US & World Daily Markets Financial Briefing 28-09-2007

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

Stocks open flat after economic data

NEW YORK  -  Wall Street opened flat Friday as investors mined through a batch of economic reports and worried about third-quarter earnings.     Stocks stayed afloat partly due to an upbeat report on consumer spending from the Commerce Department. Consumer spending increased 0.6 percent in August, the fastest growth in more than two years.
   
The government also reported a closely watched gauge of inflation showed a year-over-year rise in August of just 1.8 percent. This was the smallest increase since a similar rise in February 2004, suggesting inflation is not a problem for the economy.
   
The reading is within the Fed's comfort zone of 1 to 2 percent, so it could make the Federal Reserve more inclined to lower interest rates further after a half-point cut last week. Meanwhile, the strength in consumer spending should bolster confidence the economy can withstand the worst housing slump in 16 years and a major disruption in the credit markets.
   
But still weighing on investors Friday was lingering concern that the third quarter might have severely trimmed corporate earnings power. This is the last trading day of one of the most volatile periods in years - one that pulled stocks sharply lower after the Dow Jones industrial average hit 14,000 in
mid-July.
   
The Dow slipped 2.19, or 0.02 percent, to 13,910.75.
   
Broader indexes were also little changed. The Standard & Poor's 500 index fell 0.37, or 0.02 percent, to 1,531.01, and the Nasdaq composite index rose 2.48, or 0.09 percent, to 2,712.07.
   
Bonds rose, pushing the yield on the 10-year Treasury note down to 4.55 percent from 4.57 percent late Thursday.
   

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.

Euro breaches record high 1.42 mark against dollar after US data

LONDON  - The euro broke through the key 1.42 level against the dollar after US data showed core US inflation at its weakest level in three-and-a-half years.
   
The Commerce Department reported that the core personal consumption expenditure (PCE) price index rose by 1.8 pct from a year ago, the slowest annual increase since February 2004.
   
The headline PCE index was also up an annual 1.8 pct, the weakest pace of growth since October last year.   
   
Despite strong levels of spending, the data gave a further excuse to sell the beleagured US currency which has taken a battering since the Federal Reserve's decision to cut interest rates aggressively by 50 basis points last week. This has caused the euro to hit a series of record highs. At 1.05 pm GMT, the euro was trading at 1.4201 usd, just below a new record high of 1.4207 usd.

The Canadian dollar came close to fresh 31-year highs against its US counterpart, helped by figures showing a key measure of US inflation falling to its lowest level in three and a half years.
   
The Commerce Department reported that the core personal consumption expenditure (PCE) price index rose by 1.8 pct from a year ago, the slowest annual increase since February 2004.
   
Weaker-than-expected Canadian monthly GDP data for July meanwhile had no effect on the Canadian currency. GDP month-on-month growth was 0.2 pct against expectations for a much stronger 0.4 pct rise.
   
"Canadian GDP was disappointing but the market so far has overlooked that," said Peter Wadkins at Thomson IFR Markets, adding that the Canadian currency "leapt" on the US inflation news.
   
At 12.57 GMT, the Canadian dollar was trading at 0.9946 per US dollar, having earlier hit a high of 0.9940, very close to its recent 31-year high of 0.9932.

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

ATHENS  - Shares ended slightly higher, consolidating the market's recent sharp advance, as gains for Public Power Corp (PPC) and Hellenic Telecoms (OTE) more than offset losses for Greek Postal Savings Bbank (GPSB) and EFG Eurobank.
   
The ASE general index closed 0.4 pct higher at 5,123.3, and blue chips closed little changed at 2,702.1. Mid caps ended up 1 pct at 6,604.4, and small caps finished 0.6 pct higher at 1,124.4.  Decliners outnumbered advancers, 134 to 117, with 77 unchanged in heavy volume of about 600 mln eur

FRANKFURT - German shares were largely flat in afternoon trade as fresh hopes that the US Fed will cut interest rates offset downward pressure from a new record high for the euro against the US dollar, high oil prices and losses this morning on major Asian markets.
  
A largely unchanged opening to US markets did little to upset the balance. At 3.38 pm, the DAX was up 5.39 points, or 0.07 pct, at 7,859.18, having so far traded between 7,830.53-7,869.18 today.
   
The MDAX gained 27.20 points, or 0.26 pct, to 10,425.35, while the TecDAX added 1.89 points, or 0.20 pct, at 962.18. DAX futures were down 8.50 points, or 0.11 pct, at 7,939.50, while bund futures advanced 0.18, or 0.17 pct, to 112.62.

ZURICH - Swiss shares were higher in afternoon trade, sustaining morning gains, supported by Novartis and selected blue-chip banking stocks. At 2.15 pm, the Swiss Market Index was 24.48 points higher at 8,911.25 and the Swiss Performance Index was 16.15 points up at 7,235.77.

AMSTERDAM - Shares in Amsterdam were lower at midday, in line with European indices and with futures pointing to tough start on Wall Street ahead of closely watched macroeconomic data, while shares in Hagemeyer surged, market sources said.
   
At 1.15 pm, the AEX was 2.84 points or 0.52 pct lower at 539.40, after opening at 542.14 and trading in the 538.89-542.53 band. Government bonds were mostly higher, and the euro stood at 1.4183 usd versus 1.4150 usd late yesterday.

