US & World Daily Markets Financial Briefing 16-02-2006

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U.S. Stocks at a Glance

U.S. stocks edge higher, helped by strong earnings

NEW YORK - U.S. stocks edged higher Thursday after better-than-expected results from Hewlett-Packard Co. and Applied Materials boosted sentiment, but inflation concerns following strong housing data and a report showing a pick-up in import prices were capping gains.
   
The Dow Jones Industrial Average rose 7 points to 11,066
   
The Nasdaq Composite Index was up 6 points at 2,282 while the S&P 500 Index gained 1.5 points to 1,282.
   
On the broader market for equities, advancers outpaced decliners by 9 to 5 on the New York Stock Exchange, and by 7 to 5 on the Nasdaq.
   
Flurry of data
   
Investors worried about a slowdown in the housing market could take some comfort from the latest data on the sector.
   
New construction of U.S. homes soared 14.5% in January to a seasonally adjusted annual rate of 2.276 million, aided by the warmest weather of any January on record.
   
It's the highest rate for seasonally adjusted starts since March 1973. The percentage gain was the largest in nearly 12 years, the Commerce Department said Thursday.
   
On a less positive note, weekly jobless claims rose slightly more than expected.
   
The latest snapshot on import prices could also raise alarm bells for those concerned about inflationary pressures in the economy. Prices of goods imported into the United States rose 1.3% in January as petroleum prices surged 6.4%, the Labor Department said. Economists expected import prices to rise 1.0%.
   
Later in the session, investors will get a fresh take on the health of the country's manufacturing sector, with the release of the Federal Reserve Bank of Philadelphia's survey of manufacturing in the Philadelphia region.
   
New Fed chief Bernanke goes before the Senate Banking Committee Thurday in the second day of his congresssional testimony.
   
On Wednesday, investors breathed a sigh of relief as Bernanke promised continuity in monetary policy and offered up an upbeat outlook on the economy.
The market was also pleased that he did not signal he was more worried about
inflation in the economy than his predecessor Alan Greenspan, although he did say further rate hikes may be necessary to curb inflationary pressures.

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H-P, Applied Materials to lift technology sector
   
Shares in Dow component Hewlett-Packard Co surged as much as 5.9% to a near five-year high of $33.55 after the computer and printer maker posted forecast-beating results. Its first-quarter profit shot up 30% over year-ago levels, buoyed by higher personal computer sales and the implementation of a major restructuring of the company.
   
There was further good news for the technology sector after Applied Materials Inc. posted better-than-expected quarterly results. The company also reported a 22% rise in orders on stronger demand for its equipment used to make memory chips for portable music players, digital cameras and mobile phones. The stock added 19 cents to $20.64 in early trading.
   
Retailers report
   
Target Corp. was off 1.5% at $54.96 as some analysts expressed concern about declining retail operating margins, even as the discount retailer managed to post earnings that topped Wall Street expectations.
   
"One of the factors contributing to retail margin pressures in January was a shift in advertising to later in the year, in support of Target's evolution to more of a department store and gift destination," said Merrill Lynch in a note to clients.
   
Earlier in the week, the company warned January sales would come up short of
the high end of its forecast range because of the snowstorm that hit the Northeast last weekend.
   
J.C. Penney Co. posted a 65% jump in net income - ahead of Wall Street expectations - helped by more full-priced selling during the holiday season. The department store group also announced a new $750 million share buyback program and lifted its dividend. The stock rose 3.5% to $58.60.
   
Other stock standouts
   
On a less positive note, shares in XM Satellite Radio tumbled 8.5% to $23.12 after the company posted a wider-than-expected fourth-quarter loss. It also said subscription acquisition costs rose to $89 in the quarter from $64 in the year-ago period.
   
Expedia Inc., meanwhile, saw its shares slump nearly 20% to $19.49 after the
online travel services company posted earnings sharply below Wall Street estimates.
   
In other news, a consortium led by Cerberus Capital Management and Citigroup's private-equity arm is the front-runner to buy a majority stake in General Motors Acceptance Corp., the financing arm of General Motors Corp. , according to a report in The Wall Street Journal. GM shares were up 1% at $22.20 in early trading.

Forex*

The dollar traded higher against its major counterparts. The euro was off
0.1% at $1.1868. Against the Japanese yen, the greenback rose 0.2% to 118.14.

London

For a list of today's FTSE risers and fallers at 15.00 GMT, click here

Frankfurt

German shares push higher midafternoon as US stock futures move up

At 2.26 pm, the DAX 30 index was 8.47 points or 0.15 pct higher at 5,772.84, having moved between 5,757.25-5,796.79 so far this session. The MDAX was at 8,125.36, down 6.07 points or 0.07 pct, while the TecDAX was at 712.61, down 1.43 points or 0.20 pct.
   
The DAX futures contract was at 5,782.00, up 4.50 points or 0.08 pct, while bund futures were at 120.13, down 0.06.

Hypo Real Estate was the best performer, gaining 1.14 eur or 2.09 pct to 55.68, while Munich Re rose 2.29 to 116.20, amid upbeat broker comments on its renewals, which were published yesterday and today prompted Cheuvreux to "strongly reiterate" its 'outperform' rating and 130 eur price target.
   
Deutsche Boerse gained 1.40 to 103.55, after reporting solid growth at its Clearstream unit in January and ahead of its full-year results on Wednesday next
week, which are expected to be solid.
   
