US & World Daily Markets Financial Briefing 09-10-2008

Previously featured on ABC News BusinessNow, B-TV, in BusinessWeek, Popular Mechanics and local news papers. Click here for the free StocksJournal analyst's report.

US STOCKS-Wall St rises on bargain hunting, IBM

NEW YORK - U.S. stocks rose in skittish trade on Thursday as investors snapped up beaten down shares after a six-day slide and a solid profit from IBM spurred hope that the credit crisis might not be stifling all demand.
      
Shares of International Business Machines Corp, a technology services giant, rose 2 percent, making the stock a top boost to the Dow, while Apple Inc , another tech bellwether, led the Nasdaq with a 4 percent gain.
      
But trading was skittish, with some market participants away for the Jewish Yom Kippur holiday. The hunt for cut-price shares also fueled a recovery in the shares of natural resource companies, with aluminum producer Alcoa , rebounding nearly 6 percent after the stock was hammered in the wake of a profit shortfall that the company posted on Tuesday.
      
"What we're seeing is just a bear market rally. An oversold rally," said Dave Rovelli, managing director U.S. equity trading at Canaccord Adams in New York. "You could see a significant rally over the next couple of days. The market is so oversold."
      
The Dow Jones industrial average added 48.91 points, or 0.53 percent, to 9,307.01. The Standard & Poor's 500 Index climbed 4.08 points, or 0.41 percent, to 989.02. The Nasdaq Composite Index shot up 17.03 points, or 0.98 percent, to 1,757.36.
      
IBM shares rose to $92.45 on the New York Stock Exchange, while Apple climbed to $92.83 on Nasdaq.  Even so, lowered profit estimates by some major retailers, including TJX Cos Inc, fueled some caution about the outlook for consumer spending. TJX shares fell 3.7 percent to $26.61 after the off-price retailer cut its profit outlook.
      
The expiration of a U.S. Securities and Exchange Commission's ban on short selling in more than 950 financial stocks cast a pall on individual financial stocks, including Morgan Stanley , whose shares slid 11 percent to $14.88 on the NYSE.
      
Short sellers borrow shares and sell them in anticipation that the price will fall. They then buy the shares back at the lower price, returning them to the broker, and profiting on the price decline.
      
On the economic front, a government report showed the number of U.S. workers filing new claims for jobless benefits fell 20,000 last week, in line with forecasts as the impact of hurricanes Gustav and Ike eased

Subscribers benefit from features such as: advanced search and reading functionality.
Click here for all the action.

FOREX-Yen down as risk aversion eases; eyes on G7

LONDON - The yen fell broadly on Thursday,  while higher-yielding currencies bounced as extreme risk  aversion in financial markets receded after coordinated global  central bank rate cuts the previous day.
   
But the situation remained tenuous as investors waited for  further steps by governments to stabilise the global banking  system and stave off a prolonged economic downturn, with focus  shifting to a meeting of Group of Seven (G7) finance ministers  and central bankers on Friday.
   
The low-yielding yen fell from a three-year high against the  euro and a six-month peak versus the dollar hit the previous  day, although both pairs were off lows by midday trade. "The yen crosses are relatively stable but they are not  recovering," said Adarsh Sinha, currency strategist at Barclays  Capital in London.
  
While the steps taken by leading global central banks and  the UK government's plan to recapitalise British banks were  important, "there are still downside risks unless other  countries take similar sort of steps," he said.
   
At 1139 GMT, the euro was up 2.15 percent at 138.21 yen  while the dollar was up 1.6 percent against the yen. The euro also regained some ground against the dollar , rising 0.6 percent to $1.3702.
  
The high-yielding Australian dollar was up 5.7  percent against the U.S. dollar at $0.7014, after hitting a five  year low on Wednesday. European equities were up 1 percent by midday  trade.
   
U.S. stock futures also pointed to a higher open, but  markets were jittery after a ban on short sellers came to an end  at midnight.
    
Markets are looking to the G7 meeting, as well as a broader meeting of G20 countries for a more coordinated approach to the  global financial crisis.
   
