US & World Daily Markets Financial Briefing 24-04-2006

Start trading successfully today
Click here  to find out more

U.S. stocks open lower on weak dollar, mixed earnings

NEW YORK - U.S. stocks lost ground in early trading Monday as investors mulled the impact of a sliding U.S. dollar and a mixed set of earnings reports, with strong results from Caterpillar Inc. but a weaker-than-expected performance from Xerox.
   
The Dow Jones Industrial Average fell 22 points to 11,326 after ending Friday's session at a six-year high.
   
The Nasdaq Composite Index dropped 11 points to 2,332 while the S&P 500 Index was off 4 points at 1,307.
   
For Marc Pado, U.S. market strategist at Cantor Fitzgerald "earnings have been a wonderful distraction" for the stock market, but equity investors will not be able to ignore high energy and commodity costs for much longer.
   
On the broader market for equities, decliners outpaced advancers by 2 to 1 on the New York Stock Exchange, and the Nasdaq. 

Stocks in focus
   
Shares of Caterpillar Inc. rose 7 cents to $77.94 after the company reported that first-quarter net income soared a stronger-than-expected 45%. The machinery maker capitalized on higher prices and booming mining and construction markets.
   
Shares of Xerox Corp. fell 4.3% to $14.16 after the maker of photocopy machines, printers and fax machines posted quarterly earnings and revenue that fell short of Wall Street expectations.
   
American Express Co. reported first-quarter earnings in line with expectations as revenue rose 12% to $6.33 billion. The credit card giant was last unchanged at $52.25.
  
On the merger and acquisition front, General Electric Co. is in talks to sell its UK life insurance unit, The Wall Street Journal and the Financial Times reported. GE is in talks to sell the unit to South Africa's Sanlam and could get between 400 million and 500 million pounds ($890 million), the FT report stated.

The Journal reported GE might get as much as $1 billion. GE was last off 7 cents at $33.90.
   
Washington Mutual Inc. said it is buying Commercial Capital Bancorp Inc. for $16 a share, or $983 million, to boost its presence in California and its multifamily housing market. Washington Mutual's stock was off 20 cents at $44.81 while shares of Commercial Capital rallied 11% to $15.70.
   
Cendant Corp. said it might sell its travel unit. It had earlier said it would spin off the division to holders. Cendant, the operator of Orbitz, CheapTickets.com and Galileo International, said it might sell the unit after receiving a number of unsolicited bids. Cendant shares were up 55 cents at $17.40.
   
U.S.-listed shares of Deutsche Telekom rose 4.5% to $17.60 after Blackstone Group agreed to buy a 4.5% stake in the telecoms group, owner of the T-Mobile mobile network, from a German state-owned bank for $3.3 billion.

VantagePoint's market forecasts are nearly 80% accurate. Take a look at actual forecasts, become eligible for a Complimentary VantagePoint Market ($750 value!) and see the difference they will make. Click here to see two recent forecasts now.

Dollar slides to 7-month low vs. euro, 3-month low vs. yen

NEW YORK - The dollar slumped to a three-month low against the Japanese yen and seven-month low against the euro early Monday, after the world's seven richest nations urged China to promote greater flexibility in the value of its currency.
   
The China news helped the yen because the yen often serves as a proxy for the Chinese currency due to the limited band in which the yuan can trade.
   
"The main cause in this drop was the G7's communique that shifted to a firmer policy tone against China's regulation of currency exchange," said Boris Schlossberg, senior currency strategist at Forex Capital Markets. "With both European and American policy makers now unified in seeking a readjustment in exchange rates of Asian currencies, the strength in the yen is likely to continue."
   
The greenback was last down 1.3% at 115.02 yen. The euro, meanwhile, gained
0.2% to $1.2365. The British pound strengthened 0.2% to $1.7856. The dollar weakened 0.4% to 1.2705 Swiss francs.    

On Friday, finance ministers and central bank governors from the G7 group of most industrialized-countries agreed that their own countries need to take "vigorous action to address imbalances." The adjustment would be a "shared responsibility" and must be done in a way that maximizes growth, they said.
   
"Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur," said a statement, issued after an afternoon meeting.
   
Qatar confirms diversification
   
Adding to the dollar's woes was a report that Qatar's central bank confirmed it was diversifying reserves into euros. The bank said it had been buying euros recently and could take the proportion of euro reserves up to 40%.
   
"Although its reserves are meager ($4.5 bln), it is part of the steady stream of such news," said Marc Chandler, currency strategist at Brown Brothers Harriman.
   
