US & World Daily Markets Financial Briefing 20-08-2009

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

Stocks Look to More Data Amid Lingering Uncertainty

The major U.S. index futures are pointing to a lower opening Thursday, with the futures squandering their gains following the release of a lackluster jobs report and some disappointing earnings.

The price of oil may see some correction after yesterday’s heady gains and therefore may most likely serve as a dampener. That said, sentiment may most likely depend on the results of the duo of economic reports scheduled to be released over the course of the session.

After seeing significant weakness in early trading on Wednesday in reaction to a sell-off in Asia and Europe, the major averages clawed back above the unchanged line and climbed sharply in the afternoon, encouraging by a rally in oil prices.

Thereafter, the indexes moved mostly sideways to end up with moderate gains, thereby extending the gains into the second straight session after Monday’s sell-off.

Twenty-two of the thirty Dow components ended the session higher, with Chevron, DuPont, Kraft Foods, Coca Cola, Merck and Exxon Mobil among the notable gainers in the session. On the other hand, Alcoa lost 3.41%, retreating after its recent gains.

Among the sector indexes, the NYSE Arca Biotechnology Index rose 2.19%, the NYSE Arca Oil Index gained 1.58% and the Philadelphia Oil Service Index ended up 1.66%. The NYSE Arca Gold Bugs Index and the Dow Jones U.S. Basic Materials Average advanced close to a percentage point each. However, the NYSE Arca Airline Index fell 1.40%.

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

Canadian Stocks Look To Eke Out Another Gain

Canadian stocks will look to add to their very modest gains from the previous session Thursday morning, and early signals are indicating a positive start after Asian stocks rebounded overnight.

On Wednesday, the S&P/TSX Composite Index added 12.99 points or 0.12% to close at 10,686.83. Earlier in the week, Bay Street shares bounced back and forth as traders expressed concerns about a double-dip recession.

On the economic front this morning, Canadian wholesale sales data for June is expected to be released at 8:30 a.m. ET. A drop of 0.2% is expected for June, compared to an 0.3% decline for May.

In the US, traders will focus on the customary weekly jobless claims for the week ended August 15, to be released at 8.30 am ET. Economists expect that jobless claims eased to 550,000.
 
It will be a light day in earnings news. Open Text Corp reports fourth-quarter results. Analysts are looking for a quarterly profit of $0.70 per share is forecast, up from $0.63 cents in the same quarter a year ago. Mining stocks will be in focus after giant Rio Tinto on Thursday reported a 65% slump in first-half earnings.

The loonie was higher versus the dollar Thursday morning, rising to C$1.0950. Meanwhile, the price of oil pulled back a bit after yesterday's big jump on a decline in crude inventories. Crude slipped $0.35 to $72.07 a barrel. European shares were in the green, while Asian stocks snapped back from this week's losses.

Gold Prices Moving Back To The Downside In Morning Trading

Gold prices are seeing some weakness in morning trading on Thursday, moving back to the downside after ending the previous session moderately higher.

After ending Wednesday's trading up $5.60 at $944.80 an ounce, gold for December delivery is currently down $3.90 at $940.90 an ounce. The price of gold fell as low as $938.50 an ounce earlier in the session.

The pullback by the price of gold comes even as the value of U.S. dollar is little changed against the other major currencies. Some traders may be moving money out of gold and into more risky assets such as stocks.

On the economic front, the U.S. Labor Department released a report earlier this morning showing that first-time claims for unemployment benefits unexpectedly increased in the week ended August 15th.
 
The report showed that initial jobless claims rose to 576,000 from the previous week's revised figure of 561,000. The increase came as a surprise to economists, who had expected jobless claims to edge down to 550,000 from the 558,000 originally reported for the previous week.

With the unexpected increase, jobless claims rose for the second consecutive week, although they remain well off the highs seen in March.

At the top of the hour, trading could be impacted by the release of the Conference Board's report on leading economic indicators in the month of July as well as the Philadelphia Federal Reserve's regional report on manufacturing activity in the month of August.

The price of oil has been showing a lack of direction and is currently seeing modest strength. Crude for September delivery is currently up $0.13 at $72.55 a barrel after ending Wednesday's trading up $3.23 at $72.42 a barrel.

