US & World Daily Markets Financial Briefing 31-07-2007

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

Stocks rise on earnings, inflation data

NEW YORK - Stocks surged in early trading Tuesday, lifting the Dow Jones industrials more than 100 points, as strong earnings from General Motors Corp. and Sun Microsystems Inc. helped Wall Street extend its recovery from last week's plunge.
   
Investors' inflationary fears were also alleviated after the Commerce Department reported that in June, year-over-year core personal consumption expenditures -- one the Federal Reserve's preferred gauges of inflation -- was up 1.9 percent. That rate is within the Fed's comfort zone.
   
The tame core PCE appeared to offset some disappointment that June personal spending rose 0.1 percent, weaker than expected and below May's 0.6 percent jump. High gasoline prices and the housing market slump dampened consumer spending to the slowest pace in nine months.
   
Investors remained optimistic after quarterly results from server and software maker Sun Microsystems and automaker GM, which both posted better-than-expected profits.
   
Merger and acquisition activity also helped lift the stock market, which rebounded Monday following a sharp plunge last week on worries that a deteriorating lending environment would dampen dealmaking and growth.

Billionaire investor Nelson Peltz's Triarc Cos. said he is willing to offer $37 to $41 a share to buy Wendy's International Inc., while the Wall Street Journal reported that its parent company, Dow Jones & Co., and Rupert Murdoch's News Corp. are getting closer to a deal.
   
In early trading, the Dow Jones industrial average rose 104.53, or 0.78 percent, to 13,462.84, after gaining more than 100 points at the market's open.
   
Broader stock indicators also rose. The Standard & Poor's 500 index was up 10.23, or 0.69 percent, at 1,484.14, and the Nasdaq composite index was up 16.77, or 0.65 percent, at 2,600.05.
   
Bonds were little changed, and the 10-year Treasury note's yield was at 4.81 percent, the same as late Monday.
   
The stock market slipped only slightly after the Chicago purchasing manager's index indicated weaker-than-expected growth in July than in June. The report is considered a precursor to the Institute for Supply Management's national manufacturing index, which will be released Wednesday.

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.

Dollar gains vs low-yielding yen, Swiss franc; euro stays above 1.37 usd

LONDON - The dollar continued to gain against the low-yielding yen and Swiss franc as risk appetite continued to make a tentative return to the market.
   
Analysts pointed to gains on equity and credit markets, while carry trades -- where money is borrowed in low-yielding currencies to invest in higher-yielding assets -- showed signs of picking up, with the dollar rising back above the 119 level against the yen for the first time in five days.
   
"The dollar is a bit firmer against the low-yielding Swiss franc and yen," said Daniel Katzive at UBS."Financial market sentiment is showing some further signs of stabilization," he added.
  
Most European equity markets are up after last night's bounce in New York, while, more importantly, conditions on credit markets are improving, he said.
   
Against other currencies, however, the dollar remained on the weak side, with the euro remaining above the 1.37 usd mark and the higher-yielding sterling, Australian dollar and New Zealand dollar all firmer.
   
Markets are awaiting several significant US data releases this afternoon, including the core PCE price index for June, the July Chicago PMI survey and the Conference Board's July consumer confidence index.
   
The annual rise in the core PCE index is expected to have remained unchanged from June at 1.9 pct, while the Chicago PMI is seen coming off last month's high of 60.2.
  
Meanwhile, the pound also gained a boost from a stronger-than-expected UK retail sales survey from the Confederation of British Industry this morning.
   
The CBI found that a balance of +18 pct of retailers said sales were higher in July than in the same period a year ago, up slightly from +17 in June and well above expectations for a drop to +14 pct. This helped offset a disappointing GfK consumer confidence survey, where the headline index dropped to -6 in July from -3 in June, below analyst expectations of a smaller fall to -5.

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!

