US & World Daily Markets Financial Briefing 26-04-2006

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U.S. stocks rise, buoyed by solid earnings, GM upgrade

NEW YORK - U.S. stocks traded higher Wednesday as a fresh round of solid earnings reports and a broker upgrade of General Motors Corp. offset strong durable goods data that raised concern about the outlook for interest rates.
    
The Dow Jones Industrial Average rose 52 points to 11,335.
   
The Nasdaq Composite Index was up 6 points at 2,336 while the S&P 500 Index gained 6 points to 1,307.

Stocks in focus
   
General Motors Corp. was the biggest percentage gainer on the Dow industrials, up 3.7% at $22.20 after Merrill Lynch upgraded the stock to neutral from sell on the belief the automaker may leverage its over-funded U.S. pension plan to fund its North America restructuring.
   
Shares in Boeing Co. fell 2.1% to $83.33.The aerospace company posted a forecast-beating first-quarter profit, but sales of $14.26 billion, came in shy of analyst estimates. Its 2006 revenue outlook was also below Wall Street's view.
   
Amazon.com Inc. shares added 45 cents to $36. The online retailer's sales climbed 20% to $2.28 billion, ahead of analyst expectations, but its quarterly profit tumbled 35%, hurt by the cost of employee stock options and higher operating expenses.
   
PepsiCo Inc. added 38 cents to $57.88 after the food and beverage giant posted earnings and revenue ahead of analyst expectations.
   
The telecom sector saw gains after RF Micro Devices Inc., a maker of integrated circuits for wireless devices, posted solid quarterly results, which it attributed, in part, to strong demand's from the world's leading mobile handset manufacturers.

Nokia Corp., the biggest cell phone maker, was up 1% at $22.88. RF Micro shares shot up nearly 10% to $9.06.
   
Colgate-Palmolive Co. shares rose 1.5% to $58.20 after it posted first-quarter net income that easily surpassed Wall Street's target, helped by solid sales and volume gains, increased selling prices and a shift to higher-margin products.

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Dollar mixed after durable goods, housing report looms

NEW YORK - The dollar strengthened against the yen, but touched a new seven-month low against the euro early Wednesday after U.S. durable goods orders data came in far better than expected and as investors cautiously awaited new home sales data.
   
Orders for new U.S.-made durable goods increased 6.1% in March, led by strong demand for airplanes, machinery and electronics, the Commerce Department said Wednesday. The increase in new orders was the largest since May 2005 and far exceeded the 2.1% gain expected by economists surveyed by MarketWatch.
   
The number "offsets some of the major bearish momentum that we have seen over the past weekend," said Kathy Lien, chief strategist at Forex Capital Markets. "This could also suggest that the GDP figures that we expect on Friday will come in strong."
   
After the report, the dollar strengthened before paring gains. The euro eased 0.1% to $1.2437. Against the Japanese yen, the greenback climbed as high as 115.38, but was last flat at 114.80 yen. The British pound was down 0.2% to $1.785. The dollar was up 0.2% at 1.2701 Swiss francs.
   
The Commerce Department will report on March sales of new homes at 10.00 a.m. Eastern. Economists expect a slight increase to 1.1 million annualized from 1.08 million in February.
   
New home sales data are viewed by many as a much better gauge of current housing activity than existing home number. The dollar lost a full cent against the euro last month following the release of the February report on new home sales, which tumbled 10.5% to 1.08 million.
     
At 2 p.m., the Federal Reserve will release the Beige Book report on the economy.
   
Financial markets are also awaiting testimony from Federal Reserve chief Ben Bernanke, who's slated to speak Thursday before the House-Senate Joint Economic Committee on the nation's economic outlook.
   
Analysts said investors are looking to see if Bernanke expresses concerns over the delayed impact of the Fed's current tightening cycle on the U.S. economy.
   
The euro staged a late-session rally Tuesday after hawkish comments from European Central Bank officials raised expectations that the ECB will raise interest rates aggressively this year.
   
ECB executive board member Jose Manuel Gonzalez-Paramo said the central bank could increase the pace of rate hikes. ECB Vice President Lucas Papademos reiterated that monetary policy in the eurozone remains accommodative.
   
"At this stage it's hard to say whether the Bank is trying to re-open the door to a rate hike next week, after Trichet seemingly slammed it shut a few weeks ago," said Steve Barrow, chief currency strategist at Bear Stearns.
   
"The odds may still favor a June hike but these sorts of comments may spark speculation of a move next week--and that could help the euro," Barrow said, in a note.
   
In other developments, the Australian dollar found support in the wake of a higher than expected inflation report. Australia's first-quarter consumer price index rose 0.9%, fueling speculation that the Reserve Bank of Australia will hike interest rates in late spring or early summer.
   
At last check, the Aussie dollar traded up 1% at 0.7517. The New Zealand dollar was at 0.6312, up 0.9%.

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The European Markets at 12.00 BST

London - London shares remained higher at midday, bouncing back from yesterday's weakness as investors look for a positive opening on Wall Street on strong corporate numbers and with Centrica lifted by fresh bid talk from Gazprom, dealers said.
   
At 12.02 pm, the FTSE 100 index was 21.0 points to the better at 6,107.6, with all the broader FTSE indices, with the exception of the small caps, also firmer.

Frankfurt - Shares were slightly higher in midday trade as easing oil prices and stellar second-quarter results from Infineon offset losses on Wall Street overnight, with investors awaiting first-quarter numbers from Linde, dealers said.
   
