US & World Daily Markets Financial Briefing 29-08-2007

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

Stocks open higher after tumble

NEW YORK - Stocks rose sharply in early trading Wednesday as investors scooped up bargains after the previous session's huge tumble. The Dow Jones industrials soared nearly 100 points.
   
Though investors remain uneasy about shrinking credit and its effect on the economy, many still expect the Federal Reserve to cut interest rates at its next meeting on Sept. 18, or even sooner. That gives them some hope that the stock market will recover from its summer volatility, and that right now, it's a good strategy to buy while the buying is cheap.
   
With little economic data expected Wednesday, investors will likely be focused on the performance of the credit markets and corporate news. One headline the market is anticipating is Altria Group Inc.'s announcement of a spinoff of its cigarette business, Philip Morris International. Also, Alltel Corp. shareholders are scheduled to vote on a $24.7 bln buyout by private investors.
   
The Dow rose 91.04, or 0.70 percent, to 13.132.89, after falling 280 points on Tuesday.
   
Broader stock indicators also rose. The Standard & Poor's 500 index added 10.76, or 0.75 percent, to 1,443.12, while the Nasdaq composite index gained 21.08, or 0.84 percent, to 2,521.72.
   
Bonds fell slightly Wednesday, with the yield on the benchmark 10-year Treasury note at 4.53 percent, up from 4.52 percent late Tuesday. The dollar was mostly lower against other major currencies, while gold prices rose.
   
On Tuesday, the stock market gave back some of the robust gains it made last week as investors grew nervous again about the strength of the economy and whether the Fed will act in an effort to prevent credit troubles from spreading further.
       
European markets were mixed by afternoon trading. Britain's FTSE 100 rose 0.31 percent, Germany's DAX index fell 0.11 percent, and France's CAC-40 rose 0.63 percent.
   
Light, sweet crude rose 70 cents to $72.43 a barrel on the New York Mercantile Exchange ahead of the U.S. Energy Department's weekly inventory report.
   
The housing market outlook remains weak. Mortgage application volume, refinance volume and purchase volume all fell about 4 percent during the week ended Aug. 24 compared to the prior week, according to the Mortgage Bankers Association's weekly application survey.
   
The Russell 2000 index of smaller companies was up 6.51, or 0.85 percent, at 774.34.

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.

Yen falls back as stable European stocks prompt revival in risk appetite

LONDON - The yen fell back as European equity markets shrugged off yesterday's slump on Wall Street, prompting a revival in risk aversion.
   
Yesterday, US equities fell sharply, pushed down by a 3.2 pct fall in the S&P/Case-Shiller house price index during the second quarter - the biggest drop since it began in 1987.
   
The losses were then exacerbated by the release of the Federal Reserve's minutes to its August 7 rate-setting meeting which dented expectations that a September rate cut is on the cards. The minutes indicated that the deterioration in financial conditions might need a "policy response" but that the Fed is still concerned about inflation pressure.
   
However, while Asian equities followed Wall Street lower most European bourses are trading in the black.
   
"Following 2 pct losses for stocks in New York yesterday, there has been some degree of recovery in Europe today - European bourses were into modestly positive territory whilst the yen-crosses were enjoying a degree of stabilisation after suffering broad based losses through to the Tokyo afternoon," said Neil Mellor, currency strategist at Bank of New York.
   
This has pushed the yen down as investors make tentative steps back to engaging in the risky carry trade - where investors sell low-yielding currencies such as the yen to buy higher-yielding ones elsewhere. With no US data due this afternoon, how equities fare on Wall Street is likely to determine whether the rise in risk appetite can be sustained.
   
Meanwhile the dented rate expectations have pushed the dollar lower against the euro, which brushed off a weak German consumer sentiment survey. The GfK market research institute said its consumer climate index for Germany is forecast to fall to 7.6 points in September from 8.5 points in August, which was revised down from 8.7 points, well below expectations for a reading of 8.5.
   
Finally the turnaround in sentiment has kept the the pound well-supported above 2 usd, despite diminishing expectations that the Bank of England will raise interest rates again this year.
   
"European equity markets are pretty much all in the black and the lack of fresh domestic factors appears to have played into the pound's hand," said Peter Stoneham at Thomson IFR Markets.
     

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

Euroshares turn higher midday as Dow set for a rally

LONDON - Leading European exchanges turned positive midday as Wall Street looks set for a rally after sharp falls yesterday, with selected European earnings stories helping to lift sentiment here. At 12.34, the STOXX 50 was up 10.93 points at 3,667.56 and the STOXX 600 was up 0.91 points at 365.57. Earlier, the STOXX 50 had been as low as 3,628.92 and the STOXX 600 had slipped to 361.43.
       
