US & World Daily Markets Financial Briefing 23-02-2007

The world's most trusted name in professional trader education. Click Here

Dow, Nasdaq tumble in early trading

NEW YORK  -  Stocks fell moderately in early trading Friday as climbing oil prices again weighed on investors' already rickety sentiment and a potentially costly patent ruling against Microsoft Corp. hurt technology shares.
   
The pullback Friday followed several mixed sessions in which the tech-dominated Nasdaq composite index showed slight increases but blue chip stocks have pulled back in part amid inflation concerns.
   
Investors looking for direction in the final trading day of a holiday-shortened week will likely keep tabs on speeches from Dallas Fed President Richard Fisher and San Francisco Fed President Janet Yellen scheduled for Friday.
   
The speeches come as inflation concerns have infiltrated Wall Street's sentiment to a greater degree than in recent weeks. A reading on inflation at the consumer level earlier in the week showed inflation was higher than expected, and a pronounced increase in oil prices could also increase costs for businesses and consumers.
   
Only last week, stocks showed their best performance of the year after Fed President Ben Bernanke testified before congressional committees that inflation was likely to moderate over two years.
   
In the first hour of trading, the Dow Jones industrial average was down 32.05, or 0.25 percent, at 12,653.97.
   
Broader stock indicators were lower. The Standard & Poor's 500 index was down 2.59, or 0.18 percent, at 1,453.79, and the Nasdaq was down 6.74, or 0.27 percent, at 2,518.20. The Russell 2000 index of smaller companies was down 2.97, or 0.36 percent, at 826.47.
   
Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.70 percent from 4.73 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.
   
Light, sweet crude rose 34 cents to $61.29 on the New York Mercantile Exchange.

Stocks in focus
   
In corporate news, Microsoft slipped 25 cents to $29.14 after a San Diego jury ruled that the software maker would have to pay $1.52 billion to Alcatel-Lucent SA in a patent-infringement case.
   
Taco Bell parent Yum Brands Inc. fell 80 cents to $60.26 after several news outlets showed video of rats scurrying about a New York City Taco Bell.
   
Tekelec, a maker of telecommunications signaling devices, fell 99 cents, or 6.6 percent to $13.91 after the company's 2007 forecast was met with disappointment on Wall Street.

VantagePoint's market forecasts are nearly 80% accurate.  Take a look at actual  forecasts and see the difference they can make in your trading. Click here to see two recent forecasts now.

Euro recovers vs dollar as market reassesses Ifo number; pound higher

LONDON - The euro rose back up against the dollar, recovering from earlier falls as the market reassessed this morning's weaker-than-expected German Ifo business confidence survey.
   
The Ifo index dropped to 107.0 in February from 107.9, falling short of forecasts for a lesser fall to 107.6. Nonetheless, it was still not far off 16-year highs and consistent with robust economic growth.
   
"The sharper than expected fall in the German Ifo index in February is mildly disappointing, although both components of the index remain at levels consistent with strong German GDP growth in the near term," said Jennifer Upham at Capital Economics.
     
In contrast to the outlook in the euro zone, US data has suggested the Federal Reserve is far from being in a position to raise interest rates, while today's rise in oil prices is also likely to weigh on the dollar.
      
Elsewhere, the pound rose to eight-day highs against the dollar and the pound, with analysts citing Middle Eastern demand for sterling and as data this morning confirmed the UK enjoyed above-trend growth in the fourth quarter.
   
The figures showed the UK economy grew by 0.8 pct in the fourth quarter from the third for a 3.0 pct annual rise.
   
The data rounds off a week of solid UK figures, including strong mortgage lending and money supply data and a better-than-expected manufacturing survey from the CBI, which together point to the Bank of England raising interest rates sooner rather than later, possibly as early as March.

Follow the futures and FX markets with our trading experts and read their analysis.  Click here to sign up now!

Top Stories in Europe at 11.05 GMT

London - Household spending helped the UK economy grow by its fastest rate in two and a half years during the final quarter of 2006, the office of National Statistics confirmed today. In its second estimate for the fourth quarter, the statistics office said the UK economy grew by 0.8 pct from the previous quarter, its best quarterly performance since the second quarter of 2004. The growth rate was left unrevised from the preliminary reading released last month.

Burren Energy PLC is considering plans to exercise its right of first refusal over the 1.43 bln usd Congolese assets that French partner Maurel et Prom is selling to Italian energy giant Eni SpA. Burren is looking at plans to preempt the deal "very seriously," a company spokesman told AFX News.
 
