheduled for release Friday. Friday morning in New York, the euro was at $1.2788 from $1.3009 late Thursday, while the dollar was at Y88.65 from Y88.78, according to EBS. The euro was at Y113.38 from Y115.51, and the U.K. pound was at $1.3597 from $1.3882. The dollar was at CHF1.1697 from CHF 1.1540 late Thursday.

The pound fell as low as $1.3502 overnight, after the Office for National Statistics reported the economy contracted a massive 1.5% in the fourth quarter after a 0.6% fall between July and September.

Analysts at Credit Suisse noted the worrisome potential effects of widening U.K. sovereign credit default swaps relative to other major currencies in recent days.

"[This] is crucial for sterling because foreign purchases of U.K. debt have a major financing item in the U.K.'s balance of payments, nearly 180 billion pounds from Q1 to Q3 2008, much of which may have come from reserve managers seeking attractive yield and safe credit - now less compelling advantages for the pound," said Credit Suisse.

Meanwhile, data out of the euro zone showed German private sector output dropped sharply in January. The Markit flash Germany composite output index declined to a record low of 38.0 in January from 39.5 in December, based on about 85% of normal monthly replies to the survey. A reading above 50.0 indicates expansion while a reading below 50.0 indicates a contraction.

The same survey for the whole euro-zone economy continued to show contraction, although January was less severe than December. Markit Economics Friday said the purchasing managers index for the euro zone's manufacturing sector rose to 34.5 in January from 33.9 in December, while the PMI for the currency area's services sector rose to 42.5 from 42.1.

Despite the rosier than expected data, analysts at BNP Paribas remain pessimistic on the euro.

"[We] believe that projections for European growth, despite recent downward revisions, still remain too optimistic suggesting that there are significant negative shocks ahead," they said. "Thus, we continue to recommend using any corrective euro versus dollar rebounds as selling opportunities."

Canada Morning 
 
The Canadian dollar is modestly lower Friday morning, showing little reaction to December consumer price index data that showed inflation moderating in Canada.

With no Canadian or U.S. data scheduled for the rest of the day, equity and commodity price fluctuations will likely be the key drivers for the currency, said Dustin Reid, director of G-11 foreign exchange strategy with RBS Greenwich Capital Markets in Chicago.

On Thursday, the Bank of Canada said in its monetary policy report update that the fall in commodity prices, particularly energy prices, has put downward pressure on the Canadian dollar over the past three months.

It also noted that the U.S. dollar appreciated against most major currencies through October and November, "possibly reflecting sizable repatriation of assets by investors who manage their funds in U.S. dollars."

The U.S. dollar was trading at C$1.2601 Friday morning, up from C$1.2552 Thursday afternoon and down from a high of C$1.2643 earlier Friday.

For stock market quotes, company information, stock charts, historical quarterly reports and historical annual reports, click here

European Shares Fall To 2003 Levels

European shares were slammed on Friday, with sharp losses from banks and insurance companies helping to pull the Stoxx 600 back to 2003 levels.

The pan-European Dow Jones Stoxx 600 index dropped 2.1% to 179.14, a level not seen since the first half of 2003.

Allianz  shares fell 8.6% and AXA shares dropped 9.2% in the insurance sector. Banks trading lower included BNP Paribas , down 8.6%, and Societe Generale , down 6.6%. Barclays shares fell 13.2%.

The lender's CEO, John Varley, said that the bank will make a profit in 2008 even after taking all necessary write-downs, the Independent newspaper reported Friday. He also said that Barclays intended to pay in cash, rather than shares, if it participated in a government plan to insure banks' assets against further losses, the paper reported.

Banks fell sharply in the first trading sessions of the week as investors fretted that poor trading conditions will lead to further asset write-downs.

"It's an endless story," noted Heino Ruland, strategist at consultancy FrankfurtFinanz, speaking about the banking-sector write-downs. "There are certainly more than one or two insurance companies which do have off-balance sheet risks," he noted.