U.S. Treasury Secretary Henry Paulson suggested on Wednesday  the United States may follow in the UK's footsteps and inject capital into banks to strengthen their balance sheets.  But a British proposal to provide guarantees on interbank  lending may meet resistance.
   
"What is needed is a coordinated plan, they need to agree on  a broad set of principles," said Barclay's Sinha. "If they can show that, then it will be a positive, but if  they fail, we will see more of the turmoil."
Markets also expect global central banks to cut rates  further after the Fed, the ECB and the central banks of Canada,  England, China, Sweden and Switzerland cut rates simultaneously  on Wednesday.
  
"Having embarked on this easing cycle, all of the central  banks will find it difficult to pull back now," said Calyon  strategists in a research note. Markets will also keep an eye on further measures by central
bank to revive frozen money markets.
  
On Wednesday, the ECB also halved the premium it charges  banks for emergency overnight borrowing, upped the amount it  pays on overnight deposits and offered unlimited weekly funds at
a fixed rate. See  Debt...Indicators... Currency reports..  

For stock market quotes, company information, stock charts, historical quarterly reports and historical annual reports, click here

European stocks break losing streak; banks gain

LONDON - European stocks rose by midday on Thursday, breaking a three-day losing streak, as the previous session's concerted global rate cut and UK bank bailout emboldened investors to buy battered financials and commodities.
      
At 1108 GMT, the FTSEurofirst 300 index of top European shares was up 1.1 percent at 951.11 points, but still down more than 12 percent so far this week, placing it on track for its worst week on record.
      
The index sank to its lowest close since December 2003 on Wednesday as investors worried about economic growth despite concerted rate cuts by the world's top central banks. On Thursday, banks rose, led by Royal Bank of Scotland up 2.2 percent.
      
On top of slashing interest rates, the European Central Bank also halved the premium banks pay for emergency borrowing over its main refinancing rate. The ECB also said it was raising the rate it would pay banks which deposited excess funds with it overnight, to 50 basis points below its main rate from 100 basis points below it.
     
"They're opening the floodgates for liquidity," said David Schnautz, interest rate strategist at Commerzbank in Frankfurt.
      
UniCredit's Greetfeld said he would like to see the UK bailout plan, which envisages the government taking stakes in banks and guaranteeing bond issues to an extent, replicated in other countries.
     
"Taking stakes in the banks, and guaranteeing a certain amount of bond issues is a better way of doing it than the U.S. bailout plan. Encouragingly (U.S. Treasury Secretary Henry) Paulson is also speaking of injecting equity in U.S. banks playing a bigger role, which is positive."
      
Other major movers included ArcelorMittal, which reaffirmed its third-quarter profit outlook and jumped 10 percent. Siemens rose nearly 8 percent, boosted by a newspaper report that the engineering group planned to settle a U.S. Securities and Exchange Commission investigation earlier and for a smaller fine than previously expected.
      
A Siemens spokesman said it was still uncertain how proceedings in different countries might end.

Fast-loading, feature-rich and highly customizable interfaces for reading and posting messages. click here

Asian Market Summary

Japan
Japan's Nikkei stock average fell 0.5 percent on Thursday to its lowest close in more than 5 years amid volatile trade, with hopes for new policy steps to contain the financial crisis warring with concerns
over the global economy.
   
The Nikkei failed to gain ground despite coordinated worldwide interest rate cuts on Wednesday, which came after it tumbled 9.4 percent in its biggest one-day loss since the 1987 stock market crash, with Tokyo shares shedding $250 billion of their value.
     
The benchmark Nikkei fell 0.5 percent to its lowest close since June 2003, shedding 45.83 points to 9,157.49. The broader Topix finished up 0.7 percent at 905.11 after earlier rising more than 3 percent.

China
The benchmark Shanghai Composite Index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, closed down 17.64 points or 0.84 pct at 2,074.58, off an intraday high of 2,130.87.

