US & World Daily Markets Financial Briefing 09-07-2010

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Stocks Modestly Higher In Mid-Morning Trading

Stocks are up by modest margins in mid-morning trading on Friday, seeing tentative gains after three days of buying interest driven by bargain hunting ahead of the start of earnings season next week.

The major averages have seen some upside in recent dealing, and are near their best levels of the day. The Dow is up by 20.63 points or 0.2 percent at 10,159.62, the Nasdaq is up by 6.32 points or 0.3 percent at 2,181.63 and the S&P 500 is up by 2.78 points or 0.3 percent ant 1,073.03.

On the economic front this morning, there was a surprise drop in sales at wholesalers in May, while wholesale inventories advanced more than expected.

The U.S. Commerce Department reported that sales at wholesalers fell 0.3 percent for May following revised 0.9 percent increase in April. Economists had expected the measure to climb by 0.5 percent. This was the first drop in sales in 14 months.

Wholesale inventories rose 0.5 percent for May, accelerating from the downwardly revised 0.2 percent advance seen in the previous month. Economists had expected an increase of 0.4 percent.

In corporate news, Google (GOOG) is higher today after successfully renewing its license to operate in China. The license renewal ends a long standoff between Beijing and Google and avoids a possible shutdown of the company's service in China, the world's largest Internet market. On the other hand, Chinese search provider Baidu.com (BIDU) is lower on the news.

Air Products and Chemicals (APD) announced that has upped its bid for shares of Airgas Inc., raising its offer to $63.50 a share, up $3.50 a share from its initial proposal. The most recent offer is a premium of 46 percent over the closing price of Airgas' shares on February 4th.

Oil giant BP plc. (BP) continues to be a focal point as the U.S. government tightened its screws and demanded an immediate report detailing plans to improve its containment and clean-up efforts on the Gulf of Mexico oil spill. This assumes significance after a federal appeals court denied the U.S. government's request to reinstate a six-month moratorium on deepwater drilling in the Gulf of Mexico.

Sector News

Gold stocks are some of the morning's strongest performers, resulting in a 3 percent advance in the NYSE Arca Gold Bugs Index. The upward move is helping the index further off of Tuesday's one-month closing low.

The upward move among gold stocks comes as the price of gold futures has shot up by $13.50 to $1,209.60 an ounce.

Notable gains are also visible among steel, railroad, housing and banking stocks, while some pharmaceutical and oil service stocks are limiting the upside in the major averages.

Stocks Driven By Analyst Comments

Wright Medical (WMGI) is notably higher after being upgraded by analysts at RBC Capital Markets from Underperform to Outperform. The broker cited the firm's likelihood to expand its market share in the hip and knee replacement niche as a reason for the ratings change.

RBC Capital also raised its price target on the stock from $17 to $21. Shares are currently up by 3.3 percent, setting a two-week intraday high.

Meanwhile, Best Buy (BBY) is under pressure following an upgrade at Jefferies from Buy to Hold, citing some declining sales trends. The stock is down by 1.3 percent, sliding back down towards Tuesday's one-year low.

Other Markets

In overseas trading, stocks across the Asia-Pacific region saw strong gains on Friday. Hong Kong's Hang Seng Index jumped by 1.6 percent, while Japan's benchmark Nikkei 225 Index gained 0.5 percent.

The major European markets are also higher. The U.K.'s FTSE 100 Index and the French CAC 40 Index are both up by 0.6 percent, while the German DAX Index is up by 0.5 percent.

In the bond markets, treasuries are seeing moderate weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 3.061 percent, posting a gain of 4.1 basis points.

Open an account with CMS Forex with at least $500 and you will receive a 100% deposit bonus.  Every time you trade 10 lots you will get $50 until you have received all 100% of your deposit.  There is no maximum - deposit $100,000 and you can earn up to $100,000. Already have a CMS account?  You can still get the 100% bonus on your next deposit. Click Here

TSX May Open Higher As Canada Adds More Jobs

Bay Street stocks are poised for a higher open Friday amid encouraging jobs data and positive cues from the global equity markets. Also, firm energy prices may help lift energy stocks that have been battered badly in the last week's sell-offs.