Euroshares gain midday as Wall Street set to add to gains; on positive results

LONDON - At 12.23 am, the Dow Jones STOXX 50 Index was up 79.65 points, or 2.14 pct at 3,790.27 while the DJ STOXX 600 Index was up 7.53 points, or 2.02 pct to 379.56. The DJ Euro STOXX 50 Index, which tracks the performance of blue-chip companies in 12 countries using the euro, was up 76.5 points, or 1.8 pct at 4,315.68.
    
GlaxoSmithKline shares were 3.7 pct firmer after the FDA's drug advisory panel voted 22-1 not to withdraw the availability of the UK pharma group's Avandia diabetes drug in the US.
   
Exane BNP-Paribas said even though the demand for a black-box warning highlights the cardiovascular risk for patients taking the drug, the broker believes the drug still has a large potential in the diabetes market.
   
Renault topped the percentage gainers on the Euro STOXX 50, surging 4.2 pct, after a couple of positive broker notes, with Goldman Sachs reiterating its 150 eur price target and saying recent weakness provides a buying opportunity. Nomura reiterated its 'buy' rating and its 118 eur target for the French car group, saying a new era is unfolding as the Commitment 2009 product campaign begins.
   
Volkswagen added 3.32 pct as Deutsche Bank and Citigroup both raised their stance on Volkswagen to 'hold' from 'sell' after the group's strong second-quarter figures last week. Morgan Stanley reiterated its 'overweight' recommendation on the German car group and lifted its target to 158 eur from 143.
   
Shares in Man surged 4.1 pct after the German truck maker posted forecast-beating quarterly earnings thanks to a booming truck business and a dividend from its stake in rival Swedish truckmaker Scania. It forecast full-year sales will be higher by more than 10 pct and the return on sales would be "just over 10 pct" compared with its previous forecast of 9.6 pct.
   
Among financials, Lloyds-TSB gained 4.1 pct after it announced its first dividend increase in 5 years and agreed the sale of its Abbey Life unit to Deutsche Bank for 977 mln stg. The bank also posted an interim net profit of 1.54 bln stg versus market expectations of 1.38 bln stg.
   
And shares in EFG International rose 5.11 pct after the Swiss private bank reported a record first-half net profit of 158 mln sfr, up 58 pct year-on-year.
   
Other financial plays were largely higher, rebounding from recent credit crunch inspired falls and helped up by the recovery in global markets. BNP Paribas and Deutsche Bank were up 3.36 pct and 4.2 pct ahead of their second quarter results tomorrow.
   
Deutsche Boerse was up 1.59 pct ahead of its second quarter numbers after the close today. Allied Irish Banks added 4.66 pct, Societe Generale added 4.1 pct and Intesa SanPaolo was 3.18 pct higher.
   
Suez gained 1.76 pct as the company reported healthy sales growth in the first half and confirmed its guidance for the full year and SABMiller climbed 3.23 pct afetr the group reported a much stronger than expected rise in first quarter lager sales.
   
Sol Melia added 1.5 pct as the Spanish listed hotels chain reported forecast-beating first half results, which showed solid trends in occupancy and pricing.
   
Shares in ASM International were up 1.57 pct after the company released well-received second-quarter figures after the market closed yesterday.
   
Shares in food group Danone fell 2.33 pct as solid half-year results were somewhat overshadowed by the company's warning that the eventual impact of its ongoing dispute with Chinese partner Wahaha "cannot be precisely evaluated". The food company also announced a management reshuffle in the wake of its acquisition of Dutch baby food maker Numico, which it says marks the start of a strategic shift toward health-related foods.
   
Among other stocks of note, Unilever fell 0.72 pct after Credit Suisse downgraded the food, beauty care and household products group to 'underperform' from 'neutral'.

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 stocks close higher; China A-shares hit record high for second day

MUMBAI - Shares across the Asia-Pacific region closed higher following Wall Street's overnight rebound, with China A-shares closing at a record high for the second straight day on continued upbeat expectations for interim earnings.
   
