US & World Daily Markets Financial Briefing 09-02-2006

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Wall Street - U.S. stocks rise, buoyed by Aetna, Best Buy earnings

       
NEW YORK - U.S. stocks gained ground Thursday as investors welcomed upbeat profit forecasts from Aetna Inc, Best Buy Co. and Marriott International Inc, with the market also awaiting the Treasury Department's revival of the 30-year bond.
   
The Dow Jones Industrial Average was up 47 points at 10,906.
   
The Nasdaq Composite Index rose 14 points to 2,280 while the S&P 500 Index added nearly 7 points to 1,272.
   
Thursday's batch of solid earnings news built on the positive sentiment generated by Cisco Systems' and PepsiCo's strong results over the last two
sessions.
   
On the broader market for equities, advancers outpaced decliners by more than 2 to 1 on the New York Stock Exchange, and by 14 to 9 on the Nasdaq.
   
By sector, oil services , energy , gold stocks , semiconductors and banks and brokers were the biggest gainers.
   
On the data front, inventories at U.S. wholesalers increased 1% in December, led by growing stockpiles of autos and drugs, the Commerce Department said.
   
Despite the biggest increase in inventories in a year, the inventory-to-sales ratio remained at a very tight 1.15 in December, up from a record low 1.14 in October. Economists surveyed by MarketWatch expected wholesale inventories to increase 0.5%.
   
Also, the Labor Department reported that the four-week average of seasonally
adjusted new claims fell to 276,500, the lowest since April 2000, although claims rose in the latest week.

Stocks in motion
   
Best Buy Co. shot up 7.3% to $52.40 after the home-electronics retailer raised its fourth-quarter estimates.
   
Shares of Research In Motion gained 3.8% to $71.23 after the company said it has successfully tested a software "workaround" to keep its BlackBerry wireless
e-mail service running in case a judge orders a halt in connection with a long-running patent dispute.
   
Software giant Oracle dipped 8 cents to $12.50. The software giant is expected to announce more than 1,000 job cuts on Thursday, according to a press report.
   
Health insurer Aetna rose 4.1% to $100.05 after the company raised its financial targets for 2006 following a strong fourth quarter.
   
Similarly, hotel operator Marriott International added 2.7% to $67.87 after it offered up an upbeat profit outlook in the wake of a 25% rise in quarterly earnings.
   
On a less positive note, shares in Whole Foods Markets Inc. tumbled 6.2% to
$67.58 after the high-end grocer of natural and organic food posted a first-quarter profit that fell shy of analyst estimates.
   
In other news, shares of XM Satellite Radio Holdings surged $2.15, or 8.7%, to $26.76, adding to Wednesday's 3.9% gain. On Tuesday, the stock hit a 20-month
low of $23.01 in intraday trading. The company announced Thursday that it had signed a 3-year exclusive agreement to launch an "Oprah & Friends" radio channel, debuting in September 2006.
   
Separately, Stifel Nicolaus upgraded XM to buy from hold Stifel Nicolaus, due primarily to valuation.

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Dollar off after BofJ, BoE leaves rates unchanged

       
NEW YORK - The dollar was a bit lower Thursday morning, after both the Bank of Japan and the Bank of England left rates unchanged, actions that were widely expected and did not immediately change valuations much.
   
Throughout the year to date, the dollar overall has benefited from attractive rate differentials against the euro and yen.
   
The dollar last was down 0.05% at 118.42 yen. The euro last was up 0.1% at $1.1977. The pound last traded at $1.1740.
   
Earlier the Bank of England held its key repo interest rate at 4.5% for the sixth month in a row, as expected, after concerns of accelerating wage inflation offset recent fears on the growth side.
   
The thinking appears to be that wage inflation and second-round effects in Britain from rising energy prices are not yet intense enough to justify a new increase.
   
"We continue to expect interest rates to be on hold in coming months with the next move more likely to be up than down," said Michael Taylor, an economist at Lombard Street Research.
   
Action Economics forecast that Bank of England will stand in place on rates throughout 2006, but said there is some risk of a 25 basis points rate hike before the year is out.
   
Overnight the Bank of Japan left its easy monetary policy unchanged, as widely expected.
   
The decision handily preserved the dollar's attractive rate differential against the yen. The fed funds rate now stands at 4.5%., contrasting with the Bank of Japan's zero interest rate policy.
   
But market participants were scrutinizing statements from bank Governor Toshihiko Fukui, trying to learn whether the central bank could tighten policy later in the year.
   
Earlier in the week, market participants speculated that a change could come by mid-year.
   
Many analysts think the Japanese central bank will be hesitant to abandon its zero interest rate policy, but think it is possible it will back off its "quantitative easing" policy of flooding the economy with extra liquidity.
   
Mike Malpede, senior currency analyst at Man Global Research, said the Bank of Japan needs to see several more months of rising consumer prices, as well as firmer evidence that deflation has ended, before it can feel comfortable changing its monetary policy.
   
Recent speculation that the European Central Bank could lift rates at coming meetings was undercut by new remarks from ECB governing council member Christian Noyer.
   
ABN Amro research reported that Noyer said lower rates are not always best for growth.

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The European markets at 12.00 GMT
    
   
LONDON - Leading shares extended gains at midday, pushing session highs as the Bank of England left rates unchanged, while positive earnings news pushed BG up by nearly 10 pct, dealers said.
   
