US & World Daily Markets Financial Briefing 28-03-2008

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.

Stocks rise moderately on mixed data

NEW YORK - Stocks rose moderately Friday after a government report confirmed that personal spending came in at its weakest level in 17 months in February and after a profit warning from J.C. Penney Co. weighed on retail stocks.

The Commerce Department's report showed consumer spending ticked up by a slight 0.1 percent last month, in line with Wall Street's expectations. But word that personal incomes advanced by 0.5 percent in February came as a surprise as the market was looking for a 0.3 percent rise.

Investors appeared somewhat cheered after the findings also showed that an important inflation gauge tied to consumer spending rose only 0.1 percent when excluding often-volatile energy and food costs. The reading -- the Federal Reserve's preferred measure of inflation -- is up 2 percent over the past 12 months. With so-called core inflation back within the Fed's target of 1 percent to 2 percent it could be easier for the central bank to justify further interest rate cuts without fear of adding too much money to the economy and driving up prices.

But the profit warning from J.C. Penney offered renewed room for concern about the well-being of consumers and hurt retail stocks. As Wall Street tries to determine the degree to which the economy is slowing, any news that consumers are less willing to reach into their wallets is unwelcome. That's because consumer spending accounts for about 70 percent of U.S. economic activity.

"I'm viewing a day like today as sort of a continuation from where we were a month or two ago," said Les Satlow, portfolio manager at Cabot Money Management in Salem, Mass. "The U.S. recession concerns have resurfaced. They never went away but there was the beginning of the sense that this recession was going to be shallow and maybe a bit benign. "I do think we've got a couple more quarters of range-bound activity in the markets," he said.

In late morning trading, the Dow Jones industrial average rose 19.05, or 0.15 percent, to 12,321.51. Broader stock indicators also rose. The Standard & Poor's 500 index advanced 1.83, or 0.14 percent, to 1,327.59, and the Nasdaq composite index advanced 7.90, or 0.34 percent, to 2,288.73.

The moves comes after a two-day decline. The Dow fell 120 points Thursday as investors found little reason to continue a big rally that started the week; a government report on the gross domestic product confirmed a big economic slowdown in the fourth quarter.

Bond prices rose Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.50 percent from 3.52 percent late Thursday. The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell $1.74 to $105.84 on the New York Mercantile Exchange. In corporate news, J.C. Penney predicted a first-quarter profit of 50 cents per share, down from an earlier target of 75 cents to 80 cents. The stock fell $3.04, or 7.5 percent, to $37.48.

Kohl's Corp. fell $2.63, or 5.9 percent, to $41.89 and Macy's Inc. slid $1.14, or 4.9 percent, to $22.22. Higher-end retailers lost ground as well. Nordstrom Inc. declined $1.81, or 5.2 percent, to $32.78, while Tiffany & Co. slid $1.83, or 4.2 percent, to $41.32.

A Citi Investment Research analyst raised his rating on Lehman Brothers Holdings Inc. to "Buy" from "Hold," pointing in part to the stock's "extremely attractive" price. Lehman slipped 18 cents to $38.53. Advancing issues narrowly outpaced decliners on the New York Stock Exchange, where volume came to 375.2 million shares.

The Russell 2000 index of smaller companies fell 0.76, or 0.11 percent, to 691.63. Overseas, Japan's Nikkei stock average rose 1.71 percent. In afternoon trading, Britain's FTSE 100 fell 0.34 percent, Germany's DAX index fell 0.36 percent, and France's CAC-40 declined 0.65 percent.

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

Forex - Euro remains strong as ECB talks tough on inflation

LONDON - The euro remained stronger against other major currencies as rate-setters at the European Central Bank continue to sound hawkish about interest rates, suggesting they will not be lowered as long as price pressures persist.

ECB governing member Axel Weber said inflation was "alarmingly high" and that the current level of interest rates help to contain price pressures.

Such views were reiterated elsewhere by fellow ECB member Jurgen Stark and reflect this morning's jump in German import prices. These surprised markets to the upside, rising 1.1 pct in February from January, almost twice analysts' forecast for an increase of 0.6 pct.

"The fact that ECB officials are staunchly reiterating the suitability of the current level of interest rates when the euro is at record highs suggests very little about a sharp retreat in the currency any time soon," said Ashraf Laidi at CMC Markets.

Meanwhile, the dollar showed little reaction to the US PCE inflation and personal income data. Personal income rose 0.5 pct in February, above forecasts for a 0.3 pct gain, but the core PCE posted a 2.0 pct annual rate, below the consensus for 2.1 pct. Consumer spending also grew only 0.1 pct.

Laidi said the overall data reinforces the view that the US real economy is fundamentally weak. "These figures are a stark reminder to market participants who may have grown complacent with the absence of systemic risk-related news ignoring the macroeconomic realities weighing on consumers and corporate earnings," Laidi said.

In the UK, the pound was softer across the board, marking new record lows against the euro, after a string of worse-than-expected economic data.

