US & World Daily Markets Financial Briefing 21-02-2006

Mike Paulenoff is a 25-year veteran technical strategist. To read his latest column for ADVFN, click here

U.S Stocks at a Glance

U.S. stocks mostly lower; Home Depot results please

       
NEW YORK - U.S. stocks turned lower Tuesday as a spike in crude-oil prices outweighed solid earnings results from a number of retailers led by Home Depot.
   
The Dow Jones Industrial Average was sitting near its low for the session, down 36 points at 11,080.
   
The Nasdaq Composite Index fell 15 points to 2,267 while the S&P 500 Index climbed 2 points to 1,285.
   
"It's a tug of war between oil and earnings," said Jim Awad, chairman of Awad Asset Management. "Home Depot's numbers were strong and even if Wal-Mart's outlook was mixed, its earnings were strong. The only negative is oil."
   
On the broader market for equities, decliners had an 8 to 7 advantage over advancers on the New York Stock Exchange, and led by 8 to 5 on the Nasdaq.
   
Investors got some positive news on the outlook for the U.S. economy.
   
The U.S. index of leading economic indicators, a gauge of future economic activity, rose a larger-than-expected 1.1% in January. It was the fourth straight monthly gain. 

Treasury prices were slightly higher, putting a tad of pressure on yields, ahead of the FOMC minutes. The benchmark 10-year note last was down 4/32 at 99-18/32 with a yield of 4.55%, up from 4.541% in late trade Friday. 
 
   
Retailers in focus
   
Wal-Mart Stores managed a 14 cent gain to trade at $46.25 as investors chose to focus on a strong quarterly performance, rather than a 2007 profit outlook that was somewhat shy of Wall Street estimates.
   
Home Depot, also in the Dow, was 2.3% higher at $42.85 after its latest earnings beat expectations.
   
RadioShack climbed 1.8% to $19.43 on investor expectations the electronics retailer will be able to refocus on boosting its earnings performance, with the resignation of its Chief Executive David J. Edmonson on Monday.
   
Edmonson stepped down after it was revealed that he had lied about his educational background.
   
Gap Inc. added 38 cents to $19.20, buoyed by a Deutsche Bank upgrade. The research house now has a buy rating on the retailer and notes improvements in
product and store execution at the Gap division.
   
Federated Department Stores dipped 14 cents to $71.49 in early trading as investors weighed a modest increase in quarterly same-store sales against a sharp rise in fourth-quarter profit, helped by its acquisition of May Department
Stores last August. 
   

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Other stock standouts
   
Merck rose 1.6% to $36.62. On Friday a jury found that the company was not responsible in the death of a Florida man who had used the company's Vioxx pain
medication.
   
Royal Caribbean Cruises and Carnival Corp. traded lower after broker Credit Suisse First Boston cut its rating on both cruise operators to neutral from outperform, citing bookings weakness.

Forex

Dollar up before FOMC minutes

       
NEW YORK - The U.S. dollar edged higher against rivals Tuesday after a three-day weekend with minutes from the most recent Federal Reserve interest rate meeting ahead.

In early trade, the euro fell to $1.1903, down 0.2% from $1.1931 late Monday, while the dollar rose to 118.92 yen, up 0.5% from 118.30 yen late Monday.
   
The January 31 Federal Open Market Committee minutes, due out at 2 p.m. Eastern, will draw attention though Chairman Ben Bernanke's testimony to Congress last week is likely to remove some of the importance of the release.
   
The latest meeting was the last one chaired by Alan Greenspan, and Ben Bernanke, who replaced Greenspan as the 14th Fed Chairman, didn't attend the meeting.
   
Market watchers will compare the minutes with Bernanke's first testimony to Congress to gather to what extent other FOMC members share his concerns about inflation and other risks to the economy, according to analysts.
       
January's consumer price index, the main inflation gauge closely tracked by the Federal Reserve, is expected to jump to 0.5% from a 0.1% decline in December.
   
But excluding food and fuel prices, core inflation is expected to grow to 0.2% from the previous month's 0.1% rise.
   

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The dollar was boosted last week from strong housing and inflation reports and drew support from Bernanke, who signaled the Fed will continue lifting interest rates at its next two meetings.
   
But the currency failed to hold its gains following a soft consumer sentiment report and, as on a year-over-year basis, the core inflation data remain benign.
   
In Europe, the euro benefited from remarks by Jean-Claude Trichet, President of the European Central Bank. Trichet on Monday said in a speech that inflation risks remain to the upside and it was "perfectly sensible" for markets to price in further interest rate hikes.
   
Expectations are that the European Central Bank will lift its key interest rate by another quarter point, to 2.5%, at the upcoming March meeting.

Europe at a Glance

London

For a list of FTSE risers and fallers so far today, click here

Frankfurt

German shares higher midafternoon; M&A and upgrades boost sentiment
 

At 13.39 GMT, the DAX 30 index was 37.17 points or 0.64 pct higher at 5,831.12, having moved between 5,798.89-5,850.47 so far this session. The MDAX was at 8,283.30, up 38.18 points or 0.46 pct, while the TecDAX was at 731.14, up 8.04 points or 1.11 pct, the latter yet again boosted by sharp gains by solar stocks. The DAX futures contract was at 5,842.50, up 33.50 points or 0.58 pct, while bund futures were at 120.76, down 0.04 point.

Index heavyweights RWE and E.ON were among the top gainers on the DAX, rising 2.57 eur or 3.66 pct to 72.87 and 2.66 to 96.10 respectively, after E.ON announced a 27.50 eur per share bid for Endesa that market participants said made sense both strategically and from a financial point of view.
   
