US & World Daily Markets Financial Briefing 20-06-2006

Trade your way to Financial Fitness!
Click here to find out more.

Stock prices rise on solid housing data

NEW YORK - Stocks edged higher in early trading Tuesday as solid housing data quelled worries about a melting economy, helping Wall Street turn its back on steep losses in the prior session. In the opening minutes, the Dow Jones industrial average gained 12.32, or 0.11 percent, to 10,954.43.
  
Broader stock indicators also advanced. The Standard & Poor's 500 index was up 0.87, or 0.07 percent, at 1,241.01, and the Nasdaq composite index rose 1.27, or 0.06 percent, to 2,111.69.

Crude oil futures bounced back in electronic trade, with the July contract - due for expiration later in the day - up 60 cents to $69.58 a barrel. The Chinese government agreed to use Saudi Arabian oil in its strategic reserves.

Higher profit at supermarket chain Kroger Co. also helped stocks. Investors were also upbeat about McDonald's Corp.'s partnership to build drive-through restaurants throughout the fast-growing nation of China.
  
Continued political tension over Iran's nuclear arms program lifted oil prices following Monday's dive. A barrel of light crude added 43 cents to $69.41 on the New York Mercantile Exchange.
   
Bonds slipped, with the yield on the 10-year Treasury note edging up to 5.15 percent from 5.14 percent late Monday. The 2-year yield stood at 5.19 percent, signaling less confidence in long-term debt amid expectations of an economic slowdown.

The Kroger Co. and Apollo Group headline a quiet day for earnings news.
   
Ford Motor Co. said it expected 10,000 to 11,000 hourly workers at its U.S. plants to accept early retirement and other buyout offers by the end of the year, the Los Angeles Times reported in its Tuesday editions.
   
General Electric agreed to pay $390 million for Biacore International, a Swedish maker of machines that study protein interactions. Pfizer Inc., which holds 41 percent of Biacore, accepted the GE offer.
   
McDonald's will partner with Sinopec to build a network of drive-through restaurants in mainland China.
   
Shares of McDonald's supplier Enodis reached a new 52-week high in London, at 211.25 pence, following a report in the Financial Times that Middleby Corp. may increase its offer for Enodis.
   
Costco Wholesale received an upgrade to overweight by J.P. Morgan on second-half comparable sales hopes, while E.W. Scripps was downgraded to hold at Deutsche Bank on concerns over Food Network ratings and decelerating cable network advertising growth.

VantagePoint's market forecasts are nearly 80% accurate. Take a look at actual forecasts, become eligible for a Complimentary VantagePoint Market ($750 value!) and see the difference they will make. Click here to see two recent forecasts now.

Yen continues to find strength from Fukui rate increase hint

LONDON - Comments made overnight by the Bank of Japan's governor, Toshihiko Fuki, that a summer rate increase may be on the cards continued to buoy the yen.
   
Fukui said the central bank will take "proactive" monetary policy actions to reduce the risk of prolonged credit easing triggering a boom-and-bust cycle. However, he indicated that any tightening will be done in small increments and rate-setters should be alert to equity market movements.
   
Despite the caveats and the continuing uncertainty about Fukui's future, which stem from questions about his financial dealings, the markets interpreted his comments as paving the way for a quarter-point rate increase at the July 13 meeting of the BoJ.
   
Steve Barrow, currency strategist at Bear Stearns, said it is too early to conclude that Fukui's comments will mark a changing trend in the value of the yen, even though the global environment should "work well" for it.
   
The early impact of Fuki's comments has largely petered out and the dollar has reclaimed some earlier losses as the market positions itself for next week's rate-setting meeting at the US Federal Reserve.
   
This afternoon's stronger than expected US housing news cemented expectations that the Fed will raise borrowing costs again at its meeting on June 29 and possibly again in August, before calling a halt to the cycle of rate increases.
   
The Commerce Department said the dry weather pushed the construction of new homes and apartments up in May, after three consecutive monthly declines.
   
Housing starts increased 5.0 pct to an annualised pace of 1.957 mln units, which was ahead of the average Wall Street forecast of 1.950 mln.
   
There is now a greater than 60 pct chance the Fed will raise its Fed funds rate by a quarter point at its meetings in June and August, which would take it up to 5.50 pct.
   
The upward shift in US rate expectations has combined, and fuelled, the market's recent renewed appetite for risk, most evident in the slide in stock markets and commodity prices, and has given the US currency a lift.

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

The European Markets at 12.00 BST

London - UK blue chips continued to trade in the red at midday, under pressure from declining oil and mining stocks and with little respite on the horizon as US markets look set to open mixed to lower, dealers said.
   
At 11.54 am, the FTSE 100 was down 16.5 points at 5,609.6, off an opening low of 5,585.0 but also extending midmorning losses after official figures showed UK public finances recorded their worst ever performance in May.
   
The broader indices were also lower, with the FTSE 250 down 65.9 points at 9,048.2.

Frankfurt - Shares were lower at midday after a weak finish on Wall Street, though Deutsche Boerse rose on hopes Euronext may accept its modified merger offer and Siemens gained on upbeat broker comments following yesterday's Nokia deal, dealers said.
   
At 11.46 am, the DAX 30 index was 17.92 points or 0.33 pct lower at 5,421.31, having moved between 5,382.58 and 5,429.80 so far this session.
   
The MDAX was at 7,467.49, down 16.23 points or 0.22 pct, while the TecDAX was at 625.24, up 0.62 point or 0.10 pct.

