US & World Daily Markets Financial Briefing 10-04-2006

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U.S. stocks gain; Alcoa rises ahead of earnings results

NEW YORK - U.S. stocks gained ground Monday, with the Dow Jones Industrial Average outperforming as Alcoa rose ahead of its quarterly results and Walt Disney Co. gained on a report it will offer ABC television programs for
free on the Internet.

The Dow Jones Industrial Average was up 57 points at 11,176.

The Nasdaq Composite Index was last up 1 point at 2,340. The tech-rich index, however, is struggling to stay in positive territory.

The S&P 500 Index added 4 points to 1,299.

"People are still positive about the economy, so we're seeing some bargain hunting," said Michael Metz, chief market strategist at Oppenheimer & Co.

Metz, however, sounded a note of caution on the outlook for stocks.

"The market's in trouble. We're getting a lot of pressure from the volatility in other markets spilling over into stocks," Metz said, referring to the rise in commodity prices across the board. "It also looks like interest
rates are going higher still. Five percent now looks like past history, and maybe we're heading for 5.5%."

The Federal Open Market Committee, the Federal Reserve's interest-rate-setting body, has raised its key short-term interest rate 15 consecutive times. The federal funds rate now stands at 4.75%.

On the broader market for equities, advancers had an 8 to 7 advantage over decliners on the New York Stock Exchange, while winners and losers were evenly balanced on the Nasdaq.

By sector, energy and oil services were higher, buoyed by the rise in oil prices. Utilities , brokers and bankers and computer software stocks all moved higher.

Semiconductors , Internet stocks , airlines and homebuilders all moved lower.

Volume was 474 million on the Big Board, and 746 million on the Nasdaq.

This week, economic reports are few and far between.

Retails sales results for March are slated for release Thursday. Investors will be looking for confirmation that U.S. consumers are still spending at levels necessary to support solid economic growth.

Other data of note include February trade deficit figures Wednesday, as well as a report on March industrial production numbers on Friday.

The New York Stock Exchange is closed for the Good Friday holiday.

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Dollar off recent highs as investors book profits

LONDON - The dollar was off the highs it achieved on Friday as investors booked profits following the surge in the US currency at the end of last week.

The US currency posted impressive gains against the euro, in particular, late last week after the European Central Bank chief Jean-Claude Trichet dampened expectations of a May rate hike and a solid US jobs report encouraged speculation of further tightening by the US Federal Reserve.

The combination pushed the euro down from above 1.23 usd on Thursday to a low of 1.2089 earlier today.

Friday's closely-watched payrolls data showed the US economy created 211,000 jobs in March against expectations of around 190,000. That news reinforced expectations that the US Federal Reserve may raise the cost of borrowing above 5.00 pct from the current 4.75 pct in the months to come.

"The strong US employment report serves as reminder that upside risks to US short rates linger," said HBOS currency strategist Steve Pearson.

Before Friday, the euro had climbed up toward 2006 highs against the dollar, as ECB rate hike expectations were bolstered by the relentless flow of robust economic indicators in the area. In comparison, US data had generally been on the soft side.

However, the market reckons the yield gap between the US and the euro zone is likely to narrow over 2006, which, in theory, should work to the advantage of the euro.

And they added that this week's US trade and budget data could well have the potential to stoke up renewed structural concerns and undermine the dollar.

"Both have the potential to provide dollar with negative surprises," said Ian Stannard, currency strategist at BNP Paribas.

He also said the market's reaction to the developments at the end of last week was overdone.

"All that's happened is that expectations (about euro zone rates) have moved one month along the curve," said Stannard.

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European markets at midday

London - Bluechips remained firmer midday, bolstered by Compass Group's better-then-expected deal to sell off its SSP unit, and as Wall Street is forecast to open slightly higher as the US earnings season get's underway.
   
At 11.57 am, the FTSE 100 index was 11.1 points to the good at 6,037.2,
  
Frankfurt - Shares were slightly higher at midday led by automotive stocks which rallied from last week's losses, dealers said.

