US & World Daily Markets Financial Briefing 26-03-2009

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Stocks Remain Mostly Positive In Late Morning Trading

After showing a strong upward move earlier in the session, stocks continue to see notable strength in late morning trading on Thursday. The major averages all remain in positive territory, adding to the gains posted in the previous session.

Transportation stocks are turning in some of the market's best performances, as traders express some optimism about signs of stabilization in the economy. Significant strength is visible among railroad stocks, which saw notable weakness on Wednesday.

A variety of other sectors have also shown strong upward moves over the course of the morning, with health insurance, steel, healthcare provider, and housing stocks posting notable gains.
On the other hand, banking stocks have moved back to the downside after ending the previous session mostly higher, limiting the upside for the broader markets. Tobacco stocks are also giving back some ground after trending higher in recent sessions.

In recent trading, the tech-heavy Nasdaq rose to a new high for the session, although it has given back some ground in the past few minutes. The Nasdaq currently remains up 29.50 at 1,558.45, while the Dow is up 44.45 at 7,794.26 and the S&P 500 is up 7.04 at 820.92.

US GDP worst for 26 years

The struggling US economy posted its worst performance since 1982 in the three months to December, government data confirmed today.

GDP fell by an annual rate of 6.3% in the final quarter of last year, worse than the initial read of 6.2% but better than consensus forecasts from economists of a 6.6% fall.

The decline was spread across the whole economy with consumer and businesses suffering equally. Consumer spending fell by 4.3% rate with the large ticket items down by 22%. Housing fell 23% completing three straight years of decline. Business spending fell by 28% rate, with exports tumbling at a 24% rate.

Economists say the economy is still struggling, with current forecasts suggesting a 5% decline in the current quarter though some tentatively predict a recovery towards the end of 2009.

The IMF recently forecast the US likely to contract by 2.6% in 2009, taking it back to levels seen in the eighties, though it could rebound by the third quarter of 2010.

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Toronto stocks have rallied in early trading Thursday to recover some of the recent slide. Resource stocks have led the upward charge as commodity prices moved higher.

The S&P/TSX Composite Index has added 97.74 points or 1.11% to move at 8,895.18. Bay Street's main index has closed lower in each of the two previous sessions.

Energy stocks have surged 2.5% as crude oil gained on the NYMEX. Paramount Resources is up 5.8%, Savanna  has added 4.5% and Canadian Oil Sands is up 4.1%.

Berens Energy is up 1.1% after the company reported fourth quarter funds from operations climbed 26% to C$10.05 million from C$7.99 million a year ago, and FFO per share rose 22% to C$0.11 from prior year's C$0.09.

Mining stocks have again moved in the green, adding 3.2%. Teck Cominco led the way with a 6.7% rally. Hudbay Minerals is up 2.7% and Inmet has gained 2.4%.

Industrials are up 2.1%, led by a 3.8% rise for Canadian National Railway and a 3.7% spike for rival Canadian Pacific.

MagIndustries Subsidiary Signs Gas Supply Deal With Eni Congo -

MagIndustries Corp. announced that its Republic of Congo subsidiary, MagMinerals Potasses Congo S.A., has signed a gas supply agreement with Eni Congo S.A., a subsidiary of Eni S.p.A. of Italy, for the supply of gas to MagPotasses' Kouilou potash project.

The agreement represents the last significant cornerstone contract required for the full development of the Project.

MagIndustries said that the deal is based on a contracted supply of associated gas from EniCongo, which operates the on-shore M'boundi oil field. EniCongo would supply the gas from its treatment plant to be located at Djeno, 25km southwest of the Project. The gas supply would support all the requirements of the potash processing plant. Additional gas quantities would also be made available to support the Project's back-up power facilities if electricity supplies fail.

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Europe's top stocks are largely unchanged in midday trade, with the German Dax posting some gains and the French and Swiss markets both in red territory.

German consumer confidence fell slightly to 2.4 in April from a revised reading of 2.5 in the previous month. It was the first drop in seven-months.

"The development of the consumer climate over the coming months will depend considerably on the employment market," GfK said.

