US & World Daily Markets Financial Briefing 16-03-2009

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Dow And S&P 500 Jump To New Highs, Nasdaq Climbs Back Above Unchanged

Stocks have shown a notable upward move in recent trading on Monday, with the major averages all moving to the upside after turning in a mixed performance for much of the morning.

With traders reacting positively to comments from Federal Reserve Ben Bernanke on 60 Minutes suggesting that no other major financial institutions would be allowed to fail, banking stocks are turning in some of the market's best performances.

Transportation stocks are also seeing significant strength amid a notable decrease by the price of oil, with railroad stocks posting particularly strong gains. Utilities, defense, and natural gas stocks are also showing strong upward moves.

At the other end of the spectrum, computer hardware and semiconductor stocks have come under considerable selling pressure, limiting the upside for the tech-heavy Nasdaq.

In recent trading, the Dow and the S&P 500 have jumped to new highs for the session, while the Nasdaq has climbed modestly above the unchanged line. The Dow is currently up 117.8 at 7,341.46, the Nasdaq is up 0.98 at 1,432.48 and the S&P 500 is up 14.25 at 770.80.

Other Markets

In overseas trading, the major markets across the Asia-Pacific region closed higher on Monday amid expectations that a global economic recovery might be coming shortly. Japan's benchmark Nikkei 225 Index ended the day up 1.8 percent.

The major European markets have come off their intraday highs but remain well above the unchanged line, with the U.K.'s FTSE 100 Index up 1.4 percent, while the French CAC 40 Index and the German DAX Index are posting gains of 2.4 percent and 0.8 percent, respectively.

In the bond market, treasuries are lingering in negative territory, driving the yield on the benchmark 10-year note up 7 basis points to 2.955 percent.

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Toronto Stocks Up For Fifth Straight Session - Canadian

Canadian stocks are in the green for a fifth straight session on Monday as strength in the mining and financial sectors has outweighed a drop in energy stocks.

The S&P/TSX Composite Index is up 63.03 points or 0.75% to 8,366.42. The index is on target for its best close in more than a month.

Mining stocks are up 3.25% to lead the way. Lundin Mining has rallied 6.7% after the company said it will remove its shares from from the New York Stock Exchange in a cost-cutting effort.

Financial stocks are up 2.8% as all of the big six banks are posting notable gains. Toronto-Dominion has climbed 3.5%, Scotiabank has added 3.3% and CIBC is up 3.2%.

Ensign Energy Services has declined 2.7% after the provider of energy drilling services reported fourth-quarter net income of C$73.83 million, or C$0.48 per share, compared with C$72.56 million, or C$0.48 per share, a year ago.

Energy stocks have dropped 0.5% as crude oil is down $1.63 to $44.62 after the Organization of Petroleum Exporting Countries agreed to leave output unchanged.

Enbridge is up 1.2% after the company said it agreed to sell its indirect 24.7% stake in the Oleoducto Central pipeline to Colombian oil and gas firm Ecopetrol SA for about US$400 million.

In other corporate news, Agrium is up 0.5%. The agricultural nutrients maker Monday said it commenced an exchange offer for all outstanding shares of CF Industries Holdings, Inc.

Sino-Forest Corp. is up 1% after the commercial forest plantation operator,reported fourth-quarter net income of $95.5 million or $0.51 per share, up from $55.5 million or $0.30 per share in the same period last year.

YM BioSciences Inc. is down 1.5%. The company announced the enrollment of the first patient into its multinational trial of nimotuzumab for the treatment of patients with non-small-cell lung cancer.

On Friday, the index added 21.12 points or 0.25% to end at 8,303.39. This marks the first finish above 8,300 since Feb. 17.

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Footsie hits new high for March
 
Market Movers
techMARK 1,145.85 +2.89%
FTSE 100 3,846.38 +2.47%
FTSE 250 6,278.27 +1.88%

The sun is shining on London’s leading stocks today with the FTSE 100 rising above the level it had sunk to at the end of February for the first time this month. Sentiment has been boosted by an interview given by Federal Reserve chairman Ben Bernanke on US TV Sunday night in which he said the US recession could end this year if the government’s medicine for the ailing banking sector works.

