US & World Daily Markets Financial Briefing 18-08-2006

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Stocks mixed as Dell depresses Nasdaq

NEW YORK - Investors kept stocks mixed in opening trading Friday after Dell Inc. handed Wall Street disappointing quarterly results, and investors reacted as oil rebounded from an eight-week low.
   
Dell, the world's largest computer maker, pressured the technology sector after reporting that its second-quarter profit plunged 51 percent. The company, already reeling from a massive laptop battery recall earlier in the week, also disclosed the Securities and Exchange Commission has been investigating its accounting for the past year.
   
In the first hour of trading, the Dow Jones industrial average rose 27.86, or 0.25 percent, to 11,362.82.
   
Broader stock indicators were mixed. The Standard & Poor's 500 index was up .83, or .06 percent, to 1,298.31, and the Nasdaq composite index fell 3.38, or 0.16 percent, to 2,154.23.

Stocks in focus

Altria Group and Reynolds American may rise after a judge's ruling held that tobacco companies including Altria's Philip Morris USA and Reynolds American violated federal racketeering laws, though the judge said she was unable to order financial remedies.
   
The court victory is particularly important for Altria, as it may let them proceed with a break-up plan - or, in Citigroup analyst Bonnie Herzog words, "Get ready for MO to move the cheese," a reference to partly-held Kraft Foods. Herzog reiterated a buy rating on Altria.
   
Apparel giant Gap Inc. said second-quarter earnings tumbled 53 percent, blaming aggressive markdowns that slammed margins, and said it was paring its full-year forecast.
   
Marvell Technology, which designs chips for consumer electronic devices, said its net revenue rose 47 percent to $574 million. That's short of Wall Street's expectations, which called for sales of $583 million. The company didn't report its net income or per-share figures because of an internal review of its stock-option accounting.
   
Autodesk didn't report its earnings for the same reason. The design software maker reported a 21 percent improvement in quarterly revenue.
   
Ford Motor Co. is considering closing more factories and cutting salaried jobs and benefits by 10 percent to 30 percent, The Wall Street Journal reported Friday.
   
The same newspaper reported Bristol-Myers Squibb directors are open to replacing Chief Executive Peter Dolan over his mishandling of a failed settlement to delay generic competition to Plavix. Shares have fallen 20 percent over the past three weeks after a criminal probe started, state attorneys general rejected the proposed deal and Apotex launched a generic Plavix.

According to the report, the board has not found any evidence of misconduct, but the failed settlement threatens a large chunk of its annual $3.8 billion in Plavix revenue.

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Dollar moves higher ahead of US confidence data; Yen comes off highs

LONDON - The dollar moved higher against major currencies as the market awaited US University of Michigan consumer confidence data this afternoon, while the boost to the yen from the unexpected news of a Chinese interest rate hike earlier began to peter out.
   
As US markets opened, the dollar picked up after trading within tight ranges throughout much of the morning. The US currency had gained sharply overnight after yesterday's very strong Philadelphia manufacturing survey, which jumped to 18.5 index points in August from 6.0 a month earlier.
   
Bear Stearns analyst Steve Barrow said the positive US data combined with rumours that the Federal Reserve may raise interest rates again, while inflation and industrial production data out of the euro zone were both a little weaker than expected.
   
"On balance, the news was a little more positive for the dollar," he said.
   
Meanwhile, the yen reversed much of the gains earlier in the day which had come after the surprise news that the Chinese central bank raised its one-year deposit and lending rates by 27 basis points.
   
The interest rate hike was an attempt to cool China's overheating economy and caused a bout of yen buying, with the Japanese currency likely to benefit most from any appreciation in the Chinese yuan.
   
Barrow noted, however, that the reaction was "very fleeting" and shows there "doesn't seem to be much at the moment that can really shock the market".
   
Prior to the Chinese announcement, the yen had fallen sharply, particularly against the euro, after Bank of Japan governor Toshihiko Fukui suggested that Japanese interest rates will be kept low.
   
