US & World Daily Markets Financial Briefing 14-05-2009

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After seeing some volatility early in the session, stocks are seeing considerable strength in late morning trading on Thursday. The major averages have all moved firmly into positive territory after ending the previous session sharply lower.

The rebound may be partly due to bargain hunting, with traders picking up stocks at reduced levels following the selling seen in the past few sessions. Semiconductor stocks are turning in some of the best performances after some recent weakness.

Significant strength has also emerged among housing, banking, and transportation stocks, which are regaining some ground after trending lower earlier this week. Within the transportation sector, airline stocks are posting particularly strong gains.

On the other hand, utilities stocks are bucking the uptrend by the broader markets, with the Dow Jones Utilities Average currently down 1 percent. FirstEnergy, American Electric Power, and PSEG are posting notable losses.

The major averages have seen some further upside in recent trading, with the Nasdaq and the S&P 500 rising to new highs for the session. The Dow is currently up 53.04 at 8,337.93, the Nasdaq is up 22.29 at 1,686.48 and the S&P 500 is up 8.60 at 892.52.

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Toronto Stocks Recover Some Of Recent Losses - Canadian Commentary

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Canadian stocks turned into the green on Thursday morning after three straight losing sessions. The gain has lifted Toronto's main index off of a 12-day closing low.

The S&P/TSX Composite Index has added 70.01 points or 0.72% to 9,780.03. The index had lost more than 500 points in the first three sessions of the week after finishing Friday at a seven-month high.

Consumer discretionary stocks led the way with a 2.5% gain. Gildan Activewear has surged 22% after reporting second-quarter sales of US$244.8 million, compared to the $226.42 million projected by analysts.

The apparel manufacturer reported its net income fell to US$7.1 million, or US$0.06 per share, from US$42.1 million, or US$0.35 per share, in the year-ago quarter.

Meanwhile, Canadian Tire has edged down 0.8% after the company posted first quarter net earnings of C$49.7 million or C$0.61 per basic share, compared to C$67.1 million or C$0.82 per basic share in the prior year period.

Financials also moved higher, recovering some of yesterday's losses. National Bank has added 1.7% and Scotiabank has added 1.3% in the early going.
In other earnings news, FNX Mining has lost 2.25% after the company reported a first-quarter net loss of C$26.2 million or C$0.31 per share, compared to net income of C$24.1 million or C$0.28 per share in the same quarter last year.

Denison Mines Corp. is down 5%. The company posted a net loss for the first quarter of US$1.33 million or US$0.01 per share, in comparison with a net loss of US$10.46 million or US$0.06 per share in the same quarter a year-ago.

Vero Energy is down 2.4% after the company announced first quarter net loss of C$4.7 million or C$0.13 per share, compared to profit of C$3.78 million or C$0.13 per share in the prior year quarter.

Stantec is down 1.6% after agriculture design company reported first-quarter net income of C$20.7 million or C$0.45 per share, compared to C$16.9 million or C$0.37 per share in the same quarter last year.

Cascades rallied 11.9% after it reported first quarter net earnings of C$37 million or C$0.38 per share, compared to a loss of C$4 million or C$0.04 per share in the same quarter of last year.

The U.S. Labor Department said initial jobless claims, a closely-watched measure of layoffs, jumped to 637,000 for the week ended May 9th. This was up 32,000 from the previous week's revised total of 605,000.

A separate Labor Department report showed that the producer price index rose 0.3 percent in April following an unrevised 1.2 percent decrease in March. Economists had been expecting a slightly more modest increase in prices of about 0.2 percent.

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The Nikkei traded over 2% lower Thursday, hitting a two-week low, as the stronger yen hurt interest in exporters and fresh jitters about US growth dulled buyer appetite.

Toyota was down 3.8% to 3,520 yen while Canon fell 3.9% to 3,180 yen.

Sony injected some cheer into the market after it issued a mostly upbeat outlook for this year. The electronics giant said, “we expect operating losses to contract significantly”.

Sony's statement today echoes similar predictions from electronic companies such as Olympus, Casio and Hitachi earlier this week that sales are expected to make a recovery in the second half.

In earnings news Nippon Telegraph and Telephone posted an annual operating profit of 1.1trn yen. Its shares gained 3.6% to 4,030 yen.

Nikon fell over 8% after it predicted a smaller than expected annual operating loss as demand from chipmakers continues to fall.

Panasonic fell 4.5% after a local newspaper reported that it will forecast losses this financial year.

Meanwhile shares in Inpex fell over 6% after it said a drop in oil prices means it expects to forecast a 61% drop in net earnings this year.

The benchmark Nikkei 225 index closed down 246 points to 9,093 in Tokyo, its lowest settlement since 1 May.

The Hang Seng dropped over 3% on Thursday after grim US retail sales prompted a broad sell-off.

Shares in HSBC fell nearly 5% while China Mobile fell 4.5%. Hong Kong Exchanges & Clearing declined 5.7% after it posted a 49% fall in first-quarter earnings yesterday.

The Hang Seng index fell 517 points to 16,541 in Hong Kong.

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European shares are still largely lower in midday trade as banking shares continue to weigh following disappointing results from France’s biggest retail bank.

