US & World Daily Markets Financial Briefing 06-12-2010

Click Here

Profit Taking Contributes To Initial Weakness On Wall Street

After turning in a strong performance last week, stocks are seeing modest weakness in early trading on Monday. The major averages have dipped below the unchanged line, with the Nasdaq pulling back off Friday's nearly three-year closing high.

The weakness in the markets is partly due to disappointing comments from Federal Reserve Chairman Ben Bernanke, who said in an interview on CBS News' "60 Minutes" that it could be four or five years before the unemployment rate falls to more normal levels.

Bernanke also said the Fed might consider increasing its government bond purchase program to more than $600 billion, if necessary, to support the economic recovery and facilitate job growth.

Traders are also keeping an eye on developments in Europe in connection with debt concerns, including the outcome of the meeting of the Euro Zone finance ministers to deal with the debt contagion.

In related news, rating agency Moody's downgraded Hungary's sovereign credit rating by two notches amid rising concerns about the country's fiscal sustainability and higher external vulnerabilities than its rated peers.

The country's foreign and local currency government bond ratings were cut to Baa3, the agency's lowest investment grade, from Baa1.

No major economic data is on tap for the day in the U.S., although reports on jobless claims, consumer sentiment, the trade balance and wholesale inventories are due out later this week.

In corporate news, pharmaceutical giant Pfizer Inc. (PFE) named Ian Read as its president, CEO and director after Jeffrey Kindler retired as CEO and chairman after more than four years at the helm of the company.

Swedish telecom equipment maker LM Ericsson Telephone Co. (ERIC) stated that chairman Michael Treschow plans to resign from his position in 2011 or 2012.

Biotechnology, electronic storage, and healthcare provider stocks are seeing early weakness, although selling pressure has remained relatively subdued. Meanwhile, gold stocks are extending a recent upward move amid an increase by the price of gold.

The major averages are currently posting modest losses, just off their lows for the young session. The Dow is down 27.96 points or 0.3 percent at 11,353.86, the Nasdaq is down 2.59 points or 0.1 percent at 2,588.87 and the S&P 500 is down 2.43 points or 0.2 percent at 1,222.28.

Click Here to learn more

TSX Poised For Higher Open As Gold Glitters

Bay Street stocks may edge up at open Monday amid firm commodities prices, with gold advancing towards its record peak, hit in early November.

However, cues from the global equity markets were mixed. While Asian markets ended mixed, European stocks were lingering in the red, ahead of a meeting of euro zone finance ministers, scheduled later today.

While gold stocks are likely to move higher, large gains may be capped as traders might turn cautious ahead of an interest rate decision by the Bank of Canada Tuesday.

U.S. stock futures were pointing to a marginally lower open, after large gains in the previous week.

On Friday, the S&P/TSX Composite Index edged up 15.42 points or 0.12% to 13,178.95, its fresh 2-year peak.

The price of crude oil was trading flat despite a recovery in the U.S. dollar. Crude for January was down $0.26 to $88.93 a barrel.

The price of gold continued to hover near its record intraday peak of $1,424 hit in early November. Gold for February moved up $7.0 to $1,413.20 an ounce.

In corporate news from Canada, real estate investment trust NorthWest Healthcare Properties Real Estate Investment Trust said it would acquire The Dundas-Edward Centre for about C$103 million. The Dundas-Edward Centre property has an area of 410,000 square foot, and is a two-tower office complex wit eight-level parking facility located in Ontario.

Construction and infrastructure development company Aecon Group said it got a $25-million water treatment plant contract from Bird Construction Co.

Base-metals miner Mirabela Nickel said year to date production totaled 9,077 tonnes of nickel in concentrate and noted that it remains on track to achieve or exceed its full-year production guidance of 9,500 to 10,000 tonnes.

Silver miner Silvercorp Metals said it would sell 8 million common shares at $12.70 per share for about $101.6 million, mainly to finance the acquisition of the BYP gold-lead-zinc mine.

Capital Gold said its Board continues to unanimously recommend to its stockholders to vote in favor of $288 million merger proposal with Gammon Gold and rejected the merger proposal from Timmins Gold Corp.