Click Here

Asian Markets End Higher On Chinese Equities Rebound

The Asian markets rebounded from yesterday's loss and ended in positive territory following rally in Chinese equitiies.

In Japan, the benchmark Nikkei 225 Index ended at 10,383. representing a gain of 179.41 points, or 1.76%, while the broader Topix index of all first section stocks gained 15.34 points, or 1.63%, to 959.

Most of the stocks ended in positive territory on increasing optimism about recovery prospects in the global economy following positive closing on Wall Street on Wednesday.

All Nippon Airways gained 4.40% after Mitsubishi UFJ Financial raised the rating for the airliner to "outperform" from "market perform" stating that the airliner will report earnings growth from 2010 and further. Japan Airlines Corp. advanced 1.20%.

Automotive stocks also ended higher on expectations of recovery. Toyota Motor Corp. gained 1.23%, Honda Motor advanced 1.93%, Hino Motors surged up 5.11% and Isuzu Motors rose 5.35%.

Trading companies advanced on bargain hunting at lower levels. Toyoto Tsusho Corp. rose 2.82%, Mitsui & Co., advanced 1.97%, Mitsubishi Corp added 0.69%, Sumitomo Corp. gained 1.91% and Itochu Corp. increased 2.15%.
 
In banking space, Sumitomo Mitsui Financial gained 2.80%, Mitsubishi UFJ Financial added 1.03%, Mizuho Financial advanced 1.79% and Resona Holding edged up 0.08%.

Oil firm advanced on higher crude oil prices. Nippon Oil Corp. gained 1.92%, Showa Shell advanced 1.14% and Nippon Mining rose 2.77%.

In Australia, the benchmark S&P/ASX200 Index added 3.70 points, or 0.08%, to close at 4,378, while the All-Ordinaries Index ended at 4,391, representing a gain of 3.80 points, or 0.08%.

On economic news, the Australian Bureau of Statistics revealed that merchandis imports rose 6% during July over the revised figure for the previous month. Total merchandise imports totaled A$16.698 billion, up just over A$1 billion from June. The report further stated that the preliminary balance of payments increased by 4% or a seasonally adjusted A$678 million compared to the month before.

Light sweet crude oil price for September delivery ended at $72.75 a barrel in electronic trading, up $0.33 from its previous close $72.42 a barrel in New York on Wednesday.

Energy stocks advanced following sharp rise in crude oil price in the international market on expectations of rise in oil demand. Woodside Petroleum surged up 7.34%, and Oil Search Ltd rose 2.52%. However, Santos edged down 0.41% after reporting a sharp drop in profit for the first six months of the year. Origin Energy slipped 0.20%.

Metals and mining stocks also posted gains. BHP Billiton added 1.14%, Fortescue Metals added 0.44%, Iluka Resources edged up 0.27%, Mincor Resources advanced 1.96% and Orica Ltd rose 2.60%. However, Rio Tinto edged down 0.29% ahead of the results. After the markets closed, Rio Tinto reported a 65% drop in net profit for the first half, hurt by drop in aluminum, iron ore and copper prices.

Pellet maker Brambles gained 3.62% after the company reported a 30% drop in net income for the full year, higher than the mean expectations.

Property and casualty insurance provider QBE Insurance Group surged up 6.36% after the insurer increased first half profit by 19%. Life/Health insurance provider AMP Ltd gained 2.91% after the company reported a 16% decline in underlying profit for the first half, but came in above analysts' expectations.

Wesfarmers, owned by Coles, reported a 44% rise in net income for the full year ended 30 June 2009, but missed the analysts' estimate. The stock slumped 4.15% following the results. Among other retailers, David Jones edged up 0.21%, and Woolworths advanced 1.54%. Harvey Norman, however, slipped 1.53%.

Mixed trend was witnessed among the banking stocks. Commonwealth Bank of Australia added 0.09% and National Australia Bank edged up 0.19%. However, ANZ Bank lost 0.91% and Westpac Banking fell 0.98%.
 
In Hong Kong, the Hang Seng Index srebounded sharply and ended in positive territory with a gain of 374.63 points, or 1.88% at 20,329, taking cues from mainland Chinese market where the equities rebounded from yesterday's slump, raising hopes that growth will continue to accelerate in the country. Spurt in oil prices in the international market on report of rising oil demand also lifted market sentiment.

