US & World Daily Markets Financial Briefing 11-09-2009

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

Growth Data and Positive Outlook May Keep Alive Fading Buying Momentum

The major U.S. index futures are pointing to a higher opening on Friday, indicating that the markets may see some upside once again after five straight sessions of gains. Encouraging results and forward outlook from chipmakers and data cementing hopes that the global economies may be close to stabilization enroute to a path of sustainable recovery is keeping buying interest alive. China, the bulwark, on which many are pinning their hopes to lead the economies out of one of the severest recession turned in solid data that allayed fears that the stimulus-induced growth may not fade away soon.

The Labor Department’s export and import prices report showed a rebound in import prices in August, propelled by oil imports. That said, commodity prices may be on track for a pullback.

Shrugging off some early weakness in Thursday’s session, stocks raced to another session of gains, as economic data, positive corporate outlook and a rally in commodity prices supported the markets. An upward revision of its third quarter guidance by Texas Instrument (TXN), which in turn benefited the tech sector as a whole, and a steep decline in the weekly jobless claims for the week ended September 4th buoyed up sentiment and the buying interest was accentuated by another session of advance by crude oil price.

The Dow Industrials ended up 80.26 points or 0.84% at 9,628, the Nasdaq Composite Index gained 23.63 points or 1.15% to end at 1.15% and the S&P 500 Index closed at 1,044, a gain of 10.77 points or 1.04%.

Twenty-one of the thirty Dow components ended the session higher. Walt Disney (DIS) (up 5.23%), Procter Gamble Co. (PG) (up 4.24%), Cisco Systems (CSCO) (up 3.51%), AT&T (T) (up 2.39%) and DuPont (DD) (up 2.33%) were among the notable gainers. On the other hand, Kraft Foods (KFT), Intel (INTC) and Travelers Co. (TRV) fell sharply.

Among the sector indexes, the Dow Jones Transportation Average climbed 2.35%, the NYSE Arca Airline Index rallied 6.67% and the Dow Jones U.S. Basic Materials Average rose 1.76%. The NYSE Arca Oil Index, the Philadelphia Oil Service Index and the NYSE Arca Gold Bugs Index moved up 1.28%, 1.80% and 4.40%, respectively, while the Philadelphia Housing Sector Index advanced 1.63%.

In the tech space, the Philadelphia Semiconductor Index rose 1.78%, the NYSE Arca Disk Drive Index ended up 2.14% and the NYSE Arca Computer Hardware Index gained 1.60%. The NYSE Arca Networking Index jumped 3.37%, the NYSE Arca Software Index rose 1.37% and the NYSE Arca Internet Index added 3%.

Get our Daily Trade Signals and Grain Newsletter along with a copy of the CBOT Introduction to Agricultural Futures and Options Book for Free! The grain trading professionals at MF Global can guide you in the right direction with your trading. Click here to Get your Free Grain Trading Kit Today

Gold Extends 18-Month High Above $1,010

Bay Street stocks could extend a recent rally in early trading on Friday as stocks in Europe and the U.S. are seeing mild strength. The market has closed higher in five of the last six sessions.

Encouraging housing news could provide a spark. Canadian new home prices rose 0.3% in July following a 0.2% decline in June. This was the first increase since September 2008. Economists expected new home prices to slip 0.1% in July.

Gold has moved back above $1,000 a barrel in early trading, gaining more than $8. Copper and silver are also seeing gains. Crude oil prices are down 15 cents at $71.79 per barrel.

In corporate news, EnCana approved plans to split into two energy companies. The company will consist of a natural gas firm, EnCana, and an integrated oil firm, Cenovus Energy. The transaction is expected to close November 30.

Empire Company Limited said its first-quarter net earnings rose to C$89.7 million or C$1.31 per share from C$75.7 million or C$1.15 per share a year earlier.
 
Altius Minerals Corporation reported first quarter net loss of C$597,000 or C$0.02 per share, compared to net earnings of C$380,000 or C$0.01 per share in the year-ago quarter.