Clearstream said it processed 2.12 mln international transactions in January, up 41 pct from 1.5 mln in the same month a year earlier, while domestic settlement transactions in Germany rose 37 pct to 3.61 mln from 2.65 mln.
   
At the other end of the market, Deutsche Post dropped 0.65 eur or 2.88 pct to 21.93, as Deutsche Bank downgraded its stance on the issue to 'hold' from 'buy', WestLB cut its rating to 'add' from 'buy' and Nomura downgraded the stock to 'reduce' from 'neutral' following its full-year results yesterday.

DaimlerChrysler was deep in the red too, sliding 0.89 to 49.20, as a lack of details on its outlook and a weak performance by its truck division outweighed firm results on a group level, with a bout of profit-taking also pushing the shares lower.

Amsterdam

Amsterdam shares little changed early afternoon as ING, Reed Elsevier fall

At 1.50 pm, the AEX was down 0.07 point or 0.02 pct at 460.49, after opening near its highs at 462.16 and falling to a low of 459.94.

Reed Elsevier was the sharpest decliner among blue chips, falling 3.6 pct to 11.50 as news of a 1 bln usd share buyback programme raised questions over the strength of underlying growth, particularly at its US-based text business, Harcourt Education. Fellow publishers were higher, with VNU edging up 0.07 pct at 27.22 and Wolters Kluwer firming 1.03 pct at 18.71.
   
ING was another stock in focus after posting fourth-quarter results, falling amid profit-taking following its recent run, as analysts highlighted the company's strong fourth-quarter results benefited from low taxes and one-off releases. ING was down 0.49 pct at 30.65 in volume of over 7 mln shares, after rising to an early high of 31.04 eur but off an intraday low of 30.32.

Other financials all traded higher, with Aegon putting on 0.82 pct at 13.58, Fortis adding 0.55 pct at 29.41 and ABN Amro advancing 049 pct at 24.80.

Other decliners were DSM, off 1.8 pct at 34.94, SBM Offshore easing 0.79 pct at 81.15 and Royal Dutch Shell, dropping 0.76 pct at 26.10. Unilever shed 0.08 pct at 58.95 and Philips gave up 0.07 pct at 28.04. 

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Asia at a Glance

Asian shares close mixed, Tokyo blue chips buoyed by Wall St rise
 

HONG KONG - Share prices ended mixed with Tokyo higher, tracking the overnight rise in US shares, dealers said.
   
They noted that buying was focused on key blue chips including Toyota and Sony, as well as banks.
   
The Nikkei 225 Stock Average index closed up 110.84 points or 0.7 pct at 16,043.67, after touching a high of 16,109.20.
   
The broader TOPIX index of all First-Section shares gained 7.11 points or 0.4 pct to 1,631.39, off a high of 1,637.54.
   
But dealers said the upturn may not last as foreigners are now trimming holdings, concerned about rising prospects for an end to the country's super-loose monetary policy and a subsequent increase in interest rates.
   
"Foreigners are increasingly concerned about the (expected) end of the ultra-loose monetary policy and zero interest rates," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Securities.
   
Share prices in Australia finished lower as investor sentiment was soured by a fall in commodity prices overnight, while company earnings for the December half failed to meet expectations, dealers said.
   
They said index leading resources companies BHP Billiton and Rio Tinto were both sold during the trading session as a direct result of falling commodity prices, while the rest of the resources sector also experienced large falls.
   
Dealers said wealth management group AMP dropped from three-year highs set
yesterday after reporting a 7.3 pct fall in net profit for the December half, in addition to a lower than expected 750 mln aud capital return, well off the forecast of 1.0 bln aud.
   
The S&P/ASX 200 fell 14.4 points or 0.3 pct to close at 4,820.6, retreating further from the record close of 4,956.7 set on Feb 1.
   
In Hong Kong, share prices were trading modestly up on further fund inflows following Wall Street's rise, with the market having largely factored in signals
of further US interest rate hikes, dealers said.
   
They said the Tokyo bourse's gains in morning trade also helped boost local sentiment.
   
At 3:36 pm, the Hang Seng index was up 26.92 points or 0.17 pct at 15,450.18.
   
In mainland China, A-shares in Shanghai and Shenzhen closed sharply lower on profit-taking with automakers and energy counters dragged down, dealers said. The Shanghai A-share Index fell 29.80 points to 1,332.85 on turnover of 15.50 bln yuan and the Shenzhen A-share Index was down 8.82 points at 320.73 on turnover of 8.97 bln yuan.
   
Share prices in Seoul closed higher on institutional buying, reversing yesterday's sharp decline, with KEPCO, IT and bank stocks leading the rise, dealers said.
   
Despite a firm start sparked by Wall Street's advance and falling oil prices, the index fell below its key support level of 1,300 points at one stage.
   
But intensified program buying in later trading helped the market recover its early losses.
   
South Korea's positive jobless data along with solid gains in major Asian markets also boosted investor sentiment.
   
The KOSPI index closed up 10.48 points or 0.80 pct at 1,314.32.

 Asian Bourse Round-Up

For a full list of closing prices, click here

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Commodities

Gold futures were lower in morning trading, extending a pullback seen in the previous session as investors continue to lock in profits after a six-month run-up in the precious metal. The benchmark April contract was last off $1.50 at $541.20 an ounce.

Crude futures rose in morning trading in a bounce back from Wednesday's session when the benchmark March contract fell to its lowest level since the end of November 2005. Crude was last up 65 cents at $58.39 a barrel.

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