US & World Daily Markets Financial Briefing 18-08-2009

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

Bargain Hunting May Temporarily Relieve Economic Worries

The major U.S. index futures are pointing to a higher opening on Tuesday, suggesting a higher opening in the markets. The global markets, especially the European markets, have rebounded following the release of a report that showed that investor confidence in Germany improved by much more than expected. Economic reports released earlier in the day from the U.S. relayed a muted message. Housing starts unexpectedly fell, although the negativity could be countered by the fact that the previous month’s reading was revised upwards and single-family starts registered an increase in July.

The wholesale price inflation report showed deflationary trend. The uptick in commodity prices should support sentiment to some extent. That said, the uncertainty surrounding the economic outlook is likely to weigh on the markets, restraining any sustained uptrend.

The global sell-off triggered by apprehensions about a return to sustainable growth pressured U.S. stocks at the open of Monday’s session and continued to plague the markets till the end of the session. The markets largely ignored a couple of positive economic reports that showed increased activity in the manufacturing sector and an improvement in homebuilder confidence.

Riskier assets, namely equities, oil and gold experienced significant weakness, while safe havens such as the dollar, the yen and bonds advanced, with the yield of the benchmark 10-year Treasury notes declining 6.7 basis points to 3.49%.

The Dow Industrials ended down 186.06 points or 2% at 9,135, the Nasdaq Composite Index receded 54.68 points or 2.75% to close at 1,931 and the S&P 500 Index moved down 24.36 points or 2.43% to 980.

Twenty-eight of the thirty Dow components ended the session lower, with only Pfizer (PFE) and Coca-Cola (KO) bucking the downtrend. Alcoa (AA) (down 6.48%), American Express (AXP) (down 4.19%), Bank of America (BAC) (down 4.77%), Caterpillar (CAT) (down 4.46%), DuPont (DD) (down 4.02%), General Electric (GE) (down 4.02%), Home Depot (HD) (down 3.80%) and JP Morgan Chase (JPM) (down 4.05%) declined sharply.

Among the sector indexes, the Dow Jones Transportation Average fell 3.51% and the Dow Jones U.S. Basic Materials Average declined 4.52%. The KBW Bank Index and the NYSE Arca Securities Broker Dealer Index slipped 4.50% and 3.50%, respectively. While the S&P Retail Index moved down 3.66%, the Philadelphia Housing Sector Index declined 3.90%. The NYSE Arca Gold Bugs Index slumped 5.25%, while the NYSE Arca Oil Index and the Philadelphia Oil Service Index lost more than 3% each.

In the technology space, the Philadelphia Semiconductor Index and the NYSE Arca Computer Hardware Index both fell close to 3%, while the NYSE Arca Networking Index, the NYSE Arca Disk Drive Index and the NYSE Arca Internet Index all ended down more than 3%.

On the economic front, the National Association of Homebuilders said its index measuring builder confidence rose 1 point to 18 in August and is currently at its highest level since June 2008. The index measuring sales expectations in the next six months rose 4 points and the index of prospective buyer traffic increased 3 points, while the current sales conditions index remained unchanged.

Meanwhile, the Empire State manufacturing survey for August revealed that manufacturing conditions improve notably. The business conditions index rose to 12.1 in August from –0.6 in July, marking the first positive reading since November 2007. The new orders and the shipments indexes rose for the second straight month, while the order backlogs index remained negative, although was the least negative since October 2008.

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

Bay Street Stocks Look To Bounce Back

Canadian stocks will look to rebound on Tuesday after a sharp sell-off in the previous session. World markets are seeing slight strength after sharp declines yesterday on worries the global economy may continue to struggle.

Gold and oil are up slightly after falling sharply on Monday. Gold prices inched up $2.10 to $937.90 per ounce, while copper is down 1.75 cents at $2.768 a pound. Crude oil up 19 cents at $66.94.

Oil and natural gas firm Cequence Energy said that it agreed to buy certain oil and gas producing properties from one of the major publicly traded oil and natural gas firm as well as from a private concern. The deal price is valued at about $19 million in cash.