"If unemployment rises beyond expectations as the year progresses, this would also put a considerable damper on the consumer climate."

Swedish fashion retailer Hennes & Mauritz reported a slightly worse than expected 12% drop in first quarter net profit due to the economic slowdown and a weaker Swedish currency.

Net profit fell to 2.58bn Swedish kronor in the first three months of the financial year compared with 2.94bn last time. Revenues, meanwhile, rose 18% to 23.30bn Swedish kronor. The increase in local currencies was 4%.

Sales were affected by a "continued restrained consumption due to the current recession," the retailer said.

German carmaker Volkswagen rallied after majority shareholder Porsche said yesterday it refinanced a €10bn loan to buy Volkswagen shares.

Across the markets, the German DAX has gained 22 points to 4,245, the French CAC is down 2 points at 2,891, while the Swiss market dropped 2 points to 4,968.

Banks are mixed with Commerzbank and Deutsche Bank on the rise and Societe Generale and Credit Agricole both lower.


CAC 40 - Risers

• ST Microelectronics (STM) € 3.68 +4.25%
• Dexia (DEXB) € 2.70 +4.21%
• Renault (RNO) € 16.25 +3.83%
• BNP Paribas (BNP) € 32.67 +2.14%
• Suez Environnement Company (SEV) € 11.53 +2.08%
• Peugeot (UG) € 15.11 +2.06%
• Cap Gemini (CAP) € 25.13 +1.58%
• EADS (EAD) € 9.10 +1.41%
• Sanofi-Aventis (SAN) € 42.25 +0.84%
• Vallourec (VK) € 68.25 +0.81%

CAC 40 - Fallers

• AXA (CS) € 9.13 -4.30%
• Veolia Environnement (VIE) € 16.69 -4.02%
• Accor (AC) € 27.20 -3.00%
• ArcelorMittal SA (MT) € 15.34 -2.54%
• Alcatel-Lucent (ALU) € 1.42 -2.47%
• Unibail-Rodamco (UL) € 108.61 -2.15%
• EDF (EDF) € 30.58 -1.66%
• PPR (PP) € 48.34 -1.63%
• LVMH (MC) € 48.10 -1.56%
• Vivendi (VIV) € 20.09 -1.42%

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Indian market surges on global rally

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Thursday, the Indian market closed higher for the fourth straight session amid strong global cues after better-than-expected economic data in the U.S. fueled hopes of an economic recovery in the world's largest economy.

Additionally, sustained buying by foreign funds in the past few days, hopes of rate cuts following a further retreat in the inflation rate and short covering on account of the expiry of the March series derivatives contracts aided the rally.

The inflation rate dropped to 0.27% in the 12 months to March 14 compared to 0.44% in the previous week, driven by a sharp fall in price of inputs and food articles and on account of high base effect. Significantly, prices of manufactured items showed a modest rise on a week-over-week basis.

The BSE Sensex opened higher at 9,740 and rose to a fresh 2-1/2 month high of 10,061 before finishing at 10,003, up 335 points or 3.47% over the previous close. Similarly, the S&P CNX Nifty rose 98 points or 3.28% to 3,082.

On the BSE, the market breadth was positive, with advancers outnumbering decliners by 1392 to 1138. The broad-based BSE 500 index added 2.76%, but the mid-cap index rose a modest 1.16% and the small-cap index gained a mere 0.69%.

Twenty-seven out of 30 Sensex stocks closed in positive territory, while Ranbaxy Laboratories fell 2.95%, DLF declined 0.31% and ACC moved down 0.28%. Stocks across the sectors ended sharply higher. Stocks of capital goods, power, metal and banking companies led the rally.
Among the major gainers, Tata Motors jumped 7.94%, Larsen & Toubro soared 6.10%, Sterlite Industries surged up 5.97%, TCS climbed 5.94, BHEL advanced 5.85% and Tata Power gained 5.57%.

ONGC, Maruti Suzuki, Wipro, Tata Steel, Bharti Airtel and Reliance Infrastructure also rose around 5% each.

