US & World Daily Markets Financial Briefing 07-04-2006

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U.S. stocks open higher after March jobs report

NEW YORK - U.S. stocks gained in early trading Friday after a March employment report confirmed the robust health of the economy, but also soothed interest-rate fears as wage growth came in weaker than expected.
   
The Dow Jones Industrial Average rose 45 points to 11,261.
   
The Nasdaq Composite Index was up 12 points to 2,373 while the S&P 500 Index gained 4 points to 1,313.
   
Market sentiment received a boost after the Labor Department reported the U.S. economy created 211,000 jobs in March, more than the 187,000 expected by economists polled by MarketWatch. The unemployment rate also ticked lower to 4.7%.
   
Of equal importance, wage growth was tame, rising 0.2% for the month versus 0.3% expected. Wage inflation is an aspect of the economy the Fed is watching closely when it makes its decision on interest rates.
   
"It looks like we got some Goldilocks numbers today," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. A Goldilocks economy is one that is growing at a pace that is neither too strong nor too weak, and where inflationary pressures are contained.
   
Mendelsohn said the smaller-than-expected rise in wages in March was a significant positive for the equities market.
   
"The Fed is certainly going to look at that number in terms of its impact on inflation." The Federal Reserve has raised its short-term interest rates fifteen times in a row over the last two years in a bid to slow economic growth and keep inflation at bay. Its fed funds rate now stands at 4.75%.
   
Mendelsohn said the boost given by the report could see the S&P 500 breaking through resistance in Friday' session. He estimates resistance at around 1,310 to 1,315.

Stocks on the move
   
Shares in Starbucks Corp. rose 2.4% to $38.36 after the coffee chain posted a 10% rise in same-store sales in March from a year ago, ahead of the 7.6% average estimate of analysts polled by Thomson First Call. Same-store sales are a standard measure of retail performance and track sales from stores open at least a year.
   
Research In Motion was down 4.3% at $80.71 as its first-quarter earnings outlook missed analyst estimates after the maker of the BlackBerry wireless device said it plans to spend more on sales, marketing and product development.
   
Ford Motor Co. was up 9 cents at $7.74 after its president and chief operating officer, Jim Padilla, will retire after 40 years with the automaker. Chief Executive Bill Ford will assume Padilla's responsibilities.

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Dollar mixed after payrolls data

NEW YORK - The dollar edged lower against the yen, but was higher versus the euro early Friday, after a much-awaited employment report failed to deliver a strong enough signal to reverse the currency's recent weakness.
   
U.S. nonfarm payrolls rose by a better-than-expected 211,000 in March while the jobless rate fell back to 4.7% from 4.8%, the Labor Department said. The increase in payrolls was better than the 187,000 expected by economists surveyed by MarketWatch.
   
But February's gain was revised from 243,000 to 225,000. Wage growth was tame, rising 0.2% for the month. Average hourly wages are up 3.4% in the past year, down from 3.5% last month.
   
"The internals of the report offered a mixed picture and additionally, wage gains were modest at best," said Kathy Lien, chief strategist at Forex Capital Markets. "The report gives neither bulls nor bears a clear advantage. Overall, the report didn't have as much optimism or bullishness as the market really needed."
   
In early New York trading, the euro was down 0.4% at $1.2156. Against the yen, the greenback was flat at 117.76.
   
The euro remained under pressure after the European Central Bank chief Jean-Claude Trichet was less hawkish in comments accompanying an interest-rate decision than the market was expecting.
   
The ECB on Thursday held its key interest rate at 2.5% as expected, but the bank's president shocked traders by explicitly stating that market's expectations of a May interest-rate rise did not match the sentiment of the governing council.
   
Elsewhere, the dollar fell to an eight-and-half-year low against the Korean won after the central bank left rate unchanged at 4%.

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The European Markets at 12.00 BST

London - Leading shares just stayed modestly higher, almost static in thin midday trade as investors hugged the sidelines ahead of a key March US jobs report, due this afternoon, with rehashed bid rumours providing the only real interest, notably for ICI, dealers said.
   
At 11.50 am, the FTSE 100 index was 13.2 points firmer at 6,058.9, having eased back from a early peak of 6,071.1.
  
Frankfurt - Shares were flat in late morning trade following a mixed session on Wall Street overnight and amid caution ahead of key US jobs data this afternoon, though SAP and ThyssenKrupp gained sharply on broker objective price hikes, dealers said.
   
At 11.17 am, the DAX 30 index was 2.02 points or 0.03 pct lower at 6,029.37, having moved between 6,023.23 and 6,041.54 so far this session.

Paris - Shares were slightly higher at midsession, as large gains by market heavyweight Total and a surge by Schneider offset widespread declines in the rest of the market, dealers said.
   
At 12.48 pm, the CAC-40 index was up 4.49 points or 0.09 pct to 5,226.85, on volume of 1.79 bln eur. Of the CAC-40 stocks, 13 were higher and 27 were lower.
   
Amsterdam - Share prices were slightly higher in early afternoon trade, with SBM Offshore leading blue chip gainers amid reports it is close to winning two new orders, dealers said.
   