Hart Stores posted second quarter net earnings of C$1.0 million or C$0.08 per share, compared to C$1.5 million or C$0.11 per share in the year-ago quarter.

Jaguar Mining said that it has entered into an agreement with a group of initial purchasers to issue and sell US$150 million of 4.50% senior convertible notes due 2014.

Harry Winston Diamond posted second quarter net loss of US$24.5 million or US$0.32 per share, compared to net earnings of US$49.9 million or US$0.81 per share in the prior year quarter.

On Thursday, gold stocks led a rally on Bay Street. The S&P/TSX Composite Index added 154.83 points or 1.4% to finish at 11,155.00.

Gold prices have surged above $1,000 an ounce again on Friday and extended an 18-month high. The dollar remained weak versus major rivals, adding to the metal's hedge appeal.

August gold rallied to $1,010.10, up $13.40 on the session. Prices hit as high as $1,013.20. The dollar stabilized after it touched a new 2009 low of 1.4626 against the euro. The buck also remained near a monthly low against the British pound.

The metal also reached above $1,000 in each of the last three sessions, but hasn't closed above the mark since late February. Gold reached a record intraday high of $1,033 in February 2008.
 
In corporate news, import prices 2.0% in August. This followed a drop of 0.7% in the previous month. Excluding oil, import prices edged up 0.4 percent. Export prices climbed 0.7 percent for the month, compared to a dip of 0.3 percent in July.

At 9:55 a.m. ET, the preliminary University of Michigan/Reuters consumer sentiment report for September is due. A reading of 67.8, compared to 65.7 in August. Wholesale inventories data for July is expected at 10 a.m. ET. A decline of 1% is forecast, compared to drop 1.7% in the previous month.

Click Here

Asian Markets Extend Gains On Positive Chinese Economic Data

The Asian markets extended the gains and ended in positive territory lifted by better than expected economic data from China, increasing optimism about global recovery. Positive closing in Wall Street for the fifth successive session also lifted market sentiment. Japan's Nikkei however ended in negative territory dragged down by stronger yen and downward revision in GDP numbers for the second quarter. Profit taking following recent rally also limited the gains across the markets.

In Japan, the benchmark Nikkei 225 Index ended at 10,444, representing a loss of 69.34 points, or 0.66%, while the broader Topix index of all first section stocks slipped 0.80%, or 8.05 points, to close at 950.

On the economic front, the Cabinet Office downwardly revised its projection of quarterly growth in the gross domestic product for the second quarter to 0.6% from 0.9% reported earlier,to reflect a steeper fall in domestic demand that was partly offset by a faster growth in exports. Economists had expected the growth figures to be left unchanged from the preliminary numbers. On an annual basis, the economic growth was reduced to 2.3% from the initial estimate of 3.7%. Economists expected the growth figure to be held at 3.7%.

Light sweet crude oil futures for October delivery ended at $72.32 a barrel in electronic trading, up $0.38 per barrel from previous close at $71.94 a barrel in New York on Thursday.

Automakers led the declines following the strengthening of the local currency against the US dollar as a stronger yen reduces the sales realization from exports in terms of local currency and dents profits. Toyota Motor declined 1.79%, Honda Motor lost 2.05%, Isuzu Motor fell 3.38%, and Nippon Motor Co. shed 2.69%.
 
Steelmakers declined on concerns that the proposal by the new government to reduce greenhouse-gas emissions, once enacted, would result in huge production costs to these companies. JFE Holdings declined 2.12%, Nippon Steel fell 2.25%, Pacific Metals shed 2.66% and Sumitomo Metal Industries lost 1.28%.

Banking stocks also ended weaker. Mitsubishi UFJ Financial slipped 0.73%, Sumitomo Mitsui Financial lost 0.80%, and Resona Holdings edged down 0.32%.

