US & World Daily Markets Financial Briefing 05-11-2009

You can now manage your positions directly from your web browser, whether you use PC or Mac.  Test-drive VT Trader™ Web with your free practice account! Click Here

Euphoria Over Positive Data May Lift Stocks Despite Caution Ahead of Jobs Report

The major U.S. index futures are pointing to a higher opening on Thursday, with sentiment improving following the release of a couple of economic reports that temporarily allayed recovery concerns. Weekly jobless claims fell by much more than economists had expected in the recent reporting week, while non-farm productivity rose by the most in about 5 years. In reaction to these data, commodity prices have firmed up. Notwithstanding the initial euphoria over the positive data points, caution is likely to be the watchword as traders anxiously look ahead to tomorrow's monthly non-farm payrolls report.

Kick started by strong global cues, U.S. stocks began Wednesday's session higher and advanced further following the release of the results of the ISM's services sector survey. Thereafter, the major averages moved sideways until seeing retreat just after the release of the FOMC policy statement. Although the indexes recovered, they gave back much of their gains to close on a mixed note.

The Dow Industrials ended up 30.23 points or 0.31% at 9,802 and the S&P 500 Index closed at 1,047, representing a gain of 1.09 points or 0.10%, while the Nasdaq Composite receded 1.80 points or 0.09% to end at 2,056.

Nineteen of the thirty Dow components ended higher, with Merck (up 6.4%), Cisco Systems (up 1.66%), Disney (up 1.48%), Johnson & Johnson (up 1%), McDonald's (down 1.77%), Microsoft (up 1.93%) and Pfizer (up 1.20%) advancing strongly in the session. On the other hand, Kraft Foods fell 3.16%. JP Morgan Chase retreated 1.15% and DuPont fell 1.11%.

Among the sector indexes, the Dow Jones Transportation Average pulled back by 1.50%, the Philadelphia Oil Service Index declined 1.19% and the NYSE Arca Biotechnology Index moved down 1.71%. The KBW Bank Index slipped 2.14% compared to a 2.04% decline by the NYSE Arca Disk Drive Index. On the other hand, the NYSE Arca Gold Bugs Index gained about 1%. The Morgan Stanley Healthcare Payor Index jumped 4.65%.

On the economic front, the ADP private sector employment report showed that the private sector in the U.S. shed 203,000 jobs in October, slightly higher than the 198,000-job loss expected by economists. The job losses were the smallest since July 2008.

Meanwhile, the Institute for Supply Management's services sector survey showed that the services index eased to 50.6 in October compared to 50.9 in September. Economists had expected the index to climb to 51.5. The business activity index rose slightly to 55.2, representing the highest level since October 2007. The employment index moved down 3.2 points to 41.1, boding ill for the non-farm payrolls report to be released on Friday. While the new orders index rose 1.4 points to 53.6, the backlog orders index climbed 2 points to 53.5. The price paid index rose 4.2 points to 53.

The FOMC decided to hold the key fed funds rate unchanged at its historically low levels, a decision that was widely expected. Contrary to the expectations of some analysts, the central bank retained the phrase 'extended period' while referencing its views on maintaining the fed rate at exceptionally low levels, given the current economic conditions.

The central bank noted that economic activity is continuing to pick up and while discussing various sectors, the central bank said financial markets conditions remained unchanged after stating that conditions improved further in September. With respect to household spending, the committee sees expansion as opposed to the stabilization noted in September.

The commentary on inflation was retained, with the central bank expecting inflation to remain subdued for some time.

The central bank also said it would purchase a total of $1.25 trillion of agency-backed securities and about $175 billion of agency debt, a scale back from the $200 billion target it had initially. Both these transactions will be executed by the end of the first quarter of 2010.

Come Into the LIVE Online Trading Session and Watch Us Make at Least 1 Point ($500 - $2000 a Day). The LIVE Trading Session is Completely FREE! - Sign Up Now here!

Toronto Stocks Look For Third Straight Daily Gain

Bay Street stocks will look to build on back-to-back daily gains on Thursday morning as traders considered the latest from earnings season. U.S. futures are slightly higher on an encouraging jobs and productivity reports.

Crude oil prices are down 5 cents to $80.35 per barrel after seeing strong inventory-backed gains yesterday. Copper dropped 2.9 cents to $4.696 per pound, while gold added $4.70 to $1,092.00.

Sun Life Financial reported a third-quarter net loss attributable to common shareholders of C$140 million, compared to a net loss of C$396 million in the third quarter of 2008. The loss per share was C$0.25 compared to a loss per share of C$0.71 in the third quarter of 2008.

Goldcorp reported third quarter net income for the third quarter was US$114.2 million or US$0.16 per share, down from US$297.2 million or US$0.42 per share for the year-ago quarter.