On Friday, Sweden's central bank said it had significantly reduced dollar holdings in its foreign-exchange reserves. Russian Finance Minister Alexei Kudrin said that the dollar wasn't the absolute reserve currency and that the U.S. swelling deficit could affect its stability eventually.
   
In the past month, Middle Eastern central banks, including the United Arab Emirates, and Chinese officials also have repeatedly suggested that they're looking to diversify reserves away from the greenback.
   
The news from Sweden "reminded markets that central banks may not be wholly drawn to the US dollar's high yielding status and may revert to worrying about its structural and geopolitical lacuna, especially that the high yield accumulation may come to an end as early as next month," said Ashraf Laidi, chief currency analyst at MG Financial Group.
   
Traders have become increasingly bearish on the dollar in recent weeks after the Federal Reserve indicated that the end of the interest rate tightening process was probably "near" and with market attention shifting back to focus on the U.S. record deficit.
   
Federal Reserve Chairman Ben Bernanke is slated to testify before the House-Senate Joint Economic Committee on the economic outlook Thursday.
   
China resist to rapid change
   
Overnight, the People's Bank of China set the yuan, also known as the remnimbi, at a mid-point of 8.0185 against the dollar.
   
Zhou Xiaochuan, governor of the PBOC, said the country could stand to let the yuan rise a bit more -- at some point -- but said it would resist the pressure to adjust more quickly.
   
"Probably it could be a little bit faster, but it is not the way of Chinese reformers to do things," said Zhou, in an interview Saturday.
   
Chinese reforms must be "gradual" to balance competing interests and insure that the financial sector is strong enough, Zhou said.
   
"We don't worry too much what other people say," Zhou added.
   
"Despite the additional pressure to quicken the pace of yuan appreciation, we suspect that China is likely to continue its exchange rate adjustment at its
own pace - a conclusion we also draw from the bulk of official Chinese comments over the weekend," said analysts at Deutsche Bank.

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

The European Markets at 12.00 BST

London - The FTSE 100 index was higher midday, as investors changed tack after this morning's bout of profit-taking prompted by the rise in oil prices and after strong retail sales figures dashed hopes of a cut in domestic interest rates, dealers said.
   
By 11.50 am, the FTSE 100 was up 2.7 points at 6,135.4, while the broader indices were a tad weaker.

Frankfurt - Shares were lower in midday trade on profit-taking after last week's solid gains, as Wall Street ended mixed on Friday, Tokyo posted sharp losses this morning, and oil prices lingered around all-time highs, dealers said.
   
Only Deutsche Telekom sparkled on news Blackstone is to buy a 4.5 pct stake. At 11.45 am, the DAX 30 index was 12.99 points or 0.21 pct lower at 6,081.76, having moved between 6,034.86 and 6,090.33 so far this session.

Paris - Shares were lower midday on profit-taking after recent highs, while oil stocks figured prominently among the relatively few gainers, said dealers.
   
At 12.47 pm, the CAC-40 index was down 19.90 points or 0.38 pct at 5,232.48, on volume of 1.39 bln eur. Of the CAC-40 stocks, 34 were lower and 6 were higher.

Amsterdam - Shares were lower at midday as high oil prices and lower US futures weighed on the market in the absence of guiding local corporate news, dealers said.
   
At 12.20 pm, the AEX was 1.66 points or 0.35 pct lower to 476.34 after opening at 475.92 and reaching an earlier low of 475.58.

Madrid - Share prices were flat in moderate midday trade as M&A news offset earlier profit-taking, with Abertis gaining on its planned merger with Autostrade, while Altadis, TelePizza and Iberia were also firm, dealers said.
   
At 12.16 pm, the IBEX-35 index was down 3.8 points at 11,910.0, after trading in a range of 11,856-11,927, on turnover 1.065 bln.

Milan - Share prices were lower at midday, depressed by shares going ex-dividend, while Autostrade's rise on its planned merger with Abertis offset falls from the negative impact on the economy of higher oil prices and the weaker dollar, brokers said.
   
At 1.00 pm, the Mibtel index was down 0.64 pct to 29,743, and the S&P/Mib off 0.94 pct at 38,132.

Helsinki - The Helsinki OMX index was slightly lower in early afternoon trade, led by Nokia on profit-taking, with industrials outperforming and Cargotec shining after first quarter figures positively surprised, dealers said.
   
At 13.16, the OMX Helsinki 25 index was up 0.23 pct at 2,794.61. The OMX Helsinki index was 0.17 pct lower at 9,836.19, while the OMX Helsinki CAP portfolio index was up 0.29 pct at 5,205.52.