Gran Tierra Energy said it has resumed regular production operations in the Putumayo Basin of Southern Colombia.
 
WebTech Wireless said it has received an order for 500 model WT5000 Locators from Bridge Security for their customer Vodafone Ghana.

Manulife could triple its offices in CHina in five years, according to Bloomberg. The inusurer currently has 36 offices in the country.

On Monday, the S&P/TSX Composite Index dropped 316.42 points or 2.9% to close at 10,480.18. This marks the lowest close since July 29.

Gold Prices Inch Higher To Recover Some Of Slump

Gold prices inched higher on Monday amid uncertain trading, recovering some of yesterday's sharp slump. December gold rose to $937.80 per ounce, up $2 on the session. Prices reached as high as $941.60 and as low as $935.

The dollar saw mixed results against its major rivals after seeing sharp strength most of yesterday. The buck was slightly higher against the euro after pulling off a 2 1/2-week high last night. The greenback turned lower against the British pound.

The U.S. Labor Department revealed that producer prices dropped 0.9 percent in July. This followed an advance of 1.8 percent in the previous month. Economists had expected the measure to slip 0.3 percent for the month.
 
Core prices, which exclude the volatile food and energy sectors, ticked down 0.1 percent in July. Economists were looking for core prices to edge up by 0.1 percent.

A Commerce Department report showed that housing starts fell 1.0 percent to an annual rate of 581,000 in July from the revised June estimate of 587,000. Economists had expected starts to rise to 598,000 from the 582,000 originally reported in the previous month.

On Monday, gold declined $12.70 for the session, and posted its lowest close since July 29. Prices hit as low as $931.30 earlier in the day.

In other metal trading, silver fell 7.5 cents to $13.90 per ounce and copper dropped 3.55 cents to $2.75 a pound.

Click Here

Asian Markets Rebound Slightly; Await US Economic Data

Most of the Asian markets ended in positive territory on late buying interest at lower levels after sharp sell-off in the previous session. The markets in Australia, Taiwan and Indonesia ended in the negative territory but off the lows. Commodity stocks ended weaker on lower commodity prices in the international market. The markets await key economic data related to housing and producer price index in the U.S for further signals about the strength of recovery in the world's largest economy.

In Japan, the benchmark Nikkei 225 Index gained 16.35 points, or 0.16% to close at 10,285, while the broader Topix index of all first section stocks edged up 0.07 points, or 0.01%, to 950.

On the economic front, the Cabinet Office, in a final report, revised upward the leading and coincident indices for June. The leading index stood at 79.9 in June, revised up from 79.8 estimated on August 6, and was also higher than the reading of 76.9 in May. The coincident index was revised up to 88 from 87.8 estimated previously, and came in higher than the 87.1 in May. The lagging index was also revised upward, to 83.4 from 83.3 reported earlier.

Japan's largest mobile-phone operator, NTT DoCoMo gained 2.45% after an analyst of Mizuho Financial raised the rating of the stock from "Hold" to "firm Buy" attributing strong earnings in the usage of Internet.

Automotive stocks ended higher on weaker yen. Toyota Motor Corp. gained 0.75%, Honda Motor added 0.33%, Suzuki Motor advanced 0.89% and Isuzu Motor rose 0.55%.
 
Trading stocks declined following drop in commodity prices in the international market. Mitsubishi Corp. fell 2.97%, Toyota Tsusho Corp. lost 1.01% and Mitsui & Co., slipped 0.73%.

Oil stocks also ended in negative territory on lower crude oil prices. Nippon Oil Corp. declined 0.75%, Showa Shell slipped 0.51% and Nippon Mining Holdings edged down 0.41%.

Mixed trading was witnessed among the banking stocks. While Resona Holdings edged up 0.15% and Mitsubishi UFJ Financial Group added 0.34%, Mizuho Financial fell 1.32% and Sumitomo Mitsui Financial edged down 0.25%.

In Australia, the benchmark S&P/ASX200 Index lost 6.80 points, or 0.15%, to close at 4,382, and the All-Ordinaries Index ended at 4,386, representing a loss of 12.20 points, or 0.28%.

