US & World Daily Markets Financial Briefing 30-10-2006

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Dow, Nasdaq slide in early trading

NEW YORK - Stocks fluctuated in early trading Monday as investors tried to assess the health of the economy following a lackluster same-store sales report from Wal-Mart Stores Inc.
   
The Wal-Mart news added to concerns that arose Friday with the report that the country's economy, as measured by gross domestic product, was estimated to have risen a lower-than-expected 1.6 percent in the third quarter. That sent stocks sliding at the end of a week in which the Dow Jones industrial average had set new closing records for four straight sessions.
   
In the first hour of trading, the Dow was down 5.29, or 0.04 percent, at 12,084.97.
   
Broader stock indicators were lower. The Standard & Poor's 500 index was down 0.80, or 0.06 percent, at 1,376.54, and the Nasdaq composite index was down 2.97, or 0.13 percent, at 2,347.65. The Russell 2000 index of smaller companies was down 3.00, or 0.39, at 762.84.
   
Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.69 percent from 4.68 percent late Friday.    

Wal-Mart fell $1.26, or 2.5 percent, to $49.47 after reporting same-store sales, or sales at stores open at least a year, rose 0.5 percent in October, the smallest increase in nearly six years. The world's largest retailer had forecast sales would increase 2 percent to 4 percent.
   
Earnings news continued Monday, with Verizon Communications Inc. reporting a stronger-than-expected third-quarter profit amid robust results from Verizon Wireless. Verizon, however, was off $1.30, or 3.4 percent, at $37.54.

Stocks in focus

Media conglomerate Viacom Inc. said Monday its MTV music network closed its $175 million purchase of video-game maker Harmonix Music Systems Inc. The deal was first announced Sept 22.
   
Harmonix, based in Cambridge, Mass, developed the Guitar Hero game for Sony's PlayStation 2 gaming console.
   
Shares in Viacom, whose properties include cable networks and movie studios, fell 30 cents to $39.63 in morning trading on the New York Stock Exchange.

Real estate investment trust Archstone-Smith Trust said Monday it is buying a 360-unit apartment complex in the San Francisco Bay area for $75.6 million. The complex will operate under the Archstone brand. The company said its San Francisco Bay holdings now make up almost 10 percent of its portfolio.
   
Shares of Archstone-Smith rose 21 cents to $59.59 in morning trading on the New York Stock Exchange.

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Dollar unable to shake weak data effect

LONDON - The dollar remained unable to shake off the effects of weak US third quarter GDP data released last week, but stabilised somewhat ahead of key data this week, dealers said.
   
The Commerce Department estimated that the US economy grew at a 1.6 pct annualised rate, down on the 2.6 pct growth in the previous three months and the heady 5.6 pct recorded in the first quarter. Economists had been a more modest slowdown to 2.1 pct.
   
The news suggested that US interest rates may have already hit peak and in turn weighed on the dollar.
   
Elsewhere today, the pound bounced higher after some surprisingly strong UK property market and money supply numbers.
   
UK September mortgage approvals hit their highest in over two-and-a-half years, while mortgage lending growth stayed steady, figures from the Bank of England showed.
   
The figures suggest that the UK housing market remains surprisingly buoyant, further suggesting that the Bank of England will raise interest rates by a further quarter point this month.
   
The number of approvals for house purchases -- often seen as a good indicator of future demand in the property sector -- jumped to 126,000 from 120,000 in August, the highest figures since since February 2004. The figure is well above market expectations for a slight dip to 117,000.
   
The value of approvals for house purchases rose to 16.9 bln stg from 16.3 bln in August.

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The European Markets at 12.30 GMT

London - UK blue chips stayed weak at midday, just off session lows on expectations for further falls today on Wall Street after Friday's falls, with disappointing trading news from Cadbury Schweppes and Pearson also weighing on sentiment. At 12.06 pm, the FTSE 100 index was 39.1 points lower to 6,121.8, not far from the morning low of 6,117.5, having been weak all morning.

Frankfurt - German shares were lower midday following Friday's sell-off on Wall Street on weaker than expected third quarter GDP data, with Volkswagen lower on a broker downgrade. At 10.30 am, the DAX 30 was off 40.30 points, or 0.65 pct at 6222.16, with the MDAX 84.02 points weaker, or 1.00 pct at 8609.49.
   
Paris - Share prices were lower across the board at midday, adding to Friday's slide after a weaker than expected US growth reading shook investor confidence in a soft landing for the world's leading economy, and prompted investors to take some money off the equity table.
   
At 11.51 am, the CAC-40 index was down 48.74 points or 0.9 pct at 5,347.29, on volume of 1 bln eur. On the Matif, November CAC-40 futures were trading off 56 points at 5,352, while they stood at 1.2725 usd compared to 1.2725 usd late on Friday.

Milan - Share prices were lower at midday, hit by a bout of profit-taking, while Alitalia and Capitalia outperformed on takeover speculation. At 12.18 pm, the Mibtel was down 0.61 pct at 30,033 points and the S&P/Mib dropped 0.67 pct to 39,070. Volumes totalled 1.9 bln eur.

Madrid - Madrid shares were lower midday in light trade as profit-taking weighed on Repsol YPF and Antena 3, after the company's Investor Day presentation Friday. At 12.15 pm, the IBEX-35 index slumped 94.6 points to 13,639.5, after trading in a range of 13,600.5-13,662.4, on turnover of 1.0 bln eur.

