US & World Daily Markets Financial Briefing 05-04-2006

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U.S. stocks open higher; Apple surges on new software

NEW YORK - U.S. stocks edged higher in opening trade Wednesday, with Apple Computer Inc a notable gainer after it released software allowing its Intel-based Mac computers to run Microsoft's Windows XP operating system.
   
The Dow Jones Industrial Average was up 22 points at 11,226. The Nasdaq Composite Index rose 9 points to 2,354 after ending the prior session at a more than five-year high. The S&P 500 Index gained 2 points to 1,308.
   
On the data front, the Institute for Supply Management's March survey of the services sector is due at 10 a.m. The MarketWatch forecast, based on a poll of economists is for a decline to 59.5% from 60.1% in February.
   
Stocks on the move
   
Apple rallied 6.4% to $65.08 after the company unveiled Boot Camp, a software application that enables its Mac computers based on Intel Corp. processors to run Microsoft Corp's Windows XP operating system.
   
Microsoft shares rose 1% to $27.91 as Intel's stock gained 10 cents to $19.39.
   
Morgan Stanley added 33 cents to $64.60. The company's shareholders backed a proposal that requires the investment bank to get stockholder approval for so-called golden-parachute pay packages for departing executives, according to a regulatory filing.
   
DaimlerChrysler agreed to sell a quarter of its 30% stake in European Aeronautic Defence & Space Co for about 2 billion euros. The stock was up 1.8% at $60.18.
   
Monsanto was up 1% at $86.74. The company reported second-quarter net income Wednesday of $440 million, or $1.60 a share, compared with $373 million, or $1.37 a share in the same period a year ago. The result exceeded analysts' expectations for earnings of $1.52 a share.
   
Monsanto affirmed a 2006 earnings outlook toward the upper end of its previously announced range of $2.35 to $2.50 a share. The Wall Street analyst average stands at $2.61 a share.

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Dollar extends losses vs. euro, pound under pressure

NEW YORK - The dollar fell to a fresh ten-week low against the euro, but traded modestly higher versus the yen early Wednesday, amid mounting expectations that the European Central Bank will raise rates more aggressively than the Federal Reserve this year.
   
Solid economic data on the services side of the euro-zone economy added to the euro's strength. At the same time, slightly dovish comments by Fed officials on Tuesday continued to pressure the dollar, analysts said.
   
In early New York trading, the euro rose 0.3% to $1.2262, after earlier touching $1.2299, the highest level since Jan. 25. The dollar was flat at 117.59 yen, up 0.2%. The British pound changed hands at $1.7514, down 0.2% from late Tuesday. The dollar was fetching 1.2843 Swiss francs, down 0.5%.
   
Late Tuesday, Thomas Hoenig, the Kansas City Fed president, said interest rates are very close to appropriate levels after 15 straight meetings with quarter-point rate hikes. He said the federal funds rate at 4.75% was in the range of neutral, which neither spurs nor restricts growth.
   
"We're very close to where we need to be," Hoenig said in a speech to local business leaders in Kansas City. "And now we're in that range, it's more difficult. And that's what we mean when we say we're data dependent."
   
Also on Tuesday, Richmond Fed President Jeffrey Lacker and Dallas Fed President Richard Fisher called the U.S. economy "quite healthy" and inflation "benign". Markets interpreted their comments as indicating that the U.S. central bank might not push rates much higher.
   
"Comments by Lacker and Fisher, in particular, left the impression that the Fed may end its interest-rate hike cycle in May, suggesting Fed (rate) will top out at 5%," according to analysts from BNP Paribas.
   
Sterling falls
   
The British pound came under pressure after unexpectedly weak industrial and manufacturing data from the U.K.
   
The U.K. purchasing managers services indexes fell to 57.4 in March from 58.9 in February, and other recent British economic data also showed declines.
   
February manufacturing output unexpectedly fell 0.2% from January and industrial production eased 0.3%, also a surprise.
   
"A surprise shortfall in U.K. manufacturing and industrial output figures has undermined the pound's recent run of gains over the dollar," said Andrew Cottrill, an analyst at CMC Markets.
   