On economic news, the minutes released by the Reserve Bank of Australia revealed that the board members were of the view that the cash rate had been reduced to the current low level in anticipation of weak economic outcomes. The minutes further revealed that the board members left open the possibility of further reductions in the rate if need arose. But with the recent improvements in the global and domestic outlook, the members said it appeared unlikely that further cuts would be necessary.

Building products group James Hardie Industries surged up 22.32% following comments that the residential construction market in the U.S is nearing the bottom of a downturn. The company reported a net loss for the first quarter compared to profit last year, hurt by unfavorable asbestos adjustments. Excluding adjustments, the company's profit for the first quarter improved marginally.

Telecommunication company Telstra gained 1.11%.

Among metals and mining stocks, Fortescue Metals fell 3.93%, Gindalbie Metals lost 5.20%, Illuka Resources declined 3.93%, Oz Minerals shed 0.46% and Rio Tinto slipped 0.35%. BHP Billiton managed to end in positive territory with a gain of 0.35%.

In energy space, Woodside Petroleum lost 1.84%, Origin Energy fell 2.54% and Oil Search edged down 0.18%. Santos remained unchanged from previous close.

Gold stocks ended in negative territory. Lihir Gold shed 0.78%, Newcrest Mining slipped 0.30% and Sino Gold Mining lost 1.41%.
 
Mixed trading was witnessed among the bank stocks. While ANZ Bank advanced 0.59% and Commonwealth Bank of Australia remained unchanged from previous close, National Australia Bank slipped 0.04% and Westpac Banking shed 0.59%.

In Hong Kong, the Hang Seng Index recovered from yesterday's sell-off and ended in positive territory with a gain of 0.84%, or 169.20 points at 20,306. Buying interest at lower levels in late trading session helped market end in positive territory. Of the 42 components in the index, as many as 32 stocks registered gains. Banks, Property and china-related stocks advanced while commodity stocks ended weak.

In South Korea, the benchmark KOSPI Index ended with a gain of 3.18 points, or 0.21%, at 1,550, amid volatile trading. Late buying interest by institutional investors on select blue-chip technology and automotive stocks helped market end in positive territory.

In India, considerable amount of short covering after a sharp loss in the previous session and selective buying in battered index heavy weights at lower levels amid some improvement in global investor sentiment helped the Indian market bounce back sharply. The BSE Sensex closed at 15,035, up 250 points or 1.69% from its previous close, and the S&P CNX Nifty rose 71 points to 4,459.

Among the other major markets in the region, China's Shanghai Composite Index advanced 40.25 points, or 1.40%, to 2,911, and Singapore's Strait Times Index added 21.74 points, or 0.85% to close at 2,568. However, Taiwan's Weighted Index lost 142.03 points, or 2.05% to close at 6,790 and Indonesia's Jakarta Composite Index declined 2.09% or 49.88 points to close at 2,337.

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!

The major European averages are rebounding on Tuesday after a two-session sell-off. While the French CAC is rising 0.48%, the German DAX Index is advancing 0.74% and the U.K.’s FTSE Index is gaining 0.79%.

In corporate news, real estate company British Land said its first quarter net loss narrowed to 273 million pounds from 565 million pounds in the year-ago period. Rental income declined 12% year-over-year, although it rose 1.2% from the previous quarter.

On the economic front, the U.K.’s annual inflation rate stayed below the central bank's target of 2% for the second straight month in July, according to a report released by the Office for National Statistics. The annual inflation rate stood at 1.8% in July, the same rate as in June. Economists had expected the inflation rate to slow to 1.5%. On a monthly basis, consumer prices remained flat and the core inflation rate, which excludes energy, food, alcohol and tobacco, was 1.8%.

The Zew Center for European Economic Research said in a report that Germany's economic sentiment index rose 16.6 points to 56.1 in August. Economists expected a reading of 45. The indicator stood well above the historical average of 26.5 points. The assessment of the current economic situation stood at minus 77.2 in August, up 12.1 points.