Of the 42 components in the Index, only two stocks managed to end in negative territory with marginal losses, while the balance 40 stocks evinced buying interest and ended in positive territory.

In South Korea, the benchmark KOSPI Index ended in positive territory with a gain of 30.43 points, or 1.97%, at 1,576, following rebound in the Chinese equities and positive trading in other Asian markets. Positive closing in Wall Street in the previous session also lifted market sentiment Institutional investors picked up stocks at lower levels on optimism about recovery prospects.

A rebound in Asia led by a pullback in China and positive cues from Europe and the U.S. helped the Indian market witness a broad-based rally. The BSE Sensex finished at 15,012, up 203 points or 1.37% and the S&P CNX Nifty rose 59 points or 1.35% to 4,453

Among the other major markets in the region, China's Shanghai Composite Index surged up 4.52% or 125.99 points, to 2,912, Singapore's Strait Times Index added 36.79 points, or 1.46% to close at 2,560, and Indonesia's Jakarta Composite Index gained 2.23% or 50.89 points to close at 2,329. Taiwan's Weighted Index, however, bucked the trend and ended in negative territory with a loss of 55.35 points, or 0.82%, at 6,733.

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 markets are moving to the upside on Thursday, firmly supported by energy and bank stocks. The French CAC 40 and the German DAX Index are rising 0.82% and 0.88%, respectively, while the U.K.’s FTSE 100 Index is moving up 1.08%.

In corporate news, Rio Tinto said its net income declined to $2.5 billion from $6.95 billion last year. Underlying earnings came in at $2.6 billion.

On the economic front, the Office for National Statistics reported that the U.K.’s retail sales rose 3.3% in July from a year earlier, marking the biggest growth since May 2008. July's increase was bigger than the expected growth of 2.7%. On a monthly basis, retail sales volume grew 0.4%, in line with expectations.

U.S. Economic Reports

On the economic front, the Labor Department said first-time claims for unemployment benefits showed an unexpected increase in the week ended August 15th and continuing claims also rose.

The report showed that initial jobless claims rose to 558,000 from the previous week's revised figure of 561,000. Economists had been expecting jobless claims to edge down to 550,000 from the 558,000 originally reported for the previous week. Meanwhile, the continuing claims for the week ended August 8th rose 2,000 to 6.241 million.

The Conference Board is scheduled to release a report on its U.S. leading index for July at 10 AM ET. The consensus estimate calls for a 0.7% increase in the leading indicators index for the month.

The leading indicators index rose 0.7% in June, faster than the 0.5% increase expected by economists. With the increase, the index rose for the third straight month. The May reading was upwardly revised to show 1.3% growth. The interest rate spread continued to contribute to growth, while suggesting some stability in the housing market, building permits began to positively contribute to growth.

The results of the Philadelphia Federal Reserve's manufacturing survey are due out at 10 AM ET. Economists expect the diffusion index of current activity to show a reading of -2 for August.

In July, the business activity index fell to -7.5 from 2.2 in June. The employment index declined by 3.5 points to -25.3, while the inventories index was little changed at -15.4. Despite new orders and order backlogs indexes improving from month-ago levels, they remained negative. The 6-month outlook index fell to 51.9 in July from 60.1 in June.

Earnings

Heinz reported first quarter revenues of $2.47 billion and earnings per share of 67 cents. For 2010, the company expects 4%-6% sales growth and 5%-8% earnings per share growth. Analysts estimated earnings of 62 cents per share on revenues of $2.44 billion.

Sears Holdings said it posted a loss of 79 cents per share for its second quarter compared to a profit of 50 cents per share last year. On an adjusted basis, the company reported earnings of 17 cents per share. Revenues declined 10% to $10.55 billion. The consensus estimates had called for a profit of 35 cents per share on revenues of $10.73 billion.

Dick’s Sporting Goods’ second quarter non-GAAP net income was 38 cents per share and net sales rose by 3.7% to $1.13 billion. Analysts estimated earnings of 31 cents per share on revenues of $1.12 billion. For 2009, the company expects non-GAAP earnings of $1.02-$1.07 per share and for the third quarter, the company expects earnings of 4-7 cents per share. The consensus estimates call for earnings of 99 cents per share for the full year and 4 cents per share for the quarter.