At 12.00 pm, the DAX 30 index was 7.18 points or 0.12 pct higher at 5960.10.

Paris - Shares were lower at midday in the wake of Friday's Wall Street-led declines, and trading was calm in the absence of merger and acquisition news that has driven the market upwards over recent weeks.

At 12.54 pm, the CAC-40 index was 15.03 points or 0.29 pct lower at 5.159.33
   
Amsterdam - Share prices were slightly higher in midday trade led up by Royal Dutch Shell, dealers said.

At 12.53 pm, the AEX was trading 0.35 point or 0.07 pct higher at 469.03, after opening at 468.22 and trading in a narrow range of 467.48-469.72 points.

Milan - Share prices were slightly higher at midday trade amid caution ahead of this afternoon's first exit polls on the general election, while Autogrill was boosted by Compass' sale of its SSP unit at a higher-than-expected price, dealers said.

At 1.03 pm, the Mibtel index gained 0.27 pct to 29,559 points.

Madrid - Share prices were lower in quiet midday trade, in line with the broad European trend, after losses on Wall Street and Asia, with most blue chips on offer, while second and third-liners remained in favour from recent sessions, dealers said.

At 12.20 pm, the IBEX-35 index fell 45.5 points to 11,771.2.

Brussels - Shares moved slightly lower in midday trade, weighed down by weakness on Wall Street last week, while trading conditions were subdued in the run-up to the Easter break, traders said.

At 11.45 am, the Bel 20 index was down 9.14 points or 0.23 pct at 3,908.70.

Stockholm - Shares were slightly lower in midday trade, weakening a touch from morning levels on extended profit-taking, with oil and mining firms however outperforming on the back of high commodity prices, dealers said.

At 12.15 pm, the OMX Stockholm index was down 0.25 pct at 339.60, while the OMX Stockholm 30 index was down 0.27 pct at 1,052.81.

Helsinki - Shares were slightly lower midday, led by Nokia and UPM-Kymmene, with industrials providing relief on bargain hunting, dealers said.

At 12.59 pm, the OMX Helsinki 25 index was 0.32 pct lower at 2,694.81. The OMX Helsinki index was 0.33 pct lower at 9,364.80, while the OMX Helsinki CAP portfolio index was down 0.34 pct at 5,029.25.

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BEIJING - Asian markets at 0500 GMT:
   
Stocks:
-Bangkok: SET index 760.05 (down 10.28 pts)
-Bombay: BSE-30 index 11,629.30 (up 39.86 pts)
-Hong Kong: Hang Seng index 16,409.83 (down 61.95 pts)
-Kuala Lumpur: Composite index 940.56 (down 3.15 pts)
-Manila: Composite index 2,207.94 (down 8.79 pts)
-Seoul: Composite index 1,394.76 (down 7.60 pts)
-Shanghai: A index 1,408.74 (up 0.87 pt)
                  B index 93.26 (up 0.57 pt)
-Singapore: Straits Times index 2,537.69 (down 14.36 pts)
-Sydney: All Ords 5,140.80 (down 45.80 pts)
-Taipei: Weighted index 6,776.83 (down 5.11 pts)
-Tokyo: Nikkei 225 index 17,413.92 (down 149.45 pts)
-Jakarta: Closed

Gold: 593.45-95 usd (Hong Kong)
    
Dollar/yen: 118.04
Euro/dollar: 1.2111
   
       Japanese govt bond 273: yielding 1.900 pct

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Precious Metals Summary - London PM Fixings

LONDON -

Gold          597.25 USD      1.7442
                 588.65 USD      overnight

Gold          342.42 STG
                 337.97 STG      overnight

Silver         12.41 USD 
                 12.04 USD        overnight

Silver         711.50 pence  
                 691.27 pence    overnight

Platinum    1095.00 USD     
                 1067.50 USD     overnight

Platinum    627.79 STG   
                  612.90 STG      overnight

Palladium   357.00 USD                     
                  348.50 USD      overnight

Palladium   204.67 STG                      
                  200.09 STG      overnight