How? By using a new trading system by a 15 year market veteran designed for swing trading and day trading.  Learn how to trade any market, even if you are a novice. Manuals and videos provide a step by step blue-print to make learning easy. ADVFN subscribers save $50.00 - Only $147. Click here

Asian shares close mixed, Tokyo slips on oil prices, stronger yen

HONG KONG - Share prices across the Asia-Pacific region ended mixed with Tokyo sharply lower, as worries about rising oil prices and the yen's gains against the dollar weighed on investor sentiment, dealers said.
   
Today marked the end of truncated trading hours after the exchange had shortened the afternoon session by half an hour, starting Jan 19 this year.
   
It followed worries the exchange's computer system may not be able to handle the huge volume of orders and transactions that flooded in in the wake of news of a securities probe into Internet firm Livedoor.
   
Market players were also wary of taking aggressive new positions ahead of key upcoming year to March corporate results, dealers said.
   
The Nikkei 225 Stock Average closed down 489.56 points or 2.8 pct at 16,914.40. It was the blue-chip index's lowest finish since ending at 16,690.24 March 28.
   
The broader TOPIX index of all first-section issues lost 45.64 points or 2.6 pct to 1,710.76, a low of the day.
   
Oil prices remained above 70 usd a barrel in early afternoon trade in Asian trading even though they slipped off record highs of more than 75 usd a barrel in New York.
   
"Today's market was loaded with bad news as oil prices remained high and there is cautiousness ahead of results," said Hideyuki Suzuki, a strategist at SBI Securities.
   
In Australia share prices finished higher after investors bought resource stocks following the jump in metal prices in overnight trading on Friday, dealers said.
   
They said rises in index leading resources stocks BHP Billiton and Rio Tinto supported the wider market higher after their London-listed shares jumped on Friday following the climb in copper, gold and nickel to fresh record highs.
   
However, dealers said, banking and other financial stocks were mixed as investor concerns heightened over oil prices and their impact on global economic growth following the spike in oil futures to above 75 usd a barrel on Friday.
   
The S&P/ASX 200 gained 19.7 points or 0.38 pct to 5,269.8, closing the gap to Wednesday's record close of 5,283.9.
   
Share prices in Hong Kong were also trading lower on worries over oil prices, dealers said.
   
At 3:25 pm, the Hang Seng Index was down 188.09 points or 1.11 pct at 16,724.06.
   
In mainland China, A-shares in Shanghai and Shenzhen finished lower on profit taking ahead of the one-week Labor day holidays with steelmakers and airlines under pressure, dealers said.
   
The Shanghai A-share Index slid 6.93 points to 1,479.0 on turnover of 28.30 bln yuan and the Shenzhen A-share Index was down 5.43 points at 355.42 on turnover of 15.98 bln yuan.
   
Share prices in Seoul ended sharply lower, ending a recent run of record gains, as large cap IT stocks, banks and KEPCO posted steep losses, dealers said.
   
Wall Street's mixed close on Friday and high oil prices brought on a weak start, with the won's sharp gain against the dollar also adding to the pressure.
   
Today, the won rose to 939.80 against the dollar, compared with the previous session's 948.60, the strongest level since October 1997 when it hit 929.50.
   
Investors also took a cautious stance ahead of a batch of economic data due out this week, including the first-quarter gross domestic product (GDP) growth tomorrow and industrial output and current account figures this Thursday.
   
The KOSPI index closed down 20.37 points or 1.40 pct at 1,430.94.

Asian Bourse Round-Up

For a full list of closing figures, click here.

HotSignals.com Inc to be featured on World Business Review for Innovative Financial Trading Technologies, hosted by Alexander Haig with industry expert Al Berkeley. Explore Hotsignals, simple yet effective scanning technology here. Example: Short 18th January on GOOG at $444.91

Gold futures drop as much as $10 in morning trading

SAN FRANCISCO - June gold fell to a low of $625 an ounce in morning trading and was last down $8.50 at $627. "This week could prove quite important for gold as speculators decision whether to probe higher or to continue locking in profits," said James Moore, an analyst at TheBullionDesk.com.

May silver also fell 36.5 cents to $12.58 an ounce and May copper lost 3.85 cents to stnad at $3.102 a pound.

Crude-oil futures fell in morning trading as some traders locked in gains that pushed the contract to a record above $75 a barrel on Friday. Crude for June delivery was last down 72 cents at $74.46 a barrel.
   
On the bond market, long-term Treasury prices were little changed. The benchmark 10-year note was up 2/32 at 96 4/32, with its yield at 5%.

Automated Forex Alerts to your email or Cell phone.  Finally a system that works! Come and see it live today.  Free Automated Trading, get your complimentary trial here