Stockholm - Shares remained in slightly negative territory in midday trade, virtually unchanged from earlier levels, with SSAB leading the market lower after its recent strong performance, and a downgrade. At 12.15 pm, the OMX Stockholm index was down 0.77 pct at 348.16 points, while the OMX Stockholm 30 index was down 0.69 pct at 1,080.78.

Zurich - Share prices were lower across the board on broad-based profit-taking, not helped by Japanese and US losses last Friday.  At 10.27 am, the Swiss Market Index was down 47.53 points at 8,647.85, while the Swiss Performance Index was down 37.10 points at 6,751.17.

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Asian shares close mixed on Wall St falls;  Australia at a record high

HONG KONG - Shares across the Asia-Pacific region closed mixed after falls on Wall Street on Friday, with Japanese investors also discouraged by local data showing a drop in industrial output last month, dealers said.
   
Tokyo shares closed lower on the industrial data and the fall on Wall Street, which was a response to a US Commerce Department report raising concerns that the economy is slowing more sharply than expected, they said.
   
The blue-chip Nikkei 225 Stock Average closed 317.22 points or 1.9 pct lower at 16,351.85, after touching a low of 16,329.89.  The broader TOPIX index of all first-section issues dropped 30.08 points or 1.82 pct to 1,620.65, off a low of 1,618.36.
   
Australian shares ended at fresh record highs as investors bought mining stocks following the rise in base and precious metal prices in overnight trade on Friday. Energy stocks also rose on higher oil prices and the building sector was boosted by takeover activity.
   
The S&P/ASX 200 rose 40.9 points or 0.76 pct to close at a record 5,399.4, beating Thursday's record close of 5,389.7 while the market reached a fresh all-time intra-day high of 5,409.9.
   
The Hong Kong market was closed today.
   
In mainland China, A-shares in Shanghai and Shenzhen closed slightly higher as profit-taking in banking issues was offset by continued capital inflows partly due to a rising yuan.
   
The Shanghai A-share Index added 2.70 points or 0.14 pct to 1,901.34 and the Shenzhen A-share Index was up 0.04 points or 0.01 pct at 458.57.
   
Seoul shares closed lower, with broad sentiment undercut by Wall Street's retreat and heavy sales by foreign investors. The KOSPI index closed down 12.98 points or 0.95 pct at 1,356.11, after moving between 1,353.46 and 1,363.34.
      
South Korea's industrial output rose 16.3 pct year-on-year in September due to strong demand at home and abroad. The figure topped the market consensus of 12.9 pct, and was well above the August growth rate of 10.9 pct.
   
Taipei shares closed lower, with the benchmark index falling below the 7,000-point level, in the wake of Wall Street's retreat Friday.
   
Concerns about the US economy's prospects prompted investors to cash out of their holdings, even though some technology bellwethers have released positive third-quarter earnings results and fourth-quarter guidance.
   
The weighted index closed down 91.54 points or 1.29 pct at 6,995.20, after moving between 6,995.10 and 7,050.05, on turnover of 71.43 bln twd.

Asian Bourse Round-Up

For a full list of closing figures, click here

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Gold finds footing above 600 usd level; oil prices down on weak US data

LONDON - Gold found a stable footing above the key 600 usd level, buoyed by the dollar's woes in the wake of a weak US third quarter GDP report.
   
The metal tested the 600 usd level on Friday but resistance was strong. Today, however, fresh buying emerged to help gold vault over 600 usd to reach a four-week high but analysts were divided about further gains.
   
"Buying this morning has seen gold climb to 604 usd, and given the more bullish sentiment across the commodities spectrum, the metal appears to be making a challenge of the pivotal 607 usd," said James Moore at theBulliondesk.com. He believes gold could rise even further.
   
Analysts at UBS, however, said it is still too early to turn more positive on gold. "Gold needs to break through a series of resistances between 602 usd and 605 usd. Until these are broken, gold remains merely at the top end of its recent range," they said in a research note.
   
At 11.30 am GMT, spot gold was up 5.70 cents at 606.70 usd/oz, while silver rose 16 cents to 12.24 usd/oz.

Zinc set a new historic record price in trading at the London Metal Exchange today, surpassing the 4,200 usd per tonne level on strong demand and the lowest supplies in 15 years.
   
Zinc prices for three-month delivery reached 4,202 usd per tonne on the LME.

The new level is the highest the metal has ever traded since 1915, when trading in the metal began in London, and is up 170 pct over the past year.
   
Zinc prices reached 4,000 usd for the first time on May 11, before retreating and then rebounding in October. At 1.45 pm, the metal was trading at 4,150 usd.
   
Demand has been strongest in China, which is expected to consume 30 pct of the world's zinc demand in 2007.

Oil prices were down, and crucially under the 60 usd level, as weak third-quarter US GDP data and reports of a pick-up in Opec production dented sentiment.
       
Light, sweet crude was down $1.01 at $59.74 a barrel in premarket electronic trading on the New York Mercantile Exchange. Oil prices showed gains last week, and at times pushed down stock prices, as traders grew more confident that production cuts would take hold.   

In London, Brent North Sea crude for December delivery lost 1.25 usd to 59.69 usd per barrel.
       
Today's losses were limited by the threat of terrorist attacks against installations in Saudi Arabia, the world's biggest producer of crude, traders said.
  
Oil prices had extended gains in earlier Asian trade following the news coming out of Saudi Arabia.
   
Saudi Arabia pumps more than 9 mln barrels of oil a day and sits on a quarter of global oil reserves. It operates the world's largest oil terminal at Ras Tannura in the Arab Gulf.

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