Fukui was cited by the Kyodo news agency as saying that the BoJ will keep monetary policy loose if inflationary risks do not emerge, and that interest rates will be adjusted gradually.

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For a list of the main FTSE risers and fallers at 13.00 GMT, click here   

Paris

At 1.24 GMT, the CAC-40 index was up 3.77 points at 5,148.61, on volume of 2.2 bln eur. The benchmark index has posted daily gains over the past five straight sessions.
   
On the Matif, August CAC-40 futures were trading up 6.5 points at 5,153 ahead of their expiry later this afternoon, while the September contract was up 5.5 at 5,162.5.
   
Among blue chips, Sanofi-Aventis slid 0.20 eur or 0.3 pct to 70.80 ahead of today's US court hearing in New York, aimed at keeping Canada's Apotex from selling generic versions of its Plavix blockbuster drug ahead of the full trial on the validity of Sanofi's Plavix patent, set for early next year.
   
EADS fell 0.17 or 0.7 pct to 23.22, handing back early gains seen after the Saudi Arabian government confirmed its order for 72 Typhoon jets from the Eurofighter consortium, reportedly worth 10 bln stg. Dealers said the stock was hit by profit taking after sharp gains seen early in the week.
   
On the second line, Valeo was off 0.12 or 0.4 pct at 27.98 after the Financial Times reported that the company may bid for the whole of troubled Visteon Corp, rather than just buying some parts of the business as it has previously indicated, dealers said.
   
Air France-KLM rose 0.12 to 20.18; French tabloid Le Parisien cited unnamed sources as saying the carrier could bail out struggling Italian airline Alitalia in return for a pledge that Enel will drop its ambitions concerning Suez.

Frankfurt

The DAX 30 index was 3.90 points or 0.07 pct higher at 5,837.41, having drifted between a high of 5,849.37 and a low of 5,813.66. The MDAX was at 8,138.89, up 5.43 points or 0.07 pct, while the TecDAX was at 660.00, up 1.76 points or 0.27 pct.
   
The DAX futures contract was at 5,849.00, up 2.00 points or 0.03 pct, while bund futures were at 116.81, up 0.02 points.
   
Producer prices in Germany rose 0.5 pct in July from June and were up 6.0 pct from July last year, driven mainly by higher energy and raw metals prices, the Federal Statistics Office said.
   
Fresenius Medical Care, up 2.35 eur or 2.34 pct at 102.77, led the major board after parent Fresenius AG soared on the midcap MDAX index on the back of yesterday's wage increase won by striking doctors in university hospitals.
   
Fresenius soared 6.91 eur or 5.14 pct at 141.14 while Rhoen-Klinikum added 1.21 or 4.10 pct at 30.70, both on the MDAX.
   
Back to the blue chip board DAX 30, Deutsche Telekom (DTE) enjoyed the bulk of today's limited newsflow but the telco giant remained unmoved, trading slightly higher. It was up 0.03 or 0.26 pct at 11.36.

Carmakers were major gainers, led by DaimlerChrysler, up 0.37 or 0.90 pct at 41.70.

Amsterdam

At 11.44 GMT, the AEX was up 1.39 point or 0.3 pct at 464.65, after opening at 463.03 and trading in a narrow range of 462.76-464.66. Government bonds traded flat to slightly lower, while the euro stood at 1.2800 usd, slightly down from 1.2868 usd late yesterday.
   
Shares opened slightly lower on the back of rising crude prices, but soon moved into positive territory helped by gains in oil sector stocks and selected heavyweights, dealers said, noting that futures indicate a slightly lower start to trading on US markets.
   
DSM led blue chip gainers, rising 1.53 pct at 29.88 on news it has ended its eight-month long search for a new CFO, with analysts welcoming the intended appointment of Beiersdorf's Schwalb.
   