Junior oil and gas firm ProspEx Resources said it would divest certain undeveloped mineral rights in West Central Alberta for $8.1 million in cash to a private company.

Junior mining company Crowflight Minerals said it raised C$10 million through private placement and announced that President and CEO Mark Trevisiol has resigned from his role effective immediately.

Specialty food products company SunOpta Inc. said its indirect wholly-owned subsidiary SunOpta Fruit Group Inc. would acquire 100% of the assets and business of Edner of Nevada, Inc. for $4 million in cash.

Precious metals miner Salazar Resources said it has acquired 100% of the shares of Mariana S.A. Comador including its 100% ownership of the 2350 hectare Santiago concession located in the Province of Loja.

In economic news, Statistics Canada said municipalities issued building permits worth C$6.2 billion in October, down 6.5% from September, when permits were up 14.9%. On a yearly basis, building permits were down 1.1% in October compared to the same month in 2009.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

French Market Falls, Led By Banks

The French market is losing in afternoon trading Monday, as risk appetite waned amid lack of significant economic news. Banks and construction stocks  are witnessing downside.

In a light day for economic news, the Sentix investor sentiment index, an indicator of investor sentiment in the eurozone, dropped sharply in December due to falling optimism over current conditions. The index dropped to 9.7 from last month's 14.

In Germany, the seasonally adjusted construction purchasing managers' index rose to 53.8 in November from 51.7 in October, a survey by Markit Economics showed.

The Engineering Employers Federation-BDO LLP Manufacturing Outlook survey said the UK manufacturing sector is powering ahead into the end of the year, led by strong overseas demand. The sector is all set to outperform the rest of the economy in 2011, the survey added.

After opening slightly higher at 3,759, the CAC 40 dipped into negative territory shortly. The index is currently losing 0.38%.

Tire firm Michelin is losing 2.4%, thus topping the decliners, reportedly on an analyst downgrade.

Societe Generale is retreating 2.1%. Credit Agricole and BNP Paribas are losing 1.9% and 1.8%, respectively. Natixis is down 0.5%.

Builder Bouygues and Vinci are sliding 1.4% and 0.4%, respectively. Building materials maker Saint-Gobain and cement giant Lafarge are moderately down.

Metal fabrication firm Vallourec is rising 2% and chipmaker STMicroelectronics is rising 1.7%. Carmaker Renault is adding 1.4% and Peugeot is almost flat.

Elsewhere in Europe, the UK's FTSE 100 is adding 0.34% and the German DAX is rising 0.02%.

Across Asia/Pacific, major markets ended mixed. Australia's All Ordinaries slipped 0.01%, Hong Kong's Hang Seng lost 0.36% and Japan's Nikkei 225 retreated 0.11%. However, China's Shanghai Composite Index added 0.52% and India's BSE Sensex rose 0.07%.

In the U.S., futures point to a negative opening on Wall Street. In the previous session, the Nasdaq gained 0.5%, the Dow advanced 0.2% and the S&P 500 rose 0.3%.

Crude for January delivery is trading higher by $0.06 at $89.25 per barrel and gold is adding $9.4 at $1415.6 an ounce.

Click Here

Australian Market Ends In Negative Territory

The Australian market ended trading session on Monday, the first day of the trading week, in negative territory with marginal losses as the gains in resource stocks  was more than offset by weakness in bank stocks. Positive closing on Wall Street on Friday despite weaker than expected jobs report for November failed to enthuse traders amid cautious trading awaiting more cues on global economic recovery.

The benchmark S&P/ASX200 Index slipped 5.60 points, or 0.12%, and closed at 4,689 points, while the All-Ordinaries Index ended at 4,779, representing a loss of 0.70 points, or 0.01%.

On the economic front, a report released by the TD Securities- Melbourne Institute revealed that a gauge measuring consumer price inflation in the country rose at a faster pace in November, led by price rises for fruits and vegetables as well as communication. The TD Securities-Melbourne Institute Monthly Inflation Gauge rose by 0.4% in November, following a 0.3% rise in October. The trimmed mean of the inflation gauge, which strips out volatile price changes, rose by 0.3% in November, after a 0.2% rise in October. On a year-over-year basis, the inflation gauge rose by 3.9%, following a 3.8% rise in the previous month.