Credit Agricole reported a worse-than-expected 77% slump in quarterly earnings.

The bank saw first-quarter net profits drop to €202m in the three month ended March compared with €892m last time after more losses at its international retail and investment bank businesses. Revenue fell to €4.06bn from €4.11bn last time.

Chief executive Georges Pauget told reporters that Credit Agricole is not seeking additional state aid but added that he expects the effects of the financial and economic crisis to last until the end of 2010.

Elsewhere in the sector, Commerzbank, UniCredit and Societe Generale are also lower.

Energy stocks are stuck in the red after US crude oil retreated on a gloomy retail sales report. Royal Dutch Shell, Eni and Total are down.

Across the markets, the German DAX is down 29 points to 4,697 with the French CAC falling 16 points to 3,136. The Swiss market has gained 23 points to 5,300.

In other company news, German utility giant RWE saw first-quarter net profit almost double.


CAC 40 - Risers

1. Lafarge (LG) € 43.60 +2.78%
2. Dexia (DEXB) € 4.41 +2.68%
3. Peugeot (UG) € 16.28 +2.13%
4. Essilor International (EI) € 34.06 +2.01%
5. Veolia Environnement (VIE) € 20.47 +1.92%
6. EADS (EAD) € 10.90 +1.87%
7. Air France-KLM (AF) € 9.49 +1.75%
8. EDF (EDF) € 35.58 +1.69%
9. Saint Gobain (SGO) € 24.59 +1.67%
10. Renault (RNO) € 23.13 +1.67%

CAC 40 - Fallers

1. Bouygues (EN) € 29.42 -4.08%
2. AXA (CS) € 11.66 -2.30%
3. Total (FP) € 40.20 -2.07%
4. Credit Agricole (ACA) € 10.06 -1.42%
5. L'Oreal (OR) € 55.08 -1.40%
6. Vivendi (VIV) € 19.16 -1.26%
7. Sanofi-Aventis (SAN) € 44.80 -1.21%
8. Societe Generale (GLE) € 34.69 -0.87%
9. LVMH (MC) € 56.83 -0.79%
10. Accor (AC) € 31.78 -0.52%

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Gold Prices Slip Away From Six-Week High

Gold prices edged into negative territory on Wednesday, moving off of a six-week high. The metal fell as the dollar bounced back versus the euro and sterling.

June-stamped gold dipped to $921.30, down $2.60 on the session. Prices had hit as high as $929.50 earlier in the session.

The dollar rebounded against the other major currencies, limiting gold's hedge appeal. The greenback edged higher against the euro, moving off of a seven-week low and also climbed away from a four-month low against the British pound.
 
On the economic front, a Commerce Department report showed that retail sales fell 0.4 percent in April following a revised 1.3 percent decrease in March. Economists had expected sales to come in unchanged compared to the 1.2 percent decrease originally reported for the previous month.

Business inventories data is scheduled for release at 10 a.m. ET. Experts are calling for a drop of 1.1% in March, compared to a drop of 1.3% in February.

Gold settled at $923.90, up $10.40 for the session, at its best close since April 1. The metal had rallied more than $25 last week.

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Whole Foods Market could see some strength after it reported that its second quarter earnings declined to 19 cents per share from 29 cents per share last year, yet beat the consensus estimate of 18 cents per share. Revenues were almost flat at $1.86 billion, slightly below the mean analysts’ estimate of $1.87 billion. The company expects full year earnings of 71-76 cents per share on revenues of about $8 billion. Analysts estimate earnings of 71 cents per share on revenues of $8.04 million.

CA, Inc. may see weakness after it said it forecast full year 2010 revenues of $4.16 billion to $4.24 billion compared to the analysts’ estimate of $4.29 billion. The company’s adjusted earnings estimate of $1.51-$1.61 per share surrounded the consensus estimate of $1.58 per share. The company also said its fourth quarter earnings per share remained flat at 13 cents per share. On an adjusted basis, the company reported earnings of 31 cents per share, above the 29 cents per share consensus estimate. Revenues fell 5% to $1.04 billion, which exceeded the mean analysts’ estimate of $1.03 billion.

Cliff Natural Resources is likely to be in focus after it announced that it has priced the recently announced common share offering of 15 million shares at $21 per share. Duke Realty (DRE) may also react to its announcement that it has received a loan commitment for $125 million in secured financing. The company expects to use the proceeds to repay near term debt.

Clearwire could move to the downside after it reported a loss of 37 cents per share for its first quarter compared to a loss of 41 cents per share in the year-ago period. The year-ago results were adjusted to reflect the merging of the company’s wireless broadband unit with Sprint's. Revenues climbed 21% to $62.1 million. The consensus estimates had called for a loss of 30 cents per share on revenues of $62.6 million.

R.R. Donnelley & Sons is likely to react to its announcement that it has offered to buy Canada-based Quebecor for about $1.35 billion. American Express could recede after it said it would issue $3 billion worth of non-guaranteed senior debt, consisting of $1.25 billion worth of 7.25% 5-year notes and $1.75 billion worth of 8.125% 10-year notes.

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