US & World Daily Markets Financial Briefing 26-02-2008

Welcome to the Investors Hub World Daily Markets Bulletin; your daily e-mail guide to important Domestic, European and Global market events. Market Briefing is here to keep you informed and up-to-date on key financial developments.

If you have forgotten your password, click here.

Wall Street dips on inflation news

NEW YORK - Stocks pulled back Tuesday after two reports showed that core wholesale prices shot up more than expected last month and that consumer confidence is waning. The data together reinforced worries that the United States is suffering from stagflation, a state when the economy weakens amid rising costs.

The Conference Board's index of consumer confidence plunged in February to 75.0 from a revised 87.3 in January. The reading was the lowest since the index registered 64.8 in February 2003, came in far below analysts' average estimate. Though the report is not a perfect predictor of consumer spending, it suggests Americans are watching their budgets.

Meanwhile, the latest wholesale inflation report showed headline producer prices rising by a full 1 percent in January, driven up by higher energy prices and soaring food costs.

The result was a bit below the 1.1 percent advance projected by Thomson/IFR, but core PPI -- which excludes food and energy prices -- rose 0.4 percent, steeper than the predicted 0.3 percent gain. The data was disconcerting because the Federal Reserve is known to closely monitor core-level inflation in setting monetary policy.

In midmorning trading, the Dow Jones industrial average fell 33.79, or 0.27 percent, to 12,536.43. Broader stock indicators also declined. The Standard & Poor's 500 index fell 5.63, or 0.41 percent, to 1,366.17, and the Nasdaq composite index fell 9.21, or 0.40 percent, to 2,318.27.

Government bonds rose modestly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slipped to 3.89 percent from 3.91 percent late Monday. Stocks had rallied Monday after ratings agency Standard & Poor's affirmed investment grade "AAA" ratings for bond insurers Ambac Financial Group Inc and MBIA Inc.

Market sentiment in recent sessions has been influenced to a large degree by the plight of the insurers who appear undercapitalized and could have trouble paying back bond holders if default levels are too high. In other corporate news, Tenet Healthcare, the hospital operator, said its fourth-quarter losses narrowed sharply thanks to new contracts, higher admissions and cost-cutting. Tenet rose 50 cents, or 11.7 percent, to $4.78.

Rite Aid Corp. also jumped Tuesday, after an analyst upgraded the pharmacy chain and said a recent stock drop makes its risk and reward profile more favorable. Rite Aid rose 26 cents, or 10 percent, to $2.87.

The dollar fell against most other major currencies. Gold prices edged higher. Crude oil fell 20 cents to $99.03 a barrel on the New York Mercantile Exchange. The Russell 2000 index of smaller companies rose 1.25, or 0.18 percent, to 711.71.

Declining issues outnumbered advancers by a small margin on the New York Stock Exchange, where volume came to 266.6 million shares. Overseas, Japan's Nikkei stock average closed down 0.65 percent. In afternoon trading, Britain's FTSE 100 rose 0.76 percent, Germany's DAX index rose 0.85 percent, and France's CAC-40 rose 0.29 percent.

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

Forex - Euro spikes towards all-time dollar high after buoyant Ifo

LONDON  - The euro rose by more than a cent towards its all-time high against the dollar after the closely watched Ifo survey of German business sentiment came in above market expectations, further reinforcing expectations that the European Central Bank will not cut rates any time soon.

Earlier in the session, the euro had come under pressure on talk the Ifo would disappoint to the downside. Ifo's headline business climate index rose to 104.1 in February from 103.4 the previous month. Analysts polled by Thomson Financial News expected the index to drop to 102.7.

Talk in the market before the release was that it would fall to 101.0 had pushed the euro down to 1.4777 usd from 1.4839 usd. According to the Federal Statistics Office, German GDP grew 0.3 pct in the fourth quarter compared with the 0.7 pct growth in the third quarter of last year, with consumer spending particularly weak.

Despite that growth slowdown in the euro zone's largest economy, the Ifo report is likely to stoke talk that the ECB's next forecasts in early March will be relatively buoyant, thereby fuelling expectations that the central bank will keep borrowing costs on hold for a while longer.

The ECB has kept its key refi rate unchanged at 4.00 pct for eight months, unlike the Federal Reserve Board and the Bank of England, both of which are cutting rates, helping to underpin the euro.