Frankfurt - The Ifo research institute said its business climate index for Germany slipped to 107.0 in February from 107.9 in January, falling short of expectations as optimism among firms about their current business conditions faded. Economists polled by AFX News had expected a smaller drop to 107.6. Ifo polls about 7,000 companies about their assessment of current business and their expectations for the next six months to compile the climate index.

RWE AG said its full year operating profit rose 13.7 pct to 6.106 bln eur from 5.371 bln a year earlier thanks to strong electricity prices in its core German market. The figure was slightly above the 6.091 bln eur consensus of analysts estimates.

Volkswagen AG plans to increase its 20 pct stake in MAN AG to just under 30 pct before the latter's May 10 AGM, when it will then ask for three seats on the company's supervisory board, Handelsblatt reported, quoting industry sources. Neither MAN nor VW wished to comment on the information, the report said.

Paris - Lafarge reported a jump in full-year profits, within the range of analyst forecasts, citing positive market trends and the impact of restructuring, and said it expects to exceed its own targets for earnings per share and return on capital employed (ROCE) through 2008.
 
The company posted full-year net profit of 1.372 bln eur, up 25 pct from the 2005 reported figure of 1.096 bln, while earnings per share reached 7.86 eur, a 23 pct rise on the previous year.

European satellite launch company Arianespace, in which EADS is a key shareholder, expects to post full year 2006 sales of close to 1 bln eur, against 1.068 bln in 2005 when sales rose 60 pct from the previous year, director general Jean-Yves Le Gall said. Arianespace aims to move into the US market for satellite launch services in the next two to three years, he told Agence France-Presse on the sidelines of an industry event in Washington.

Arcelor Mittal said it expects to invest about 2.2 bln usd to develop iron ore mining in Senegal under a number of agreements signed with the West African state. The project will involve the development of a mine in the Faleme region of south-east Senegal, the building of a new port near the capital Dakar and the development of around 750 kilometres of rail infrastructure to link the two, the company said.

Milan - Eni SpA said that its adjusted net profit fell to 2.355 bln eur from 2.396 bln a year earlier, as oil and gas daily production fell to 1.796 mln barrels of oil equivalent (boe) from 1.806 mln. Production suffered from the nationalisation of the Dacion oilfield in Venezuela, which knocked 61,000 barrels a day off Eni's production.

Madrid - Banco Bilbao Vizcaya Argentaria SA's acquisition of Compass Bancshares Inc includes a clause whereby either company may be required to pay the other a termination fee of 385 mln usd, according to a filing lodged by Compass Banchares with the US Securities and Exchanges Commission.

Stockholm - Outdoor gardening equipment supplier Husqvarna AB reported an 18 pct rise in fourth quarter profit after financials, to 279 mln skr, boosted by a strong performance in the Professional Products division. Market expectations were for a fourth quarter profit after financial items of 205 mln skr, according to SME Direkt.

Trade with RCG fxtrader™, the platform offering instant access to 12 major FX trading pairs with low spreads (2 pips EURUSD, USDJPY) and global news from 3 major sources.  Trade with a registered and regulated company in business for 80 years. Smart money trades here – Get your FREE Trial Today!

Source - AFX News/Associated Press

Asian stocks close higher, Tokyo up on weak yen

HONG KONG - Stocks across the Asia-Pacific region closed higher, with the Australian and Seoul markets hitting new record highs and Tokyo ending at a seven-year high, dealers said.
   
But the Hong Kong market was lower on fears of a correction in mainland Chinese markets when they reopen Monday after this week's Lunar New Year holiday.
   
Tokyo shares closed firmer on the yen's weakness, bolstered by strong foreign institutional support, dealers said.
   
Market watchers expect the Nikkei 225 to test the 18,500-point level next week, as the Bank of Japan's rate action on Wednesday has put an end to a period of uncertainty and the market will be less dictated by economic indicators due out next week.
   
The Nikkei 225 Stock Average closed at a seven-year high of 18,188.42, up 79.63 points or 0.44 pct, after touching the day's high of 18,239.13. The last time the index closed at its highest level was on May 8, 2000.The Nikkei 225 rose 1.75 pct over the week.
   
The TOPIX index of all first-section issues added 12.06 points or 0.67 pct to a fresh 15-year closing high of 1,814.96, after reaching an intra-day high of 1,817.97. The index climbed 2.28 pct for the week.
   
