US & World Daily Markets Financial Briefing 16-05-2007

The world's most trusted name in professional trader education. Click Here

Stocks Rise Following Housing Data

NEW YORK  -  Wall Street rose in early trading Wednesday after economic data rendered a better-than-expected picture of the housing and industrial sectors.
   
The Commerce Department figures on building permits and housing starts come a day after a lackluster read on the housing sector upended a big rally in stocks, sending Wall Street to a mixed finish. Still, the Dow Jones industrials rose above 13,400 for the first time Tuesday and the blue chip index saw a record close.
   
Wednesday's report said housing starts rose 2.5 percent on a seasonally adjusted annual rate. In March, the increase was 0.3 percent. However, housing starts fell 16.1 percent from a year earlier to their lowest level in 17 years.
   
The strength of housing has for months remained an ever-present concern on Wall Street as investors debated whether a pullback in home values and an unraveling of some loans made to people with poor credit would derail the economy.
   
Always mindful of the latest economic data as it tries to plot where the economy is headed, Wall Street appeared pleased by a Federal Reserve report that found industrial output rose 0.7 percent in April. The stronger-than-expected increase reflected a rebound in manufacturing and a big jump in output by the nation's utilities. In March, output fell 0.3 percent.
   
In early trading, the Dow rose 45.99, or 0.34 percent, to 13,429.83. Broader stock indicators rose. The Standard & Poor's 500 index rose 7.35, or 0.49 percent, to 1,508.54 and the Nasdaq composite index rose 10.78, or 0.43 percent, to 2,536.07.
   
Bonds showed little change despite the economic readings. The yield on the benchmark 10-year Treasury note remained flat at 4.71 percent from late Tuesday. Light, sweet crude fell 62 cents to $62.55 per barrel in premarket electronic trading on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies rose 2.38, or 0.29 percent, to 816.56. Overseas, Britain's FTSE 100 rose 0.01 percent, Germany's DAX index fell 0.08 percent, and France's CAC-40 fell less than 0.01 percent.
   
In corporate news, Federated Department Stores Inc. said it swung to a profit from a loss, although earnings excluding costs of the company's integration of May Department Stores Co., which it acquired in 2005, fell short of Wall Street's expectations. Federated rose 14 cents to $40.08.

VantagePoint's market forecasts are nearly 80% accurate.  Take a look at actual  forecasts and see the difference they can make in your trading. Click here to see two recent forecasts now.

Pound steadies after fall caused by BoE inflation report

LONDON - The pound steadied after falling slightly this morning in the wake of the Bank of England's inflation report for May, which seemed to confirm market expectations of another rise in interest rates this
year.
   
The pound levelled out after falling to a day low against the dollar and a two-month low against the euro, after the BoE predicted inflation will be around the 2.0 pct target in two years' time assuming interest rates rise as the market expects.
   
"There's nothing else for the market to feed on from this report," said Neil Mellor, currency strategist at the Bank of New York. The market is expecting rates to go up and the Bank has supported this view."
   
The dollar, meanwhile, was steady ahead of housing and industrial production data this afternoon.
   
Housing starts in April are set to fall to 1.480 mln units from 1.518 mln the previous month, while building permits are set to dip to 1.523 mln from 1.544 mln. Industrial production is expected to have risen by 0.2 pct in April from the previous month, offsetting the equivalent fall in March. Capacity utilisation is expected to have edged up to 81.5 pct from 81.4 pct.
       
Earlier, the dollar slipped slightly after US core CPI in April came in below consensus, but the negative effect was mitigated by other data, such as the Empire State survey into manufacturing conditions around the New York region, coming in fairly strong.
   
"With the FOMC presumably growing in confidence that slower growth will bring elevated core inflation back in line with price stability without it resorting to higher rates, the continued decline in yield support for the dollar ... may now be seen to be on a firmer footing," said Simon Derrick, currency strategist at the Bank of New York.
   
Elsewhere, the euro was little affected by this morning's inflation data, which was consistent with the widely-held view that interest rates will rise in June and that more rate hikes later this year are a possibility.
   
The euro zone's harmonised index of consumer prices rose a final 1.9 pct year-on-year in April, revised up from a provisional estimate of a rise of 1.8 pct and the same rate as in March.

Trade with RCG fxtrader ™, the platform offering instant access to 12 major FX trading pairs with low spreads (2 pips EURUSD, USDJPY) and global news from 3 major sources.  Trade with a registered and regulated company in business for 80 years. Smart money trades here. Get your FREE Trial Today!