In Europe, Renault led the STOXX 50 fallers -- down 3.65 pct -- as comments from the car group's CEO were interpreted by some as a profit warning. However analysts, said the market is over-reacting.
       
Among utilities, Veolia added 1.62 pct after its stronger than expected interims. "Core EBIT beat our forecasts and net income was well above consensus," said an analyst at a leading European brokerage. "Overall, this was a strong set of numbers, especially at the operating profit level."
   
Suez led the STOXX 50 risers -- up 2.9 pct -- bolstered by strong numbers from peer Veolia and as talk of difficulties in the planned merger with Gaz de France reawakened speculation that the utility giant might become a bid target.
   
Meanwhile, French government spokesman Laurent Wauquiez said today that a resolution of the Suez-GDF merger was needed "by the end of September". Wauquiez stressed that no ultimatum had been issued on the project, but that "positions will obviously emerge rapidly".
   
Yesterday, Suez denied a newspaper report which said Suez Chairman Gerard Mestrallet wrote to the government saying that if an agreement cannot be reached before the end of the week, Suez would have to consider other options. Shares in Gaz de France rose 1.62 pct.
    
Vivendi shares were up 1.35 pct as Bear Stearns said the company's management has the potential to increase guidance in its upcoming results announcement.
   
Nokia added 2.38 pct as it unveiled a new range of products at an investor presentation in London.
   
Elsewhere, oil-related plays were a key focus after strong numbers but a disappointing outlook from SBM Offshore NV, down 3.81 pct, and a trio of bullish notes in the sector from UBS -- which upgraded Technip, Saipem, SBM Offshore, Seadrill and Wood Group -- as well as Lehman Brothers and Merrill Lynch.
   
Elsewhere, Goldman Sachs initiated coverage on Cairn Energy, down 0.35 pct, Burren Energy, up 0.61 pct, and Dana Petroleum, up 2.04 pct, with 'buy' ratings.  However it started Soco International, down 3.02 pct, as a 'sell', and Tullow Oil, down 0.5 pct. Venture Production fell 4.11 pct after a recent strong run as it was started with a 'neutral' recommendation.
   
In food retail, Carrefour added 1.92 pct ahead of its numbers tomorrow. Ahold was up 1.32 pct ahead of its interims -- also tomorrow -- as Morgan Stanley resumed coverage with an 'overweight' stance. The broker said Ahold could afford to pay back as much as another 3 bln eur to shareholders -- which could lift EPS by 25 pct.
   
Northern Foods added 1.27 pct and Premier Foods moved up 0.32 pct as ABN Amro repeated its 'buy' ratings on the pair, albeit with lower EPS estimates.
   
Among clothing retailers, Next added 0.43 pct and H&M moved up 0.67 pct as JP Morgan initiated the pair as 'overweight', saying the recent sell-off was largely on weather and rates concerns, but it sees the possibility of margin improvement going forward.
   
Accor added 3.03 pct after the French hotels group reported a strong set of first half numbers and after it unveiled a surprise plan to buy back a further 500 mln eur worth of its own shares.

Get your free futures starter kit metals, energies, grains, currencies, stock indexes, tropical softs, plus more! Click Here.

Asian markets tumble as Fed minutes disappoint; banks bear brunt

SINGAPORE - Stock markets across Asia tumbled Wednesday, caught up in Wall Street's decline overnight after minutes from the Federal Reserve's August meeting showed policymakers more focused on inflation than the fallout from the housing sector meltdown and volatile financial markets.
   
In Tokyo, the Nikkei 225 index closed down 1.7 pct. The broader Topix lost the same amount as a stronger yen put pressure on exporters.
   
The Singapore Straits Times Index fell 0.3 pct to 3,334.66, while the Hang Seng lost 1.5 pct to end at 23,020.60.
   
In Sydney, the S&P/ASX 200 finished down 1.2 pct and the All Ordinaries closed down 1.2 pct. Leading investment bank Macquarie closed down 3.8 pct at 71.50 aud and investment firm Babcock & Brown was down 3.7 pct at 22.90 aud as banks again bore the brunt of the selling.
   
Banks were also key decliners in Tokyo, with Mitsubishi UFJ Financial Group down 2.7 pct at 1.08 mln yen, Sumitomo Mitsui Financial Group off 2.6 pct at 879,000 yen and Resona Holdings down 1.3 pct at 231,000.
   
In Singapore, DBS Group closed down 30 cents at 19.50 dollars as investors continued to digest its disclosure that it has 2.4 bln Singapore dollars in exposure to collateralized debt obligations, securities based on loans and other debt instruments.
   
