US & World Daily Markets Financial Briefing 14-07-2006

Trade your way to Financial Fitness!
Click here to find out more.

Stocks drop as oil prices soar

NEW YORK - Surging oil prices pulled stocks lower for a third straight session Friday, with bland earnings at General Electric Co. and weak retail sales dampening the economic outlook. The Dow Jones industrial average has lost more than 300 points this week.
   
In the first hour of trading, the Dow shed 58.49, or 0.54 percent, to 10,787.80. The blue-chip index fell more than 121 points Wednesday, and lost another 166 points Thursday.
   
Broader stock indicators were lower. The Standard & Poor's 500 index lost 3.55, or 0.29 percent, to 1,238.74, and the Nasdaq composite index declined 9.18, or 0.45 percent, to 2,044.93.

The Russell 2000 index of smaller companies fell 5.26, or 0.77 percent, to 682.03.
   
Bonds continued rising, with the yield on the 10-year Treasury note down to 5.06 percent from 5.07 percent late Thursday.

Stocks in focus
   
GE said five of its six core businesses saw double-digit earnings growth last quarter, with revenue climbing 9 percent to $39.9 billion. The sole loser was its NBC Universal broadcast unit. GE, which met Wall Street's profit and revenue forecasts, nonetheless sank 47 cents $32.20.
   
EMC Corp. added to Wall Street's stress over corporate profits after the software maker said earnings slid 5 percent last quarter. EMC, which earlier this week warned of a possible miss, fell 17 cents to $9.81.
   
Borders Group is expected to slide after the book retailer widened its loss forecast and said sales trends were below forecasts. Home builder D.R. Horton also late Thursday cut its earnings forecast.
   
Korea's Samsung Electronics reported an 11 percent profit decline on difficulty with its cellphone and LCD-screen businesses, but said third-quarter results should improve.
   
The auto industry will also receive attention with the highly anticipated meeting between General Motors' Rick Wagoner and Carlos Ghosn, the chief executive of both Renault and Nissan. The CEOs will discuss whether to extend the Renault-Nissan alliance to include the world's leading automaker.

All three companies showed declining sales in June in Western Europe, according to statistics released by a trade association on Friday.
   
Elsewhere, U.K. food equipment maker Enodis said it's considering a $1.64 billion takeover proposal from The Manitowoc Co. Enodis earlier rejected a $1.5 billion bid from Middleby Corp.
   
Forest Labs said late Thursday that a Federal Court has upheld a patent on Lexapro, ruling that Ivax and Teva Pharmaceutical Industries' planned generic drug would infringe upon that patent. The news boosted shares of Forest Labs' partner, Denmark's H. Lundbeck, which rallied 6 percent in Copenhagen.

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.

Dollar weathers dip in US retail sales

LONDON - The dollar weathered news that headline US retail sales fell in June with some focus also going to upward revisions to the figures which strip out the volatile car sales numbers.
  
US retail sales fell 0.1 pct in June, dragged lower by a 1.4 pct drop in automobile sales. If the latter were to be stripped out, retail sales in June rose 0.3 pct.
  
Underlying consumer spending is expected to be weak in the second quarter, reinforcing expectations that the US economy is cooling. However, as the latest spike in oil prices, indicates, the risks on the inflation front are ever present.
   
Earlier today, the Swiss franc and the pound hit 23 and 18-day highs respectively against the euro.
   
Elsewhere, the yen held steady after the Bank of Japan ended its zero rate policy overnight.
   
The Bank of Japan unanimously voted to raise its overnight lending rate to 0.25 pct from zero. It also raised the official discount rate to 0.4 pct from 0.1.
   
The central bank sought to calm market expectations for further rate hikes, however, by saying that it will keep interest rates at "very low" levels for the time being, implying that it would not rush the second increase.
   
The yen reacted little to the news, continuing to trade around the 115.70 per dollar level that was seen prior to the rate announcement.
 
Among other currencies, the Australian dollar earlier fell to several-day lows against its US counterpart following disappointing trade data overnight which showed a massive deficit of 2.27 bln aud in May, well above the 1.30 bln shortfall expected.

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!