Official data revealed that Canada added more jobs than expected in June, a day after the IMF upped its growth forecast for the nation. The Canadian dollar rose against its U.S counterpart immediately after the jobs report.

Yesterday the International Monetary Fund said that the Canadian economy is on track to grow more quickly this year than expected and upped its 2010 growth forecast for Canada to 3.6% from its earlier 3.1% in April. The IMF also raised its 2010 world growth forecast to 4.6% from 4.2% in April.

Elsewhere, the Asian markets ended up for a second session, lifting the the MSCI Asia Pacific Index up by about a percent to its highest level since June 24. Meanwhile, stocks in Europe rose for a fourth day, albeit with marginal gains.

On Thursday, the S&P/TSX Composite Index edged up 36.10 points or 0.32% to 11,433.37, after moving forth and back the unchanged line for most of the day.

The price of crude oil moved up for a third session to recover from its 4-week low. Crude for August edged up $0.07 to $75.51 a barrel.

Meanwhile, the price of gold recovered from its 6-week low, with gold for August adding $7.80 to $1,203.90 an ounce.

In corporate news, specialty retailer West 49 Inc. said that U.S. based action sports retailer, Zumiez Inc. (ZUMZ), would be prepared to acquire all of its outstanding common shares for C$1.30 per share.

Transportation logistics software solutions provider TECSYS Inc. reported higher fourth-quarter net income of C$0.10 per share, compared to C$0.04 per share in the same quarter last year.

Communications equipment maker RuggedCom Inc. said it received $2 million purchase orders from major US rail companies.

Mineral properties developer Solitaire Minerals said it raised $0.54 million at $0.05 per share through a non-brokered private placement announced on June 15th, 2010.

Mineral properties developer Goldcliff Resource said it raised C$312,000 at C$0.10 per unit through a non-brokered private placement.

In brokerage update, JP Morgan downgraded Canadian National Railway to 'Neutral' from 'Overweight' with a six month price target of $68. Yesterday, the stock closed at C$61.15.

In economic news, Statistics Canada said employment rose by 93,000 in June, pushing the unemployment rate down 0.2% to 7.9%. This is the first time the rate has been below the 8% mark since January 2009. Economists were expecting the unemployment rate to remain unchanged at 8.1% and the economy to add only 20,000 jobs.

Our "Value Packed" online trading seminar will show you how you can.

Click Here To Find Out More

Asian markets extended gains and ended the trading session Friday in positive territory, taking cues from Wall Street, where the major averages ended in positive territory for the third successive day. The unexpected hike in interest rates by Bank of Korea took the markets by surprise. The central bank of South Korea, after 17 months, revised the benchmark seven-day repo rate to 2.25% from 2.00%.

In Japan, the benchmark Nikkei 225 Index added 49.58 points, or 0.52%, to 9,585 while the broader Topix index of all First Section issues was up 0.19 point, or 0.02%, to 861.

On the economic front, a report released by the Conference Board revealed that its leading economic index declined 0.6% month-on-month in May, compared to a 0.1% decrease in the previous month. The report noted that out of the 10 components of the index, four components including contributions from stock prices, new orders for machinery & construction, inverted business failures and new orders for machinery & construction showed weakness, while the other six components that include real operating profits, dwelling units started, Tankan business conditions survey, real money supply, index of overtime worked and interest rate spread showed marginal growth.

Machinery stocks advanced on hopes of global economic recovery. Daikin Industries gained 1.96%, Komatsu Ltd gained 2.01%, Chiyoda Corp. climbed 3.24%, Hitachi Construction Machinery added 0.53%, Kuboto Corp. advanced 1.31% and Ebara Corp. was up 1.86%.