Hong Kong
Share prices closed higher as interest rate cuts by world's major central banks helped ease worries over the credit crisis, enabling the market to recoup some of its losses in yesterday's 8.2 pct slide.
   
China stocks outperformed, with banks, property firms and telecom counters leading the way after China's central bank cut its key rates and lowered bank reserve ratio requirement following coordinated monetary easing by the US Federal Reserve and five other central banks.
  
Oil refiners also posted strong gains as crude oil price dropped below 89 usd a barrel, while gold firms were mostly higher after recent gains in gold prices on safe-haven buying.
   
Heavyweight HSBC was up 1.9 pct as it decided to keep its prime lending rate in Hong Kong unchanged despite cuts by the Hong Kong Monetary Authority (HKMA) and the US Fed of their benchmark rates.
   
The Hang Seng index closed up 511.51 points or 3.31 pct at 15,943.24, off a low of 15,550.86 and high of 15,990.20.

The most traded market in the world; 24 hr market platform with the latest news, prices and charts gives you the knowledge to invest in this exciting and fast moving market.
Click here

Gold slips as equity rally spurs profit-taking

LONDON - Gold fell more than 2 percent in Europe on Thursday as investors took profits after a rise of almost $20 an ounce on Wednesday, with firmer equities attracting cash back into the stock markets.

Spot gold was quoted at $888.70/891.70 at 0851 GMT, down from $906.50 in late New York trade on Wednesday. Earlier it touched a session low of $881.15. "We are seeing some profit-taking," said Deutsche Bank trader Michael Blumenroth. "We had a lack of follow-through buying after we hit $920 yesterday. That seems to be a tough level of resistance."

An uptick in equities is pressuring gold. European stocks climbed after fresh government and central bank action to combat the financial crisis. A group of major central banks including the Federal Reserve and European Central Bank opted to cut interest rates by 50 basis points on Wednesday, with South Korea, Hong Kong and Taiwan making cuts of their own early on Thursday.

Investors have been pulling cash out of stocks and shares in favour of so-called safer assets like bullion in recent weeks as the financial crisis has unfolded. A reversal of that trend is likely to lead to a correction in gold prices, analysts say.

Crude prices, an important external driver of gold, which is often bought as a hedge against oil-led inflation, are also softer, undermining support for bullion. Investors are worried about the effect of the credit crisis on demand.

Standard Bank analyst Manqoba Madinane said vulnerability in the oil price could pressure gold, especially when coupled with equity index futures pricing strong gains in the U.S. markets. "This, coupled with oil prices weakness, could decrease systemic risk indicators thanks to the central bank cuts," he said. "Precious metal investment sentiment could be cautious today."

The dollar slipped a touch against the euro, but rose against the yen. Aside from its value as a financial instrument, gold is also supported by firm fundamentals. South African gold output fell 23.2 percent year-on-year in August, Statistics South Africa said in a report. The republic has been plagued by power problems since the near-collapse of its electricity grid in January.

South Africa is the world's second largest gold producer after China. Strong demand for physical gold from both institutional and smaller investors is still likely to support bullion. "People are buying all the physical gold available," said Blumenroth. "This will hold up the market."

Buying of gold exchange-traded funds -- which issue securities backed by physical gold -- has been particularly strong. The largest gold-backed ETF, New York's SPDR Gold Trust GLD, says its holdings rose to a record 763.9 tonnes on Wednesday. They are up nearly 25 percent since Lehman Brothers filed for Liquidation on September 15.

The world's biggest silver-backed ETF, the iShares Silver Trust SLV.A, also recorded an inflow on Monday, the last day for which data has been released. Its holdings now stand at 6,877.15 tonnes. Spot silver was trading at $11.58/11.65 an ounce against $11.70 an ounce in late New York trade on Wednesday. Among other precious metals, platinum fell to $994.50/1,018.50 an ounce from $990.50, while palladium slid to $195/205 from $192.50.

The latest streaming prices and news on major commodities from precious metals to crude oil, so you can keep up-to date and never miss a trading opportunity again.
Click here

Investors Hub Services