Euroshares lower midday after mixed earnings news; Wall St set to open higher

LONDON - Europe's leading exchanges traded mostly lower after a mixed set of quarterly results in the banking and telecom sectors, but Vivendi shares bucked the downtrend as analysts gave a cautious welcome to a solid first-quarter performance.
   
At 13.02 am, the STOXX 50 index was down 7.65 points to 3,876.98 while the STOXX 600 dipped 0.24 points to 389.97.
   
Credit Agricole shares fell 4.23 pct after the company's disappointing first quarter results with net profit at 2.655 bln eur missing analysts consensus. Goldman Sachs, in a note to clients, said the bank remained its best 'buy idea' in France due to its "higher exposure to asset gathering businesses and a more attractive valuation."
   
Also Goldman upgraded Banco Popular -- up 1.64 pct -- to 'neutral' from 'sell' and said it prefers Banco Bilbao Vizcaya Argentaria SA -- up 0.38 pct-- over France's BNP Paribas -- down 0.46 pct.
   
But ING slipped 0.12 pct after initial enthusiasm about its much bigger than expected share buyback programme faded. Citigroup said underlying first quarter at its banking arm were "in-line with forecast, with margin pressure offset by good volume growth".  Shares in Zurich Financial Services gained 2.12 pct after a solid set of first-quarter results.
  
On the M&A front, Banca Monte Paschi di Siena SpA is reportedly eyeing Spain's Banco Bilbao Vizcaya Argentaria SA for a possible link-up, according to an unsourced report in daily Finanza & Mercati.
   
Unicredito shares were 0.74 pct lower and Capitalia slipped 0.15 pct as the two Italian banks confirmed they were in talks with a view to a possible tie-up.
    
Shares in Societe Generale, which had also been mooted as a possible merger partner for Unicredito, were down 0.8 pct.
   
Shares in Julius Baer was still up 2.82 pct midday, but was well off intra-morning highs, as speculative talk waned that Deutsche Bank could be interested in UBS' 21.5 pct stake in the banking group waned.
   
Car stocks also some vague speculative interest with Volkswagen leading the STOXX 50 risers on ongoing Porsche bid rumours. Renault spiked in early after trade on talk of BMW interest, but soon came off highs as few gave the talk any credence. Sceptical traders said a potential acquisition would yield few benefits for BMW.
 
Zurich - Shares were trading little changed with a weakness in heavyweights Nestle and Roche weighing on the index and insurer Zurich Financial outperforming after its first quarter results exceeded expectations, analysts said. At 3.16 pm, the SMI was down 0.06 points at 9,390.97 and the SPI was up 5.35 points at 7,625.71.

Lisbon - Shares were slightly lower midday, amid volatile trade, led down by blue chip Portugal Telecom and conglomerate Sonae as heavyweight BCP led the few gainers on heavy volume. At 12.56 pm, the PSI 20 index was down 15.49 points at 12,300.71.
   
Milan - Milan shares were slightly lower after yesterday's new record highs for the S&P/Mib index, and in terms of trading volumes, with no new theme on the table, but selective shares like Bulgari shined after better-than-expected results. At 1.20 pm, the Mibtel index was down 0.18 pct at 33,971 while the S&P/Mib index fell 0.32 pct at 43,883, on volumes worth some 8.056 bln eur.

Madrid - Share prices were higher in quiet mid-session trading led by Gamesa after forecast-beating first quarter sales, with construction and energy issues firm, while Telefonica was lower after in-line first quarter results. At 1.02 pm, the IBEX-35 index was up 28.3 points at 14,852.5, after trading in a range of 14,763 - 14,889, on turnover of about 1.910 bln eur.
   
Amsterdam  - Shares were slightly lower in Amsterdam at midday, failing to correct this morning's dip on Wall Street's mixed close, while ASML led blue-chip decliners. At 12.40 pm, the AEX was down 1.94 points or 0.37 pct at 529.45, after opening at 530.90 and trading in a range of 529.19-531.84.
  
Stockholm - Stockholm shares closed today's shortened session marginally higher, after spending most of the session hovering around the unchanged level on a dearth of leads, with NCC posting strong gains after recent underperformance. The OMX Stockholm index closed up 0.08 pct at 409.58, while the OMX Stockholm 30 index rose 0.13 pct to close at 1,259.27.
   

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 mostly higher; Tokyo flat ahead of GDP release

HONG KONG - Shares across the Asia-Pacific region closed mostly higher on bargain hunting and technical rebounds although Tokyo shares were flat as investors await the release of GDP data tomorrow.
   