Electric Machinery stocks also ended in positive territory. Fanuc Ltd gained 2.29%, TDK Corp. advanced 1.20%, Mitsumi Electric Co. climbed 3.45%, Denso Corp. rose 1.80%, Kyocera Corp. added 0.54% and Tokyo Electron edged up 0.31%.

Exporters also ended in positive territory on weaker local currency against the US dollar. Canon Inc. gained 1.02%, Sony Corp. advanced 0.91%, Advantest Corp. added 1.01% and Panasonic Corp. edged up 0.42%.

Shipping stocks also advanced on optimism about sustaining global economic recovery. Kawasaki Kishen Kaisa rose 1.39% and Nippon Yusen gained 1.53%. Mitsui OSK Lines managed to remain unchanged from previous close.

In Australia, the benchmark S&P/ASX200 Index advanced 39.60 points, or 0.91% and closed at 4,396, while the All-Ordinaries Index ended at 4,414, representing a gain of 40.50 points, or 0.93%.

Light sweet crude oil futures for August delivery ended at $75.87 a barrel in electronic trading, up $0.43 per barrel from previous close at $75.44 a barrel in New York on Thursday.

Energy stocks led the gains in the market led by Santos, which surged up 9.72%, Woodside Petroleum added 1.05%, ROC Oil Ltd climbed 3.03%, Oil Search gained 2.30% and Origin Energy rose 2.79%.

Gold related stocks ended in positive territory. Lihir Gold edged up 0.24% and Newcrest Mining added 0.38%.

Bank stocks also advanced on expectation of sustaining global economic recovery, nevertheless, at a slower pace. ANZ Bank advanced 1.13%, Commonwealth Bank edged up 0.50%, National Australia Bank gained 1.18% and Westpac Banking rose 0.82%. Investment banker Macquarie Group surged up 2.77%.

Mining and metal stocks also ended in positive territory. BHP Billiton advanced 0.71%, Rio Tinto gained 1.57%, Fortescue Metals rose 1.82%, Iluka Resources added 1.00%, Macarthur Coal climbed 1.75%, Mincor Resources was up 2.06%, and Oz Minerals edged up 0.47%. Gindalbie Metals managed to end unchanged from previous close.

In Hong Kong, the Hang Seng Index surged 328.10 points, or 1.64%, and closed at 20,379, taking cues from other markets in the region, which have continued their winning streak for the third straight day in what appears to be a relief rally after the global markets declined too much and too sharply in the past few trading session. Speculation that the global economic recovery is just moving to a lower gear and will be sustained in the medium term, and optimism about earnings season from next week lifted market sentiment with almost all the stocks ending in positive territory.

Firm global cues on the back of encouraging data on U.S. jobless claims and sales gains reported by a handful of U.S. retailers lifted the Indian market sharply higher for a second straight session Friday. An upbeat assessment of the global economy by the IMF and interest rate increases by some Asian countries in recent days, including India, also boosted confidence about global economic recovery. The benchmark 30-share BSE Sensex ended up 182 points or 1.03% at 17,834 and the 50-share Nifty rose by 56 points or 1.05% to 5,352.

Among the other major markets open for trading, China's Shanghai Composite Index advanced 55.77 points, or 2.31%, to 2,471, Singapore's Strait Times Index added 20.02 points, or 0.69% to close at 2,917, Taiwan's Weighted Index gained 38.40 points, or 0.50%, to close at 7,647, and Indonesia's Jakarta Composite Index added 27.99 points, or 0.69%, and closed at 2,944.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European averages opened Friday’s session higher following three straight sessions of gains. However, the averages have surrendered much of their gains by the mid-session. The French CAC 40 Index and the German DAX Index are rising 0.20% and 0.11%, respectively, while the U.K.’s FTSE 100 Index is advancing 0.12%.

On the economic front, the U.K. Office for National Statistics said output prices fell by 0.3% on a monthly basis in June, the first and the biggest monthly drop since November 2008, when the index fell 0.9%. The consensus forecast was for a 0.1% rise. June's drop follows a revised 0.1% increase seen in May.

