US & World Daily Markets Financial Briefing 02-06-2006

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Stocks gain on employment data

NEW YORK - Stock prices are on the rise, after the government said payrolls growth came in well below expectations. The same report said the unemployment rate edged down to 4.6 percent.
   
The Dow Jones Industrial Average is up 25 points in today's early going. Advancing issues on the New York Stock Exchange hold a 3-to-1 lead over decliners.
   
The Nasdaq Composite Index is ahead 13 points and the Standard and Poor's 500 Stock Index is up about five points.
   
This morning's news from the Labor Department was just what Wall Street was looking for. With concern running high about inflation, the report suggests jobs growth and wage gains have moderated. For a Federal Reserve that can't seem to decide whether to stop raising interest rates, it is some good news on the inflation front. It also means that investors will place a lot of importance on the pair of inflation reports coming later this month.
   
Still to come this morning is a government report on April factory orders. Another homebuilder is suggesting that the best of times may have already passed by.
   
Pulte Homes cut its full-year financial forecast, citing a sharp drop in orders. In its statement, Pulte says demand has been affected by a rising supply of homes, higher cancellation rates and the rise in interest rates.

Payroll growth has averaged about 165,000 over the past 12 months and about 200,000 per month since November, when payrolls began to bounce back from the hurricanes.
   
Warm weather in the first months of the year also boosted payrolls, as some seasonal workers got some extra weeks of work.

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Of companies likely to draw attention, the NYSE Group and the Euronext late Thursday agreed terms on a merger, with the operator of stock exchanges in Paris, Amsterdam, Brussels and Lisbon getting a stock-and-cash bid valued at nearly $10 billion.
   
Euronext's Paris-listed shares rose beyond the value of the offer, a possible indication that some in the market believe Deutsche Boerse may come back with a better bid.
   
Goldman Sachs Group may split its lead role into two when the bank meets Friday to decide on a replacement to Henry Paulson, who's left to become U.S. Treasury Secretary. According to a Financial Times report, the board will confirm Lloyd Blankfein as chief executive, but some directors think it's not wise to give him both roles in a turbulent global market and when the bank is being asked questions about conflicts of interests with its corporate clients.
   
GlaxoSmithKline is close to offering around $15 billion for Pfizer Inc. over-the-counter unit, according to several media reports.
   
If Glaxo is the winning bidder, it will become the world's top seller of non-prescription drugs.
   
Starbucks late Thursday said same-store sales rose 7 percent in May, below consensus estimates of 7.6 percent growth.
   
Microsoft Corp. General Counsel Brad Smith expects the software giant to be sued by Adobe Systems Inc. over antitrust issues, according to an interview he gave The Wall Street Journal. Previously undisclosed talks between the companies about the use of an Adobe technology format broke down this week, Smith said, the newspaper reported.
   
The same newspaper reported that Boeing recorded more than $5.8 billion in plane orders last week.

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Asian shares close mostly higher, Tokyo ends at day's high

HONG KONG - Shares across the Asia Pacific region closed mostly higher in response to Wall Street's rise and on domestic demand.
   
Tokyo share prices ended at their highs for the day as a late wave of short-covering of blue-chips and domestic demand-linked stocks helped the market reverse early losses, dealers said.
   
While local players are still wary of the intentions of foreign investors in the wake of recent heavy capital repatriation, dealers said it appears that selling by foreign hedge funds has peaked, and is declining.
   
They forecast further gains in the local market next week if the US market extends its rebound for a third straight trading day today.
   
The blue-chip Nikkei 225 Stock Average closed up 285.57 points or 1.8 pct at 15,789.31, its high for the day. Over the week the index shed 1.1 pct.
   
The TOPIX index of all first-section issues rose 21.55 points or 1.4 pct, also finishing at its day's high of 1,606.11.
   
A flurry of short-covering in blue-chip and technology shares boosted afternoon trade, reversing an earlier slump and pushing the market to finish at its highs.
   
"Some short-term players who had gone too short on blue-chips rushed to cover positions ahead of the release of US May non-farm payroll data tonight," Shinko Securities market analyst Yutaka Miura said.
   
Australian shares closed higher although buying support eased during the trading session as the market failed to capitalize on the strong gains on Wall Street overnight, dealers said.
   
They said falls in resources stocks, hostage to volatile commodity prices, reduced the prospect of the market recovering further.

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The S&P/ASX 200 gained 16.6 points or 0.33 pct to close at 5,077.2, but still well short of the May 11 record close of 5,364.5.
   
Hong Kong shares rose on a technical rebound and in response to Wall Street, dealers said.
   
At 3:29 pm, The Hang Seng Index was trading at 15,898.35, up 253.08 or 1.62 pct.
   
Dealers said liquidity was boosted as funds which had flowed into Bank of China's 9.7 bln usd initial public offering started moving back into the market.
   
In mainland China, A-shares in Shanghai and Shenzhen closed lower as new listings tied down investors' funds, dealers said.
   
They added the market also saw some profit taking after the Shanghai Composite Index hit a two-year high yesterday.
   
The Shanghai A-share Index fell 15.56 points, or 0.88 pct, to 1,754.00 on turnover of 44.74 bln yuan and the Shenzhen A-share Index was down 2.64 points at 443.87 on turnover of 26.46 bln yuan.
   
Seoul share prices finished higher in volatile trade, rebounding from yesterday's sharp decline, as blue chips advanced on program buying, aided by Wall Street's overnight rise, dealers said.
   
The market lost ground on foreign investor selling but managed to close near the day's high on heavy gains by large caps such as Samsung Electronics and Kookmin Bank, they added.
   
The KOSPI index closed up 13.95 points or 1.08 pct at 1,309.04.

Asian Bourse Round-Up

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Dollar falls back as US jobs data comes in weak

LONDON - The dollar fell back in a knee-jerk reaction to weaker than expected US jobs data which weighed against expectations of a Fed rate hike late June.
   
At 1340 BST, the euro jumped to 1.2900 usd from 1.2827 usd before the news. The dollar fell to 112.05 yen from 112.81 while the pound rose to 1.8810 usd from 1.8676 usd.
   
Crude oil futures headed toward $71 a barrel in electronic trading Friday, with the front-month contract up 54 cents to $70.88 a barrel.
   
Data released Thursday showed rises in crude, gasoline and heating-oil inventories, but it also showed refinery throughput advancing. "Look for today's steadier opening tone to stay in place going into the weekend and in view of the several refinery glitches compounding the geopolitical backdrop," said analysts at Man Energy.

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