US & World Daily Markets Financial Briefing 23-04-2007

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

Stocks open flat with Dow near 13,000

NEW YORK - Wall Street crept higher in early trading Monday, with the Dow Jones industrial average within striking distance of 13,000. Investors were enthusiastic about earnings reports and new takeover activity, but itching to take profits after the blue-chip index's record-breaking run.
   
Early Monday, British bank Barclays PLC said it will acquire Dutch bank ABN Amro NV for $91.16 billion -- the world's biggest bank deal, and one that would lead to ABN Amro selling its U.S. unit, LaSalle Bank, to Bank of America Corp. for $21 billion. Also, British drugmaker AstraZeneca PLC said it will buy U.S. drugmaker MedImmune Inc. for $15.6 billion.
   
Though the U.S. economy has been slowing and the dollar has been weakening, global takeover activity remains robust, giving investors reason to believe U.S. companies will keep finding ways to pull in profits.
   
In the first hour of trading, the Dow Jones industrial average was up 4.80, or 0.04 percent, at 12.966.78. The Standard & Poor's 500 index was up 1.56, or 0.11 percent, at 1,485.91, while the Nasdaq composite index was up 2.25, or 0.09 percent, 2,528.64.

No Dow component companies release earnings Monday, but later this week, six will. So far, 16 of the 30 Dow component companies have reported financial results from the most recent quarter, with 10 exceeding analyst forecasts. The stronger-than-expected earnings have been the big catalyst behind the Dow's trek back into record territory.
   
Many market watchers are questioning, though, whether the recent run-up has been too much too quickly; the Dow traded briefly below the 12,000 mark on March 14, and has recovered 1,000 points in the 26 sessions since then. The Dow first breached the 12,000 mark in October last year.
   
In afternoon trading, Britain's FTSE 100 was down 0.29 percent, Germany's DAX index was down 0.30 percent, and France's CAC-40 was down 0.40 percent.   

Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.69 percent from 4.67 percent late Friday.
   
Gold prices slipped. The dollar rose slightly against the euro and British pound, but is still trading at historically low levels versus those currencies.
   
The dollar's recent drop is not necessarily bad for the U.S. economy; the currency's weakness is helpful to exporters, because it makes U.S. goods comparatively cheaper and therefore more attractive to importers. However, a weaker dollar reduces its allure as an investment currency, especially as interest rates rise in other countries.
   
Meanwhile, earnings reports from companies such as Hasbro Inc., Novartis SA and Kimberly-Clark Corp. were strong Monday, but investors still await results from cell phone chip maker Texas Instruments Inc., which will be released after the market closes.
   
Investors, who have been slightly disappointed by cell phone and chip makers' profits last quarter, are expecting Texas Instruments to post a profit of 31 cents per share, slightly weaker than a year ago.

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.

Yen off earlier highs; euro falls on reported comments by ECB's Garganas

LONDON - The yen fell back amid quiet newsflow, falling off its highs in the wake of an upgrade of Japan's sovereign ratings by Standard & Poor's.
   
S&P upgraded its long-term sovereign debt rating and long-term senior debt rating for Japan to "AA" from "AA-" to reflect "budgetary rehabilitation, monetary policy normalization and visible progress in structural reforms".
   
The news sparked renewed talk of possible carry trade unwinding, but ultimately had less of an impact than anticipated, said Jeremy Bolton at Informa Global Markets.
   
"There was limited reaction to this potentially bullish news for the yen," he said. "As the European market opened, people have looked at that and seen cheap levels to buy".
   
Russell Bloom at Thomson IFR Markets said the market is "shrugging off" the S&P upgrade, "with the usual leverage-backed yen-selling beginning to influence in the absence of key data."
   
Analysts at BNP Paribas noted that this is the first time S&P has raised Japan's long-term currency debt rating since it assigned a AAA rating in 1975, having subsequently downgraded the rating three times in 2001 and 2002.
   
Market players also focused on a story in the Financial Times which said Japan is considering establishing a special state investment fund to manage part of its foreign exchange reserves and improve returns.
   
Meanwhile, the euro weakened after press reports quoted the Greek representative on the European Central Bank as saying a strong euro could stop the ECB from raising interest rates.
   
Bank of Greece Governor and ECB committee member Nicholas Garganas subsequently denied the report in Greek newspaper To Vima, where he was quoted as saying that "to the extent that the strength of the euro helps contain
inflationary pressure, there is less reason to raise interest rates".
   
The single currency, meanwhile, has shown a minimal reaction to the first ballot of the French presidential elections over the weekend. Right-wing UMP candidate Sarkozy garnered the most votes at 31 pct, while Socialist candidate Royal won 26 pct. Both will go into the second round run-off on May 6.
       
Elsewhere, the pound hovered just under the 2 usd threshold, but came off earlier lows after a raft of mortgage data suggested the housing market remained strong in March.
   
Figures from the Council of Mortgage Lenders and the Building Societies Association both showed mortgage lending in March was the highest on record for that month. The British Bankers Association also reported that net mortgage lending growth in March was 5.1 bln stg -- unchanged from February's figure after it was revised slightly downwards.