The European Markets 12.00 BST

London - Shares remained weaker at midday amid continuing geopolitical tensions, although a firm oil sector and indications of a positive opening by Wall Street helped the FTSE recover from its opening lows, dealers said.
   
By 12.10 pm, the FTSE 100 index was 12.8 points lower at 5,752.2, bouncing back strongly from its early fall of near 1 pct. The wider market remained under pressure however, while volume was below par, with 934.7 mln shares changing hands in 115,386 deals.

Frankfurt - Shares were lower in midday trade after Wall Street's negative close yesterday and a drop on the Nikkei index this morning, as oil prices continue their climb and rose to new record levels, weighing down on the market, dealers said.
   
At 11.57 am, the DAX 30 index was 30.51 points or 0.55 pct lower at 5,496.78, having moved between 5,448.85 and 5,502.35 so far this session. The MDAX was at 7,627.97, down 42.61 points or 0.56 pct, while the TecDAX was at 611.28, down 6.41 points or 1.04 pct.

Paris - Shares remained mostly lower in midday trading, dominated by concerns about the upsurge in Middle East fighting and high crude oil prices, with activity thin on France's Bastille Day holiday, dealers said.
   
At 11.58 am, the CAC-40 index was down 15.70 points or 0.32 pct at 4,836.82. Volume was 1.1 bln eur.

Amsterdam - Shares were slightly lower in early afternoon trade but off their opening lows ahead of an expected higher opening on Wall Street, dealers said.
   
At 1.57 pm, the AEX was down 2.97 points or 0.68 pct to 431.44, after opening near its intraday lows at 429.78 and just off a high of 432.91.

Milan - Share prices were flat at midday, while Pirelli outperformed on expectations the group could soon sell a stake in its tyre business, dealers said.
   
At 12.05 pm, the Mibtel index was down 0.01 pct at 27,467 points and the S&P/Mib rose 0.08 pct to 35,802.
   
Madrid - Share prices were down midday, though off of lows in line with other European bourses, with blue-chip banks taking a hit and media issues extending recent losses, dealers said.
   
At 12.35 pm, the IBEX-35 index was down 69.3 points at 11,306.7, after trading in a range of 11,244-11,325, on turnover of 1.7 bln eur.

Stockholm - Stockholm shares were slightly lower in early afternoon trade, but off earlier lows amid indications that the US markets will open higher this afternoon, brokers said.
   
At 12.20 pm, the OMX Stockholm index was down 0.47 pct at 297.28, while the OMX Stockholm 30 index was down 0.51 pct at 916.82. Turnover was 6.910 bln skr.

Copenhagen - Share prices in Denmark were slightly lower in midmorning trade, with market sentiment hit by escalating tensions in the Middle East, although Lundbeck rose after winning a US court case, brokers said.
   
At 11.30 am, the OMXC20 index was down 0.59 points at 365.85 and the OMXCB Benchmark index declined 1.32 points to 343.06.

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

Asian shares close lower on oil price worries, Wall St slump

HONG KONG - Shares across the Asia-Pacific region ended lower in response to record high oil prices and the slump on Wall Street overnight, dealers said.
   
Tokyo shares closed sharply lower as investors turned jittery about global economic prospects following a fresh spike in oil prices to record levels.
   
The surge in crude and fears of an escalation of tension in the Middle East further dampened sentiment.
   
The Bank of Japan's decision to raise its overnight call rate target to 0.25 pct from almost zero, ending a nearly six-year-long freeze on rates, was largely ignored by the market as it had been widely expected, dealers said.
   
The Nikkei 225 Stock Average closed down 252.71 points or 1.7 pct at 14,845.24, after touching a low of 14,815.90. It was the weakest finish since June 21, when the index settled at 14,644.26. For the week, the index was down 3.0 pct.
   
The TOPIX index of all first-section issues shed 29.32 points or 1.9 pct to 1,521.71, just off its intraday low of 1,521.57. For the week, the TOPIX was down 3.3 pct.
   
For next week, the Nikkei 225 index is likely to move in a range of 14,500 and 15,000 points, analysts said.
   
Australian shares finished sharply lower with investors dumping stocks following the steep falls on Wall Street and oil prices hitting fresh record highs above 76 usd a barrel, dealers said.
   
