US & World Daily Markets Financial Briefing 06-09-2006

Start trading successfully today
Click here  to find out more

Stocks lower as productivity falls

NEW YORK - Stocks fell in early trading Wednesday after the Labor Department said productivity fell and wages increased in the spring, stoking fears that wage inflation will slow an already cooling economy.
   
The major indexes, which have been at three-month highs, pulled back on the news. The declines came despite recent lows in the price of oil. Crude, which has recently been above $70, hovered close to $68 a barrel on news of a major deepwater find in the Gulf of Mexico, a letup in tensions with Iran over its nuclear ambitions and relief that the hurricane season that has proven less severe than many forecasts.

In the first hour of trading, the Dow Jones industrial average fell 44.19, or 0.39 percent, to 11,425.09.
   
Broader stock indicators also fell. The Standard & Poor's 500 index was down 6.55, or 0.50 percent, at 1,306.70, and the Nasdaq composite index dropped 17.22, or 0.78 percent, to 2,188.48.

Stocks in focus       
   
Ford Motor advanced 3.9 percent in German trading after the automaker named Boeing executive Alan Mulally as its next chief executive. Bill Ford Jr., a descendent of Henry Ford, will stay on as chairman.
   
The move prompted Citigroup to upgrade Ford to hold from sell and raise its price target to $9 from $6. The hiring adds credibility to Ford's restructuring plan, the broker advised.
   
Intel Corp. late Tuesday announced it would cut 10,500 jobs, a move long awaited by the markets.
   
Analysts at J.P. Morgan said they had already factored $500 million in cost savings into its earnings model.
   
"While we are positive on the restructuring progress, recent capital expenditure cuts and potential second-half 2006 share gains, we remain concerned on Intel's record inventory, sluggish PC demand, and aggressive guidance," the broker said.
   
Intel slipped 1.4 percent in Germany.
   
XM Satellite Radio edged lower in thin German trading after it disclosed an informal Securities and Exchange Commission probe into how it accounts for costs.
   
Sony Corp. may see activity after it warned it would have to delay the release of the PlayStation 3 in Europe. It's keeping to its timetable for U.S. and Japanese releases.
   
On the deal front, Australian retailer Coles Myer rejected a takeover approach, France's Accor said it may sell its Red Roof Inn hotels chain and Bertelsmann agreed to sell its music publishing arm to Vivendi for $2.1 billion.

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.

Pound pressured by mounting Blair uncertainty

LONDON - The pound remained under pressure on the continued uncertainty surrounding Prime Minister Tony Blair as six junior members of the government have quit their posts.
   
Following weeks of speculation and growing in-fighting within the governing Labour Party, the tabloid Sun newspaper reported this morning that Blair will finally quit on July 26, 2007 following an eight-week leadership contest.
   
That "revelation" hasn't been enough for some and six junior members of the Labour administration have quit and urged Blair to do the same.
  
This political baggage on the pound has come at a time when the data flow in the UK has turned noticeably soft.
   
Overnight, the Nationwide building society found consumer confidence in August falling to its lowest level since the survey began in May 2004 in the wake of the Bank of England's surprise quarter point rate hike on Aug 3 to 4.75 pct. The Nationwide's consumer confidence index now stands at 83, down sharply from 94 in July and well below the previous low of 92 recorded in October 2005.
   
Elsewhere, the dollar was relatively firm ahead of this afternoon's release of the non-manufacturing survey from the Institute for Supply Management and this evening's Beige Book, a snapshot into the US economy from the US Federal Reserve.
   
Investors will be looking to see if they confirm expectations that the US economy is experiencing a "soft landing" that would keep the key Fed funds rate at 5.25 pct for some time to come. 
   
At the moment most analysts expect the Fed to keep policy unchanged over the months ahead. In contrast to the Fed, most expect the European Central Bank to lift borrowing costs in both October and December.
   
That was more or less confirmed by Bundesbank president Axel Weber as he indicated to reporters that borrowing costs could rise further this year, and next as well. Weber said that further increases in euro zone interest rates were "necessary" to counter inflationary pressures and did not rule out further rate rises in 2007.
   