On a national level, the French CAC-40 index fell 2.4% to 2,801.58 and the German DAX 30 index dropped 2.4% to 4,116.40.

The U.K. FTSE 100 index dropped below 4,000 for the first time since December after GDP figures showed the country is in a recession. The index was down 1.6% at 3,990.58.

Oil producers also fell in Europe, with BP shares down 2.3%. Crude-oil futures declined, with the front-month contract down 83 cents at $42.86 a barrel.

Drug makers in focus Several pharmaceutical stocks were higher. The Wall Street Journal reported that Pfizer is in talks to buy Wyeth in a deal that could be worth more than $60 billion.

Shares of Merck KGaA climbed 5.7% after its Merck Serono unit said that a phase III trial of Cladribine for patients with relapsing-remitting multiple sclerosis met its two-year primary endpoint.

Shares of Roche Holdings rose 0.5%. It said Friday that the European Union's Committee on Human Medicinal Products has issued a positive recommendation for the use of MabThera with any chemotherapy combination as a first-line treatment for chronic lymphocytic leukaemia.

UCB shares jumped 5.2% after GlaxoSmithKline signed a deal to acquire UCB's current marketed product portfolio across certain territories in Africa, the Middle East, Asia Pacific and Latin America for 515 million euros in cash. GlaxoSmithKline shares edged down 0.3%.

Shares in Infineon Technologies fell 6.3% in Frankfurt after its Qimonda (QI) unit filed for insolvency in a Munich court.

The company said the decision was due to the "massive drop in prices in the DRAM industry" as well as dramatically reduced access to financing on the capital markets. A previously agreed 325 million-euro ($421 million) financing package involving the German state of Saxony, several banks and Infineon Technologies could not be completed in time, the company said.

Aer Lingus shares dropped 16.4% in London. Ryanair Holdings late Thursday abandoned its latest takeover attempt on Aer Lingus Group, after the Irish Government rejected its 748 million-euro offer. Ryanair shares rose 1.7%.

Fast-loading, feature-rich and highly customizable interfaces for reading and posting messages. click here

Asian Shares End Lower; Sony Loss Forecast Weighs On Techs

Asian shares closed firmly lower Friday, ending a downbeat week, with tech stocks under pressure in Japan as Sony forecast its first annual loss in 14 years. Selling pressure in Tokyo was aggravated as the Japanese currency advanced, making the prices of exports more expensive.

"Technology companies are getting badly hit by falling demand," said Howard Gorges, vice chairman of South China brokerage.

Samsung Electronics was among the day's biggest decliners after the South Korean electronics giant reported its first-ever quarterly loss for the three months through Dec. 31. Mr. Gorges added there was a generally risk adverse mood as investors weighed up the latest batch of grim economic data.

Many investors chose to pare down positions in the event of profit warnings or other negative news during the Lunar New Year holiday, which sees many Asian markets closed Monday and Tuesday.

"Players are expected to square off positions ahead of the holidays on worries over Wall Street's renewed volatility," said AmFraser Securities head of retail research Najeeb Jarhom.

The Nikkei closed down 3.8% at 7,745.25, Korea's Kospi Composite was off 2.1% at 1,093.40, Australia's S&P/ASX 200 finished 4.1% lower at 3,342.70 and Hong Kong's Hang Seng index ended 0.6% lower at 12,578.60. New Zealand shares were down 1.1% at 2,705.09, Singapore's Straits Times index was off 0.7% in late trade, and China's Shanghai Composite fell 0.7%.

In other regional action, Indonesian shares slipped 1.3%, Malaysia fell 0.8%, Philippines was down 0.3%. Thailand's leading index eased 0.8%, and India fell 1.6%.

Markets in Taiwan were closed for a public holiday. "We don't know which dominos are going to fall, we just know they keep falling," said BBY trader Peter Copeland in Sydney. "It's not going to be pretty for a while yet and I think this is going to be a multiyear scenario."