"The stronger Ifo may give some support to the ECB hawks' case to delay easing, but ECB president Jean-Claude Trichet has already opened the lid on rate cut expectations and it would be taking a big risk with the economy to delay easing much longer," said David Brown, chief European economist at Bear Stearns.

The worries ahead of the Ifo's release came after some solid US economic news helped support the dollar against the single currency, while affirmation that monoliners MBIA and Ambac had retained their AAA status helped boost risk appetite, to the detriment of the yen against the US currency.

The Japanese currency has been on the offensive in recent months as the turmoil in financial markets capped demand for carry trades, where money is borrowed in low-yielding currencies, mainly the yen, to invest in areas with high interest rates

Today's US economic news is unlikely to alter market expectations that the Fed will cut its benchmark funds rate further on March 18. The producer price index is expected to have increased 0.3 pct in January following a 0.1 pct fall in December, with the core rate, which excludes food and energy, up 0.2 pct for the second month running.

Meanwhile, the Conference Board's estimate of consumer confidence is expected to decline, to a level of 81.3 this month from 87.9 in January.

Elsewhere, the pound was steady as the monthly retail sales survey from the Confederation of British Industry pointed to slowing consumer demand at the same time as mounting price pressures. Analysts said this combination is likely to keep the Bank of England's rate-setting Monetary Policy Committee on hold for the time being.

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

Euroshares open higher on Wall St rally, financials shine, data in focus

At 9.10 am, the DJ STOXX 50 was up 29.43 points, or 0.90 pct, at 3,286.32 and the DJ STOXX 600 was 2.96 points, or 0.91 pct, higher at 328.26.

Shares in the German bank added 2.24 pct, while Royal Bank of Scotland rose 1.39 pct, BNP Paribas gained 1.03 pct and Deutsche Bank was up 1.08 pct. Insurance stocks were also lifted by the news and Fortis added 1.10 pct and AXA was up 2.48.

Turning to earnings news, shares in French utility Suez came off highs in early morning trade, up 0.56 pct at last check, after its full-year earnings report received a mixed response from traders and analysts. Technology stock Singulus fell 3.77 pct this morning after it presented a solid set of earnings results for the full-year 2007 but with traders pointing to a weak outlook for the reason behind the share's decline. 

In other news, EADS was up 2.63 pct after the group last night confirmed an order from the United Arab Emirates for three air-to-air refuelling aircrafts, without disclosing financial details. Siemens gained 1.61 pct as it announced various cost cutting measures including plans to cut some 3,800 jobs at its Siemens Enterprise Communications (SEN) unit.

In the oil and gas sector, meanwhile, Norwegian oil services firm AGR Group rallied 18 pct in opening trade, after private equity firm Altor confirmed it is to make a mandatory offer for all remaining shares. However shares in AGR jumped beyond the 40 nkr-mark on speculation that a bidding war could emerge.

Regarding broker action, ThyssenKrupp was up 3.35 pct on the back of a target hike at Credit Suisse. The broker reiterated its 'outperform' rating for the steel maker and raised the target substantially to 75 eur from 61 eur.

Turning to economic news, the Ifo Index for Germany was released this morning and showed a surprise rise in its headline business climate index to 104.1 from 103.4 and above the 102.8 forecast by analysts polled by Thomson Financial News.

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

Asian markets end mixed; Japan, South Korea succumb to profit-taking

Japan's Nikkei 225 finished 0.7 percent lower at 13,824.72, off a high of 14,053.85, as some investors took to the sidelines ahead of the release of US producer price data later Tuesday and Federal Reserve chairman Ben Bernanke's testimony to the Senate Banking Committee on Wednesday.

Australian shares ended off highs. The S&P/ASX 200 finished 0.8 percent higher at 5,666.1, off its intra-day high of 5,689, while the All Ordinaries ended up 0.8 percent at 5,745.8.

Elsewhere, Hong Kong's Hang Seng ended 1.9 percent higher at 23,714.75, off a low of 23,395.26, while the Shanghai composite index closed 1.1 percent higher at 4,238.18, off a low of 4,123.31.

The Philippine composite index edged down 0.7 point to 3,079.54, stretching its losses into a fourth straight session amid mounting calls for President Gloria Arroyo to resign on allegations of corruption in her government.

Malaysia's KLCI gained 0.3 percent to 1,375.43, while the Jakarta composite index eased 0.5 percent to 2,739.48. Singapore's Straits Times index closed up 0.4 percent at 3,077.83.

