US & World Daily Markets Financial Briefing 22-02-2006

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 gain on benign inflation report

       
NEW YORK - U.S. stocks rose in early trading Wednesday after a benign retail inflation report, but shares of Intel Corp. were under pressure after a broker downgraded the world's largest chipmaker on inventory concerns.
   
The Dow Jones Industrial Average was up 37 points at 1,106.
   
The Nasdaq Composite Index gained 3 points to 2,266, while the S&P 500 Index rose 3 points to 1,286. 
   
On the broader market for equities, advancers outpaced decliners by 18 to 11 on the New York Stock Exchange, and by 7 to 6 on the Nasdaq. 

By sector, banks, gold stocks, Internet companies and pharmaceuticals were moving higher. 

Oil services and energy were the sectors showing the biggest declines as crude prices pulled back.

Inflation fears were soothed after core consumer prices, which exclude volatile food and energy prices, increased just 0.2% in January, in line with economists' forecasts. 
       
The Federal Reserve has raised its key short-term interest rate 14 times in a row to 4.5% in a bid to slow economic growth and keep inflation at bay.

Treasury prices were higher after the CPI report. The fixed-income market abhors inflation because it eats into the value of assets and puts pressure on the Fed to lift rates.
   
The benchmark 10-year Treasury note last was up 5/32 at 99-20/32 with a yield of 4.55%.

Stocks in action
   
Intel Corp. was down 1.2% at $20.37. The stock was downgraded to sell from accumulate by ThinkEquity, which also cut its price target to $16 from $26.
   
The broker believes Intel is building inventories, losing market share - particularly in servers - and could see a negative impact from pricing cuts.
   
Sprint Nextel fell 3% to $24.18 after the telecommunications company missed consensus forecasts by a penny, although sales of $11.3 billion narrowly topped
forecasts.
   
Dell dropped 31 cents to $29.51 after the company delayed its analyst meeting from April to September.
   
"The postponement of Dell's analysts' meeting from April to September, while bound to create more uncertainty about the timing and scope of Dell's changing model, is probably a reality check on how much Dell needs to accomplish before it can feel confident about execution and results," said Goldman Sachs analyst Laura Conigliaro, in a note to clients.

   

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Forex

Dollar little changed after CPI

NEW YORK - The dollar was higher against the euro and lower against the yen early Wednesday, showing a limited reaction to a consumer inflation report showing core prices rising in line with expectations.
   
The dollar barely reacted to the data. It was last down almost 0.2% to 118.64 yen, as the euro fell 0.3% to $1.1873.

The Labor Department said U.S. consumer prices increased a larger-than-expected 0.7% in January, led by higher energy, food and housing costs.
   
Economists surveyed by MarketWatch had expected the CPI to rise 0.5% in January.
   
The core consumer price index - which excludes food and energy prices - increased 0.2%, as expected.
   
The CPI data were "not having much of a real impact on the market" said Brian Dolan, head of currency research at Gain Capital. "It's not alarming enough to send the dollar higher. The inflation picture did not appear to be reigniting. Instead, it's remaining steady."
   
Fed Chairman Ben Bernanke has said that additional interest rate hikes may be needed because of the threat of higher inflation from a strong economy and higher energy prices.
   
Bernanke's views were repeated in the minutes of the January 31 Fed policy meeting released Tuesday.
   
"The possibility of additional policy moves was reinforced by readings on core inflation and inflation expectations that were somewhat higher than was desirable over the long run," according to the FOMC. But Fed members also indicated that the central bank's policy stance was "close to where it needed to be".
   
The Fed's series of steady rate hikes have made the dollar more attractive than the low-yielding euro and yen. The Fed has lifted the benchmark overnight lending rate 14 times in a row since June 2004, to the current 4.5%.
   
Also on Wednesday, the Japanese government upgraded its view of the economy
and described it as "recovering."
   
Japan's Economics and Financial Services Minister Yosano subsequently said that deflation was "very mild" and that the GDP deflater was negative only because of high import prices, according to news reports.

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Europe at a Glance

The European Markets at 12.00 GMT

London - The FTSE 100 remained lower in midday trade, on expectations Wall Street will open in the red, extending yesterday's falls amid inflation worries across the Atlantic, dealers said.
   
At 11.59 am, the FTSE 100 was down 16.3 points to 5,841.4, after reaching a morning low of 5,836.8, with the broader indices mixed.

   
Frankfurt - Shares were lower in midday trade after Wall Street slumped on soaring oil prices overnight, and as investors were unimpressed by a raft of corporate news earlier today, dealers said.
   
At 12.51 pm, the DAX 30 index was 9.96 points or 0.17 pct lower at 5,791.08, having moved between 5,783.35-5,805.60 so far this session.

   
Paris - Shares were slightly higher at midday, slowly improving from slight early losses with Suez up strongly amid a report that Italy's Enel could launch a hostile takeover bid.
   
At 12.17 pm, the CAC-40 index was up 11.32 points or 0.23 pct at 5,003.25.