Barclays is sharply higher after it confirmed weekend reports that talks are underway with a number of parties over a sale of iShares, its exchange-traded funds business. The bank also confirmed it is holding talks with HM Treasury and FSA regarding its potential participation in the UK's Asset Protection Scheme. Barclays added that its businesses overall have had a strong start to 2009.

Rexam is another stock with a double-digit percentage rise under its belt after Credit Suisse upgraded the stock to “out-perform” from”neutral”.

Oil stocks are moderately lower after OPEC’s decision over the weekend not to cut output quotas. In contrast, heavy oil users such as Thomas Cook, British Airways and FirstGroup attract support on expectations that the OPEC decision will head off a resurgence in oil prices.

Rio Tinto is lower on weekend comment that some of its big shareholders are intent on scuppering the refinancing deal with Chinalco.

Bus and rail group Stagecoach's trading since the end of October has been on track to meet management expectations. The UK bus division has seen 9% like-for-like (LFL) revenue growth in the 44 weeks to 1 March 2009, while the UK rail division (excluding East Midlands Trains) saw 6.7% LFL growth. In North America, the company has seen 6.8% LFL growth in the 10 months to 28 February 2009.

Shares in industrial property group Brixton surged after the property group reassured the market it was compliant with its banking covenants at the end of 2008, despite a sharp deterioration in its financial position. The firm reported a pre-tax loss of £768.8m for the year, compared with a profit of £58.2m the previous year. Net asset value per share fell 47% to 290p.

Many market observers were expecting Brixton to accompany its results with a rights issue or some other form of fund raising but the company said it was still considering a wide variety of options aimed at strengthening its balance sheet.

Insulation and building materials supplier SIG is another company considering a range of options, including a potential equity raising. Reports at the weekend suggested SIG had spoken to investors about a possible £250m-£300m rights issue at a heavy discount to the current share price. Full-year results are due tomorrow, though it is unclear if a cash call will accompany the figures.

A consortium led by Interserve has been named as Selected Bidder by Sandwell Council for a big schools development project under the government’s Building Schools for the Future initiative.

Gulf of Mexico-focused oil and gas explorer and producer Leed Petroleum posted a large increase in production over 2008 and said it was in a strong position to continue growing. The firm posted a pre-tax income of $3.6m on revenues of $15.1m, as it ramped up production at its Eugene Island field.

Hopes of a big contract for Aero Inventory have been dashed as the company said it had withdrawn from discussions with a major airline having been unable to agree on satisfactory commercial terms for the proposed deal.

Emerald Energy, the oil explorer focused on South America and the Middle East, is awash with cash after a strong trading performance in 2008. Net cash flow from operations tripled to $64.7m from $21.6m in 2007. Cash and cash equivalents at the end of 2008 stood at $74m, up from $40m at the end of 2007, after the company saw profit before tax soar from 2007’s level of $8.59m to $52.45m.

FTSE 100 - Risers
Barclays (BARC) 89.70p +21.05%
Rexam (REX) 269.75p +12.75%
Prudential (PRU) 287.75p +10.35%
London Stock Exchange Group (LSE) 449.25p +9.24%
Thomas Cook Group (TCG) 229.00p +7.64%

FTSE 100 - Fallers
Tullow Oil (TLW) 762.00p -1.68%
Kazakhmys (KAZ) 318.50p -1.55%
Amec (AMEC) 540.50p -1.10%
Rio Tinto (RIO) 2,060.00p -0.82%
RSA Insurance Group (RSA) 135.00p -0.74%

FTSE 250 - Risers
Brixton (BXTN) 17.50p +18.64%
SIG (SHI) 135.50p +15.32%
Intermediate Capital Group (ICP) 228.00p +11.76%

FTSE 250 - Fallers
Gem Diamonds (GEMD) 155.00p -3.73%
Wellstream Holdings (WSM) 388.25p -3.54%
Brit Insurance Holding (BRE) 188.50p -3.33% 

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Indian market continues winning streak

Monday, the Indian market recovered from its day's lows to end sharply higher for the day. While easing fears about the U.S. banks and net buying by foreign funds on Friday helped the market open firm, investors took profits in early trading amid a mixed trend in the Asian markets and an uncertain outlook for the global economy.

However, stocks bounced back later in the afternoon after the European markets opened on a positive note. The higher US index futures, which pointed towards a firm opening on Wall Street Monday and the strengthening of the rupee to near a two-week high also improved investor sentiment.