The ECB has raised its benchmark "refi" refinancing rate four times since December, each time by a quarter of a percentage point. The refi currently stands at 3.00 pct.
   
As a result, most analysts said the expected narrowing of yield differentials between the US and the euro zone is likely to put the dollar under pressure.

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 mostly lower on profit taking

HONG KONG - Shares across the Asia Pacific region closed mostly lower as investors locked in gains after a strong run in recent days, dealers said.
   
Tokyo shares closed lower after investors took profits after deciding equities might be over-bought after the recent rally, dealers said.
   
Sentiment was also depressed by overseas investors having become net sellers for the first time in six days, dealers said.
   
But the market showed firm resistance on the downside because worries are fading about sharp declines in liquidity levels and the possibility of a recession in the US, dealers added.
   
The blue-chip Nikkei 225 Stock Average closed 101.87 points or 0.62 pct lower at 16,284.09, off a low of 16,245.16. The broader TOPIX index of all first-section issues lost 8.53 points or 0.52 pct at 1,642.82, after touching a low of 1,640.31.
   
Australian shares closed lower following a June quarter growth figure that was softer than expected, dealers said.
   
They said an unexpected fall in June quarter gross domestic product growth to just 0.3 pct, giving an annualized rate of 1.9 pct, rattled investor sentiment after a generally strong earnings reporting season for the June half.
   
The S&P/ASX 200 benchmark index fell 36.8 points to 5,113.8, trading off a low of 5,108.4 and a high of 5,164.2. The broader All Ordinaries Index ended down 33.0 points at 5,078.7.
   
Dealers aid the GDP data weakened the overall market as it showed the Australian economy was decidedly patchy.
   
Hong Kong shares were weaker in afternoon trade as investors continued to lock in profits amid a lack of fresh leads as the earnings season winds down, dealers said.
   
At 3.28 pm the Hang Seng Index was off 210.88 points or 1.21 pct at 17,227.92.
   
In mainland China, A-shares in Shanghai and Shenzhen closed slightly higher, with metals companies rising on gains in futures prices, and oil refiners boosted by the resumption of Sinopec share trading tomorrow, dealers said.
   
The Shanghai A-share Index rose 0.49 points to 1,758.06 and the Shenzhen A-share Index was up 2.08 points at 440.49.
   
Seoul shares ended lower, with investors locking in gains ahead of a rate decision by the Bank of Korea and a FTSE committee announcement on the status of South Korean stocks, dealers said.
   
Investors were cautious ahead of the possible rate move and the FTSE outcome, with next week's triple witching also sparking fears of possible program selling, they added.
   
The downside, however, was capped as foreign investors continued to buy into POSCO and financials, helping the main board index hold up well above 1,350 points. The KOSPI index closed down 4.23 points or 0.31 pct at 1,357.01, off a high of 1,364.86 and a low of 1,353.55.

Asian Bourse Round-Up

For a full list of closing figures, click here

Trade with RCG fxtrader™, the platform offering instant access to 12 major FX trading pairs with low spreads (2 pips EURUSD, USDJPY) and global news from 3 major sources.  Trade with a registered and regulated company in business for 80 years. Smart money trades here – Get your FREE Trial Today!

Copper prices rise on strong demand from China; Gold off 4 week highs

LONDON - Copper prices rose, adding to yesterday's very strong gains, boosted by strong demand from top consumer China, where Shanghai futures prices traded limit up in Asia earlier on concern over falling stockpile levels.
   
At 2.52 pm, LME copper for three-month delivery was at 7,950.00 usd a tonne, up from 7,920.00 usd at the close yesterday, while nickel was up at 28,350.00 usd a tonne against 27,900.00 usd.
   
Other metals were higher, except for zinc, which was down at 3,612.55 usd against 3,620.00 usd.
   
Lead was at 1,300.00 usd against 1,281.00 usd, aluminium was at 2,607.00 usd against 2,573.00 usd and tin was at 9,150.00 usd against 9,080.00 usd.    

Copper rose yesterday as buyers returned to the market after Monday's Labor Day holiday in the US, which traditionally marks the end of the northern hemisphere summer lull.
   