Royal Gold reported that its first-quarter net income increased to $7.126 million from $5.749 million last year. Earnings per share were $0.17, flat with prior year.

Canadian Natural Resources reported third-quarter net earnings were C$658 million or C$1.21 per share, much lower than prior year's C$2.84 billion or C$5.25 per share.

Agrium announced that it is increasing its exchange offer to acquire CF Industries Holdings to $92.99 per CF share.

Statistics Canada reported building permits increased 1.6% to $5.1 billion in September, beating expectations for an 1.3% rise but slower than the 7.38% jump seen in August.

Currency, Commodity Futures

Crude oil futures are trading up $0.02 at $80.42 a barrel after rising $0.80 to $80.40 an ounce on Wednesday. The previous session's gain came amid the release of the weekly inventory report, which showed that crude oil stockpiles fell by 4 million barrels to 335.9 million barrels in the week ended October 30th, 2009. Notwithstanding the decline, inventory levels were near the upper limit of the average range.

Gasoline stockpiles edged down by 0.3 million barrels and remained above the upper limit of the average range, while distillate fuel inventories declined by 0.4 million barrels. Distillate stockpiles remained above the upper boundary of the average range. Refinery capacity utilization averaged 81.1% over the four weeks ended October 30th compared to 82.2% in the previous week.

After rising $2.40 to $1,087.30 an ounce in the previous session, gold futures are moving up $5.50 to $1,092.80 an ounce.

On the currency front, the U.S. dollar is trading at 90.496 yen compared to the 90.725 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is currently valued at $1.4892.

Click Here

After a fairly decent start, most Asian stock markets drifted lower on Thursday on growing concerns about a nascent global economic recovery. Investors trod a cautious path ahead of the release of the U.S. jobs report. A lack of positive surprises from the U.S. Federal Reserve and caution ahead of rate decisions by the Bank of England and the European Central Bank also kept investors on the sidelines.

The Japanese market fell to a one-month low, as technology stocks fell, tracking the fall in the Nasdaq Composite Index overnight, and a weaker U.S. dollar dragged exporters lower.

The benchmark Nikkei fell 127 points or 1.29% to 9,717, its lowest closing since October 6th. Among exporters, Sony Corp fell 2.11% and NEC tumbled 3.50%. Sanyo Electric plunged over 20% after Panasonic Corp. offered to buy a stake in the firm at a large discount. Toyota Motor shed 0.83% ahead of its second-quarter earnings announcement. After the markets closed, the company reported a profit of 21.84 billion yen, its first profit this fiscal year, although it represented an 84% year-over-year decline. Sales declined 24% to 4.542 trillion yen.

Property developers and power utilities also ended lower after yields on government bonds rose to three-month highs. Nissan Motor, which revised its annual outlook to a profit from a loss, also edged up 0.30%.

On the other hand, the Chinese market advanced for a fifth straight session, led by companies with operations in Shanghai amid reports about a proposed world-class Disney theme park in Shanghai. The benchmark Shanghai Composite index, which tracks both A and B shares, rose 27 points or 0.85% to 3,155, its highest close since August 11th.

However, Hong Kong stocks fell as investors moved to the sidelines fearing a further correction. The benchmark Hang Seng index closed at 21,479, down 136 points or 0.63%. Market heavyweight HSBC Holdings fell 0.76%, top insurer China Life Insurance declined 1.34% and telecom firm China Mobile dropped 0.88%.

The South Korean market saw a broad-based fall on low volumes. The benchmark KOSPI closed at 1,552, down 28 points or 1.75%. Volume was moderate at 201.3 million shares worth 3.3 trillion won and decliners outnumbered gainers by 608 to 194.

Among frontline stocks, exporters such as Hyundai Motor, Samsung Electronics and Hynix Semiconductor fell sharply, weighed down by mixed economic data from the U.S. Steel maker POSCO gave up a percent and shipbuilder Hyundai Heavy Industries tumbled nearly 3%.

The Australian market also fell as a weaker dollar pushed up the price of oil, triggering concerns about corporate earnings. The benchmark S&P/ASX200 index closed at 4,508, down 32 points or 0.71% and the broader All Ordinaries index fell 28 points or 0.62% to 4,519, its lowest closing level since September 7th.

Big miner BHP Billiton declined 1.35% after it temporarily suspended work on a new rail line in Western Australia's Pilbara region amid safety concerns. Its rival Rio Tinto also ended down 1.32%. Gold miners Newcrest and Lihir Gold ended subdued despite rising gold prices.

On the economic front, the Australian Bureau of Statistics announced that Australia's trade deficit widened less than expected in September, with both imports and exports on the rise. Nevertheless, September marked the fifth successive month in which Australia has posted a trade deficit.