In Japan, consumer electronics giant Sony fell 7% after saying Thursday it expects a net loss of 150 billion yen ($1.7 billion) for the fiscal year ending March 31, battered by the global economic slowdown. As recently as October the firm had forecast a net profit of 150 billion yen. Canon lost 5.2%.

Samsung's results hurt the Korean market with its shares down 4.4% and LG Electronics falling 3.2%.

The world's largest maker of computer memory chips reported a fourth quarter loss of 22.2 billion won ($16 million) with weakness in its chip and liquid crystal display segments, though it expected the global LCD market to recover in the second half of this year. A Dow Jones Newswires poll had predicted a 38.6 billion won net profit.

Asian stocks were also following the weaker finish in the Dow Jones Industrial Average, which ended 1.3% lower Thursday, hurt by weak earnings from Microsoft and news the software maker plans to cut 5,000 jobs over the next 18 months, the software giant's first major round of layoffs in its history.

In Australia, Babcock & Brown said it saw no value for equity holders under its revised business plan and restructured balance sheet. Heavyweight miner BHP Billiton was down 5.8% and News Corp, publisher of this report, was down 7.8%.

The Hong Kong market was supported by a 0.8% gain in shares of HSBC as traders exited short positions after a recent string of large declines. Oil and gas refiner Sinopec saw its shares retreat 1.7%, while Chalco fell 3%, with both companies saying they expected 2008 profits to fall more than 50%.

Singaporean shares were in negative territory after the government Thursday unveiled a record S$20.5 billion ($13.7 billion) stimulus package, equivalent to 8% of GDP.

The most traded market in the world; 24 hr market platform with the latest news, prices and charts gives you the knowledge to invest in this exciting and fast moving market.
Click here

Spot Gold Rising, Market Ignores Dollar

LONDON -- Spot gold continued to break from its normal trading correlations Friday, trading higher despite a stronger dollar against the euro, because traders and analysts said weak data and bank earnings are triggering buying.

At 0941 GMT spot gold was trading at $866.55 a troy ounce, up 1.2% from Thursday's close. Spot silver was at $11.41/oz, up 0.1%. Spot platinum was at $917.50/oz, down 0.9%. Spot palladium was at $180/oz, down 1.1%.

In the wider markets, European stocks were down, the dollar stronger against the euro and crude oil lower. The U.K. officially entered a recession after data showed fourth quarter GDP contracted 1.5%.

Traders said the precious metal is poised to rise further with two large banks behind much of the buying. "Gold continues to trade erratically, but the general trend has been higher despite the dollar," said Standard Bank analyst Walter de Wet. "Gold is trading without correlation to any one single factor."

The dollar has been bouncing between $1.2850 and $1.3050 against the euro for the past few days but gold bucked its normal trend of trading lower on dollar strength and instead posted some light gains, de Wet said.

Gold buying is being triggered by disappointing economic data out of Asia, U.S. and Europe and poor quarterly earnings from U.S. regional banks, said HSBC analyst James Steel.

Fear that the outlook for currencies is deteriorating could be driving more people to want a physical asset like gold, a London-based trader said.

If gold prices rise above $866.6/oz then they could head towards $892/oz, said FuturesTechs technical analysts. "We are tentatively siding with the bulls for now, although all within the auspices of a range play," FuturesTechs said. Despite concerns about the financial sector and banks, gold gains could still be capped be deflation pressures, HSBC's Steel said.

Platinum prices continue to hold largely hold recent gains, despite autocatalyst and industrial demand, which fell markedly since mid-2008 because of the global economic downswing.

The outlook for platinum jewelry is more positive, HSBC's Steel said. Platinum for jewelry is the second largest component of physical demand, he said, and customs data showed Chinese imports at 97,600 ounces of platinum in December, which was only 1,000 ounces below December 2007 imports.

The latest streaming prices and news on major commodities from precious metals to crude oil, so you can keep up-to date and never miss a trading opportunity again.
Click here

Investors Hub Services