US & World Daily Markets Financial Briefing 18-04-2006

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U.S. stocks open higher on Merrill earnings, data

NEW YORK - U.S. stocks gained ground in early trading Tuesday, buoyed by solid quarterly results from Merrill Lynch and largely benign wholesale inflation data, but concern persisted over the impact on economic growth and corporate earnings of high crude-oil prices.
   
The Dow Jones Industrial Average rose 36 points to 11,110 after ending the prior session at a more than one-month low.
   
The Nasdaq Composite Index gained 11 points to 2,322 while the S&P 500 Index was up 6 points at 1,291.40.
 
The minutes from the latest Federal Open Market Committee monetary policy meeting will be put out this afternoon. According to Cardillo, investors will be on the lookout for clues about the central bankers' views on inflation.
   
Stocks on the move
   
Merrill Lynch gained 98 cents to $79.44. The brokerage reported that its first-quarter net income slipped 61% on a previously announced charge to account for stock options paid as compensation to employees, but the firm reported a record $8 billion in quarterly revenue.
   
Also in the financial sector, investors weighed earnings from Wells Fargo & Co , Mellon Financial , National City Corp. , U.S. Bancorp. and Jefferies Group Inc.
   
Johnson & Johnson stock rose 22 cents to $57.87. The pharmaceutical and medical products company had a modest improvement in quarterly earnings, but revenue fell slightly shy of Wall Street estimates, due largely to a drop in sales at its pharmaceutical division.
   
Pfizer Inc. tacked on 8 cents to $24.52 in early trading, weathering news that a UK advisory board has recommended that the state-run health service not buy the company's Exubera inhaled insulin product.

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Dollar eases on tame inflation, weak housing data

NEW YORK - The dollar eased against major rivals early Tuesday after a tame core wholesale inflation reading and weaker-than-expected housing data triggered concerns the Federal Reserve will soon stop raising interest rates.
   
Outside of food and energy, the core producer price index increased 0.1% in March, the smallest gain since November, a Labor Department report showed. Economists surveyed by MarketWatch had been expecting the core to rise 0.2%.
   
The data "will remove some of the Fed pressure to raise interest rates going out in the future," said John McCarthy, director of foreign exchange trading at ING Capital Markets. The market believes "U.S. rates will rise more slowly or will stop rising."
  
The dollar, for its part, lost strength after the tame core PPI and housing starts reports, as they support a case for the Fed to back off its current rate tightening cycle. The dollar last was down 0.2% at 117.63 yen, as the euro rose 0.2% to $1.2274.The British pound rose 0.4% to $1.7769. The dollar was last down 0.5% at 1.2727 Swiss francs.
   
At 2 p.m., the Federal Reserve will release the minutes from its March 27-28 monetary policy meeting, which is also the first meeting at which Ben Bernanke served as Fed chairman.
   
Currency investors will scrutinize the statement for any hints about the Fed's leanings on future interest rate increases and inflation.
   
"The market will be interested to see whether any members expressed opinions about the likely end of the cycle," said Steve Barrow, chief currency strategist at Bear Stearns, in a note.
   
Tame PPI, weak housing data
   
U.S. producer prices rose 0.5% in March as gasoline prices showed their largest gain in 17 months, the Labor Department said Tuesday. Economists surveyed by MarketWatch had been expecting for last month's PPI to rise 0.4%.
  
Outside of food and energy, however, seasonally adjusted finished goods prices showed little movement.
   
The PPI is up 3.5% in the past year, the lowest year-over-year gain since September 2004. Core prices are up 1.7% in the past year, the same year-over-year gain as last month.
   
Separately, new construction of U.S. houses fell 7.8% to a seasonally-adjusted annual rate of 1.960 million units in March, the lowest level in a year. Economists were calling for a decline to 2.04 million.
   
The dollar lost 1.2% versus the euro and 0.8% versus the yen Monday on a weaker-than-expected Empire State manufacturing report and amid concern the Federal Reserve will soon wrap up its campaign to raise interest rates.
   
Persisting worry about the clash between Iran and the West and the possibility of U.S. military intervention in Iran also weighed heavily on the greenback.
   
Chinese President Hu Jintao is scheduled to visit Washington on Thursday. The Group of Seven finance ministers meet Friday ahead of the weekend meetings of the International Monetary Fund and World Bank.
   
The White House doesn't expect a dramatic announcement of a one-time revaluation of the yuan to coincide with Chinese President Hu Jintao's visit to Washington this week, a senior administration official said Monday, speaking on background to reporters.

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The European Markets at 12.00 BST

London - Leading shares remained higher at midday, paced by further strength across oil and mining issues, while a duo of broker upgrades lifted British Land shares sharply higher, dealers said.
   
By 12.05 pm, the FTSE 100 index was 22.1 points firmer at 6,051.5, while the broader indices were mixed.

Frankfurt - Shares were sharply lower in midday trade following losses on Wall Street overnight after the price of oil breached the 70 usd a barrel level and with a relative lack of local news following the Easter break, dealers said.
   
At 11.50 am, the DAX 30 index was 42.92 points or 0.73 pct lower at 5,875.65, having moved between 5,866.85 and 5,917.84 so far this session.

Paris - Shares were lower midday as trade resumed after a four-day break, weighed by record high oil prices and yesterday's declines on Wall Street, with technology stocks hit by mixed first quarter results from Philips, dealers said.
   
At 12.31 pm, the CAC-40 index was 8.55 points or 0.17 pct lower at 5,094.53, on volume of 1.24 bln eur. Of the CAC-40 stocks, 33 were lower and 7 were higher.

