US & World Daily Markets Financial Briefing 03-01-2007

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Dow, Nasdaq advance in morning trading

NEW YORK - Stocks opened soundly higher in the first session of 2007 as investors cheered news that Home Depot Inc.'s chairman and chief executive had resigned after years of lackluster stock performance and as Wall Street embraced the idea that the holiday shopping season had been stronger than expected.
   
Investors appeared to shrug off a weak employment report from a division of payroll company Automatic Data Processing Inc. that briefly unnerved the bond market.
   
In the first hour of trading, the Dow Jones industrials rose 65.21, or 0.52 percent, to 12,528.36 after surging to a new trading high of 12,552.95 in the opening minutes of the session.
   
Broader stock indicators were also higher. The Standard & Poor's 500 index was up 4.91, or 0.35 percent, at 1,423.21, and the Nasdaq composite index advanced 19.69, or 0.82 percent, to 2,434.98. The Russell 2000 index of smaller companies was up 6.09, or 0.77 percent, at 793.75.
   
Bonds rose in response to the ADP report, with the yield on the benchmark 10-year Treasury note falling to 4.64 percent from 4.71 percent late Friday. The market theorized that the report might improve the chances for an interest rate cut in the early part of the year.

With markets closed Tuesday to mark the funeral of President Gerald R. Ford, Wall Street creaked back to life after its longest hiatus -- four days -- since the aftermath of the Sept. 11, 2001, terrorist attacks. As they returned to work, investors appeared to look past word that private sector unemployment fell by 40,000 in December, according to the ADP National Employment Report. The findings, which came after three months when gains in employment averaged 121,000 per month, were a surprise.
  
Stocks in focus
   
News that Bob Nardelli resigned from the world's largest home improvement chain added to positive investor sentiment from a weekend report that Wal-Mart Stores Inc.'s same-store sales rose 1.6 percent between Nov. 25 and Dec. 29, topping the company's forecast that growth would remain flat to up 1 percent.

Home Depot rose $1.39, or 3.5 to $41.55, while Wal-Mart advanced $1.71, or 3.7 percent, to $47.89.
   
In corporate news, Cytokinetics Inc. surged $1.34, or 17.9 percent, to $8.82 on news it would work with Amgen Inc. to develop drugs to combat heart failure. Amgen rose 50 cents to $68.81.
   
Sirius Satellite Radio Inc. rose 20 cents, or 5.6 percent, to $3.74 after the radio service said its subscriber base jumped 82 percent to more than 6 million last year.

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Dollar benefits from profit-taking ahead of key manufacturing ISM data

LONDON - The dollar reclaimed some lost ground ahead of key US data due at 1500 GMT as investors took profits on the recent gains made by the yen and pound.
   
The dollar remained solidly above the 119 mark against the yen while the pound eased to just under 1.96 usd ahead of the US data.
   
The ISM manufacturing sector index is expected to rise to 50.3 in December from 49.5 the previous month, while the November construction spending is seen dropping by 0.5 pct from the previous month, having declined by 1.0 pct in October.
   
According to Charles Dumas at Lombard Street Research, the bear patch for the dollar is over. "The surpluses of the countries that have most actively shifted from the dollar, typically oil exporters, are falling fast, while those of the savings glut countries locked into the dollar are growing," he said.
   
The dollar stumbled momentarily, mainly against the euro, after the ADP jobs forecast published in the US estimated a fall in non-farm payrolls for the first time since April 2003.
   
However, the euro failed to make any large gains, despite very strong jobless data from Germany earlier in the morning. German unemployment fell by an adjusted 108,000 in November against expectations for only 50,000.
     
Elsewhere, the pound has remained steady against the euro but lost ground to the dollar. Bids for the dollar pushed the pound from 1.970 down below 1.960, although it enjoyed a brief run back up towards 1.9630 after the weak ADP figures.
   
Should the dollar gain any more against the pound on the upcoming data, analysts at IFR Markets identified resistance levels at 1.9591, 1.9569, and 1.9550.

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The European markets at 12.50 GMT

London - UK blue chips were a touch higher at midday, rallying from early falls as investors looked ahead to an expected strong rally today on Wall Street although falls in heavyweight mining issues held the market back. At 12.18 pm, the FTSE 100 index was 1.3 points higher at 6,303.4, bouncing back from a late morning low of 6,296.0 after having retreated from an opening peak of 6,316.8.

Frankfurt - German shares were largely flat midday as a boost provided from positive jobless data was offset by declines by Metro and ThyssenKrupp. At 12.00 noon, the DAX 30 index was down 3.99 points or 0.06 pct at 6,677.14 after moving between a low of 6,667.14 and a high of 6,686.00 this session.
   
The MDAX fell 9.87 points or 0.10 pct to 9,517.91 while the TecDAX added 12.91 points or 1.70 pct to 771.98. The DAX futures contract was 10.50 points, or 0.16 pct, higher at 6,727.50.

Paris - Share prices were flat late morning as the market took a breather after yesterday's 1.3 pct surge, but underlying optimism remained as investors anticipated renewed corporate profits and M&A activity in 2007.

At 10.55 am the CAC-40 index was down 2.67 points at 5,615.04.  Volume was a modest 700 mln eur as investors held back ahead of Wall Street's first session of 2007.

Amsterdam - Shares in Amsterdam were flat around midday as investors awaited the start of Wall Street and US macro-economic data with a dearth of guiding local corporate news while Wegener soared. At 11.25 am, the AEX was 0.03 pct or 0.17 points lower at 500.83, after opening at 501.48.