At midday, the FTSE 100 was up 71.9 points at 5,797, with the broader
indices all higher.

FRANKFURT - Shares were higher midday, boosted by overnight gains in
Tokyo and on Wall Street, and led by heavyweights Siemens and Deutsche Telekom, dealers said.
   
At 11.59 am, the DAX 30 index was 61.93 points or 1.09 pct higher at 5,728.34, having moved between 5,694.46-5,731.33 so far this session. The MDAX was at 8,114.71, up 54.10 points or 0.67 pct, while the TecDAX was at 700.16, up 8.60 points or 1.24 pct.

PARIS - Shares were higher at midday, with the outlook turning more
positive amid yesterday's gain on Wall Street, according to dealers.
   
At 1.45 pm, the CAC-40 index was up 44.02 points or 0.90 pct at 4,939.10.
Some 31 CAC-40 stocks were higher and 9 were lower.

AMSTERDAM - Share prices were broadly higher in early afternoon trading ahead of an expected higher opening on US markets, dealers said.
   
At 12.31 pm, the AEX stood 3.88 points or 0.85 pct higher at 456.45, slightly off its intraday high of 456.52.

MILAN - Share prices were higher at midday, with gainers led by Finmeccanica on positive broker recommendations, while oils recovered from
losses yesterday and banks continued to be supported by consolidation talk,
dealer said.
   
The Mibtel index rose 0.90 pct to 28,224 points and the S&P/Mib was up 0.92 pct at 36,988. Volume was 1.66 bln eur.

MADRID - Share prices were higher in moderate midday trading as US
futures pushed into positive territory, with Telefonica higher and Altadis leading the gainers on reports of a possible bid, dealers said.
   
At 12.32 pm, the IBEX-35 index added 93.5 points to 11.296.9, after trading in a range of 11,222-11,301, on turnover of 1.5 bln eur.

ZURICH - Share prices were firmer midmorning after strong overnight gains on Wall Street and in Asia, led by Syngenta after strong results and plans to return 800 mln usd to shareholders this year.
   
At 11.26 am, the SMI was up 46.24 points at 7,878.14 and the SPI was up 33.92 at 5,981.88.

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Asian shares close mostly higher tracking Wall St gains

       
HONG KONG - Share prices across the Asia-Pacific region ended mostly higher with Japan buoyed by gains overnight in US markets and with investors deciding that yesterday's sell-down was overdone, dealers said.
   
The Nikkei 225 Stock Average closed the day up 166.99 points or 1.0 pct at 16,439.67, after touching a high of 16,540.49.  Yesterday, it ended at 16,272.68, down 448.31 points or 2.7 pct.
   
The broader-based TOPIX index of all first-section shares rose 10.87 points
or 0.6 pct to 1,682.26, off a high of 1,695.11.
   
"Investors here took heart from the bullish tone on Wall Street, while others chased bargains after the Nikkei lost some 450 points yesterday," said Mitsushige Akino, chief portfolio manager at Ichiyoshi Investment Management.
"It's obviously a technical rebound."
   
Share prices in Australia closed up as investor sentiment recovered from yesterday's sell-off, helped by a solid return to positive territory on Wall Street overnight, dealers said.
   
They said Telstra, the nation's biggest telco and 51.8 pct owned by the Australian government, rose after a smaller than expected 10 pct fall in first half net profit.
   
Dealers said investors took comfort from Telstra reaffirming it will maintain dividend payout levels over the next three years, ensuring its attractiveness as a yield stock.
   
The S&P/ASX 200 gained 46.2 points or 0.96 pct to close at 4,877.6, below the record close of 4,956.7 set on Feb 1.
   
Shares prices in Hong Kong were trading higher in the afternoon following gains on Wall Street and in the Japanese market, with select China stocks staging a mild rebound after profit-taking yesterday, dealers said.
   
At 3:44 pm, the Hang Seng Index was up 46.28 points or 0.3 pct at 15,419.72.
   
In mainland China, A-shares in Shanghai and Shenzhen closed significantly
lower on profit-taking with market heavyweight petrochemical producers and power firms losing ground, dealers said.
   
The Shanghai A-share Index fell 20.28 points to 1,331.19 on turnover of 13.75 bln yuan and the Shenzhen A-share Index was down 3.83 points at 322.95 on
turnover of 7.64 bln yuan.
   
In Seoul, share prices finished higher after the Bank of Korea raised interest rates and expressed confidence in the strength of the economic recovery, dealers said.
   
Initial sentiment was lifted by Wall Street's overnight gains and upbeat South Korean consumer confidence data, with the BoK rate hike and the options expiry largely priced in during the recent corrections, they added.
   
The KOSPI index closed up 10.67 points or 0.81 pct at 1,321.66.

Asian Bourse Round-up

For a full list of closing figures, click here

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Crude futures were on the rise, trading up 25 cents at $62.80 a barrel. At 10.30 a.m. the market will view natural gas inventories data for the most recent week.
   
Gold futures also trended higher, on safe-haven interest following an evacuation of a U.S. Senate building overnight. The front-month contract last was up $8.90 at $562.60 an ounce, after ending Wednesday at a three-week low.
 

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