Union Bank of India rose 2.36% after the bank raised additional capital to the extent of Rs.140 crore by issue of subordinated perpetual bonds. Allahabad Bank moved up 1.04% after it closed the sale of perpetual bonds earlier than scheduled after collecting extra bids.

Unitech soared 7.82% after Morgan Stanley Mauritius purchased 96 lakh shares of the realty firm on Wednesday through an open market transaction. Hero Honda Motors rose 1.79% on reports that it expects to sell a record 3.72 million motorcycles and scooters in the current financial year through March.

Nucleus Software Exports rallied 3.24% on bagging a new order for one of its software products. Indian Overseas Bank jumped 6.01% after the biggest domestic institutional investor Life Insurance Corporation of India hiked its stake in the bank.

Sobha Developers gained 2.49% on reports that the company is in discussion with banks, financial institutions and private funds to restructure its debt. Zuari Industries moved up 4.63% after SIL Investments, one of the promoter group companies, revoked 7.50 lakh pledged shares representing 2.55% of the equity capital of the company.

Phoenix Mills climbed 7.46% and Motherson Sumi Systems rallied 4.64% following the execution of block deals on the Bombay Stock Exchange. Tata Tea gained 2.76% after its overseas unit and the European Bank for Reconstructions and Development decided to acquire a 51% stake in a Russian firm Grand.

Akruti City plunged 55% to Rs.819.40 ahead of the removal of the stock from the derivatives segment. In a circular dated 19 March, the National Stock Exchange said that fresh monthly contracts will not be introduced in the stock for expiry month June and all existing future contracts will expire on Thursday. However, the stock will continue to be traded in cash market.

HCL Technologies fell 2.07% despite signing a 3-year contract with M.J. Logistic Services.
Altogether, turnover on the stock exchanges stood above Rs.90, 000 crore for the third consecutive day. Total traded turnover was Rs.97, 107.51 crore. This includes Rs.15, 527.42 crore from NSE cash segment, Rs.76, 957.01 crore from NSE derivative segment and the balance Rs 4,623.08 crore from cash segment on the Bombay Stock Exchange.

Akruti City topped the traded value with a turnover of Rs 545.50 crore followed by Reliance (Rs 370.53 crore), Motherson Sumi (Rs 206.66 crore), ICICI Bank (Rs 163.50 crore) and Reliance Infrastructure (Rs 135.80 crore).

Unitech led the traded volume with trades of around 3.71 crore shares followed by Motherson Sumi (3.43 crore), Cals Refineries (1.75 crore), GVK Power (1.10 crore) and IFCI (95.80 lakh).

On the last date of March series derivatives contracts, marketwide rollover stood at 70% compared to 63% in the previous month.

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Oil prices came under pressure on Wednesday but settled off earlier lows after the government’s weekly report showed a much bigger than expected build in energy stockpiles.

The Energy Information Administration said crude inventories rose 3.3m barrels last week compared with expectations of a 1.4m barrels increase.

Gasoline inventories fell by 1.1m barrels in the week while forecasts had been for a decrease of 900,000 barrels. Meanwhile distillate, which is used in diesel and heating oil, fell by 1.6m barrels, bigger than the 200,000 barrels decline expected.

Some surprisingly strong US economic data lifted crude prices off the day’s lows. New home sales figures climbed 4.7% in February to a seasonally adjusted annual rate of 337,000. The Commerce Department said orders for US made durable goods rose 3.4% in February, its first rise in seven months.

US light crude oil for May delivery fell $1.21 to settle at $52.77 a barrel. Before the stockpile and economic data crude traded around 4% lower.

Among precious metals gold bucked its recent losing streak to close higher on Wednesday as the dollar weakened against other major currencies.

COMEX gold for May delivery advanced $12 to close at $936.70 an ounce on the New York Mercantile Exchange.

Bigger gains were capped however after the upbeat economic data which reduced demand for safe haven investments.

Silver for May delivery rose 8 cents to $13.44 an ounce while copper for May was less than a cent lower at $1.803 a pound.

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