It has continued higher today, boosting the base metals complex, as traders worry about revived demand from China - as evidenced by last week's decline in Shanghai stockpile levels.
   
Deutsche Bank analyst Peter Richardson said the outlook for the base metals, especially copper, remains positive, with supply side tightness and rising Chinese demand.
   
"Strong supply and demand fundamentals among the major metals were the protector of these markets and investors appear to have recognised these factors upon their return," he added.

Gold prices edged lower, after touching four-week highs in Asia, as lower oil prices and a firmer US dollar weighed, but analysts said increased physical and investment demand means prices are set to test new highs.
   
At 12.30 pm, spot gold, which earlier hit 640.20 usd, was quoted at 635.70 usd, down from 638.70 usd at the time of the COMEX market close in New York yesterday. Other precious metals were mixed.
   
Spot silver was down at 12.96 usd an ounce against 13.00 usd yesterday, platinum was up at 1,269.50 usd against 1,268.00 usd while palladium was not much changed at 348.50 usd against 349.00 usd.
   
Silver hit a three-month peak yesterday, as did platinum, while gold touched five-week highs as strong investor and fund buying interest emerged after the Labor Day holiday in the US on Monday.
   
The metals have given back a bit of their gains today, as oil prices dipped on receding supply concerns while the dollar regained some ground against the major currencies.
   
But TheBullionDesk.com analyst James Moore said "the recent pick-up in physical, investor and fund interest, coupled with more fundamental issues such as low mining output should see gold test back towards 650-655 usd usd".
   
Turning to silver, Moore said the metal could dip a little lower in the coming sessions but "given the ... recent increase in investor interest, silver still has plenty of potential to rally".
   
Silver has been gaining relative to gold recently, and UBS investment Bank analyst John Reade said the fact that it underperformed gold by the close yesterday was likely due to profit taking on gold silver ratios.
   

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

Oil prices decline on easing supply concerns

LONDON - Oil prices continued lower, with Brent crude striking the lowest point for almost three months in London on easing supply concerns.
   
Analysts expect the close of the peak-demand summer driving season in the US will see a significant drop in gasoline demand. They also see the Iranian nuclear dispute as less likely to affect supply.
  
At 1.05 GMT, Brent North Sea crude for October delivery slid 70 cents to  67.39 usd, after touching 67.25 usd earlier -- its lowest point since June  15.
   
Crude-oil futures had edged 44 cents lower to $68.30 a barrel by 14.05 GMT New York's light sweet crude hit an intra-day low of 67.77 usd yesterday, the lowest level since May 22, before ending at 68.60 usd.
   
It has plunged more than 10 usd, or about 14 pct, since striking an all-time high of 78.40 usd in mid-July.
   
Crude futures were lower on Wednesday "with fading fears over potential supply disruptions", Sucden analyst Michael Davies said.  "The market is lacking any little bullish news to support the prices."
   
A key focus for traders remained Iran, the world's fourth-biggest producer of crude, which defied the August 31 deadline set by the UN Security Council to suspend its uranium enrichment work or face UN sanctions.
   
Further talks with European powers are now planned, while no sanctions have yet been imposed.
   
"I think the market has already priced in the Iranian tensions on the expectation the situation will drag on for a period," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.
   
The United States and other major world powers suspect Iran is using its nuclear enrichment programme as a cover to make nuclear weapons. Iran claims its nuclear ambitions are peaceful.
   
Should Iran face economic sanctions, however, analysts warn that the Islamic republic could retaliate by disrupting its oil exports, in turn leading to rocketing oil prices.
   
Elsewhere, prices were being weighed down by news of Chevron's discovery of a pool of oil and gas in the Gulf of Mexico that could raise US reserves by as much as 50 pct.
   
That, along with a more-subdued forecast for this year's Atlantic hurricane season, has extended a tumble in the energy markets that began Friday, analysts said.
   
Tropical Storm Florence formed far out in the open Atlantic, but forecasters said today it was too soon to tell if the sixth named storm of the hurricane season would reach the United States.

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.