Hong Kong shares closed sharply higher led by HSBC and its unit Hang Seng Bank, after the banks announced stronger-than-expected first half results, leading to target upgrades by several brokerages. The market ignored the tepid outcome of a government land auction, with property stocks gaining in line with the broader market. The Hang Seng index closed up 445.04 points or almost 2 pct at 23,184.94.
   
In mainland China, The Shanghai A-share Index was up 31.23 points or 0.7 pct at 4,689.09 and the Shenzhen A-share Index was up 17.33 points or 1.3 pct at 1,349.83.
       
South Korean shares closed sharply higher, extending gains into a second session, on the overnight rebound on Wall Street. The KOSPI index closed up 26.56 points or 1.4 pct at the day's high of 1,933.27.
   
Tokyo shares closed mixed after investors refrained from decisive buying while they awaited more corporate earnings reports. Investors also remained cautious in view of the persistent worries about the US housing and credit markets. The blue-chip Nikkei 225 Stock Average closed 40.41 points or 0.2 pct lower at 17,248.89. The broader TOPIX index inched up 0.47 point to 1,706.18.
   
Australian shares closed firmer after US and European equity markets recovered, inspiring bargain hunters to step in. The S&P/ASX 200 closed up 35.4 points or 0.6 pct at 6,144.2. The All Ordinaries index rose 41.0 points or 0.7 pct to 6,187.5.
   
Taiwan share prices closed sharply higher in response to the Wall Street rebound. The weighted index closed up 214.68 points or 2.4 pct at 9,287.25.
   
Philippine stocks ended higher as investors pocketed gains, exercising caution amid lingering concerns about a possible credit crunch in the US. The 29-company composite index gained 33.74 points or 0.9 pct at 3,501.20. The broader all-share index rose 16.91 points or 0.7 pct to 2,268.96.
   
Malaysian shares staged a technical rebound, with the local benchmark index driven up by mining and industrial-related stocks. The Kuala Lumpur Composite Index was up 21.3 points or 1.6 pct at 1,373.71.
   
Singapore shares ended mixed with the benchmark index closing higher led by gains in property stocks after Wall Street's rebound, while the broader market remained weak amid lingering worries about the US economy. The Straits Times Index closed up 21.37 points or 0.6 pct at 3,547.66.
   
Indonesian shares closed sharply higher led by index heavyweight Telkom on the back of its strong first half to June results. The composite index rose 47.12 points or 2 pct to 2,348.67.

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

Gold rallies on weaker dollar, prospect of higher Wall St open

LONDON - Gold extended gains into afternoon trade, supported by ongoing weakness in the US dollar against the euro and by expectations the recovery in the US equities market will continue. The precious metal is viewed as an alternative investment to the US currency, and typically moves in an inverse relationship to it.
   
At 1.48 pm, spot gold was trading at 666.88 usd an ounce, against 664.50 usd in late New York trade on Monday.
   
The precious metal is recovering from losses it suffered last week as the sell-off in global equities prompted investors to liquidate their gold holdings to cover losses elsewhere.
   
The precious metal lost around 13 usd per ounce in value over the end of last week as equity prices tumbled in the wake of concerns about a looming credit crunch.
   
Nonetheless, analysts at Commerzbank said they "expect the problems hitting the US financial sector to have a sustained positive impact on the demand for gold over the coming months".
   
While the crisis initially pressured prices lower, the market expects that in the long term the metal's performance during the slide will prove supportive, demonstrating as it did gold's role as a ready source of liquidity.
       
Meanwhile the market is eyeing a raft of US economic data due out this afternoon -- including July inflation data, construction spending, and consumer confidence indicators -- for signs of its impact on the gold market.
   
Among other metals, platinum rose to 1,291 usd from 1,274 usd, buoyed by yesterday's news that producer AngloPlatinum has cut its 2007 production forecast by some 300,000 ounces. The prospect of supply disruptions linked to the threat of strikes in major producer South Africa is also buoying prices of both platinum group metals.
       
Palladium was steady at 362 usd per ounce against 363 usd yesterday, while silver edged up to 12.97 usd from 12.85 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.