A separate report released by the agency showed that the U.K.’s trade deficit widened to 8.1 billion pounds in May from the 7.4 billion pound deficit in April. Economists had expected a contraction in the deficit to 7 billion pounds. Exports rose at an anemic 0.2% rate, while imports rose 2.4%.

Meanwhile, the Federal Statistical Office said the German consumer price index rose 0.9% year-on-year in June, confirming preliminary data released on June 28. In May, the inflation rate was 1.2%. "The rate is still well below the threshold of two percent, which is important for monetary policy," the statistical agency said. On a monthly basis, consumer prices grew 0.1%, matching the increase in May.

The French industrial production report released by INSEE showed a 1.7% month-over-month increase in May. Economists had expected a 0.3% increase. In April, output had fallen 0.5%.

U.S. Economic Reports

The Commerce Department is due to release its wholesale inventories report at 10 AM ET. Economists expect wholesale inventories at the end of May to show a 0.4% increase.

Wholesale inventories rose 0.4% month-over-month in April, slightly less than forecasts for 0.5% growth. Inventories of non-durable goods rose 0.7% compared to a more modest 0.3% increase in inventories of durable goods.

Open an account with CMS Forex with at least $500 and you will receive a 100% deposit bonus.  Every time you trade 10 lots you will get $50 until you have received all 100% of your deposit.  There is no maximum - deposit $100,000 and you can earn up to $100,000. Already have a CMS account?  You can still get the 100% bonus on your next deposit. Click Here

Air Products (APD) may be in focus after it said it has increased its fully financed offer to buy all the outstanding shares of Airgas (ARG) to $63.50 per share in case, up $3.50 per share over its initial offer. Air Products said the deal is expected to be immediately accretive to Air Products’ earnings per share on both GAAP and cash basis. Airgas responded by saying that it would review the revised offer, although it advised its stockholders not to take any action at this time.

ACE Ltd. (ACE) could gain ground after Standard & Poor’s announced that it would replace Millipore (MIL) in the S&P 500 Index after the close of trading on July 14th. Millipore is being acquired by Merck KgaA at about that date.

Kansas City Southern (KSU) is likely to see some activity after it announced that rail service of its Mexican rail subsidiary Kansas City Southern de Mexico has been disrupted due to damage from Hurricane Alex. The company expects the financial impact from the disruption to be reflected in its third quarter results.

United Airlines (UAUA) may also be in focus after it reported that its consolidated passenger load factor rose 2 points year-over-year to 87.9% in June. Traffic rose 3.5% compared to a more modest 1.1% increase in capacity.

Lawson Software (LWSN) is likely to move in reaction to its announcement that its fourth quarter non-GAAP earnings rose to 12 cents per share from 10 cents per share last year. Revenues were up about 6% year-over-year to $197.03 billion. Analysts estimated earnings of 11 cents per share on revenues of $198.7 million. For the first quarter, the company expects non-GAAP earnings of 8-9 cents per share on revenues of $170 million to $174 million. The company estimates full year non-GAAP earnings of 47-51 cents per share on revenues of $751 million to $766 million. The consensus estimates call for earnings of 50 cents per share on revenues of $794.18 million.

99 Cents Only Stores (NDN) is expected to be react to its announcement that its first quarter sales rose 4.3% year-over-year to $346.5 million, while analysts estimated sales of $347.01 million. Same store sales for the period rose 2.7%.

Big 5 Sporting Goods (BGFV) may see weakness after it lowered its earnings per share guidance for the second quarter to 20-23 cents per share, as revenue growth suffered due to the economic downturn and a lack of warm weather in its west coast markets. Analysts estimate earnings of 28 cents per share for the quarter. The company also said its second quarter same store sales rose 0.3% year-over-year.

Our "Value Packed" online trading seminar will show you how you can.

Click Here To Find Out More

Investors Hub Services