But the euro-zone services data came in broadly as expected, at 58.2 in March, tying a five-year high.
   
The European Central Bank will meet on Thursday with most economists expecting the central bank to keep rates unchanged at 2.5%.
   
But it is expected to extend the rate-hike cycle by another quarter point at its May meeting. And Trichet is expected to provide hints in that direction at the post-decision press conference, whether by using the "vigilance" word, which has effectively translated as "rate hike next month," or by stressing the various risks to price stability.

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The European Markets at 13.00 GMT

London - Leading shares edged back into positive territory at midday, with further strength across the mining sector and a bullish trading update from BP helping the FTSE 100 eke out a slight gain, dealers said.
   
At 12.17 pm, the FTSE 100 was 2.7 points higher at 6,007.4, although the broader indices were mixed.
  
Frankfurt - Shares reversed gains at the opening to trade lower at midday as US stock futures pointed to losses on Wall Street this afternoon, with Lufthansa sliding after HVB placed 9.5 mln shares in the flag carrier and Linde dipping on a broker downgrade, dealers said.
   
At 11.50 am, the DAX 30 index was 4.42 points or 0.07 pct lower at 6,009.43, having moved between 5,995.77 and 6,033.60 this session.

Paris - Shares were slightly lower in early afternoon trade as profit-taking continued and as key defense electronics stocks dipped amid major moves in the restructuring of the sector, dealers said.
   
At 12.48 pm, the CAC-40 index was trading 9.18 points or 0.18 pct lower at 5,196.63. Of the CAC-40 stocks, 24 were down and 16 were up.
   
Amsterdam - Shares were lower at midday, reversing from earlier highs, as heavyweights weighed on the AEX, dealers said.
   
At 12.14 pm, the AEX was down 2.48 points or 0.53 pct to 465.47, after opening at 470.52 and reaching an earlier low of 464.64
   
Milan - Share prices edged up at midday, with investors cautious about taking positions ahead of April 9-10's election, while Unicredito was higher as it reached a compromise agreement with the Polish government to merge its Polish units Pekao and BPH, dealers said.
   
At 12.50 pm, the Mibtel index rose 0.22 pct to 29,504 points and the S&P/Mib was up 0.25 pct at 38,133, while volumes stood at 1.89 bln eur.

Madrid - Share prices were lower midday, with the main blue chips all on offer led by Endesa on profit-taking after yesterday's strong gains, dealers said.
   
At 12.25 pm, the IBEX-35 index fell 26.9 points to 11,866.9, after trading in a range of 11,839-11,908, on turnover of 1.7 bln eur.

Stockholm - Shares were little changed in midday trade with the index heavy banks pressuring the bourse but mining stocks, telecom operators, and fashion retailing were all in positive territory, brokers said.
   
At 12.40 pm the OMX Stockholm index was up 0.19 pct at 342.67 and the OMX Stockholm 30 up 0.15 pct at 1,067.69. Turnover was 12.038 bln skr.

Zurich - Shares were moderately higher midafternoon, winning back yesterday's losses as investors awaited fresh direction from the US. Midcap insurer Helvetia Patria rose 9 pct after better-than-expected results.
   
At 1.10 pm, the SMI was up 27.94 points at 8,079.11, and the SPI was up 20.69 at 6,210.8.
 
Helsinki - Helsinki shares were slightly higher midday, led by Nokia, with Outokumpu gaining after unveiling new orders, dealers said.
   
At 12.43 pm, the OMX Helsinki 25 index was 0.21 pct higher at 2,713.66. The OMX Helsinki index was 0.33 pct higher at 9,401.84, while the Helsinki CAP portfolio index was up 0.25 pct at 5,052.09.

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Asian shares close mixed, Tokyo slips on profit-taking after morning gains

HONG KONG - Share prices across the Asia-Pacific region ended mixed with Tokyo finishing lower as investors took profits after morning gains that saw both the Nikkei and TOPIX indices mark fresh multi-year highs, dealers said.
   
