US & World Daily Markets Financial Briefing 21-07-2006

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Stocks are up on Microsoft results

NEW YORK - Stocks are up in early trading, helped by Microsoft Corp.'s plan to buy back $40 billion of its own stock.
   
In the opening minutes, the Dow Jones industrials were up 7.76 points at 10,935.86, the Nasdaq Composite was unchanged at 2,039.42, and the S&P 500 rose .14 of a point to 1,249.27.
   
Downbeat Intel Corp. results and manufacturing data pulled on U.S. markets on Thursday, with the Dow industrials losing 83 points and the Nasdaq Composite shedding 41 points.
   
Stocks in focus
   
Microsoft, the world's largest software maker, rose to $23.88 a share in Frankfurt after it issued an upbeat financial forecast for the upcoming fiscal year and announced plans to buy back up to $40 billion worth of its own stock with a $20 billion tender offer and a five-year share-repurchase program.
   
Google Inc. edged up to $396.13 in Frankfurt after it said that second-quarter profit more than doubled as it expanded its leading share of the market for online-search advertising.
   
Advanced Micro Devices slipped to $21.74, however, after its results lagged expectations amid lower prices for personal-computer chips.
   
Ericsson slipped in Stockholm trade after the mobile systems maker reported a 2 percent profit decline.
   
On the mergers-and-acquisitions front, HSBC Holdings agreed to buy a Panamanian bank for $1.8 billion.
   
Deutsche Bank and Citigroup both upgraded Johnson Controls to buy, with both arguing that a 12 percent sell-off was overdone. "We believe there were several one-time negatives that were not well-flagged, implying the numbers were not as bad as investors perceived," the Deutsche Bank analysts said.

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Yen gains against dollar as China raises reserve requirement

LONDON - The yen firmed, rising to week-highs against the dollar, after China announced today that it is raising the reserve requirement -- the amount banks must place with the central bank -- by half a percentage point from August 15.
   
Though there was some disappointment that the People's Bank of China made no announcement on yuan flexibility today, talk is likely to intensify that China could announce a move over the coming months.
   
Bank of New York currency analyst Neil Mellor noted that Ba Shusong, an influential government economist said today that China needs to widen the yuan's trading band to help control excess liquidity.
   
A further widening of the trading band "could easily come within the next few weeks," Mellor reckoned.
   
The yen would be the major gainer among major currencies from any appreciation in the yuan, but the Japanese currency has also gained separately today as investors see the currency's current low levels as a good buying opportunity.
   
"Players are itching to re-establish long-yen exposure either against the dollar or on the crosses," said Divjang Shah at IdeaGlobal.
   
Meanwhile, the euro continued to inch higher against the dollar, still trading at week highs, after last night's second testimony from Federal Reserve chairman Ben Bernanke and the minutes from the latest meeting of US rate-setters confirmed that US interest rates are close to peaking.
   
Most in the market now expect the Fed to hike interest rates one more time in August before pausing.
   
In yesterday's testimony, Bernanke warned that high energy prices could damage the US economy, while rate-setters expressed concern in the minutes to last month's meeting about rising core inflation but said they expect it to "edge down."

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The European Markets at 11.30 GMT

London - By 12.05 BST, the FTSE 100 index was down 19.5 points at 5,751.4, off its early low of 5,725.4, while the broader indices were also under pressure.
   
Volume remained below average, with 841.2 mln shares changing hands in 91,207 deals.

Frankfurt - At 12.01 pm, the DAX 30 index was 41.37 points or 0.75 pct lower at 5,504.45, having moved between 5,480.27 and 5,539.72 so far this session.
   
The MDAX was at 7,611.89, down 69.63 points or 0.91 pct, while the TecDAX was at 595.40, down 6.44 points or 1.07 pct.
   
The DAX futures contract was at 5,530.00, up 5.00 points or 0.09 pct, while bund futures were at 116.29, down 0.05.

Paris - At 1.05 pm, the main CAC-40 index was trading 22.30 points or 0.46 pct lower at 4,842.74, in light volume of 1.36 bln eur.

Of the CAC-40 shares, 31 were lower and 8 were higher. Arcelor stock  remainsuspended from the index, pending the outcome of Mittal Steel's merger offer.

Amsterdam - At 12.43 pm, the AEX was down 0.74 points or 0.17 pct at 437.98 after opening at 436.83 and reaching an earlier high of 438.89.
   
Government bonds traded flat to higher while the euro stood at 1.2672 versus 1.2634 usd late yesterday.
   
Pharming soared 5.19 pct to 3.04 eur on news the biotech company applied for EU marketing approval for its lead product, recombinant human C1 inhibitor for the treatment of acute attacks of hereditary angioedema.

Madrid - At 11.26 am, the IBEX-35 index was down 68.6 points at 11,377.8, after trading in a range of 11,361-11,419 on turnover of about 1.5 bln eur.
   
NH Hoteles was up 0.35 eur or 2.43 pct to 14.75. Acerinox was up 0.09 to 13.89 eur.