Do you want to trade the e-mini S%P profitably without the cumbersome technical analysis? Take the guess work of out of trading, and trade with automated Price Action method only. Proven and Consistent. Click here to find out more

The major European averages, which opened with notable losses, have snapped back their losses and are trading higher. The French CAC 40 Index and the German DAX Index are moving down 0.43% and 0.30%, respectively, while the U.K.'s FTSE 100 Index is declining 0.13%.

In corporate news, Unilever reported that its third quarter sales declined 2% to 10.2 billion euros. Excluding acquisitions, disposals and currency movement, sales rose 3.4%, with volume growth helping to a notable extent. Net profit fell to 1.05 billion euros from 1.64 billion euros last year, which benefited from gains from several disposals.

The Bank of England and the ECB, whose policymaking arms met for two-day meetings ending today, announced decisions along the expected lines. The Bank of England decided to hold interest rates unchanged at a record low 0.5%. The central bank also announced a 25 billion pound increase in the amount authorized under its quantitative easing program to 200 billion pounds.

Meanwhile, the European Central Bank's Governing Council announced a status quo stance, retaining its main refinancing operations rate at 1%. The two other key rates, namely the rates on deposit facility and marginal lending facility were maintained at 0.25% and 1.75%, respectively. Traders now look ahead to a press conference by ECB President Jean Claude Trichet, due to be held shortly, as they try to gauge the central bank's thinking on when the quantitative measures should be withdrawn.

Among economic reports, Eurostat reported that the euro area's retail sales declined 0.7% month-over-month in September following a revised 0.1% drop in August. Economists were looking for an increase of 0.2%. Annually, retail sales were down 3.6% in September compared to the revised 2.3% drop in August.

A report released by the U.K. Statistical Office showed that the U.K.'s industrial production grew 1.6% in September from the previous month, while economists estimated a 1.2% increase. Meanwhile, output was down 10.3% on an annual basis, in line with expectations. Output of the manufacturing industries increased 1.7% month-over-month following the revised 2% drop in August.

You can now manage your positions directly from your web browser, whether you use PC or Mac.  Test-drive VT Trader™ Web with your free practice account! Click Here

Cisco Systems traded higher in Wednesday's after hours session after it reported first quarter adjusted earnings of 36 cents per share compared with the 31 cents per share consensus estimate. Revenues declined 13% to $9 billion, although they exceeded analysts' estimate of $8.74 billion. The company expects second quarter revenues to rise 1%-4%, while analysts expect a 1.3% year-over-year decline.

American Airlines could see some activity after it reported that its October load factor rose 4 percentage points to 83.1%, although traffic and capacity fell 2.6% and 7.3%, respectively. Meanwhile American Eagle's load factor increased 3.7 percentage points to 73.3, with traffic and capacity rising 6% and 0.7%, respectively.

99 Cents Only Stores is expected to see activity after it reported that its second quarter net sales rose 2.2% to $324.7 million, ahead of the $323.82 million consensus estimate. The company reported a profit of 14 cents per share compared to a loss of 13 cents per share last year. The company also said it expects third quarter same store sales growth to be in the low single digits.

Qualcomm is likely to be in focus after it reported that its fourth quarter earnings fell to 48 cents per share from 52 cents per share last year. Revenues fell 19% year-over-year to $2.7 billion. Analysts, on average, estimated earnings of 52 cents per share on revenues of $2.72 billion. The company guided first quarter earnings to 54-58 cents per share and revenues to $2.6 billion to $2.8 billion. The consensus estimates call for earnings of 56 cents per share on revenues of $2.84 billion. For the full year, the company expects earnings of $2.10-$2.30 per share on revenues of $10.5 billion to $11.3 billion, while analysts estimate earnings of $2.32 per share on revenues of $10.4 billion.

THQ, Inc. may gain ground after it reported a loss of 8 cents per share for its third quarter compared to a loss of $1.73 per share last year. On an adjusted basis, the company reported a loss of 37 cents per share, narrower than the consensus estimate. Revenues declined 39% to $101.3 million.

Prudential Financial is also likely to be in focus after it reported a third quarter adjusted operating profit of $1.59 per share, higher than $1.02 per share last year. Revenues were up 4% to $6.6 billion. The consensus estimates called for earnings of $1.33 per share on revenues of $6.65 billion. The company also raised its earnings guidance for the year.

Among retailers, Hot Topic reported a 2.6% decline in same store sales for October compared to 8.3% growth in the previous year. For the third quarter, same store sales declined 5%. The company raised its third quarter earnings guidance to the high end of its earlier guidance range of 11-13 cents per share, while analysts estimate earnings of 12 cents per share. Zumeiz ( said its October comparable store sales fell 8.9%, while Costco Wholesale reported a 5% increase in same store sales for October.

"Full of insight, it never lets up for a moment. Fresh as today’s headlines, it reminds the world just how close it could be to financial meltdown." Geoffrey Wansell,
Daily Mail Buy it now CLICK HERE