The stock was also in focus after the German utility giant at the same time as announcing its offer released full-year results and a dividend proposal.

MAN added 1.82 to 52.94, as market participants welcomed its "solid" 2006 outlook, after the company reported largely in-line fourth quarter and full- year results.

Continental AG gained 2.32 to 85.42, after Credit Suisse hiked its price target on the stock to 100 eur from 90 and reiterated its 'outperform' rating ahead of the German tyremaker's full-year results on Feb 23.

Bucking the trend, Henkel lost 1.49 eur or 1.62 pct to 90.40, after this morning releasing detailed full-year figures that however provided little new information, and announcing its US unit Dial Corp will acquire several deodorant brands from Procter & Gamble Co's Gillette Co for around 420 mln usd.

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Amsterdam

Amsterdam shares slightly up early afternoon

At 12.25 GMT, the AEX was up 1.87 points or 0.40 pct at 466.51, after opening at its low of 465.49 and reaching a high of 467.12.

Fortis led blue chip gainers, rising 1.21 pct at 30.08 as ABN Amro raised its price target to 33 eur, while ING firmed 0.51 pct at 31.35 and Aegon gained 0.29 pct at 13.84. ABN Amro was flat at 25.04 while second-liner Van der Moolen dropped 3.04 pct at 8.61 after yesterday's sharp gains on the back of takeover rumours, as SNS Securities and Rabo both downgraded the market specialist to 'hold'.
   
Vedior put on 0.96 pct at 16.81 after the staffing company announced a small specialist acquisition in the UK. 
   
Most noticeable overall gainer was Fugro, jumping 4.51 pct to 32.19 after the oil services company announced it won a 3-D marine seismic contract in the Asia-Pacific region, worth around 40 mln eur.
   
Among other oil stocks, Royal Dutch Shell climbed 0.65 pct at 26.51 and SBM Offshore firmed 0.42 pct at 84.45. 

Asia at a Glance

Asian shares close mostly higher, Tokyo surges on foreign-led buying

       
HONG KONG - Share prices across the Asia-Pacific region ended mostly higher with Tokyo's Nikkei 225 index rising more than 450 points, as foreign investors returned to the market after days of selling, dealers said.
   
Persistent concerns about offshore investors cutting their Japanese stock holdings has been the primary catalyst for the market's slide in recent sessions.
   
The Nikkei 225 Stock Average closed up 457.01 points or 2.96 pct at 15,894.98, its session high. Yesterday, the blue-chip marker fell 275.52 points or 1.75 pct to 15,437.93, its lowest finish since Jan 23.
   
The broader TOPIX index of all first-section issues gained 40.45 points or 2.57 pct to 1,612.56, just off its high for the day of 1,612.97
   
"The market got a lift from foreigners, who placed net buy orders ahead of the market opening today for the first time in the past 10 trading sessions," said Hiroichi Nishi, equity chief at Nikko Cordial Corp.

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Share prices in Australia closed up as investor sentiment continued to be boosted by positive company earnings reports released today, dealers said.
   
They said Australia's leading land-transport company Toll Holdings rose after reporting a 10 pct rise in December half profit and announcing that it expects to at least meet its full-year forecast.
   
Dealers said Australian-listed Papua New Guinea oil and gas producer Oil Search climbed higher after announcing an 87 pct surge in full-year net profit to December.
   
The S&P/ASX 200 rose 43.6 points or 0.90 pct to close at 4,879.1, gaining on the record close of 4,956.7 set on Feb 1.
   
In Hong Kong share prices were trading slightly higher in afternoon trade, rebounding from a weak performance this morning on caution ahead of Financial
Secretary Henry Tang's annual budget speech tomorrow, dealers said.
   
A fresh spike in oil prices and a lack of fresh market-moving news, with the US market closed for a holiday yesterday, also drove many investors to the sidelines, they said.
   
At 3:29 pm, the Hang Seng Index was up 45.56 points or 0.29 pct at 15,644.23.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher, helped by bargain-hunting interest with telecom issues and steelmakers snapped up in particular, dealers said.
   
The Shanghai A-share Index jumped 21.93 points to 1,351.50 on turnover of 12.67 bln yuan and the Shenzhen A-share Index was up 4.95 points at 323.80 on turnover of 8.09 bln yuan.
   
Share prices in Seoul finished flat, putting the brakes on a three-day advance, with massive foreign investor selling offsetting the impact of strong institutional interest, dealers said.
   
With few overseas leads from US markets due to the President's Day holiday, retail investors took a cautious stance.
   
Large cap IT and bank stocks turned lower while autos and steel makers posted gains.
   
Automakers made gains on a falling won and steel makers were firmer on investor expectations for higher steel prices.

The KOSPI index closed down 1.76 points or 0.13 pct at 1,346.49.

Japan

For a summary of Japanese stocks at the close of trade, click here

Asian Bourse Round-Up

For a full list of closing prices, click here

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Commodities

Crude futures were on the rise on concern violence in Nigeria would lead to
even more oil supply being taken off the market. The benchmark March contract
last was up $1.12 at $61 a barrel.
   
Gold futures rose, extending prior-session gains, as the precious metal
benefited from its reputation as a safe-haven investment amid concern over
potential supply disruptions out of oil-rich Nigeria and continued worry about
Iran's nuclear ambitions. Gold for April delivery was last up $3.20 at $557.80
an ounce.

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