Real-estate stocks also slipped into negative territory. Sumitomo Realty & Development shed 2.17%, Mitsui Fudosan lost 1.36%, Tokyu Land Corp., plunged 3.18% and Mitsubishi Estate edged down 0.54%.

In Australia, the benchmark S&P/ASX200 Index advanced 0.55% or 25.30 points to close at 4,596, while the All-Ordinaries Index also ended at 4,596, representing a gain of 22.80 points, or 0.50%.

Light sweet crude oil futures for October delivery ended at $72.32 a barrel in electronic trading, up $0.38 per barrel from previous close at $71.94 a barrel in New York on Thursday.

Banks led the gains on increasing confidence about the economy. ANZ Bank advanced 1.66%, Commonwealth Bank of Australia added 0.68%, National Australia Bank climbed 1.79% and Westpac Banking rose 0.53%.

Gold stocks also ended in positive territory. Lihir Gold advanced 1.00%, Newcrest Mining gained 1.79% and Sino Gold Mining climbed 0.89%.

Among retail stocks, David Jones rose 2.69% and Woolworths added 0.67%. Wesfarmers remained unchanged from previous close, while Harvey Norman bucked the trend and ended weaker by 1.23%.

Mixed trading was witnessed among metals and mining stocks as some traders preferred to lock-in gains ahead of the weekend. BHP Billiton added 0.79%, Gindalbie Metals climbed 1.01%, Iluka Resources gained 1.95%, Oz Minerals advanced 0.90% and Rio Tinto rose 0.65%. However, Fortescue Metals edged down 0.23% and Mincor Resources lost 1.59%.
 
Oil related stocks also ended mixed. Woodside Petroleum edged down 0.31% and Origin Energy slipped 0.27%, However, Santos advanced 1.47%, and Oil Search rose 2.83%.

In Hong Kong, the Hang Seng Index ended in positive territory with a gain of 91.86 points, or 0.44% at 21,161, taking cues from Wall Street where the major indices extended their gains for the fifth successive day and China reported better than expected industrial output data. Profit taking in late trading however limited the gains.

In South Korea, the benchmark KOSPI Index gained 7.02 points, or 0.43% to close at 1,652, following Wall Street cues where the major averages ended in a positive territory for the fifth successive session. Profit trading limited the gains amid volatile trading while positive economic data from China lifted the market sentiment.

The Indian market ended modestly higher on Friday after moving choppily all through the day due to intermittent profit taking ahead of the weekend. The BSE Sensex closed at 16,264, up 47 points or 0.29% and the S&P CNX Nifty followed with a gain of 10.15 points, or 0.21%, at 4830..

Among the other major markets in the region, China's Shanghai Composite Index surged up 64.91 points or 2.22% to close at 2,990, Indonesia's Jakarta Composite Index added 4.08 points, or 0.17% to close at 2,416, and Taiwan's Weighted Index edged up 0.07% or 5.06 points to close at 7,337. However, Singapore's Strait Times Index bucked the trend and ended in negative territory with a marginal loss of 0.99 points, or 0.04% at 2,681.

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!

After closing mixed in a fashion, the European markets are trading higher on Friday. While the French CAC 40 Index and the German DAX Index are rising 0.77% and 0.56%, respectively, the U.K.’s FTSE 100 Index is gaining 0.72%.

On the economic front, the Office for National Statistics said the U.K.’s output prices were down 0.4% year-over-year in August, smaller than July's 1.3% annual decline and the 0.5% drop expected by economists. On a monthly basis, output prices rose 0.2% in August, the same rate as in July.

Core output prices that exclude food, beverages, tobacco and petroleum climbed 0.2% on a monthly basis and 0.7% annually in August.

Meanwhile, the input price index for materials and fuels purchased by manufacturing industry slipped 7.5% in August from the year-ago period. Input prices grew 2.2% on a monthly basis, reversing the 1.1% fall in July. Economists had estimated a 1% increase.