China A-shares also closed lower, with the latest liquidity tightening by the finance ministry via the issue of special treasury bonds triggering broad profit-taking.
   
The benchmark Shanghai Composite Index closed down 85.26 points or 1.6 pct at 5,109.43. The Shanghai A-share Index was down 1.7 pct at 5,365.55 and the Shenzhen A-share Index was down 1.7 pct at 1,482.72. The Shanghai B-share Index rose 0.13 points to 313.90 and the Shenzhen B-share Index fell 9.97 points or 1.4 pct to 717.25.
   
In South Korea, Kookmin Bank was down or 3.2 pct at 71,800 won and Shinhan slid 2.9 pct to 56,300 won. Brokerage houses fell on news that the Korea Stock Exchange (KRX) is delaying its floatation plan.
   
The KRX said on Tuesday it has decided to delay its plan to go public as the government intends to revise a law governing the exchange's activity. The decision means a hold up in proceeds from the float for brokerages that have seats on the bourse. Daewoo Securities fell 3.8 pct to 26,600 won and Samsung Securities sank 3.1 pct to 72,700 won.
   
The Kospi closed down 0.2 pct after stronger-than-expected industrial production data helped it recoup most of its early losses late in the session.
   
Indian shares closed higher as attractive valuations lured investors back after an initial decline, but the scheduled expiry of futures contracts tomorrow and soft US economic data capped further gains.
   
The Bombay Stock Exchange's benchmark Sensex rose 0.50 pct, or 73.85 points at 14,993.04, after falling 2.19 pct to 14,592.11 earlier in the day, while The National Stock Exchange's S&P CNX Nifty climbed 0.89 pct, to 4359.30 points. In the BSE 30, 20 shares advanced, 10 shares retreated. In the broader market, 1,532 shares gained, 1,093 lost and 68 were unchanged.

Among the smaller Asian bourses, the Kuala Lumpur Composite Index closed down 15.25 points or 1.2 pct at 1,263.70, the Jakarta Composite fell 1.1 pct to 2,134.88 and Philippines composite index was down 1.3 pct at 3,209.53. The Taiwanese Taiex lost 1 pct.

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!

Copper down on healthy global inventory, traders watching equities

LONDON - Copper fell as global inventory looked healthyamid weak sentiment, but losses were limited in the short-term as Wall Street is expected to open higher. If equities stabilise in the long run, traders' appetite for risky assets like metals is likely to return.
   
"Prices are weaker across the complex in early trade this morning and LME inventories have posted net rises for copper and nickel, although well below yesterday's sizeable inflows, as well as a net rise in LME zinc inventories," noted MF Global analyst Edward Meir. "US equities are called to open slightly higher, but this could change rather quickly as the day wears on," he added.
   
At 1.31 pm, copper for three-month delivery was trading at 7,225 usd against 7,280 usd at the close yesterday.
   
On the fundamental side, supply looked healthy. A 3,025-tonne rise in global copper stocks tracked by the LME following yesterday's 10,075-tonne increase bought the total inventory number up to 138,650 tonnes, a three-month high. Copper has lost some 7 pct since the start of the month, mainly as risk aversion outweighed fundamental news. Other metals have followed copper's lead.
   
Elsewhere, nickel was down but off month-lows because traders believe recent price falls were overdone. The metal has lost some 47 pct since striking an historic high of 51,800 usd in May on demand destruction with prices so high.
   
"Nickel prices have stabilised recently after falling dramatically since May; however, the fundamentals point to more price weakness in the short-term," said analysts at Macquarie.
   
The LME's daily report said global stocks in LME-certified warehouses rose 330 tonnes to 23,436 tonnes. Nickel was lower at 27,250 usd from 27,695 usd.
   
In other base metals, aluminium was lower at 2,515 usd from 2,527 usd, lead fell to 3,090 usd from 3,180 usd, tin was down at 14,775 usd from 14,800 usd, while zinc fell to 3,020 usd from 3,080 usd.

Gold ticked higher today on dollar weakness but market sentiment remains fragile as players continue to track jittery equity markets. At 12.46 pm, spot gold was trading at 665.60 usd an ounce against 664.40 usd in late New York trade yesterday.
   
Looking ahead, however, the fourth quarter is likely to bring with it stronger demand with more traders at their desks after summer holidays and as Christmas, Diwali and Eid festivals boost physical buying.
   
"Gold prices are likely to continue to trade largely sideways through to the end of the summer months, until physical demand picks up in September," said Barclays Capital analysts.
   
Among the other precious metals, platinum slipped to 1,254 usd per ounce against 1,257 usd, while its sister metal palladium fell to 322 usd against 327 usd. Silver was slightly stronger, following gold's example, at 11.81 usd per ounce against 11.77 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.