The key S&P/ASX 200 index quickly dropped below 5,000 points as equity markets were sold off due to geopolitical tensions after an escalation in fighting between Israel and Lebanon.
   
Few local stocks avoided the plunge with the selling gaining momentum after the release of data showing Australia's trade deficit further widened in May, increasing expectations of an interest rate hike in August.
   
The S&P/ASX 200 fell 118.5 points or 2.33 pct to close at 4,966.1, at the day's low and off a high of 5,062.2. Over the trading week the key index lost 169.2 points or 3.29 pct.
   
Hong Kong shares were lower in afternoon trade, following the falls on Wall Street and Japan and higher oil prices.
   
At 3.27 pm the Hang Seng Index was down 193.27 points or 1.19 pct at 16,112.21.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on bargain-hunting following yesterday's plunges, with banks and real estate developers in favor.
   
The Shanghai A-share Index climbed 9.93 points or 0.57 pct to 1,750.85 and the Shenzhen A-share Index was up 2.86 points or 0.65 pct at 442.84.
   
Seoul shares finished sharply lower with sentiment hit by renewed oil price worries and the Bank of Japan's rate hike.
   
The KOSPI index closed down 29.89 points or 2.33 pct at 1,255.13, after moving between 1,261.24 and 1,246.65. It lost 18.80 points over the week.

Asian Bourse Round-Up

For a full list of closing prices, click here

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.

Gold rises amid Middle East tensions, but off 7 week highs

LONDON - Gold prices were higher but off 7 week highs touched earlier as oil prices hit new all-time records amid mounting geopolitical tensions, including international tensions over Israel's new offensive in Lebanon.
   
At 10.12 am, spot gold, which earlier hit 665.40 usd an ounce, its highest level in seven weeks, was quoted at 660.20 usd against 652.90 usd at the time of the COMEX market close in New York yesterday.
   
Other precious metals traded mixed. Spot silver was up at 11.70 usd against 11.48 usd, platinum was down at 1,248.50 usd against 1,250.00 usd while palladium was up at 330.00 usd against 326.00.
   
Prices have found strong support this week amid geopolitical strife, including bomb attacks in Mumbai, in top bullion consumer India on Tuesday, which left over 200 people dead, and escalating tensions in the Middle East.
   
About 50 Lebanese civilians were killed yesterday as Israeli jets pounded Lebanon in retaliation for the capture and killing of Israeli soldiers by Hezbollah guerrillas, igniting fears of a wider Arab-Israeli conflict.
   
Israel is now engaged on two fronts -- its jets also continued bombing Gaza yesterday -- while nearby in Iran, the dispute over that country's nuclear programme has taken a turn for the worse.   
   
Analysts said safe haven buying in response to the Lebanon attacks took gold up to 665 usd in Asia and, while mild profit-taking set in after that, gold is still heading higher.
   
"With no sign of a let up in geopolitical tensions, and oil prices potentially looking to test 80 usd a barrel, I think there is now scope for gold to test 680 usd," said TheBullionDesk.com analyst James Moore.
   
Gold is often bought as a safe haven asset or hedge against inflation. It  hit a 26-year-high of 730 usd in mid-May on increased geopolitical tensions, high oil prices and an uncertain outlook for the dollar.
   
A brutal sell-off then ensued, sending the precious metal down to 543 usd in mid-June, but gold has since been trending higher, boosted also by rising demand and central bank buying. 
 
Crude futures reached a record $78.40 a barrel as Israel intensified its attacks on Lebanon, raising concerns about potential supply disruptions. A barrel of light crude recently was up $1 at $77.70 on the New York Mercantile Exchange.

All it takes is 2 minutes a day to get your hands on some of the best stock option trades going! MICC - 1207%, AMR - 612%, HMY - 400%, GFI -177%, AEM - 1079%, VRTX - 192%, ALXN - 433%, ZRAN - 380%, ATHR - 326%, TKLC - 64%, TWTC - 540%

If you ever thought about trading options, now is the time to take a closer look. Click here

Comments

We welcome any suggestions or comments you may have concerning our bulletin, so please do contact us via comments@advfn.com. To advertise with ADVFN please contact Dunstan Rickard dunstanr@advfn.com North America Sales Manager +44 (0)20 7070 0986