The Nikkei 225 Stock Average ended down 48.93 points or 0.3 pct at 17,243.98, after touching an intraday peak of 17,464.54, its best level since July 12, 2000 when it struck 17,541.98.
   
The broader TOPIX of all First Section issues lost 3.60 points or 0.2 pct to 1,746.05, after hitting a high of 1,769.11, its loftiest since Nov 21, 1991.
   
Stocks had earlier gained, spurred by the rally in US markets and on hopes for solid corporate earnings here, but they succumbed to a wave of profit-taking.
   
"Share prices fell back into negative territory as investors turned cautious and opted to cash-in profits as they believed stocks had surged too rapidly in recent sessions," said Hitoshi Yamamoto, president and chief portfolio manager at Commerz International Capital Management (Japan).
   
Share prices in Australia closed at fresh record highs as investor sentiment remained upbeat, supported in part by the overnight rise on Wall Street, dealers said.
   
They said index leading resources stocks BHP Billiton and Rio Tinto continued their surge into record territory on expectations that the miners will secure a price increase following iron ore negotiations with Chinese and Japanese steel producers.
   
Dealers said the major banks rose after the Reserve Bank of Australia left rates on hold at 5.50 pct for the 13th consecutive month.
   
They said this allayed investor fears in the short-term that the central bank may hike rates in the coming months due to a flow of stronger-than-expected economic data which would impact on the banking sector's earnings.
   
The S&P/ASX 200 climbed 44.5 points or 0.86 pct to close at 5,207.0, surpassing Monday's record closing high of 5,180.5.
   
The stock market in Hong Kong was closed for a public holiday.
   
In mainland China, A-shares in Shanghai and Shenzhen ended higher on sustained follow-through interest due to a rising Chinese yuan with oil refiners and real estate developers gaining ground, dealers said.
   
The Shanghai A-share Index climbed 10.77 points to 1,404.95 on turnover of 19.78 bln yuan and the Shenzhen A-share Index was up 3.28 points at 346.54 on turnover of 12.87 bln yuan.
   
In Seoul, share prices finished slightly higher, rising for a 10th trading session, as KEPCO, Hyundai Motor and Shinhan Financial posted solid gains, dealers said.
   
The advance marks the longest consecutive run of higher trading sessions since 1995.
   
Wall Street's overnight rally and easing oil prices ensured a firm start to trading, sending the index above 1,390 points at one stage.
   
But the market shed some of its early gains, as strong foreign investor support was offset by massive profit-taking by retail and institutional investors.
   
Foreign investors' continued stock purchases helped the index stay in positive territory but contributed to sending the won to an eight and a half year high against the dollar.
   
The won closed at 957.30 against the dollar, compared with yesterday's closing price of 963.20.
   
The KOSPI index closed up 3.13 points or 0.23 pct at 1,388.77.

Asian bourse Round-Up

For a full list of closing figures, click here

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Gold, silver prices climb; copper futures at all-time high

SAN FRANCISCO - June gold climbed $3.50 to $594.10 an ounce, trading as high as $594.70, while May silver tacked on 2 cents to stand at $11.75 an ounce.

May copper rose as high as $2.583 a pound, the highest futures level ever. The contract was last up 4.05 cents, or 1.6%, at $2.576. "With stock draw downs gaining momentum in most of the metals and with consumers likely to be gearing up ahead of the summer slowdown, physical demand [for base metals] should be gaining momentum," said Williams Adams, an analyst at BaseMetals.com.

"This, and ongoing concerns over supply are likely to underpin prices, so unless some external event upsets the funds, the upward trends are likely to keep prices on the rise," he said in a note to clients.

Oil futures were trending higher ahead of the inventory numbers, last trading up 14 cents at $66.37 a barrel.

On the bond market, long-term Treasury prices were higher, sending yields lower, after a Fed official said interest rates are very close to appropriate levels after 15 straight meetings with quarter-point rate hikes.
   
The benchmark 10-year note last was up 3532 at 97-10/32 with a yield of 4.84%.

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