Paris - Share prices were lower at midday, in the wake of sharp overnight losses in NewYork and Asia, dealers said.
   
At 1.15 pm , the main CAC-40 index was down 9.46 points or 0.20 pct at 4,719.70.

Amsterdam - Shares were down at midday following overnight losses on Wall Street, with tech stocks hardest hit, dealers said.
   
At 11.31 am, the AEX was down 2.69 points or 420.87 pct, after opening at 420.49 and reaching an earlier high of 422.04.
   
TomTom led decliners, down 3.49 pct to 30.40 eur following a newspaper report Philips will move into the personal navigation device market, in direct competition with TomTom. Philips was down 1.58 pct at 22.48.

Milan - Share prices were lower at midday, led by oil service companies Saipem and Tenaris, dealers said.
   
At 12.27 pm, the Mibtel index was down 0.64 pct at 26,702 and the S&P/Mib dropped 0.62 pct to 34,935.
   
A dealer said he remains "moderately optimistic" about the bourse's performance in the medium term because it is trading at 12.8 times expected 2006 earnings compared with a ten-year average of 20.3.

Madrid - Share prices were lower in quiet midsession trade weighed down by renewed inflation pressures and overnight losses in US oil companies, dealers said.
   
At 12.50 pm, the IBEX-35 index was down 55.7 points at 11,001.1, after trading in a range of 10,987-11,033, on turnover of 1.56 bln eur.

Stockholm - Shares extended their losses in early afternoon trade on indications that Wall Street will resume selling this afternoon on continued concerns over US interest rates, brokers said.
   
At 12.50 pm, the OMX Stockholm index was down 1.01 pct at 294.89 and the OMX Stockholm 30 down 1.07 pct at 911.05. Turnover was 8.616 bln skr.

Zurich - Share prices turned lower at midday. At 12.40 pm the Swiss Market Index was down 15.01 points or 0.2 pct at 7,348.98 and the Swiss Performance Index was down 8.44 points or 0.69 pct at 1,223.98.

When you need to send money, trust Western Union. We’re a fast, easy and reliable way to transfer funds worldwide. Plus, you can take care of bills fast with our Quick Collect® service. Visit westernunion.com to transfer money or send a bill payment online!

Asian shares close mostly lower on Wall St, global economy fears

HONG KONG - Share prices across the Asia-Pacific region ended mostly lower after the overnight fall on Wall Street and lingering nervousness about the global economy, dealers said.
   
Tokyo share prices closed lower, with sentiment hurt by Wall Street's retreat and with caution growing ahead of next week's meeting of the US Federal Open Market Committee (FOMC), dealers said.
   
The blue-chip Nikkei 225 Stock Average Index closed down 211.94 points or 1.4 pct at 14,648.41, while the broader TOPIX index of all first-section issues dropped 17.34 points or 1.1 pct to 1,510.32.
   
Investors widely expect the FOMC to raise its key interest rate by 25 basis points to 5.25 pct next week, even though the US economy shows signs of slowing, dealers said.
   
And there is growing conjecture that the Federal Reserve will continue to raise interest rates after the next FOMC meeting to contain inflation.
   
"Following the recent series of hawkish comments by US Fed officials, market participants have begun to call into question the chances of the rate-hiking cycle coming to an end soon," said Nozomi Securities strategist Akihiro Shiroeda.
   
"And as such expectations have surfaced, investors here are now opting to wait on the sidelines until next week's FOMC meeting," he added.
   
"After all, investors here still cannot rule out the possibility of the resumption of the collapse on the global equity markets and massive capital repatriation by US investors," he said.
   
Australian share prices closed lower as investors added to Monday's sell-off following the fall on Wall Street, dealers said.
   
They said Friday's decision from China's central bank to tighten its reserve requirements on banks continued to weigh on markets, with investors worried that China's growth may slow and even end the commodities boom.
   
The S&P/ASX 200 shed 39.8 points or 0.81 pct to close at 4,861.4.
   
Hong Kong shares were lower in afternoon trade with the markets focused on Wall Street and China's credit-tightening measures, dealers said.
   
At 3.29 pm the Hang Seng Index was down 176.76 points, or 1.12 pct, at 15,592.10.
   
But in mainland China, A-shares in Shanghai and Shenzhen shrugged off early weakness and closed higher on sustained bargain hunting, with metal companies and telecom plays in demand, dealers said.
   
The Shanghai A-share Index added 6.71 points or 0.40 pct to 1,674.11 on turnover of 20.57 bln yuan and the Shenzhen A-share Index was up 2.03 points or 0.47 pct at 431.28 on turnover of 12.37 bln yuan.
   
Seoul shares finished sharply lower, with investors waiting for the FOMC meeting and the market nervous about reports that North Korea may be about to launch a missile test, dealers said.
   
The KOSPI index ended down 25.84 points or 2.06 pct at 1,225.83, after moving between 1,244.56 and 1,221.13.

Asian Bourse Round-Up

For a full list of closing figures, click here

All it takes is 2 minutes a day to get your hands on some of the best stock option trades going! MICC - 1207%, AMR - 612%, HMY - 400%, GFI -177%, AEM - 1079%, VRTX - 192%, ALXN - 433%, ZRAN - 380%, ATHR - 326%, TKLC - 64%, TWTC - 540%

If you ever thought about trading options, now is the time to take a closer look. Click here

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.

Comments

We welcome any suggestions or comments you may have concerning our bulletin, so please do contact us via comments@advfn.com. To advertise with ADVFN please contact Dunstan Rickard dunstanr@advfn.com North America Sales Manager +44 (0)20 7070 0986