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!

Top Stories in Europe at 12.05 GMT

Amsterdam - Barclays has made an agreed 3.225-for-1 all-share bid for ABN Amro Holding NV that values the Dutch bank at 36.25 eur per share, the banks said in a joint statement. The valuation is based on Barclays' closing price Friday and equates to a total purchase price of 67 bln eur.

Milan - Italian banks are seeking a consortium of Italian investors to join the Spanish group Telefonica SA in buying a controlling stake in Telecom Italia SpA from Pirelli & C SpA, the daily La Stampa said without giving a source. The banks Intesa Sanpaolo SpA and Mediobanca SpA are discussing with the television company Mediaset SpA, which is controlled by former prime minister and opposition leader Silvio Berlusconi, to join the consortium.

Zurich - Novartis AG reported forecast-beating first quarter net profit of 2.171 bln usd, up from 1.956 bln usd, citing strong growth across all divisions, while reaffirming expectations for another year of record operating and net profit in 2007. Analysts polled by Thomson Financial News had forecast net profit of 1.622-1.974 bln usd, with the median of expectations at 1.825 bln usd.

Nestle SA reported a first quarter sales rise of 6.4 pct to 24.3 bln sfr, the increase driven by organic growth of 7.4 pct with a positive contribution form all regions and businesses, partially due to higher demand ahead of expected price increases. Looking ahead, the Swiss food giant said it continues to target organic growth of 5-6 pct as well as improved constant currency EBIT margins for the full year.

French reinsurer Scor SA said its takeover offer for Swiss rival Converium Holdings AG will run from May 8 to June 6 following a ruling by the Swiss Takeover Board extending by 10 days the cooling off period before the bid's launch. The offer was scheduled to be open from today until May 22. Scor is offering 0.5 of a Scor share and 4 sfr cash for each Converium share. Scor already holds 33 pct of Converium.

Kuehne & Nagel Group reported a first quarter net profit rise of 28.2 pct to 130.3 mln sfr, supported by growth in all segments. EBIT for the period rose to 172.2 mln sfr from 141.9 mln sfr in the year earlier period, while sales rose 13.5 pct to 4.9 bln sfr.

Paris - Carrefour said it signed an agreement to acquire Atacadao, Brazil's leading operator of discount hypermarkets, for 825 mln eur. In a statement, Carrefour said the transaction will make Carrefour Brazil the largest food retailer in the country in terms of sales.

Frankfurt - Siemens AG's internal investigation into the growing scandal at the conglomerate over alleged bribery has not found any evidence implicating chief executive Klaus Kleinfeld, unnamed company sources told Sueddeutsche Zeitung. Investigators from US law firm Debevoise & Plimpton have been combing through Siemens records since December in order to determine the extent to which senior managers were aware of the alleged unethical activities.

London - Terra Firma believes it will be able to submit a firm 10.9 bln stg offer for Alliance Boots PLC but will then face a higher counterbid from KKR, its rival private equity suitor, reports the Financial Times without citing sources.
 
That scenario, which would deliver even greater returns for Alliance Boots shareholders, will take place only if Terra Firma manages to justify its indicative 1,115 pence a share bid after meeting the health and beauty group's management and examining its books, the FT says.

Diageo PLC and SABMiller PLC, two of the world's most powerful drinks companies, have held detailed talks about breaking up Scottish & Newcastle PLC, the British brewer, reports the Financial Times. The FT says work on the takeover, which was being actively discussed as recently as the end of last month, centred on a plan for SAB to bid about 710 pence a share for S&N, or just over 9 bln stg, including debt.

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

Asian shares close mostly higher; Tokyo pulled down by yen fears

HONG KONG - Shares across the Asia-Pacific region closed mostly higher, boosted by Wall Street's record high on Friday but with Japanese stocks pulled down by concern over a stronger yen.
   
Tokyo shares closed flat, having shed the broad gains they had made in the morning, because of fear that the yen will strengthen in the near term and so reduce the earnings of exporters.
   
The yen was firmer against other major currencies in the afternoon after Standard & Poor's said it had it raised Japan's long-term sovereign debt rating and long-term senior debt rating to "AA" from "AA-".
   
The blue-chip Nikkei 225 Stock Average closed 2.75 points or 0.02 pct higher at 17,455.37, off a high of 17,656.55. The TOPIX index of all first-section issues finished 4.44 points or 0.26 pct lower at 1,705.63, off a low of 1,701.59.
   
Kazuhiro Takahashi, an equities official at Daiwa Securities SMBC, said the stronger yen prompted players to unwind long trades, especially in index futures.
   
Australian shares closed slightly higher after moving in and out of positive territory during the session on profit-taking in leading bank stocks countered by support for miners. Banks succumbed to mild profit-taking ahead of key inflation data due for release on Tuesday which is likely to determine whether the Reserve Bank of Australia (RBA) hikes interest rates after its policy meeting next month.
   
The S&P/ASX 200 closed up just 1.7 points or 0.03 pct at 6,209.2. The benchmark index closed off an all time high of 6,252.3 surpassing last Wednesday's record of 6,240.8. It closed off a low of 6,165.6.
   