At 11.49 am, the DAX 30 index was 9.19 points or 0.15 pct higher at 6,087.99, having moved between 6,082.57 and 6,098.97 so far this session.

Paris - Shares were slightly higher as French corporate results and broker recommendations stimulated market confidence, which was also supported by an ease in crude prices overnight, dealers said.
   
At 1.23 pm, the CAC-40 index was up 16.30 points or 0.31 pct at 5,251.64

Amsterdam - Shares were trading flat at midday, with the overall market reacting well to an upswing in Asian markets overnight but held back by ABN Amro's poor first-quarter results, dealers said.
   
At 12.10 pm, the AEX was 0.14 points or 0.03 pct higher at 476.17 after opening at 475.92 and reaching an earlier low of 475.58.

Madrid - Share prices were slightly lower in quiet midday trading, depressed by losses in BBVA after an unsurprising set of good first-quarter figures, while Endesa also succumbed to selling pressure, dealers said.
   
At 11.46 am, the IBEX-35 index was down 17.10 points at 11,903.4, after trading in a range of 11,895-11,958, on turnover of about 777 mln eur.
   
Milan - Share prices were higher in quiet midday trading led by Capitalia, which found support from a report saying ABN Amro could bid for the bank, dealers said.
   
At 11.48 am, the Mibtel index was up 0.39 pct at 29,802 and the S&P/Mib gained 0.56 pct to 38,291.

Helsinki - Share prices were slightly lower in midday trade, with Rautaruukki falling sharply after weaker-than-expected first-quarter earnings figures, while Nokia shrugged off its weaker close on Wall Street, dealers said.
   
At 12.25 am, the OMX Helsinki 25 was down 0.61 pct at 2,742.71. The OMX Helsinki was 0.26 pct lower at 9,709.68.

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Asian shares close up, Tokyo buoyed by bargain-hunting, upbeat results

HONG KONG - Share prices across the Asia-Pacific region ended up with Tokyo higher on bargain-hunting as well as some upbeat results from selected companies, including Elpida Memory, dealers said.
   
However, they added the upside in Japan was capped ahead of the release of earnings from a number of key companies including Sony Corp and Matsushita Electric Industrial.
   
The Nikkei 225 Stock Average closed up 85.64 points or 0.5 pct at 17,055.93, after moving between 16,944.54 and 17,107.93.
   
The broader TOPIX index of all first-section issues rose 3.56 points or 0.2 pct to 1,723.29, after trading between 1,715.37, and 1,729.49.
   
Dealers noted there was some volatility in the broad market before it closed modestly higher.
   
"The indices slipped between negative and positive through the day... only those stocks which reported strong earnings moved up significantly," said Ryuta Otsuka, a strategist at Ryuta Otsuka, a strategist at Toyo Securities.
   
Elpida Memory, the world's fifth-largest dynamic random access memory chip chipmaker, rose 350 yen or 7.3 pct to 5,120 after it said yesterday that it returned to net profit in its fourth quarter to March.
   
Share prices in Australia finished at fresh record highs as investors returned from the one-day break to buy banking stocks while resources were mixed, dealers said.
   
They said investors ignored the fall on Wall Street overnight after local consumer inflation data for the March quarter showed still subdued core data.
   
Dealers said the core CPI is likely to keep rates on hold for the coming months which led to strong gains for all the major banks as solid earnings are expected to continue.
   
The S&P/ASX 200 rose 57.4 points or 1.09 pct to a record close of 5,327.28, beating the previous record close set last Wednesday of 5,283.9.
   
In Hong Kong, share prices were trading stronger on bargain-hunting after the market's sharp falls over the last two days, dealers said.
   
They said the index was also supported by some trading activity related to the settlement of April futures contracts tomorrow.
   
At 3:27 pm, the Hang Seng Index was up 99.51 points or 0.60 pct at 16,677.28.
   
In mainland China, A-shares in Shanghai and Shenzhen ended higher on renewed buying in heavyweight banks and automakers after they reported solid earnings, dealers said.
   
The Shanghai A-share Index gained 18.80 points to 1,487.35 on turnover of 27.69 bln yuan and the Shenzhen A-share Index was up 4.38 points at 360.89 on turnover of 16.45 bln yuan.
   
Share prices in Seoul closed higher as Samsung Electronics, banks and KEPCO posted solid gains, dealers said.
   
After a mixed performance in initial trade, the market remained firm for most of the session, as massive program buying effectively offset continued selling by foreign investors, they added.
   
Easing oil prices and a decline in the won's value against the dollar over the past two days also helped sentiment.
   
The KOSPI index closed up 20.27 points or 1.40 pct at today's high of 1,451.22

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Gold futures head higher for a second session

SAN FRANCISCO - June gold climbed $3.80 to $638 an ounce in morning dealings on the New York Mercantile Exchange.

"The theme of dip buying capped by fund profit taking looks set to continue ... with broader concerns about geopolitical instabilities and oil-driven inflation providing background support," said James Moore, an analyst at TheBullionDesk.com, in a note to clients.

May silver was up 5 cents at $12.61 an ounce and July silver tacked on 6.7 cents to $12.75.

July copper aded 0.75 cent to $3.28 a pound.

On the bond market, long-term Treasury prices fell, sending yields higher. The 10-year benchmark fell 14/32 to 95 9/32. Its yield stood at 5.12%, its highest level since June 2002.
   
Crude-oil futures were slightly lower in early trading after closing under $73 a barrel for the first time in more than a week Tuesday. Traders are awaiting weekly supply data, with most expecting to see a drawdown in motor gasoline inventories.

The benchmark contract was last down 33 cents at $72.55.

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