US & World Daily Markets Financial Briefing 27-07-2006

Trade your way to Financial Fitness!
Click here to find out more.

Stocks rally on Exxon earnings

NEW YORK - Stocks rose in early trading Thursday as spectacular earnings from Exxon Mobil Corp. motivated investors to build on Wall Street's gains from earlier in the week.
   
Surging profit growth at Dow Jones industrial Exxon and Royal Dutch Shell PLC drew attention from weak results at Bristol-Myers Squibb Co. Exxon's earnings jumped 36 percent to reach the second-highest level ever reported by a public U.S. company, and Shell saw a 40 percent rise in profit despite production problems last quarter.
   
The market showed little reaction to a stronger-than-forecast increase in monthly orders for durable goods, a sign that persistent economic strength could bring higher interest rates. Meanwhile, unemployment claims dropped last week following a recent spike from seasonal auto factory shutdowns.
   
Oil futures posted more gains amid caution about the Middle East conflict and pipeline snags at Royal Dutch Shell PLC's Nigerian operations. A barrel of light crude gained 66 cents to $74.60 on the New York Mercantile Exchange.
   
In the first hour of trading, the Dow climbed 57.96, or 0.52 percent, to 11,160.47. The Dow ended barely changed Wednesday after rising 230 points on Monday and Tuesday.
   
Broader stock indicators were also higher. The Standard & Poor's 500 index was up 5.35, or 0.42 percent, at 1,273.75, and the Nasdaq composite index gained 17.03, or 0.82 percent, to 2,087.49.
   
Bonds advanced, with the yield on the 10-year Treasury note slipping to 5.02 percent from 5.03 percent late Wednesday.

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.

Dollar falters again despite solid US durable goods news

LONDON - The dollar struck a new two-week low against the euro as a soft economic report from the Federal Reserve continued to dominate trading despite solid US industrial news.
  
The Commerce Department reported an 8.8 pct rebound in new orders for civilian aircraft and parts helped that durable goods orders rose by 3.1 pct in June, nearly twice as much as expected and the fastest pace since March. Economists were expecting durable goods orders to rise 1.7 pct in the month.
   
Though the data helped the dollar enjoy a brief rally, it soon succumbed to further selling pressure, with the year euro climbing to a high of 1.2770 usd, from the reduced possibility of another Fed rate hike.
   
Throughout the day the dollar had been soft after the Fed's Beige Book report into the US economy fuelled speculation that the central bank will not be raising interest rates again in August.
   
In its Beige Book, the Fed, which has raised its key Fed funds rate a quarter point on 17 consecutive occasions to 5.25 pct, said growth in the US was moderating at the same time as wage pressures remained benign.
   
Following the publication, the market reined back its expectations of another rate hike at the Aug 8 meeting of the rate-setting Federal Open Market Committee. Interest rate markets are now pricing in around a 43 pct chance of a hike against 57 pct before the Beige Book's release.
   
"This caused Fed futures yields and ten year bond yields to decline while the S&P was flat as the Feds report increased uncertainty over whether the Fed would pause or not at next months FOMC meeting," said Mansoor Mohi-uddin, currency strategist at UBS.
   
The next key release in the US is tomorrow's second-quarter GDP report, with Wall Street anticipating a slowdown in the annualised rate of growth to 3.1 pct from the heady 5.6 pct recorded in the first quarter.
   
Most currency watchers think the dollar is likely to enter a renewed weakening phase if the Fed is done with its tightening cycle. The markets are now discounting a 34 pct probability the Fed will not hike again any time soon.
   
However, Divyang Shah, global strategist at IDEAglobal.com, noted that a pause at the August meeting is likely to lead to more volatility as the markets become uncertain about the next move.
   
"Indeed the risk is that if the Fed does decide to pause then this might see a repeat of the 1994 cycle whereby a pause at one meeting was followed by a large hike at the next meeting on three consecutive occasions," he said.

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

Elsewhere, analysts said the yen may garner some support as it emerged that US Senators Charles Schumer and Lindsey Graham told new US Treasury Secretary Henry Paulson that they would demand a vote on legislation for steep US tariffs on Chinese goods by Sept 30 if the Chinese yuan has not move significantly.
   
In addition, the Chinese authorities have been making noises about the need for the booming Chinese economy to slow down.
   
"The market is waking up to the fact that China may do something about its currency," said BNP Paribas' global head of forex strategy Hans Redeker.
   
If it does, most currency watchers expect the same sort of reaction as occurred last July when China abandoned the yuan's peg with the dollar, and linked the currency to a basket of currencies.
   
The step was widely seen as a political move by China aimed at appeasing trading partners like the US and was widely praised by governments and economists as the "first step" toward greater flexibility in China's forex regime. As expected, the revaluation of the yuan raised the value of Asian currencies, including the yen, against the dollar.
   
But not much has happened since, fuelling disappointment in the US, in particular, which is experiencing a record trade shortfall with the Chinese.

Get a Completely Free $50,000 FX Demo!
Instant Execution. No Slippage. No Commissions. No Debit Balances. 20 Currencies. Streaming Quotes.  24-Hour Trading. We�re Better. We�ll Prove It. Click Here Now!

Asian shares close higher on stronger corporate results

BEIJING - Share prices across Asia closed higher as key corporate results lifted sentiment, dealers said.
   