At 1.09 pm, the AEX was trading 1.81 point or 0.39 pct higher at 471.41, after opening at 470.23 and trading in a narrow range of 469.87-471.90 points.
  
Milan - Share prices were little changed at midday, amid caution ahead of Sunday and Monday's general election, with index heavyweight Eni sharply higher in an oil sector rally, dealers said.
   
At 12.24 pm, the Mibtel index was down 0.04 pct at 29,750 points and the S&P/Mib was off 0.16 pct at 38,342, while volumes stood at 2.59 bln eur

Madrid - Share prices were lower midday in thin trade, ahead of key US jobs data, with blue chips such as Telefonica and BBVA on offer, while Repsol YPF was firm, dealers said.
   
At 12.00 pm, the IBEX-35 index shed 13.6 points to 11,894.6, after trading in a range of 11,892-11,922, on turnover of 771 mln eur.

Stockholm - Shares were little changed in midday trade, off the morning's highs on interspersed profit taking, but with oil shares continuing to perform strongly, dealers said.
   
At 12.15 pm, the OMX Stockholm index was up 0.05 pct at 341.88, while the OMX Stockholm 30 index was up 0.07 pct at 1,061.37. Turnover was 10.76 bln skr.

Helsinki - Helsinki shares were flat in low volume midday trade, with paper stock Stora Enso declining on profit taking, dealers said.
   
At 12.30 pm, the OMX Helsinki 25 index was 0.02 pct lower at 2,715.33. The OMX Helsinki index was 0.01 pct lower at 9,433.73, while the OMX Helsinki CAP portfolio index was up 0.01 pct at 5,066.02.

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Asian shares close mixed, Tokyo sharply up on higher earnings hopes

HONG KONG - Share prices across the Asia-Pacific region ended mixed with Tokyo sharply higher as investors bet that corporates will unveil stellar earnings for the past fiscal year in the upcoming reporting season, dealers said.
   
The TOPIX index ended at its best mark in nearly 14 and a half years, they added.
   
Dealers said investors have also been emboldened by recent data showing the economy continues to revive.
   
Strong overseas buying interest further encouraged local players, the dealers added.
   
The 225-issue Nikkei 225 Stock Average ended up 74.04 points or 0.4 pct at 17,563.37, its session high. It is the highest finish since July 10, 2000 when it reached 17,572.68.
   
The broader TOPIX of all First Section issues gained 8.05 points or 0.4 pct to 1,783.72, also its high for the day. This is its best close since Nov 15, 1991 when it ended at 1,812.17.
   
Share prices had earlier moved in and out of negative territory in cautious trade as investors were reluctant to make aggressive bets ahead of US jobs data tonight.
   
"It was a tug of war between investors taking profits and those chasing bargains. But buying interest appeared to beat profit-taking in the end," said Mitsushige Akino, chief fund manger at Ichiyoshi Investment Management.
   
Share prices in Australia finished lower as investors became wary about the market's strong rise over the trading week, driven predominantly by a rise in resource stocks, dealers said.
   
They said the resources sector was mixed today despite copper and zinc reaching record levels overnight.
   
The S&P/ASX 200 fell 6.0 points or 0.11 pct to close at 5,232.9, slipping from Thursday's record closing high of 5,238.9.
   
Dealers said gold miners Newcrest, Lihir Gold and Oxiana failed to capitalize on the precious metal's move above 600 usd an ounce overnight on the futures market.
   
In Hong Kong, share prices were trading higher in the afternoon as index heavyweights Hutchison Whampoa and China Mobile extended their gains, dealers said.
   
At 3:23 pm, the Hang Seng Index was up 78.46 points or 0.48 pct at 16,489.59.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on renewed follow-through buying, backed by continued strength in the yuan with property developers and tourism issues buoyed, dealers said.
   
The Shanghai A-share Index added 3.38 points to 1,407.88 on turnover of 20.52 bln yuan and the Shenzhen A-share Index was up 1.94 points at 350.48 on turnover of 13.20 bln yuan.
   
Share prices in Seoul finished above the 1,400 points level, extending a run-up for a 12th day, with institutions and foreign investors focusing on financial stocks instead of forex-vulnerable exporters, dealers said.
   
The market stayed in the negative column for most of the day before firming near the close as investors weighed the won's continued strength and the Bank of Korea's hints of further tightening, they added.
   
The South Korean currency rose past 950 won per dollar in the morning for the first time in more than eight years.
   
The KOSPI index closed up 5.36 points or 0.38 pct at 1,402.36, the best level for the day.

Asian Bourse Round-Up

For a full list of closing prices, click here

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On the bond market, long-term Treasury prices turned lower, sending yields higher. Initially, bonds gained in the wake of the jobs report.
   
The benchmark 10-year note was down 7/32 at 96 21/32, with its yield at 4.93%.
   
Gold futures fell as investors locked in gains across the metals market after breaking through key psychological levels the day earlier.
   
Gold for June delivery was last down $6.90 at $592.80 an ounce, after topping $600 on Thursday for the first time in 25 years.
   
Crude-oil futures fell on easing supply concerns after comments at a Paris oil conference led to speculation that some Nigerian production could re-start as early as next week.
   
The benchmark May contract was last down 75 cents at $67.19 a barrel.

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