Australian shares closed at new record highs again aided by strength in resource stocks, with the broad All Ordinaries index finishing above 6,000 points for the first time.
       
The S&P/ASX 200 closed up 19.0 points or 0.32 pct at a record finish of 6,036.1, surpassing yesterday's record close of 6,017.1. The index also touched a fresh intra-day high of 6,052.1. Over the trading week, the key index rose 82.4 points or 1.38 pct.
   
The broader All Ordinaries index advanced 18.2 points to end at a new all-time closing high of 6,009.3, surpassing the previous record finish of 5,969.4 also set on Thursday. The index settled below a fresh intra-day high of 6,024.7.
   
Hong Kong shares were lower in afternoon trade on worries that China's stock markets may come under pressure next week when they reopen after a week-long Lunar New Year holiday.
   
Investors are nervous about how the mainland bourses will react to the Chinese central bank's announcement last Friday that it is raising the reserve ratio requirement for commercial banks by 50 basis points. At 3.10 pm the Hang Seng Index had fallen 104.92 points or 0.50 pct to 20,704.31.
   
Seoul shares closed slightly higher on sustained foreign investor interest in financial stocks, with the index running up to another record high. The KOSPI index closed up 4.47 points or 0.31 pct at 1,469.88, off a low of 1,459.81 and a high of 1,471.04. The benchmark index gained 21.07 points for the week.
      
Manila shares closed higher on broad-based buying as most blue chips rebounded from recent losses to again propel the main index to its best finish in a decade.
      
At the close, the 30-company composite index was up 23.84 points or 0.71 pct at 3,389.37, after moving between 3,369.58 and 3,399.67. It was the index's highest close since Feb 5, 1997 when it settled at 3,396.04 points. The all-time high was 3,447.60, set on Feb 3, 1997. The key index posted a gain of 1.7 pct from last week.

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

Gold holds steady near 9-month highs but further gains unlikely

LONDON - Gold held near nine-month highs amid strong energy prices although further gains are seen unlikely.
   
Strong oil prices, around the 61 usd level, have added to gold's appeal as a hedge against inflation but the metal's gains are expected to prompt bouts of profit-taking.
   
At 12.11 pm, spot gold was quoted at 677 usd an ounce, down a touch from the 679.90 usd level seen at yesterday's close. Gold hit a nine-month high of 682 usd on Wednesday.
    
Elsewhere, prices were underpinned as tensions between the US and Iran attracted investment into gold as a safe-haven asset. President Mahmoud Ahmadinejad vowed Iran would defend its nuclear programme to the bitter end, a day after the UN nuclear watchdog again found it in breach of a Security Council ultimatum to suspend uranium enrichment.
   
In the longer term, analysts are upbeat about gold's prospects, with most anticipating a test of the 700 usd this year.
       
In other precious metals, silver was at 14.25 usd an ounce against 14.22 usd in late New York trades yesterday, platinum was at 1,223 usd against 1,224 usd while palladium was at 343 usd against 344 usd.

Copper surges as China resumes buying after new year holiday

Copper rose to its highest level since early January, as Chinese buying picked up at the end of the week-long Lunar New Year holiday in China. China will resume normal trading conditions on Monday.
   
At 2.47 pm, LME copper for three-month delivery was up at 6,315 usd a tonne having risen 345 usd to settle at 6,135 usd yesterday. Copper struck an intra-day high of 6,300 usd.
   
Copper edged up despite a daily rise in stocks of 1,950 tonnes stored in LME warehouses, bringing the total to 212,375 tonnes. Despite the increase inventories are relatively low, especially amid a high number of cancelled warrants.
   
Cancelled warrants represent pledges to take delivery of the metal.
   
In the background, China's robust economy continues to underpin prices as demand is expected to remain strong.
   
All other base metals, apart from tin, also rose.
   
Tin had been rising as the Indonesian government cracked down on illegal tin mining, shutting down several operations last week. LME tin for three-month delivery was down at 13,300 usd a tonne, having settled at 13,650 usd yesterday.
   
In other metals, aluminium was up at 2,848 usd having settled at 2,795 usd yesterday. Lead was up at 1,925 usd against 1,880 usd, while nickel was up at 39,950 usd against 38,900 usd at yesterday's close.
   
Zinc was also up at 3,590 usd from 3,481 usd seen at yesterday's close.

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