A statement released by the ANZ Bank revealed that the total number of jobs advertised in major metropolitan newspapers and on the internet in Australia rose by a seasonally adjusted 2.9% in November to an average of 184,580 per week. This is the seventh consecutive monthly rise in total job advertisements. Ads were up 0.7% in October. Newspaper jobs ads rose 0.9%, while internet job ads rose 3%. On a year-over-year basis, total job ads rose 33.2% in November.

Light sweet crude oil futures for January delivery ended at $89.40 a barrel in electronic trading, up $0.21 per barrel from previous close at $89.19 a barrel in New York on Friday.

Banks led the decline in the overall market indices amid cautious trading. ANZ Bank slipped 0.17%, Commonwealth Bank of Australia shed 0.28%, National Australia Bank fell 0.88% and Westpac Banking Corp. was down 1.14%. Investment banking company Macquarie Group ended in negative territory with a loss of 0.50%.

Mixed trading was witnessed among resource related stocks. Riversdale Mining was the major gainer in the market, having surged up 15.67% after the company confirmed that it is a prime takeover target of Rio Tinto Ltd. Among the other gainers, Fortescue Metals added 0.31%, Gindalbie surged 3.28%, Macarthur Coal climbed 3.30%, Mincor Resources advanced 1.68% Minara Resources rose 1.96%, Murchison Metals surged up 4.88% and Oz Minerals was up 1.85%. However, BHP  Billiton slipped 0.13%, Rio Tinto shed 0.49% and Iluka Resources declined 1.84%.

Gold mining stocks  ended in positive territory on higher bullion prices in the bullion market. Newcrest Mining gained 0.86%, and Kingsgate Resources was higher by 1.80%.

In the U.S., stocks jumped late in the day to end with moderate gains on Friday, getting over a disappointing November jobs report released before the start of trading. The much weaker than expected jobs growth was written off as a stumble on the way to broader economic recovery, helping to stave off heavy selling in today's session. The major averages moved higher late in the day, with the tech-heavy Nasdaq index rising to a three-year closing high. The Nasdaq gained 12.11 points or 0.5% to end at 2,591, the Dow advanced by 19.68 points or 0.2% to 11,382 and the S&P 500 rose by 3.18 points or 0.3% to 1,225.

Click Here

Dollar Steadies After Drubbing On Jobs

The dollar was stable Monday morning, after coming under pressure late last week amid renewed concerns about the health of the US economy.

Friday's dismal jobs report and lingering weakness in the housing market suggest numerous potholes remain on the path to recovery.

With Europe's sovereign debt problems seen easing due to support from Germany and other strong EU members, the dollar has tailed off after seeing solid gains in November.

Today's light economic calendar will give investors time to consider remarks from Federal Reserve Chairman Ben Bernanke, who told 60 Minutes that the central bank could expand its new $600 billion quantitative easing program if the economy fails to revive as anticipated.

Asked if he could anticipate a scenario in which the Fed would have to commit more than $600 billion to buy up assets, Bernanke replied: "Oh, it's certainly possible. It depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks."

He downplayed criticism that the program will lead to runaway inflation down the line, saying that inflation fears are "overstated."

The dollar improved to $1.3260 against the euro Monday morning, edging back toward a recent 2-month peak near $1.2960.

EU officials met on Sunday to discuss the regions debt problems. Along with the IMF, the EU worked out a rescue for Ireland last month, and it remains to be seen whether that will be enough to prevent a crisis from spreading to debt-ridden Spain and Portugal.

The buck gained a penny to $1.5680 versus the sterling, and was stable near Y83.90 against the yen, after falling sharply in the previous session.

In other economic news from around the planet, an indicator of investor sentiment in the eurozone dropped sharply in December due to falling optimism over current conditions, a survey showed on Monday.

The Sentix investor sentiment index, an indicator of confidence among over 900 investors, dropped to 9.7 from 14.0 last month.