Amsterdam - Share prices were down slightly at midday, as many of the main players lost ground following overnight losses on Wall Street and continued rising oil prices, with Philips down following first-quarter results, dealers said.
   
At 12.45 pm, the AEX was down 1.34 points, or 0.29 pct, at 461.42, after trading in a range of 460.09 to 462.89.

Milan - Share prices were lower at midday, tracking the international trend, and depressed by the impact of high oil prices on the wider economy, brokers said.
   
At 11.50 am, the Mibtel index was down 0.33 pct to 29,160 points and the S&P/Mib down 0.57 pct to 37,462.
   
One broker said the international trend is more of a factor than the continued uncertainty about the outcome of the general election a week ago.

Stockholm - Shares were slightly lower in early afternoon trade as high oil prices helped mining stocks but hit much of the rest of the market, with weak US futures market adding to downward pressure, brokers said.
   
At 1.00 pm, the OMX Stockholm was down 0.35 pct at 337.44 points, and the OMX Stockholm 30 down 0.51 pct at 1,046.63. Turnover was 1.013 bln skr.

Helsinki - Shares were slightly lower midday, as a weaker Nokia offset strong gains in Fortum and Neste Oil amid higher oil prices, dealers said.
   
At 11.53 am, the OMX Helsinki 25 index was down 0.08 pct at 2,680.79. The OMX Helsinki index was 0.25 pct lower at 9,374.17, while the OMX Helsinki CAP portfolio index was up 0.07 pct at 5,007.59.
   
Nokia, which publishes its first quarter report on Thursday, was down 1.26 pct to 17.20 eur, tracking its lower ADR price in New York last night, dealers said.

Brussels - Shares slipped in subdued midday trading, tracking other European bourses as markets remained under pressure from high oil prices and overnight losses on Wall Street, dealers said. At 12.36 pm, the Bel 20 index was down 16.42 points or 0.43 pct at 3,825.58.
   
Bancassurance group KBC slipped 0.40 eur or 0.46 pct to 87.20 after UK newspaper The Business reported that Banco Sabadell has tabled a near 800 mln eur offer for KBC's Spanish unit Banco Urquijo, a higher price than many players had been expecting.

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Asian shares close up, Tokyo firmer on bargain-hunting

HONG KONG - Share prices across the Asia-Pacific region ended firmer with Tokyo sharply higher as bargain hunters stepped back in to the market to snap up stocks dumped in yesterday's heavy sell-off, dealers said.
   
A weaker Wall Street overnight and surging oil prices were not enough to deter investors, with the country's robust economic recovery and hopes for strong full year to March corporate earnings underpinning the buyback.
   
Dealers said the session was volatile, with some early losses following the Wall Street weakness, but the market rebounded in the afternoon session.
   
At the close, the 225-issue Nikkei Stock Average closed up 232.50 points or 1.4 pct at 17,232.86. On Monday the index slumped 233.46 points or 1.35 pct at 17,000.36
   
The broader TOPIX index of all first-section issues rose 22.70 points or 1.3 pct to 1,741.75.
   
"Yesterday plunge was overdone (encouraging today's buy back)," said Ryuta Otsuka, a strategist at Toyo Securities.
   
Share prices in Australia closed at fresh record highs as investors returned from the Easter holiday break buying resource stocks on metal and oil prices, while banking stocks also supported the market higher, dealers said.
   
They said the local market ignored negative offshore leads following the fall on Wall Street overnight, with sentiment lifting as metal prices rose, including gold which hit a 25-year high above 618.00 usd an ounce.
   
Dealers said index leading resources stocks BHP Billiton and Rio Tinto rose on expectations of stronger metal prices ahead as copper futures surged to fresh record levels.
   
The S&P/ASX 200 climbed 72.9 points or 1.41 pct to close at a fresh record high of 5,248.6, surpassing the previous record high of 5,238.9 set on April 7.
   
Share prices in Hong Kong were trading higher in the afternoon after mainland authorities announced that Chinese individuals and corporates will be given greater access to foreign exchange and be permitted to invest in overseas capital markets for the first time, dealers said.
   
They said China stocks led the gains on expectations that they will get a boost from increased capital flows from the mainland, with news of strong first-quarter GDP growth on the mainland also providing support.
   
At 3:20 pm, the Hang Seng Index was up 169.29 points or 1.03 pct at 16,598.74.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on sustained follow-through interest with metal listings and food stocks snapped up in particular, dealers said.
   
The Shanghai A-share Index added 6.72 points to 1,452.63 on turnover of 18.0 bln yuan and the Shenzhen A-share Index was up 1.04 points at 359.38 on turnover of 12.67 bln yuan.
   
In Seoul, share prices finished higher, rebounding from yesterday's retreat, as Samsung Electronics surged more than one pct on its share buyback, dealers said.
   
Samsung Electronics bought back a total of 70,000 shares on the market for about 45.3 bln won as a part of a 1.85 trln won share buyback program.
   
The KOSPI index closed up 4.37 points or 0.31 pct at 1,427.00.

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Crude futures rose 27 cents to $70.67 a barrel. Continued concerns about a possible military confrontation between the West and Iran largely spurred the gains. Credit Suisse now forecasts crude at between $65 and $72 in three months, with a level of $75 a barrel seen as the top.
   
Gold futures were choppy in morning trading. The benchmark June contract was last up 50 cents at $619.40 an ounce.
   
Treasury prices were on the rise, sending yields a little lower, after the tame core producer price result and the weak housing starts numbers. The benchmark 10-year Treasury note last was up 4/32 at 96-6/32 with a yield of 4.99%.

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