US & World Daily Markets Financial Briefing 19-04-2006

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Stocks trade mixed; inflation report caps gains

NEW YORK - U. S. stocks were mixed in early trading Wednesday as solid earnings reports from United Technologies, Yahoo, Texas Instruments and others were offset by a stronger-than-expected rise in retail inflation.
   
The Dow Jones Industrial Average was last up 17 points at 11,286. The Nasdaq Composite Index rose 5 points to 2,361 while the S&P 500 Index was off 1 point at 1,306.
   
On Tuesday, stocks put in their best one-day gain in a year after minutes from the latest Federal Reserve meeting showed most members agreed the central bank's chapter of steady rate hikes was coming to a close.
   
Six Dow stocks report earnings
   
International Business Machines Corp. fell 45 cents to $43.71. The company late Tuesday unveiled a 22% increase in quarterly profit after it cut costs in its services business and sold its struggling personal computer business to a Chinese rival.
   
Pfizer fell 26 cents to $24.67 after reporting a sharp improvement in quarterly profit. Revenue, however, failed to live up to analysts' expectations as the drug giant suffered a loss of market exclusivity on several key products.
   
Coca-Cola rose 25 cents to stand at $41.55 in early trading. The soft drinks giant had a 10% gain in quarterly net income, although revenue was flat. The company board increased the quarterly dividend by 11%.
   
JP Morgan Chase was off 2 cents at $42.58. The investment bank had a 35% increase in quarterly net income, although its retail banking profits was lowered by mortgage weakness.
   
United Technologies Corp soared 4.1% to $61.39. The company turned in an 18% increase in net income and lifted its 2006 forecast.
   
Honeywell Inc. reported earnings and sales that outstripped expectations, amid a strong performance by its aerospace group. The stock was down 40 cents at $43.76 after rising 3% ahead of its earnings release on Tuesday.
   
Other earnings standouts
   
Texas Instruments gained 26 cents to $34.26. Late Tuesday the chips maker reported a 42% rise in net income, due to higher demand from the mobile phone sector.
   
Among other closely-watched technology stocks, Yahoo Inc. shot up 7.2% to $33.55. Although the company's profit dropped 22% due to higher expenses and employee stock options costs, sales surged on growth in the Web giant's online advertising business.

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Dollar bounces back from 7-month euro low after CPI

NEW YORK - The dollar rallied against major rivals early Wednesday after a consumer price report showing higher inflation boosted speculation the Federal Reserve will keep lifting interest rates.
   
U.S. core consumer prices rose at their largest pace in a year, the Labor Department said. The core consumer price index -- which excludes food and energy prices -- increased 0.3% last month. Overall consumer price inflation also picked up in March, rising 0.4%. Economists surveyed by MarketWatch had expected the CPI to rise 0.3% and the core rate to rise 0.2%.
   
"The high level of 'certainty' priced into the markets yesterday about a Fed pause at a 5% target will be removed with today's core CPI inflation gain. Though we still think the Fed will be comfortable pausing at a 5% rate," said analysts at research firm Action Economics.
   
In early New York trading, the euro was down 0.4% at $1.2309, after having earlier touched $1.2373, the highest level since early Sept., 2005. The dollar was changing hands at 117.32 yen, up 0.3% from late Tuesday. The British pound rose 0.03% to $1.7835, while the dollar was last up 0.5% at 1.2743 Swiss francs.
   
Traders said the higher core reading and relatively high headline CPI readings also gave dollar bears an excuse to take profits after the currency's recent steep declines.
   
The dollar had earlier fallen to a seven-month low against the euro and a two-week low against the yen after minutes from the latest Federal Reserve monetary-policy meeting released Tuesday suggested an end to the U.S. rate hike cycle was near.
   
"Most members thought that the end of the tightening process was likely to be near, and some expressed concerns about the dangers of tightening too much, given the lags in the effects of policy," the summary of the March 27-28 meeting said.
   
The Fed has hiked rates for 15 straight meetings, bringing rates back to 4.75% after hitting a low of 1% in the spring of 2004.
   
Sterling up on hawkish BOE
   
Overnight, the British pound picked up strength, buoyed by hawkish minutes from the Bank of England's April 5-6 meeting.
   
The BOE voted 7-to-1 to hold interest rates at 4.5%, as expected. Soon-to-depart member Stephen Nickell voted for a rate cut, as he has since December.
   
"For most committee members the data suggested that recent output growth had continued to grow at or around the trend rate, although for some there remained a small downside risk to the near-term outlook. Inflation was likely to remain close to target with some upside risks in the near term related to recent increases in energy prices," the bank said.
   
Elsewhere, the Japanese leading economic index was revised up to 90.9%, the second highest reading since 2000, suggesting economic growth in the world's second-largest economy remains robust.

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The European Markets at 12.00 BST

London - Blue chips remained higher at midday but held off earlier 5-year highs, having touched the key 6,100 mark in early deals. Dealers were awaiting the latest US CPI data and Wall Street's opening after yesterday's near 200 point surge on easing interest rate concerns in the US, dealers said.
   
At 12.10 pm, the FTSE 100 index was 34.7 points firmer at 6,078.8, having reached a peak of 6,100.6.

Frankfurt - Shares were sharply higher in midday trade, following a solid session on Wall Street overnight and as bullish statements after the US close from IBM, Texas Instruments and Yahoo and a raft of upbeat broker comments on German stocks boosted sentiment, dealers said.
   
At 11.20 am, the DAX 30 index was 84.94 points or 1.44 pct higher at 5,987.52, having moved between 5,935.41 and 5,994.01 so far this session.