The consumer confidence index from pollsters GfK/NOP fell another two points from February to -19 in March, a 15-year low, while Nationwide revealed a 0.6 pct monthly drop in house prices in March to bring the annual rate to just 1.1 pct -- the slowest since March 1996.

The pound was not helped by an improvement in the the UK current account deficit, either. This deficit shrank to 8.5 bln stg in the fourth quarter from a record of 19.1 bln stg in the third quarter and much better than the 18.5 bln stg expected by analysts, although the change was due to a collapse in profits of foreign-owned banks, hardly a boost for the UK economy.

UK GDP growth, meanwhile, was confirmed at 0.6 pct in the fourth quarter. For the rest of the day, the final results from the University of Michigan consumer confidence survey will be the key driver to forex moves. The index is expected to dip to 70.0 from 70.5 in the previous month.

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

Euroshares flat midday in directionless trade ahead of US data; Dow seen higher

At 11.49, the DJ STOXX 50 was down 5.28 points, or 0.17 pct, at 3,042.29 and the STOXX 600 was down 0.95 points, or 0.31 pct, at 307.51.

In Europe, Allianz was among the few STOXX 50 gainers, up another 2.36 pct on fading hopes of a Chinese bid for its Dresdner Bank unit, only to be replaced by talk Bank Santander may be interested in the bank or Allianz may consider a three-way merger of Dresdner Bank with Commerzbank and Deutsche Postbank.

Shares in Deutsche Postbank were 2.09 pct higher as traders noted talk Deutsche Bank may be considering making a bid for Germany's largest retail bank.

Traders said they had heard talk in the market of a possible bid from Deutsche Bank at 73.5 eur per share. But other financials were lower, still reeling from yesterday's renewed fears Lehman Brothers is the latest victim of the credit crisis. Societe Generale slipped back 1.39 pct and Intesa Sanpaolo fell back 0.62 pct.

European software groups rallied as good news from Accenture overnight made up for disappointment from Oracle on Wednesday.  Merrill Lynch said very strong bookings at Accenture indicates demand remains strong, which is positive for European names such as Cap Gemini, up 0.9 pct and SAP, up 1.44 pct.

However, shares in Altran Technologies slumped 5.2 pct after the French IT consulting and engineering group announced a smaller-than-expected rise in full-year net profit and gave no news about how it plans to refinance its heavy debt. And selected technology hardware stocks were dragged lower by a bearish note from Morgan Stanley.

The broker downgraded ARM Holdings to 'underweight' from 'equal-weight' and LM Ericsson to 'equal-weight' from 'overweight', saying it is increasingly bearish due to growing uncertainty on handset markets in the US and Western Europe. Ericsson shares slipped back 0.6 pct and Arm shares were down 2.29 pct.

Sanofi-Aventis gained as traders note upbeat comments from UBS suggesting the group may announce some bullish news on its Acomplia drug at a conference in Chicago this weekend as BusinessWeek re-sparked hopes of a bid from Bristol Myers Squibb. Shares added 2.32 pct.

EON though was down 0.25 pct after agreeing to pay 11.8 bln eur for assets put up for sale by Endesa SA, Acciona SA and Enel SpA. And Veolia fel 3.4 pct, as Cheuvreux downgraded the shares to 'underperform' from 'outperform' and amid renewed talk Eurozeo may be preparing to reduce its stake in the group.

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

Hong Kong paces Asian stock gains as Chinese insurers let into market

The Hang Seng closed up 2.7 percent at 23,285.95. Oil stocks were key gainers after a pipeline blast in key crude producer Iraq sparked supply jitters, sending crude futures above 107 dollars a barrel in New York overnight. Oil prices eased slightly in Asian trade but held above 106 dollars a barrel.

Petrochina rose 5.2 percent to 9.96 dollars, China Petroleum & Chemical Corp (Sinopec) was up 5.08 percent at 6.82 dollars and Cnooc was up 6.83 percent at 11.88 dollars. The Shanghai Composite rose 4.94 percent to 3,580.15, with Petrochina also a major gainer on that exchange.

The Kospi closed up 1.5 percent at 1,701.83 as investors shrugged off for now at least reports that North Korea has fired several short-range missiles off its west coast. Pyongyang warned that US delays in resolving the nuclear dispute could slow work to disable its atomic plants, state media reported on Friday.

"The market trimmed some gains after the news, but the response was very brief and weak," said Kim Young-Gak, an analyst at Hyundai Securities. "Investors quickly shrugged off the news and rather pinned their hopes on the end-of-the-quarter's window dressing activity by fund managers."

The Malaysian KLSE Composite closed up 0.4 percent at 1,258.41 and the Philippines Composite rose 1 percent to 2,956.02. After floundering early in the day, the Nikkei opened the afternoon session higher and closed up 215.89 points, or 1.7 percent to 12,820.47, well above its low of 12,507.68. The Topix finished up 1.4 percent to 1,243.81.