U.S. Economic Reports

The Commerce Department reported that housing starts fell 1% month-over-month in July to 581,000 from an upwardly revised June estimate of 587,000. Economists had expected housing starts to have risen to 598,000 from the initially estimated reading of 582,000 for June.

Single-family starts rose 1.7%, while starts of buildings with five units or more were 80,000. Annually, housing starts slumped 37.7%. Building permits fell 1.8% month-over-month to 560,000.

A Labor Department report showed that the producer price index fell 0.9% month-over-month in July. The decrease followed rises of 1.8% in June and 0.2% in May. Economists had estimated a mere 0.2% drop. Core producer prices eased 0.1% as opposed to expectations for a 0.1% increase.

Food prices fell 1.5% compared to a 2.4% decline in energy prices. Deflationary trends also prevailed in the pipeline, as the intermediate food and energy prices fell 2% and 1.4%, respectively.

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!

Home Depot said its second quarter earnings rose to 66 cents per share from 71 cents per share in the yea-ago period. On an adjusted basis, the company reported earnings of 67 cents per share, ahead of the 59 cents per share consensus estimate. Revenues fell 9% to $19.07 billion, below the mean analysts’ estimate of $19.23 billion. The company raised its 2009 earnings guidance, saying it now expects earnings from continuing operations to be flat to up 7% compared to its previous forecast for a 7% drop.

Cardinal Health reported that its fourth quarter non-GAAP earnings from continuing operations were 86 cents per share. Revenues rose 10% to $25.2 billion. Analysts estimated earnings of 86 cents per share on revenues of $24.33 billion.

Saks reported a loss of 39 cents per share for its second quarter compared to a loss of 24 cents per share in the year-ago period. On an adjusted basis, the company reported a loss from continuing operations of 23 cents per share. Net sales fell to $561.70 million from the year-ago’s $656.97 million. Analysts estimated a loss of 52 cents per share on revenues of $562.98 million.

Target said its second quarter earnings per share were 79 cents per share, lower than 82 cents per share last year. Sales fell 2.7% to $14.6 billion. Analysts estimated earnings of 66 cents per share on revenues of $15.14 billion.

Stocks in Focus

Dillard’s could react to its second quarter results that revealed a loss of 36 cents per share compared to a loss of 51 cents per share last year. The year-ago period included a gain of 15 cents per share and a charge of 8 cents per share. Revenues fell 11% to $1.43 billion. Analysts estimated a loss of 56 cents per share on revenues of $1.41 billion.

Agilent Technologies could move to the upside after it reported adjusted earnings of 15 cents per share for its third quarter, higher than the 11 cents per share consensus estimate. Revenues declined 27% to $1.06 billion, exceeding the mean analysts’ estimate of $1.02 billion. For the fourth quarter, the company expects earnings of 20-25 cents per share, while analysts estimate earnings of 20 cents per share.

CDC Corp. is likely to gain ground after it said its second quarter net income was 3 cents per ADS compared to a loss of 9 cents per ADS last year. Revenues declined 26% to $81.7 million. Analysts estimated earnings of 2 cents per ADS on revenues of $84.2 million. The company also said it has completed the public offering of 4.8 million ADS in its subsidiary CDC Software Corp. at $12 per ADS.

FMC Technologies is likely to be in focus after its subsidiary FMC Wyoming said it would increase off-list soda ash prices by $10 per short ton for all grades of soda ash. The company noted that the increase applies to both bulk and packaged products.

Weyerhaeuser could react to its announcement that it has completed the sale of its commercial business to a wholly-owned subsidiary of Atlas Holdings. The company did not disclose the financial terms of the deal.

Delphi Financial may see weakness after it announced a registered underwritten public offering of 3 million shares of its Class A stock. The company expects to use the net proceeds from the offering for general corporate purpose.

TRW Automotive Holdings is also expected to be in focus after it announced the successful completion of its previously announced public offering of 16.1 million shares at $17.50 per share. The company said it received $269 million in net proceeds from the offering. Separately, rating agency Standard & Poor’s raised its outlook on the company to ‘Stable’ from ‘Negative.’

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