Taiwan's weighted index closed up 0.26 percent at 8,307.67. In Australia, National Australia Bank was up 3.4 percent at 30.11 Australian dollars, Westpac Banking Corp was 2 percent higher at 23.99 dollars and Commonwealth Bank was 2.7 percent stronger at 45.86 dollars.

Among Japanese banks, Mitsubishi UFJ Financial gained 1 percent to 985 yen, Mizuho Financial gained 0.9 percent to 456,000 yen and Sumitomo Mitsui Financial declined 0.4 percent to 799,000 yen.

With easing concerns about the US credit woes, investors are buying back financial stocks that have been oversold, said Fumiyuki Nakanishi, chief strategist at SMBC Friend Securities.

But Nakanishi doubts if gains can be sustained ahead of the release of key US economic data later this week and the IPO of Seven Bank, the banking arm of Japanese retailer Seven & I Holdings, this Friday. The 50 bln yen IPO could siphon off market liquidity.

A big IPO is also underway in Hong Kong.

China Railway Construction has priced its IPO at 9.93-10.70 Hong Kong dollars per share, with a view to raising up to 18.2 bln dollars, according to IFR Asia. The company has cut the number of shares on offer to 1.7bln from 1.8 bln, said IFR, a unit of Thomson Financial. The Hong Kong IPO will be priced on March 6.

Nine cornerstone investors such as Hong Kong tycoon Li Ka-shing, Bank of China, and Singapore state-linked investment company Temasek Holdings will take up 450 mln US dollars worth of shares, representing about 19 percent of the Hong Kong IPO, said IFR.

Hong Kong-listed banks were higher. HSBC Holdings gained 2.8 percent to 119.70 Hong Kong dollars, Bank of Communications rose 2.2 percent to 9.12 dollars, China Construction Bank jumped 1.6 percent to 5.60 dollars and China Merchants Bank was up 1.8 percent at 25.30 dollars.

The Bombay Stock Exchange's 30-share benchmark Sensex closed up 155.62 points, or 0.88 pct, at 17,806.19 and the National Stock Exchange's 50-share S&P CNX Nifty closed up 69.35 points or 1.33 pct at 5,270.05.

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

Metals - Gold falls on IMF sales but weak dollar and high oil underpin

At 10.27 am, gold was trading at 933.58 usd per ounce against 938.00 usd in late New York trade yesterday. Gold hit a record above 950 usd late last week but yesterday fell to as low as 926.40 usd as the US treasury looked likely to approve the sale of gold from the IMF, the world's third largest holder of the precious metal.

The US treasury's under-secretary for international affairs David McCormick said the Bush administration will support the sale of roughly 8 pct of the IMF's reserves. The sale, which will equate to about 12.9 mln ounces of gold, marks a significant policy shift for the Bush administration, which had until now opposed selling IMF reserves.

"The sale of 12 pct of the IMF's gold reserves could add around 10 pct to world gold supply if it goes ahead, although there needs to be an 85 pct majority agreement of IMF member nations," noted Fairfax analyst John Meyer.

However, inflation worries remained, with oil close to 100 usd a barrel and the dollar weak. Gold moves in line with oil as investors hedge against inflation and in the opposite direction to the greenback, as bullion is seen as an alternative asset to the US currency.

Analysts also hope gold's slide will be limited by renewed interest from physical buyers as prices dip. Physical demand has suffered in recent months as jewellers shied away from paying record high prices for the precious metal.

Elsewhere, platinum fell to 2,109 usd from 2,145 usd in late New York trade yesterday. While the metal is continuing to take support from ongoing supply disruptions linked to power outages in major producer South Africa, analysts fear the run-up in prices since the beginning of the crisis may have been overdone.

"Given the still overbought conditions in the market, further weakness could easily be seen in the coming sessions," said James Moore, an analyst at TheBullionDesk.com. "But with supply disruptions in South Africa still occurring, and with the market set to move into a deeper supply deficit this year, traders will remain cautious buyers, with any signs of tightness sending prices rapidly higher."

Sister metal palladium was down at 509 usd from 519 usd per ounce. On Thursday it touched 525 usd, its highest level since mid-2001. Meanwhile, silver was steady at 18.05 usd per ounce against 18.07 usd, having yesterday hit a 27-year peak of 18.18 usd per ounce.

In the longer term, said Moore, "the IMF sales news could potentially be very favourable for silver, drawing increasing demand from investors seeking safe-haven (or) anti-inflationary assets, as well as a cheaper alternative to gold".

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