Paris - Shares were higher midday after a strong overnight rally on the US and Asian markets, as surging oil prices were offset by an easing of US interest rate fears, dealers said.
   
At 12.47 pm, the CAC-40 index was up 54.64 points or 1.07 pct to 5,150.61, on volume of 1.87 bln eur. Of the CAC-40 stocks, 38 were higher and two were lower.

Amsterdam - Shares were broadly higher at midday, buoyed by a higher close of Wall Street and with US futures indicating a higher opening of the US market, dealers said, while Philips led gainers after a price target hike.
   
At 12.05 pm, the AEX was up 4.21 points or 0.91 pct to 466.94, after opening at 467.40 and reaching an earlier high of 467.92.

Milan - Share prices were higher at midday, tracking a strong performance on Wall Street overnight, with gainers led by Finmeccanica on a broker upgrade and STMicro, which was boosted by positive chip sector earnings news, dealers said.
   
At 11.58 am, the Mibtel index had gained 0.98 pct to 29,491 points and the S&P/Mib had added 1.17 pct to 37,949, while volumes stood at 3.04 bln eur.
   
Finmeccanica was up 2.55 pct at 19.14 eur, driven by an upgrade to 'buy' from 'neutral' at Merrill Lynch on valuation grounds.

Helsinki - Helsinki shares were firmer midday, buoyed by Wall Street's stronger close, with Nokia up ahead of its first quarter results tomorrow, and industrials and paper enjoying solid gains on improved sentiment and bargain-hunting, dealers said.
   
At 12.45 pm, the OMX Helsinki 25 index was up 0.94 pct at 2,703.48. The OMX Helsinki index was 0.69 pct higher at 9,458.17, while the OMX Helsinki CAP portfolio index was up 0.77 pct at 5,042.59.

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Asian shares close higher tracking Wall St gains, easing US rate worries

HONG KONG - Share prices across the Asia-Pacific region ended up on gains on Wall Street overnight after minutes from the latest Federal Open Market Committee meeting suggested that the series of interest rate increases in the US may soon end, dealers said.
   
Share prices in Tokyo finished higher tracking Wall Street's rise although worries over crude oil prices which remained near 71 usd per barrel in Asian trading trimmed the market's gains, dealers said.
   
The Nikkei 225 Stock Average closed up 117.26 points or 0.7 pct at 17,350.12, off its intraday best of 17,459.24.
   
The broader TOPIX index of all first-section issues gained 5.57 points or 0.3 pct to 1,747.32, off a high of 1,764.55.
   
"Investors followed the strong gains in US markets as the minutes of the March FOMC meeting raised hopes of an end to the Fed's current credit tightening process," said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.
   
Share prices in Australia closed at fresh record highs as investors there also followed gains on Wall Street and while strong metal prices continued to drive resource stocks, dealers said.
   
They said the market surged from the open as the key S&P/ASX 200 index reached a fresh intra-day record of 5,301.8 before profit taking later in the trading session reduced some of the gains.
   
Dealers said investor sentiment was largely unaffected by oil rising to record levels above 71 usd a barrel.
   
They said metal prices continued their strong rise in London which supported global miners BHP Billiton and Rio Tinto to record closing levels.
   
The S&P/ASX 200 gained 35.3 points or 0.67 pct to a fresh record close of 5,283.9, surpassing Tuesday's previous record close of 5,248.6.
   
In Hong Kong, share prices were trading higher in the afternoon, extending yesterday's rally as steep gains on Wall Street overnight helped investors put aside worries over oil prices, dealers said.
   
At 3:32 pm, the Hang Seng index was up 203.98 points or 1.23 pct at 16,841.51.
   
In mainland China, A-shares in Shanghai and Shenzhen ended higher on continued follow-through interest with metal stocks and real estate developers buoyed, dealers said.
   
The Shanghai A-share Index added 11.99 points to 1,464.62 on turnover of 21.44 bln yuan and the Shenzhen A-share Index was up 1.03 points at 360.41 on turnover of 12.77 bln yuan.
   
Share prices in Seoul finished at a new record as investors cheered Wall Street's surge amid an easing in rate fears and positive quarterly results from IBM and Yahoo!, dealers said.
   
The KOSPI index closed up 10.84 points or 0.76 pct at 1,437.84.

Asian Bourse Round-Up

For a full list of closing figures, click here

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Gold futures climb as much as 1% in morning trading

SAN FRANCISCO - June gold climbed to $629 an ounce in morning trading, a level the futures market hasn't seen since late 1980. The contract was last up $3.70 at $627.50 an ounce.

"The volatile mixture of oil, gold, and world economics and politics continues to show signs of disquieting instability," said Jon Nadler, an analyst at bullion dealers Kitco.com.

"The three components of this maelstrom appear to feed off of each other, as news propels oil, and then oil propels gold." May silver was also up 38.5 cents, or 2.8%, at $14.17 an ounce and May copper reached $2.978 a pound, up 0.7 cent.

Crude-oil futures dipped below recent peaks, but remained near the heady level of $71 a barrel in the early going Wednesday, ahead of weekly inventory supply tallies. Traders believe the latest figures should show another increase in crude inventories.
   
Oil futures, which overall are being sent higher by the continuing tensions over Iran's nuclear ambitions, last were down 41 cents at $70.94.

Treasury prices turned lower, sending yields higher after the CPI report. The benchmark 10-year Treasury note last was down 6/32 at 96-2/32 with a yield of 5.02%

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