In Tokyo, the benchmark Nikkei 225 index rose back above the key 15,000 points mark on the back on some upbeat June quarter results from leading companies, Matsushita Electric and Honda Motor.
   
The Nikkei 225 Stock Average closed up 295.71 points or 2.0 pct at 15,179.78, off a high of 15,220.33.
   
The TOPIX index of all first-section issues gained 21.37 points or 1.4 pct to 1,541.81, off a peak of 1,548.51.
   
Share prices in Australia closed sharply higher as investors shrugged off yesterday's inflation concerns, lifting the key S&P/ASX 200 back above 5,000 points, dealers said.
   
They said yesterday's large sell-off seemed an over-reaction to the data, with investors discounting the jump in headline inflation to 4.00 pct over the year to June as influenced by one-off items and not longer-term influences.
   
Dealers said this positive sentiment led to investors buying banking and resource stocks, while gains in the wider market offset yesterday's losses.
   
The S&P/ASX 200 advanced 72.1 points or 1.46 pct to close at 5,007.8. The All Ordinaries climbed 68.9 points or 1.40 pct to close at 4,976.5.
   
In Hong Kong shares were trading sharply higher led by property and banking stocks as the US Federal Reserve's latest survey of economic conditions gave rise to fresh hopes that the Fed may pause in its rate hikes next month, dealers said.
   
The Fed's so-called Biege Book survey pointed to slowing economic growth.
   
At 3.37 pm, the Hang Seng Index was trading up 297.58 points, or 1.70 pct at 16,914.82. 
   
In mainland China, A-shares in Shanghai and Shenzhen closed lower on renewed liquidity worries with property developers and oil refiners losing ground, dealers said.
   
The benchmark Shanghai Composite Index, which covers both A - and B - shares listed on the Shanghai Stock Exchange, closed down 11.49 points, or 0.68 pct, at 1,675.17.
   
Share prices in Seoul closed sharply higher on heavy program buying led by foreign investor activity in futures, with the KOSPI approaching 1,300 points, dealers said.
   
A blue chip rally drove the market through 1,290 points after a directionless opening following Wall Street's weaker close and weak South Korean current account data for June.
   
The KOSPI index closed up 17.19 points or 1.45 pct at 1,296.27, off a high of 1,299.80 and a low of 1,277.19.
   
"It seems the market is riding on much better sentiment now," Dongbu Securities analyst Chang Hwa-Tak said.

Asian Bourse Round-Up

For a full list of closing prices, click here 

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.

Gold gains as dollar still pressured by hints of Aug rate pause

LONDON - Gold prices posted strong gains as the dollar remained under pressure from a key US Federal Reserve report into the US economy that fuelled speculation the central bank will not be raising interest rates.
   
At 12.08 pm, spot gold, which earlier hit a one week high of 634.05 usd an ounce, was quoted at 633.40 usd against 622.20 usd in late New York trade yesterday. Other precious metals were also higher.
   
Spot silver was at 11.22 usd against 11.05 usd in late trade yesterday, platinum was at 1,231.00 usd against 1,221.50 usd while palladium was at 315.50 usd against 314.00 usd.
   
In its Beige Book, the Fed said the pace of growth in the US was moderating, dampening expectations of another quarter point hike in August and pushing the dollar sharply lower.
   
Gold tends to trade counter to the dollar as some investors see it as an alternative to the US currency.
   
Standard Bank said in a note that gold's technical trend had improved, and that "strong support seen around the 100-day moving average could suggest... further attempts to the upside (are) likely".
   
Adding to the upside bias is the ongoing conflict between Israel and Hezbollah. The fighting is inducing safe haven buying and lifting oil, thereby increasing the appeal of the gold as a hedge against inflation.
   
The Israeli army pressed on with its incursion into south Lebanon today, a day after talks in Rome failed to make any substantial progress towards halting a conflict that has killed hundreds of Lebanese and dozens of Israelis.

Copper rises as supply woes multiply

LONDON - Copper prices rose amid nervousness ahead of a strike vote tomorrow at Chile's Escondida mine, riots at Zambia's Chambishi mine and production losses at Chile's Chuquicamata mine.
   
At 2.20 pm, LME copper for three-month delivery was at 7,585 usd a tonne, up from 7,450 usd at the close yesterday, while nickel was up at 24,400 usd a tonne against 24,055 usd.
   
Other metals were also higher. Zinc was at 3,255 usd against 3,195 usd at the close yesterday, tin was at 8,375 usd against 8,350 usd and aluminium was at 2,532 usd against 2,465 usd.
   
Workers at Escondida, the world's largest copper mine, stepped up a slowdown yesterday to pressure management to improve their new contract offer ahead of a strike vote tomorrow.
   
Meanwhile at Zambia's Chinese-run Chambishi copper mine, production has stopped altogether after six workers were shot yesterday in riots following a dispute about delayed wages.
   
Analysts noted upbeat comments on the long term prospects for the copper market from key industry players were providing further support for copper prices.

HotSignals.com Inc to be featured on World Business Review for Innovative Financial Trading Technologies, hosted by Alexander Haig with industry expert Al Berkeley. Explore Hotsignals, simple yet effective scanning technology here. Example: Short 18th January on GOOG at $444.91