Milan - At 1.10 pm, the Mibtel index fell 0.37 pct to 27,410 points and the S&P/Mib was off 0.43 pct at 35,735, while volumes were at 1.45 bln eur.
   
Decliners outnumbered fallers 196 to 89, while seven shares were flat.

Stockholm - At 12.15 pm, the OMX Stockholm index was down 0.40 pct at 297.52, while the OMX Stockholm 30 index was down 0.34 pct at 925.41. Turnover was 9.00 bln skr.
   
The major movers were SEB A, up 1.50 pct at 169 skr; Hennes & Mauritz B, 1.69 pct lower at 262; and Ericsson B, down 1.31 pct at 22.60.

Helsinki - At 12.10 pm, the OMX Helsinki 25 was 0.59 pct lower at 2,418.59 and the OMX Helsinki was down 0.72 pct at 8,476.03. Turnover was 332 mln eur.

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Asian shares close lower on profit taking, Wall St fall

HONG KONG - Shares across the Asia-Pacific region closed lower as profit takers moved in after yesterday's strong gains, and following a fall on Wall Street overnight, dealers said.
   
Tokyo share prices ended lower as investors opted to take profits on yesterday's sharp gains, with the market also waiting for quarterly earnings reports by major companies next week.
   
Among the key firms due to release their quarterly earnings next week are Sharp Corp, Nissan Motor Co, Sony Corp, NEC Corp and Matsushita Electric Industrial Co Ltd.
   
The blue-chip Nikkei 225 Stock Average closed 125.58 points or 0.8 pct lower at 14,821.26, after touching a low of 14,784.24. For the week, the index fell 0.2 pct.
   
The broader TOPIX index of all first-section issues closed down 13.06 points or 0.85 pct at 1,515.53, off a low of 1,512.33. For the week, the index declined 0.4 pct.
   
Australian shares finished lower as sentiment turned negative after Wall Street fell on earnings concerns, while a slump in metal prices weighed directly on the resources sector.
   
Dealers said Thursday's near-2.0 pct gains by key indices were partly reversed as index leading resource stocks succumbed to a drop in base metal prices and as US-focused companies fell on concerns over a slowing US economy and declining demand within the housing and construction sectors.
   
The S&P/ASX 200 shed 35.9 points or 0.72 pct to close at 4,960.6. Over the week the key index slipped 5.5 points or 0.11 pct.
   
Hong Kong shares were weaker in afternoon trade on profit taking in property and financial stocks following the sharp gains yesterday, with Wall Street's retreat overnight prompting investors to take a cautious stance ahead of the weekend.
   
At 3.30 pm the Hang Seng Index was down 18.94 points or 0.11 pct at 16,454.92.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on sustained bargain-hunting with banks and property developers gaining ground.
   
The Shanghai A-share Index added 10.60 points or 0.61 pct to 1,750.69 and the Shenzhen A-share Index was up 3.05 points or 0.69 pct at 446.73.
   
Seoul shares closed little changed as a late push by institutional investors helped offset profit-taking by foreign and retail investors following a gain of more than 3.0 pct yesterday, dealers said.
   
The market moved sideways for much of the session, with investors hesitant to build positions ahead of the weekend, until institutional investors drove the index to close near its high for the day.
   
The KOSPI index closed down 1.97 points or 0.15 pct at 1,271.33, after moving between 1,271.58 and 1,259.32, ending the week with a gain of 16.20 points.

Asian Bourse Round-Up

For a full list of closing prices, click here

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Oil prices rise after Bernanke remarks

VIENNA - Crude oil prices rose Friday, as concerns about Mideast fighting and potential gasoline supply tightness outweighed the bearish pull of comments by the U.S. Federal Reserve chief that surging energy prices are crimping growth and that oil demand was decreasing.
    
Light, sweet crude for September delivery rose 38 cents to $74.65 a barrel by afternoon in Europe on the New York Mercantile Exchange. The contract lost 50 cents to settle at $74.27 a barrel in the previous session.
   
The August crude contract, which expired Thursday, rose 42 cents to settle at $73.08 a barrel.
   
Gasoline futures Friday rose by 1.7 cents to $2.265 a gallon, reflecting what Vienna's PVM Oil Associates described as concerns about the "latest news of refinery outages."
   
Heating oil prices jumped by 2.6 cents to $1.96 a gallon, while natural gas futures dropped 16 cents to $5.93 per 1,000 cubic feet.
   
September Brent on London's ICE Futures exchange was up 55 cents to $74.27 per barrel.
   
Outlining his concerns, US Federal Reserve Chairman Ben Bernanke said Thursday "the increase in energy prices is clearly making the economy worse off both in terms of real activity and in terms of inflation."
   
If oil prices were to rise another $10 or $15 a barrel, there would be "significant consequences" for the economy, he added. He said high energy prices are already hurting the economy, "in terms of real activity and in terms of inflation."
   

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