   
Stockholm - Share prices remained little changed in midday trade, virtually unchanged from morning levels, with Nordea however booking solid gains in the wake of its better-than-expected fourth quarter results, dealers said.
   
At 12.00 pm, the OMX Stockholm index was down 0.05 at 317.84, while the OMX Stockholm 30 index was down 0.03 pct at 993.19. Turnover was 9.24 bln skr.

   
Milan - Share prices were slightly higher in midsession trade led by gains in Enel on a price target upgrade and on prospects for expansion via acquisitions, while telecom shares continued to lag the the market, dealers said.
   
At 12.51 pm, the Mibtel index rose 0.18 pct at 28,783 points, and the S&P/Mib was up 0.22 pct at 37,770.

   
Madrid - Share prices were flat in moderate midday trade, with the energy sector once again grabbing the spotlight, dealers said.
   
At 12.05 pm, the IBEX-35 index added 0.9 points to 11,627.8, after trading in a range of 11,604-11,649, on moderate turnover of 1.5 bln eur.

   
Amsterdam - Share prices in Amsterdam were lower in early afternoon trade, led by index heavyweights, and as US futures pointed to a lower start on Wall Street, dealers said.
   
At 12.26 pm, the AEX was 2.02 points or 0.44 pct lower at 462.37, after opening at 463.31 and reaching an intra-day high of 464.55.

   
Helsinki - Helsinki shares were lower in midday trade, led by Nokia and by Sampo after a broker downgrade, with Nordea outperforming on the back of
consensus-beating fourth quarter numbers, dealers said.
   
At 12.12 pm, the OMX Helsinki 25 index was 0.53 pct lower at 2,578.20 points. The OMX Helsinki index was down 0.55 pct at 8,887.80 points, while the Helsinki CAP portfolio index was 0.49 pct lower at 4,819.41 points.

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Asia at a Glance

Asian shares close mostly lower, Tokyo slips on profit-taking

HONG KONG - Share prices across the Asia-Pacific region ended mostly lower, with Tokyo down on profit-taking after yesterday's sharp rally, dealers said.
   
The technology sector was hurt after Citigroup Investment Research downgraded its recommendation on chip-related stocks, they added.
   
The Nikkei 225 Stock Average closed down 113.16 points or 0.7 pct at 15,781.78. Yesterday, the blue-chip marker rose 457.01 points or 2.96 pct to 15,894.98.
   
The TOPIX index of all first-section issues fell 3.10 points or 0.2 pct to 1,609.46.
   
"Weakness in high-tech shares - which are the key contributor to the Nikkei - pushed down the market, after Citigroup Investment Research downgraded its recommendation on the chip-related sector," said Ryuta Otsuka, a strategist at Toyo Securities.
   
In Australia, share prices closed higher, buoyed by solid December period earnings reports including CSL and PBL, dealers said.
   
Dealers added upmarket retailer David Jones jumped after raising its forecast for first-half profit due to better margins and cost savings. The retailer is due to report its December half earnings on March 21.
   
They said the market's performance was weighed down by resources, largely due to falls in heavyweights Rio Tinto after going ex-dividend and BHP Billiton.
   
The S&P/ASX 200 rose 7.6 points or 0.16 pct to close at 4,886.7, inching toward the record close of 4,956.7 set on Feb 1.
   
Share prices in Hong Kong were little changed in the afternoon as the market went through a consolidation phase, largely ignoring Financial Secretary Henry Tang's budget speech, which provided no surprises, dealers said.
   
The government's move to lower the marginal rates of salaries tax and to consult the public on the possible implementation of a goods and services tax were widely expected, they said.
   
At 3:30 pm, the Hang Seng index was down 4.57 points at 15,622.67.
   
In mainland China, A-shares in Shanghai and Shenzhen gave up early gains and ended mixed with steelmakers additions tempered by weak telecom counters and automakers, dealers said.
   
The Shanghai A-share Index fell 4.45 points to 1,347.04 on turnover of 13.36
bln yuan and the Shenzhen A-share Index was up 0.59 point at 324.38 on turnover of 7.75 bln yuan.
   
Share prices in Seoul finished lower in volatile trade, extending the previous session's decline, with KEPCO, large cap IT and bank stocks posting losses, dealers said.
   
Massive program selling, combined with the lackluster performance of major Asian markets, weighed heavily on investor sentiment.
   
The KOSPI index closed down 5.91 points or 0.44 pct at 1,340.58.

Asian Bourse Round-Up

For a full list of closing figures, click here

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Commodities

Crude futures were backing down ahead of Thursday's release of the latest weekly crude tallies. The front-month contract was 73 cents lower at $62.01 a barrel in electronic trading.
   
Gold futures also fell, after advancing Tuesday on safe-haven buying after fresh attacks on Nigerian oil pipelines and renewed concerns about Iran's nuclear program.
   
The futures contract was off $2.10 at $554.50 an ounce.

Precious Metals Summary - London, 1530 GMT

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