Tokyo investors held back, waiting for the release tomorrow morning of the first-quarter GDP figures. Market participants are also waiting to see the latest US industrial output and housing starts data, which are due out later today, for further clues about the outlook for US interest rates.
   
The blue-chip Nikkei 225 Stock Average closed 16.02 points or 0.09 pct higher at 17,529.00, off a high of 17,539.95. The TOPIX index of all first-section issues was down 0.66 point or 0.04 pct at 1,711.89, off a low of 1,701.55.
   
Investors are also awaiting remarks by Bank of Japan governor Toshihiko Fukui for indications about the outlook for interest rates.
      
Australian shares ended flat as gains in BHP Billiton and leading investment bank Macquarie overshadowed mixed results elsewhere as investors await fresh leads from either domestic or offshore sources.
   
The S&P/ASX 200 closed up 3.4 points or just 0.05 pct at 6,294.6.
   
Aequs Securities head of institutional trading Ric Klusman said trading was characterized by consolidation. "It was a bit of a lackluster day and also there's a bit of uncertainty about which direction the market is heading," Klusman said.
   
Hong Kong shares were firmer in afternoon trade, largely on a technical rebound in China-related stocks and local blue chips after yesterday's losses.
   
However, caution remained, capping the session's gains, as investors worried about a possible correction in the mainland China markets following recent sharp gains, especially if Beijing imposes new credit-tightening measures.  At 3.25 pm the Hang Seng Index was up 35.65 points or 0.17 pct at 20,903.83.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on bargain-hunting interest after yesterday's sharp declines, with food and machinery stocks in demand.The Shanghai A-share Index was up 89.42 points or 2.19 pct to 4,175.87 and the Shenzhen A-share Index was up 27.91 points or 2.44 pct at 1,171.36.
   
Seoul shares closed higher, recovering much of yesterday's losses to reclaim the 1,600-point level, with sentiment underpinned by firmer regional markets.
     
The KOSPI index closed up 11.23 points or 0.71 pct at 1,600.60, off a low of 1,586.00 and a high of 1,600.72.

Follow the futures and FX markets with our trading experts and read their analysis.  Click here to sign up now!

Copper down on worries over build up of stocks in Shanghai; gold eases

Copper edged lower on worries the surge of imports into China this year has led to a build up of stocks in Shanghai.
   
Dresdner Kleinwort analyst Peter Fertig said while copper rallied in London yesterday on strong Chinese import data, "the perception in China was completely different today. There the focus is on already increasing stockpiles and the high level of copper imports is expected to lead to further rising inventories, which would depress the price of copper," he said.
  
Shanghai copper futures fell for a fifth day in a row today. At 12.21 pm in London, LME copper for three month delivery was trading down at 7,670 usd a tonne against 7,760 usd at the close yesterday.
   
Copper rallied yesterday after Chinese customs data showed the world's biggest copper consumer imported 205,053 tonnes of metal in April, or 44 pct more than the same month last year.
   
Imports were down 7 pct from the record 219,359 tonnes imported in March, but players overlooked this as they had been expecting a much larger fall on the month.
   
Nickel was down at 50,150 usd a tonne against 50,700 usd at the close yesterday after the LME reported stocks of the metal held in its warehouses rose by 198 tonnes to 4,872 tonnes.
  
Zinc was down at 3,850 usd against 3,920 usd, while lead was down at 2,085 usd against 2,090 usd. Yesterday, the International Lead and Zinc Study Group (ILZSG) said global lead and zinc markets will be in deficit this year, mainly because of surging Chinese demand. It projected a deficit of 40,000 tonnes for zinc and 50,000 tonnes for lead in 2007.
    
Aluminium was down at 2,832 usd against 2,855 usd, while tin was down at 14,100 usd against 14,150 usd.

Gold softened a touch this morning after yesterday's minor upswing on the back of a weakening dollar, as the metal continued to consolidate between key resistance levels. The market is now looking to further economic data, out later this afternoon, for further clues as to the direction of prices.
   
At 9.53 am, spot gold dipped slightly to 670.00 usd per ounce against 673.45 usd in late New York trade yesterday.
   
"Although encouraging that support at 665 usd is holding firm, which is key to keeping the upward momentum intact, gold could likely run into resistance in front of 675 usd," said analysts at Standard Bank. "A period of consolidation within the current 665-675 usd band should continue," they added.
   
Gold swung higher yesterday after the US currency eased as weaker-than-expected US inflation figures spurred expectations that a cut in interest rates could come sooner rather than later.

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.