Hong Kong shares were stronger in afternoon trade, recovering from a fall in the morning as a sharp drop in China Mobile trimmed gains driven by Wall Street's record close on Friday.
   
There was some profit taking ahead of the settlement of April futures contracts on Friday, but the overall market mood remained positive.  At 3.15 pm the Hang Seng Index was up 41.16 points or 0.2 pct at 20,607.75.
   
In mainland China, A-shares in Shanghai and Shenzhen closed sharply higher amid strong funds inflows and strong overseas markets, with banks, power generators and steelmakers snapped up. About 110 companies closed up by their daily 10 pct limit.
   
The Shanghai A-share Index was up 133.12 points or 3.53 pct at 3,899.95 and the Shenzhen A-share Index was up 41.14 points or 3.91 pct at a record 1,093.30.
   
Seoul shares closed higher, with the key index at a new record, as foreign investors emerged as active buyers following a solid Friday rally on Wall Street.
   
Sentiment was buoyed by another record close by the Dow Jones Industrial Average. The index is on track to breach 13,000 points this week, with more companies expected to report strong quarterly results.
   
But the local market closed off its new intraday high after Tokyo shares trimmed gains toward the close and due to resistance around the 1,550-point level. The KOSPI index closed up 11.27 points or 0.74 pct at a record 1,544.35, after moving between 1,538.33 and 1,554.50. Steel makers, retailers and builders led the advance.

Get a FREE $50,000 Forex demo.  Free streaming quotes, guaranteed executions, 1% margins, and zero commissions! Click Here.

Gold continues lower as dollar recovers

LONDON - Gold continued lower as the dollar clawed back ground lost against the major currencies last week.
   
The metal remained near fresh 11-month highs hit earlier, however, and analysts remained upbeat its prospects.
   
"In the precious sector we remain bullish on gold prices. Gold is biased to head towards the 700-715 usd an ounce level in the second and third quarters," said JP Morgan analyst Michael Jansen.
   
At 1.28 pm, spot gold was quoted at 690.05 usd an ounce, down from the 691.75 usd level seen in late New York trades on Friday, when the metal touched an intraday peak of 693.60 - its highest in 11 months.
   
The metal hit a fresh 11-month peak of 693.95 usd an ounce in Asian trade earlier, before a recovery in the dollar and technical resistance above the 690 usd an ounce level sent it lower.
   
"Gold ... has again met strong resistance above 690 usd, a theme likely to leave gold vulnerable to sharp corrections," said TheBullionDesk.com analyst James Moore.
   
He added, however, that despite this resistance, gold should remain supported in the coming sessions as recent weakness in the dollar will continue to prompt asset diversification.
   
Separately, gold was underpinned by upbeat sentiment in the platinum and palladium market. ETF Securities is scheduled to launch five new physically backed exchange-traded commodities (ETCs) based on platinum, palladium, gold and silver on the London Stock Exchange tomorrow.
   
Meanwhile, Swiss bank ZKB is planning to launch an EFT in platinum, palladium and silver on May 10.
   
ETCs, like ETFs, trade commodity futures, backing up every ounce of stock bought on paper with actual physical stock. As a result, the launch of an ETF often squeezes the market as it eats up the amount of physical stock available.
   
Platinum was down at 1,311 usd an ounce against 1,326 usd in late New York trades Friday, when it hit 1,330 usd an ounce, its highest level in 5 months.
   
Platinum exceeded those highs in Asian trade earlier, hitting a fresh 5-month peak of 1,336.50 usd an ounce before turning lower.
    
Silver fell to 13.86 usd an ounce against 13.93 usd, while palladium was down at 376 usd an ounce against 383 usd.

Copper rose as robust Chinese imports fuelled supply fears in light of low global stocks. At 2.06 pm copper for three-month delivery stood at 7,945 usd, against 7,955 usd at the close on Friday. Copper had hit a seven-month high of 8,100 usd on Tuesday of last week on supply fears from Indonesia.
   
Chinese copper production is flat at 5 pct per year or even less, "keeping the balance sheet for copper in the second quarter tight," said JP Morgan analyst, Michael Jansen.
   
Also underpinning prices, copper inventories stored in LME-certified warehouses across the globe fell 925 tonnes to 147,100 tonnes, said the LME in a daily report. Copper inventories at LME-registered warehouses are down by around 22 pct since the start of February, and stand at less than four days' of global consumption.

Nickel was sharply higher amid critically low stocks. Prices rose in spite of a small 18-tonne rise in stocks stored in LME warehouses, as reported by the LME. Inventories are still so low that they would not satisfy a day's worth of global consumption.
   
Nickel was up at 49,230 usd from 48,800 usd. The metal, used extensively for stainless steel production, had struck an all-time high of 51,150 usd earlier this month.
   
In other metals, zinc was up at 3,675.75 usd against 3,600 usd, lead was at 1,970 usd against 1,930 usd, aluminium was up slightly at 2,845 usd against 2,842 usd. Tin rose to 13,850 usd against 13,675 usd at Friday's close.

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.