U.S. Economic Reports

On the economic front, the import price index rose 2% month-over-month in August compared to a 0.7% decline in July, with the increase mainly due to a 9.8% rise in petroleum import prices. Prices of non-fuel imports edged up 0.4%, reversing the 0.2% decline in the previous month. On a year-over-year basis, the index was down 15%.

Export prices moved up 0.7% in August after edging down 0.3% in July. Agricultural export prices rose 0.2% compared to 0.8% growth in export prices of non-agricultural commodities. On a year-over-year basis, export prices declined 6.1%.

The Reuters/University of Michigan's preliminary report on the consumer sentiment index for September is scheduled to be released at 9.55 AM ET. Consumer sentiment is expected to rise to 67.5 from the previous month's reading of 65.7.

The Commerce Department is due to release its wholesale inventories report at 10 AM ET. Economists expect wholesale inventories at the end of July to show a 1% decline.

Wholesale inventories declined by a bigger-than-expected 1.7% month-over-month in June. The previous month's numbers were revised down to show a 1.2% drop. However, wholesales rose 0.4%, resulting in an inventory-to-sales ratio of 1.26, the lowest level since October 2008.

The Treasury Budget, a monthly account of the surplus or deficit of the federal government is due to be released at 2 PM ET. The budget is considered as an indicator of budgetary trends and the thrust of fiscal policy. Economists estimate a deficit of $139.5 billion for August.

Here are 10 simple Dos and Don’ts any investor can follow which may contribute to potential for success in trading futures. This FREE guide can provide some of the basic principles that traders inherently live by.

Click Here to Request Your Free Guide!

Morgan Stanley is likely to react to its announcement that its CEO John Mack would leave the company after being in office for 4 years. The company’s Co-President James Gorman will become its CEO, effective January 1, 2010.

National Semiconductor is up in pre-market trading after it reported Thursday after the bell that its first quarter earnings fell to 13 cents per share from 33 cents per share in the year-ago period. Revenues fell 32% to $314.4 million. The recent quarter’s result included a pre-tax restructuring charge. Analysts estimated earnings of 7 cents per share on revenues of $300.5 million. The company guided second quarter revenues to $325 million to $340 million compared to the $315.9 million consensus estimate.

Cree, Inc. is likely to move in reaction to its announcement that it has priced the public offering of 11 million shares at $35.50 per share, which is likely to bring in gross proceeds of $390.5 million. The company intends to complete the offering on September 16th, 2009.

Centerpoint Energy may also be in focus after it announced that it has priced a public offering of 21 million shares at a price of $12 per share. The company hopes to use the net proceeds from the offering for general corporate purposes, including repayment of borrowings under its revolving credit facility and its money pool and making loans to its subsidiaries.

Steel Dynamics (STLD) is likely to see buying interest after it raised its third quarter earnings guidance to 20-25 cents per share from its earlier estimate of 10-20 cents per share. Analysts estimate earnings of 16 cents per share. The company attributed the optimism to strong orders for flat-rolled steel and an improvement in recycling volumes.

Pepsi Co. may see some activity after it announced that it has recommended its shareholders to reject the mini-tender offer by TRC Capital Corp. The company noted that the TRC had made an offer for 2 million shares or 0.13% of its outstanding shares at $53.65 per share.

At the same time, SRA International is likely to trade higher after it said it received a contact from the U.S. Army valued up to $19 million. Under the contract, the company will develop a one-stop source that will improve the planning, programming and operational employment of reconnaissance equipment and the distributed common ground system.

Lattice Semiconductor may see buying interest after it announced that it expects third quarter revenues to be flat to up 3% compared to its earlier expectations for a decline of 2% to 3% growth.

Our informative 24”x36” wall chart explores 40 years of historical market data on Crude Oil, Gold and S&P500 markets, and includes historical event call-outs. It’s a great trading and analytic tool for professional and beginner traders.

Sign up here to receive your chart today!

Investors Hub Services