LONDON - UK blue chips remained close to session lows midday in quiet trade with participants waiting for fresh direction from the US with a raft of data scheduled for release. However, with an aura of uncertainty pervading the markets, activity was expected to remain minimal.
   
At 12.00 am, the FTSE 100 index was off 55.5 points to 6,429.9, down from a high of 6,500.4, while the FTSE 250 index dropped 65.4 points to 10,973.1. Volume was fair with 993 mln shares changing hands in 230,993 deals.

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

SINGAPORE - Most Asian stock markets extended their rally Friday following the overnight gains on Wall Street as investors set aside concerns over the continued fallout from the US subprime crisis to focus on the possibility that the Fed will continue easing interest rates next month.
    
In Japan, industrial production showed a healthy rebound in August after the decline in the previous month, suggesting that the Japanese economy weathered through turbulence on the global financial market, triggered by the US subprime lending problem.
   
The blue-chip Nikkei 225 Stock Average closed down 0.3 pct at 16,784.65, off a high of 16,929.26. But other key Asian markets extended their rally, particularly Hong Kong and Australia.

Australian shares soared to fresh record highs as investors continued to buy BHP Billiton, the world's largest mine, on expectations that commodity prices will remain strong. The S&P/ASX 200 ended up 0.5 pct at a record closing high of 6,567.8.
   
Hong Kong's Hang Seng index has been the biggest gainer in recent weeks, with the index now trading above 27,000 points and brokers expecting the climb to continue all the way to 28,000 next month. "The market is liquidity driven," said Castor Pang, strategist at Sun Hung Kai Financial in Hong Kong. "There are
a lot of funds from everywhere, from China, Europe and Middle East."
   
The Hang Seng closed up 0.3 pct, or 77.32 points, at a record 27,142.47, off a high of  27,210.38.
   
The benchmark Shanghai Composite Index closed up 2.64 pct at 5,552.30, surpassing the previous record of 5,485.01 on Sept 24, with sectors such as coal energy and resources -- in which funds have large holdings -- soared on institutions' support ahead of book-closing for the third quarter. About two trln yuan worth from Shenhua Energy's Shanghai initial public offering was returned today to investors who failed to secure shares, providing a boost to the market.
   
Mainland stock markets will be closed during the National Day holiday, which runs from Oct 1-7
 
The Jakarta composite index closed down 0.8 pct, or 19.62 points at 2,359.21, while the Philippine composite index closed down 0.1 pct at 3,572.90.  Elsewhere in the region, the Singapore Straits Times index closed down 0.2 pct, or 8.54 point at 3,706.23, the Malaysian KLCI closed up 0.64 pct at 1,336.30, while the KOSPI in South Korea ended down 0.1 pct at 1,946.48.
   
In Taiwan, shares closed almost flat as late profit-taking eroded gains spurred earlier by Wall Street's overnight advance and purchases by fund managers to boost their portfolios for the end of the quarter. The weighted index closed down 0.02 pct at the day's low of 9,411.95.

Indian shares clocked another record finish Friday, propped by data which revealed that the nation's inflation has dropped to near a five-year low.
   
The Bombay Stock Exchange's Sensex ended up 140.54 points or 0.82 pct at 17,291.10, while the National Stock Exchange's S&P CNX Nifty closed at 5,021.35, up 0.42 pct.  For the week to Sept 15, India's wholesale price index-based inflation rate showed a better-than-expected drop to 3.23 pct from 3.32 pct the previous week. This is the lowest level since Dec 2002.

Trade Energy contracts? Get your FREE research. Click here.

Gold tops earlier high, surges to new 27-year peak

LONDON - Gold exceeded earlier highs, surging to its highest point since 1980 as fund buying accelerated amid record low dollar values and another new peak for oil prices in London.
   
"Funds are throwing lot of money at gold," said Kitco analyst Jon Nadler. He added, however, that gold's one way ascent over the past month is taking on some "ominous and speculative features that may not see it correct in orderly fashion".
   
The precious metal rose to 743.70 usd an ounce -- extending this mornings high of 739.60 usd -- before retreating to 743.30 usd at 2.15 pm. In late New York trade yesterday, the metal was quoted at 734.50 usd.
   
The dollar plunged to a new all time low against the euro above 1.42 usd amid continued speculation the Fed will have to cut rates further to prop up the ailing US economy.
   
Although August consumer spending data released earlier came in in line with expectations, helping ease concerns over the US economy, the figures was overshadowed by a tame set of core inflation figures.
   
The inflation number served to increase speculation the Fed will be biased towards cutting rates to boost the economy rather than raising them to combat inflation.
   
Among other precious metals, silver was up at 13.69 usd an ounce from 13.55 usd yesterday.
   
"Silver still has the potential to rally in the coming sessions given the bullish mood in gold and platinum, as silver is viewed as a cheaper alternative," said TheBullionDesk.com analyst James Moore.
   
Platinum rose to a new year high of 1,375 usd an ounce, topping yesterday 1,361 usd peak, before retreating slightly to 1,373 usd. The metal is underpinned by by rising investment and industrial demand, and tight supply. Palladium bucked the trend, falling to 341 usd an ounce against 343.50 usd.

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.