Investors in Tokyo looked past data that showed Japanese consumer prices rose 1.0 percent in February from a year earlier, the fastest clip in nearly 10 years, due to higher prices of gasoline and food. Meanwhile, the jobless rate edged up to 3.9 percent from 3.8 percent in January, reflecting the difficult environment. Economists were expecting the rate to be unchanged.

"In view of recent falls in other Asian stocks, investors have reconsidered the relative strength of Japanese stocks, limiting the downside," said Mitsushige Akino, chief fund manager at Ichiyoshi Management.

Only the Australian market remained under water, hit by news that unlisted Australian financial services group Opes Prime Group Ltd has gone into receivership, the latest victim to the deepening global credit crisis. "Financials are getting belted," said Michael Heffernan, private client advisor at Austock Services. "In our nervous market this sends the shivers through to any of the financial stocks."

The All Ordinaries closed down 0.35 percent at 5,401.2 and the S&P/ASX 200 lost 0.4 percent to 5,351.1. Australia and New Zealand Banking Group (ANZ), which said it will not incur a material loss on its exposure to Opes, ended down 2.8 percent to 23.18 dollars.

National Australia Bank was down 2.6 percent at 29.96 dollars and Westpac Banking was 2.8 percent lower at 23.90 dollars. Singapore's Straits Times Index closed up 0.2 percent at 3,031.90 while Taiwan's weighted index closed up 0.20 percent at 8,623.48. The Jakarta composite also closed up 1.1 percent at 2,448.09 and India's Sensex provisionally closed 2.41 pct higher at 16,401.63.

Among other stocks on the move, Hong Kong-listed shares of Chinese retail supplier Li & Fung fell 9.9 percent to 28.70 dollars  after its 2007 earnings fell short of expectations. The company reported a 39 percent growth in net profit to 3.06 billion Hong Kong dollars. The result was 7 percent lower than the 3.29 billion dollars estimated by analysts polled by Thomson Financial.

Analysts said the lower-than-expected profit could be attributed to greater interest expenses and an investment loss. "Given the market's high expectations and the stock's 42 percent rebound from its January low, we think the market is unlikely to look through this miss, and are downgrading our rating to 'neutral'," said Denise Chai and Kenny So, research analysts at Merrill Lynch.

In Tokyo, Toyota Motor closed up 2.5 percent to 5,240 yen on a report that the automaker plans to boost domestic output of its Prius hybrid car by 60 percent to 450,000 a year by 2009, in order to take advantage of rising global demand for fuel-efficient vehicles.

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 - Copper jumps on falling inventory ahead of busy demand season

LONDON - Copper extended gains after rising sharply yesterday, with falling global stocks sparking supply jitters as the market enters the busy demand season and as steadier equity markets boosted sentiment.

Inventories have fallen to seven month lows and now stand at 115,250 tonnes, according to a daily report from the LME, which worries consumers as the second quarter arrives. Demand is seasonally busier in the April to June months as buying picks up ahead of the summer, when many players enjoy long vacations.

Calmer equity markets, with London shares steady after an Asian stock market rally managed to offset overnight falls on Wall Street, also lifted prices. Metals tend to move in line with equity markets, as strength eases fears of lower demand.

"The combination of a steadier performance overnight on equities and some stronger chart pictures on the base metals bodes well for further strength especially with copper now once again within striking distance of its highs," said BaseMetals.Com analyst William Adams.

At 10.07 am, LME copper for three-month delivery was up at 8,570 usd a tonne against 8,505 usd at the close yesterday. On March 6 copper hit a record high of 8,820 usd per tonne.

Yesterday the International Copper Study Group said the world refined copper market was in a 40,000-tonne deficit in 2007, from a surplus of 290,000 tons in 2006.

"Fundamentals in the copper market look constructive going into Q2 2008," said Michael Lewis, Deutsche Bank analyst. "We think the risk of a slowdown in OECD demand will be contained by ongoing strength in emerging market consumption patterns.

"Global inventories are again approaching critical levels as supply side dynamics have thus far in the cycle failed to catch up with demand."

Elsewhere, nickel was up at 31,900 usd a tonne against 31,400 usd. Mining group BHP Billiton has declared force majeure on nickel deliveries from its Cerro Matoso mine in Columbia due to a strike that started at the end of February, a spokesman said today.

Nickel has surged around 20 pct this year on rising Chinese consumption and as the BHP Billiton strike has squeezed supply.

Reports said that the mine produced 51,000 tonnes of nickel in the 12 months ended June 30. Some analysts reckon the strike will cut output to 44,000 tonnes of nickel this year, compared with an earlier forecast from the company of 48,000 tonnes.

Meanwhile, tin rose to 20,700 usd a tonne against 20,645 usd at the close yesterday. Zinc rose to 2,425 usd against 2,405 usd, lead edged up to 2,940 usd against 2,900 usd, while aluminium climbed to 3,055 usd against 3,030 usd.

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