Oil sector issues were also higher amid rising crude prices, with Royal Dutch Shell gaining 1.39 pct at 27.68 and SBM Offshore firming 0.86 pct at 21.16, also benefiting from a report it is frontrunner for two mid-size FPSO orders for ExxonMobil's Bosi field off Nigeria. Fugro, meanwhile, was 1.01 pct higher at 33.90 after announcing it is in talks to buy Rovtech, a Scottish provider of ROV (Remotely Operated Vehicle) services to the oil and gas industry.
   
Other notable AEX gainers were ABN Amro, up 0.84 pct at 21.67 and Fortis, adding 0.63 pct at 30.31, while KPN put on 0.53 pct at 9.54 and Philips, 0.27 pct higher at 26.38.
   
VastNed Retail tumbled 4.43 pct at 62.55 after ABN Amro downgraded the stock to 'reduce' from 'hold'.
   
Other fallers were Getronics, down 1.27 pct at 5.46, TomTom off 1.13 pct at 31.42 and Numico easing 1.06 pct at 35.40 while ASML gave up 0.9 pct at 16.53 as Delta Lloyd Securities downgraded the chip equipment maker to 'hold' from 'accumulate' as the stock nears the broker's 17 eur price target.

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Asian shares close mixed; Tokyo boosted by Wall St and lower oil prices

HONG KONG - Shares across the Asia-Pacific region closed mixed with Tokyo and Seoul boosted by gains on Wall Street overnight and a further drop in oil prices.
   
Tokyo shares closed higher with investor sentiment getting a boost from modest gains in US stocks and a belief that oil prices have stabilized, dealers said.
   
The market could sustain its upturn next week with the benchmark Nikkei index predicted to touch 16,500 points, but investors will probably look to Wall Street for trading cues, with the corporate earnings season over and fresh economic data scarce, they added.
   
The Nikkei 225 Stock Average closed up 85.14 points or 0.5 pct at 16,105.98, after moving between 16,022.12 and 16,169.84. For the week, the index gained 3.5 pct.
   
The broader TOPIX index of all first-section issues rose 9.99 points or 0.6 pct to 1,641.45, just off the day's peak of 1,644.50. For the week, the TOPIX was up 4.0 pct.
   
Australian shares closed slightly lower as investors took profits after recent solid gains, while lower commodity prices weighed on resource and energy stocks, dealers said.
   
They said banking stocks fell after a semi-annual testimony by Reserve Bank of Australia governor Ian Macfarlane who suggested interest rates could rise further.
   
The S&P/ASX 200 slipped 3.4 points, or 0.07 pct, to close at 5,052.5. The benchmark indicator closed off the day's low of 5,026.5, with the high at 5,059.1.
   
Over the trading week the key index advanced 103.3 points or 2.09 pct.
   
Hong Kong shares were weaker in afternoon trade with investors cautious ahead of the weekend and more corporate results announcements next week, dealers said.
   
At 3:25 pm the Hang Seng Index was down 17.66 points or 0.10 pct at 17,355.39.
   
In China, A-shares in Shanghai and Shenzhen closed lower, with the weak sentiment reflected in the debut of Air China Ltd which closed unchanged at its IPO price on on the Shanghai Stock Exchange, dealers said.
   
The Shanghai A-share Index fell 5.68 points, or 0.34 pct, to 1,679.86 and the Shenzhen A-share Index was down 2.55 points at 411.88.
   
Seoul share prices finished slightly higher, extending their gains for a fourth session, in tandem with a rise on Wall Street and lower oil prices, dealers said.
   
After a brief downturn initially, the market gained momentum, moving into positive territory as foreign investors, mostly focused on large cap IT stocks, boosted overall sentiment, they said.
   
The KOSPI index closed up 3.32 points or 0.25 pct at 1,331.10, after moving between 1,336.38 and 1,324.62, ending the week higher by 39 points.

Asian Bourse Round-Up

For a full list of closing figures, click here

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Oil prices moved higher in trading after bottoming at $70 a barrel a day earlier on cooling of Middle East tensions. A barrel of light, sweet crude for September delivery rose 68 cents to $70.74 a barrel in electronic trading on the New York Mercantile Exchange.

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