The BSE Sensex opened at 8,794 and slipped to the day's low of 8,697 in early trading. The index since then bounced back sharply and closed near the day's high at 8,944, up 187 points or 2.13% over the previous close. Meanwhile, the S&P CNX Nifty rose 58 points or 2.13% to 2,777.

Second-line stocks also showed significant gains. The broad-based BSE 500 index, the small-cap and the mid-cap indexes advanced around 2.20% each. On the BSE, the market breadth was extremely positive, with gainers outnumbering decliners by 1611 to 847.

Stocks across the sectors received good support. Realty, oil/gas and banking stocks were the top gainers.

Jaiprakash Associates (up 8.96%), Mahindra & Mahindra (up 8.48%), Ranbaxy Laboratories (up 6.82%), Reliance Communication (up 6.74%), DLF (up 6.16%), ICICI Bank (up 4.52%), State Bank of India (up 3.65%)and Sterlite Industries (up 3.52%) were some of the prominent gainers.

Twenty-five out of 30 Sensex stocks finished in positive territory, while Sun Pharma, Maruti Suzuki, Grasim Industries, Infosys and Reliance Infrastructure ended in the red.

Aviation stocks surged higher after data released by the Civil Aviation Ministry showed a marginal improvement in domestic passengers traffic for February. Kingfisher climbed 9.83%, JetAirways jumped 17.16% and SpiceJet gained 3.15%.

Realty stocks showed handsome gains, leading the rally. Among the major gainers in this space, Mahindra Life jumped 22.03%, Akruti City soared 19.50%, Parsvnath climbed 6.17% and DLF added 6.16%.

Stocks of oil-exploration companies closed mixed after crude oil price fell about 2.5 percent in Asian trading on Monday. Reliance Industries gained 3.45% and ONGC advanced 1.32%, but Cairn moved down 0.21%.

On the other hand, state-owned oil firms, namely HPCL surged up 8.30%, BPCL jumped 4.40% and IOC added 2.96%.

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Oil falls by nearly $1 a barrel
 
Crude oil futures fell nearly $1 on speculation that oil cartel OPEC will not announce further output cuts at its weekend meeting in Vienna.

Reports suggest OPEC is under pressure to keep oil prices lower to help an economic recovery. Since September the group, which controls about a third of the world’s oil production, has reduced production by 4.2m in an attempt to stem falling oil prices.

According to reports the group has an 81% compliance rate of reaching its reduction target.

US light crude oil for April delivery fell 78 cents to settle at $46.25 a barrel on the New York Mercantile Exchange. In a volatile week for oil prices crude registered gains of 1.6%.

Gold prices rose above $930 an ounce amid strong demand for ETF holdings. The precious metal has endured a bumpy ride in recent weeks with prices rising above $1,000 an ounce and then falling quickly to profit taking.

Traders say demand for gold will slow as it inches towards the $1,000 level again and as demand for safe haven assets eases as investors reassess the economic outlook. COMEX gold for April delivery rose $6.10 to settle at $930.10 an ounce.

Silver for May delivery rose 27 cents to $13.22 an ounce while April platinum advanced 40 cents to $1,063.60 an ounce. 

Forex

Euro broadly higher
 
Demand for the dollar’s safe haven qualities faded on Friday with renewed risk appetite boosting the euro and sterling.

The single market currency also benefited from Thursday’s decision from the Swiss central bank to stop the Swiss franc's advance against the euro.

The euro consolidated gains against the greenback on Friday and early in the session hit a two-week high against the dollar before easing slightly. The euro also gained around 0.4% to 126.43 yen.

The euro has recently been under pressure by concern about the euro zone’s exposure to bad debt in Eastern European banks.

The dollar rose against the broadly weaker Japanese currency after a report showed the US trader gap narrowed to its smallest level since October 2002. The yen’s attractiveness as a safe haven currency has been fading as traders mull the country’s deepening economic troubles.

Sterling took its cue from buoyant markets on Friday and investors turned to riskier currencies. The pound rose about 0.50% to $1.4005 after reaching a six-week low against the US currency earlier in the week at $1.3653.

The UK currency was also boosted as the Bank of England continues will its quantitative easing plans, which is hoped will stimulate lending. 

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