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!

Limited Brands is likely to be in focus after it reported that its second quarter adjusted earnings fell to 19 cents from 27 cents per share in the year-ago period. Net sales fell to $2.07 billion from $2.28 billion last year. Analysts estimated earnings of 16 cents per share on revenues of $2.06 billion. The company expects a third quarter loss of 7-12 cents per share, while for the year it expects adjusted earnings of 75-90 cents per share. The consensus calls for a loss of 9 cents per share for the quarter and earnings of $1 per share for the year.

Cyberonix traded higher in Wednesday’s after hours session after it said its first quarter earnings soared to 23 cents per share from 8 cents per share last year. Revenues climbed to $38.5 million from the year-ago’s $33.7 million. The Street estimated earnings of 17 cents per share on revenues of $37.3 million. The company reiterated its 2009 net sales guidance of $157 million to $161 million.

Semtech could see weakness after it reported second quarter earnings of 12 cents per share, lower than 19 cents per share in the year-ago period, as revenues fell 15% to $66.3 million. The results compared to the consensus estimates that called for earnings of 16 cents per share on revenues of $64.5 million. The company expects third quarter earnings of 12-14 cents per share on 6%-10% sequential sales growth. Analysts estimate earnings of 18 cents per share for the quarter.

Phillips Van Heusen could be in focus after it reported adjusted earnings of 60 cents per share for the second quarter and revenues of $529.3 million, down 5.6% year-over-year. Revenues fell 6.5% to $529.3 million, above the consensus estimate of $515.2 million. The company expects adjusted earnings of $2.30-$2.40 per share for the year on a 6%-7% revenue decline.

NetApp may recede after it announced the appointment of Tom Georgens as its CEO, effective immediately. Georgens will replace the incumbent Dan Warmenhoven. Separately, the company also reported its first quarter results, which showed non-GAAP earnings of 22 cents per share, flat with last year. Revenues fell 4% to $838 million. Analysts estimated earnings of 20 cents per share on revenues of $828.30 million. Citing reduced visibility, the company said it would not issue revenue guidance for the second quarter.

Gymboree traded lower in the after hours session after it reported earnings of 41 cents per share for its second quarter compared to 27 cents per share last year, as sales rose 5% to $215.4 million. The recent quarter’s results included a gain of 5 cents per share. Analysts’ estimates that typically exclude one-time items called for earnings of 39 cents per share on revenues of $215 million.

JDSU may also be in focus after it said its fourth quarter loss was 28 cents per share, wider than the loss of 13 cents per share last year. On an adjusted basis, the company reported a loss of 1 cent per share. Revenues fell to $276.1 million from the year-ago’s $390.3 million. Analysts estimated a loss of 2 cents per share on revenues of $278.6 million. For the first quarter, the company expects revenues of $283 million to $300 million.

PetSmart is likely to move to the downside after it lowered its full year earnings estimate to $1.37-$1.45 per share from its previous estimate of $1.42-$1.52 per share. The company also reported that its second quarter earnings rose to 31 cents per share from 30 cents per share last year, while net sales fell 5% to $1.31 billion. Analysts estimated earnings of 29 cents per share on revenues of $1.32 billion.

Hot Topic is likely to move in reaction to its announcement that its second quarter loss widened to 7 cents per share from a loss of 1 cent per share. The recent quarter’s results included a charge of 2 cents per share. Revenues fell 5% to $157.8 million compared to the $158.7 million consensus estimate. The company expects third quarter earnings of 11-13 cents per share, which includes a 2 cents per share expense related to ShockHound, while it also expects its same store sales to decline by a mid-single digit.

DivX is expected to be in focus after it said it has reached a settlement agreement with Yahoo (YHOO) in a lawsuit concerning its licensing and distribution deal with the latter. Consequently, the company said it would book a gain of 17 cents per share in its third quarter, which is expected to increase its reported earnings to 10-12 cents per share. However, on an adjusted basis, the company continues to expect results to range between breakeven and a loss of 2 cents per share.

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