Milan - Share prices were flat to slightly lower at midday with the publishing sector, especially Seat Pagine Gialle, outperforming as investors rotated into sectors that performed least well last year. At 11.55 am, the Mibtel index was down 0.02 pct at 32,240 points and the S&P/Mib was down 0.09 pct at 42,089.

Madrid - Share prices were lower in midday trade on light profit-taking after strong gains yesterday, in line with European markets, with little fresh domestic newsflow to boost buying interest. At 1.30 pm, the IBEX-35 index had dropped 24.7 points to 14,341.3, after trading in a range of 14,307-14,383, on turnover of 2.0 bln eur.

Stockholm - Shares remained in slightly negative territory in quiet midday trade, but below morning levels on deepening profit-taking, with outdoor products maker Husqvarna bucking the negative trend on M&A speculation. At 12.00 noon, the OMX Stockholm index was down 0.61 pct at 376.11 points, while the OMX Stockholm 30 index was down 0.63 pct at 1,156.83.

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Asian shares close mixed as profit taking emerges after year-end rallies
 
MANILA - Asian share prices closed mixed with some markets continuing their advance while others succumbed to profit-taking following recent heady gains.
     
In Australia, investors decided to lock in profits after the main indices posted fresh closing highs for the four previous trading days in a row.
   
The S&P/ASX 200 closed down 20.9 points at 5,649.3, off a fresh all-time high of 5,698.2, while the broader All Ordinaries index was down 19.1 points at 5,626.8.
   
Index major BHP Billiton and banks came under pressure, as did energy stocks, after oil prices eased overnight amid lower demand for heating oil in the US because of relatively mild winter weather there.
   
CMC Markets senior equities analyst David Land said with key markets shut there was little in the way of drivers to keep the market's momentum going. "But some stocks that have been positive for quite some time still seem to be able to keep rallying along quite happily despite this," he said, noting AMP and Brambles which ended higher.
   
In Hong Kong, the Hang Seng Index posted another record finish as continued interest in China related stocks helped the market overcome profit-taking pressure. The Hang Seng Index closed up 103.21 points or 0.51 pct at 20,413.39, off an new all-time high of 20,554.58 hit during the morning session.
   
Korean prices slid sharply as investors unloaded both shares and futures contracts ahead of US manufacturing data and the minutes of the Federal Reserve's Dec 12 meeting due later today.
   
Rumors of a possible rate hike in China, and worries that selling may continue ahead of the expiry of options contracts next week, also prompted investors to liquidate stocks, dealers said.
   
The KOSPI index finished down 25.91 points or 1.81 pct at 1,409.35, its weakest level in three weeks. The KOSDAQ market also fell as foreign and institutional investors cashed-in gains from a three-session advance. The KOSDAQ index closed 6.03 points or 0.99 pct lower at 602.69.
   
Taipei stocks finished flat as early gains on strong liquidity gave way to profit-taking late in the session. Dealers said investors turned cautious after the index almost hit a key technical level of 8,000 points.
     
The weighted index closed down 3.50 points at the day's low of 7,917.30, after hitting a high of 7,999.42.
   
In Singapore however, a robust GDP performance for 2006, helped the market sustain its positive run of late. GDP for the full year rose 7.7 pct, sharply above the 6.4 pct recorded in 2005, although it is expected to ease back in 2007 to around 4-6 pct.
   
While the data fell within market expectations it was still enough to boost sentiment, pushing the benchmark index above 3,000 points for the first time ever. At 3.53 pm, the Straits Times index was up 35.92 points or 1.20 pct at 3,021.75, after hitting a record high of 3,026.94 earlier.
   
In Manila, the bourse continued its advance, with improving economic indicators and strength in many regional markets, helping to underpin further gains. The composite index closed up 43.85 points or 1.47 pct at 3,020.70.
   
Malaysian stocks also began the first day of their trading year on an upward note, aided by gains in plantation stocks, while the Jakarta bourse faltered as profit takers came to the fore.
   
The Kuala Lumpur Composte Index was up 17.78 points at 1,114.04, while the Jakarta composite index was down 2.079 points at 1,834.614.

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Copper drops below 6,000 usd a tonne

LONDON - Copper prices fell below the critical 6,000 usd a tonne mark on yet another gain in LME inventories, which have now more than doubled since the start of last year.
   
At 1.20 pm, LME copper for three-month delivery was at 5,959.00 usd a tonne, down more than 3 pct from yesterday's close at 6,110.00 usd.
   
The LME said in its daily report that copper stocks held in its warehouses gained another 1,975 tonnes to total 192,550 tonnes. Yesterday copper stocks rose by a massive 7,775 tonnes.
   
"We are in sight of the significant 200,000 tonnes (of copper stock) mark on the LME, with this, no doubt, being the prime catalyst behind the change in psychology," said Man Financial analyst Ed Meir.
   
He noted if copper closes below 6,200 usd for a second day today "there is nothing in terms of meaningful (technical) support at least until much lower levels - 5,000 usd a tonne to be exact".
   
Copper prices posted a 43 pct year-on-year gain last year, but lost some 30 pct of their value after hitting a record 8,800 usd a tonne in May. The falls were driven by concerns over rising stocks and slowing US economic growth.
   
In other metals, nickel fell to 31,999.00 usd a tonne from 32,475.00 usd, zinc was down at 3,980.50 usd from 4,130.00 usd while lead dropped to 1,615.40 usd against 1,652.00 usd.
   
Meanwhile, aluminium slipped to 2,696.50 usd against 2,785.00 usd while tin, which hit a 17 year high last week, sank to 10,900.00 usd against 11,450.00 - a drop of more than 4.5 pct from yesterday's close.

Light, sweet crude fell 1.22 to $59.83 per barrel in premarket electronic trading on the New York Mercantile Exchange.

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