US & World Daily Markets Financial Briefing 22-11-2010

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Stocks Turn Mixed In Mid-Morning Trading

Stocks are showing a lack of direction in mid-morning trading on Monday, as traders await any details on Ireland's bailout package. Concerns over persistent debt problems in Europe are hampering any meaningful movement in stocks thus far.

The major averages have moved to the downside in recent dealing but currently remain mixed. While the Nasdaq is up 0.98 points or less than 0.1 percent at 2,519.10, the Dow is down 70.95 points or 0.6 percent at 11,132.60 and the S&P 500 is down 6.45 points or 0.5 percent at 1,193.28.

Some optimism was visible before the markets opened amid news that Ireland applied for aid, although concerns about the repercussions of the bailout took the wind out of traders' sails.

The financial stability of Europe remains a key concern amid the Irish debt crisis, with possible complications from Spain and Portugal also on the horizon.

In earnings news, Tyson Foods (TSN) posted adjusted fourth-quarter net income of $0.64 per share, topping estimates for earnings of $0.56 per share for the period. Sales came in at $7.44 billion, short of analyst estimates for $7.75 billion for the quarter.

After the markets close for trading today, Hewlett Packard (HPQ), Jack in the Box (JACK), La-Z-Boy (LZB) and Pacific Sunwear (PSUN) will report their quarterly results.

In other corporate news today, U.K.-based defense and aerospace company Rolls-Royce Group PLC received a $1.8 billion contract from Air China Ltd. to provide engines for a total of 20 new aircraft. The contract also includes a long-term service agreement for the engines.

Sector News

Health insurance stocks are among the strongest percentage gainers in the early going, with the Morgan Stanley Healthcare Payor Index up by 1.4 percent. The advance is helping the index to move back towards its best levels since 2008, set earlier this month.

Electronic storage stocks are also seeing modest strength, with SanDisk (SNDK) leading the way higher after an upgrade at Robert W. Baird. Shares of SanDisk are currently up by 5 percent after reaching a three-month intraday high in earlier trading.

On the other hand, banking stocks are under pressure, with the KBW Bank Index posting a loss of 1.4 percent. The decline has dragged the index down to its lowest intraday level in three weeks amid worries about institutional exposure to the Irish financial sector.

Oil service stocks are also under pressure amid a decrease by the price of oil on the day. The Philadelphia Oil Service Index is down by 1.5 percent as the price of oil has slipped by $0.39 to $81.59 a barrel.

Stocks Driven By Analyst Comments

Argonaut Group (AGII) is trading higher after being upgraded at FBR Capital Markets from Perform to Outperform. The broker also raised its price target on the stock from $40 to $46 after seeing a strategy to boost returns following a recent meeting with company management. The stock is up by 0.4 percent after rising to a two-year intraday high.

Meanwhile, Massey Energy (MEE) is trading lower after being downgraded at FBR Capital Markets from Outperform to Market Perform. Shares are down by 2.2 percent, slipping from the seven and a half month closing high of $49.01 set on Friday.

Atwood Oceanics (ATW) is also under pressure following a downgrade by Wells Fargo to Market Perform based on recent valuation. The stock has fallen by 2.3 percent, pulling back further off last week's seven-month closing high.

Other Markets

In overseas trading, stock markets in the Asia-Pacific region ended on a mixed note Monday. Japan's benchmark Nikkei 225 Index gained 0.9 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

The major European markets are also mixed. The German DAX Index is up by 0.1 percent, while the French CAC 40 Index and the U.K.'s FTSE 100 Index are both down by 0.5 percent.

In the bond markets, treasuries are seeing solid gains. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 2.813 percent, posting a loss of 6.2 basis points.

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TSX Poised For Mixed Open Amid Flat Commodities

Toronto stocks may witness a lackluster session Monday amid mixed cues from the equity and commodities markets.

European stocks and euro moved higher in early deals after Ireland agreed to a bailout plan for its banks from the European Union and the IMF, but have now turned lower.


On Friday, the S&P/TSX Composite Index added 86.33 points or 0.67% to 12,956.33.

The price of crude oil was little changed as traders overlooked the last week's move by China to hike the reserve ratio requirements for its banks and await a host of economic data due out from the U.S. during this week. Crude for January edged down $0.04 to $81.94 a barrel.

The price of gold was flat, with gold for December edging up $0.70 to $1,353.00 an ounce.

In corporate news from Canada, technology licensing company Wi-LAN Inc. said it has initiated patent infringement suit against Comcast Corp., Time Warner Cable Inc. and Charter Communications.

Natural resources company Potash One Inc.  said it would be acquired by K+S Aktiengesellschaft for C$4.50 per share in cash for total consideration of around C$434 million. KCL shares closed Friday's session at C$3.620.

Energy conservation technology services provider MicroPlanet Technology posted a narrower third-quarter net loss of $1.0 million or $0.02 per share, compared to $1.3 million or $0.03 per share in the same quarter last year.

Natural resources explorer Silver Quest Resources said it would acquire 100% interest in 316 quartz mineral claims covering approximately 6,400 hectares known as the Rude Creek Property.

Silver explorer Arian Silver Corp. said it has commenced a new 10,000 million drill program at its 100% owned San Jose Property, Zacatecas, Mexico.

In brokerage ratings, Raymond James hiked its price target on Osisko Mining Corp to C$16 from C$14 and that of West Fraser Timber to C$55 from C$50.

Raymond James upped its price target on Canfor Corp to C$12.50 to C$11.25 and maintained its "Outperform" rating on the stock.

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Footsie gives up gains

      Market Movers
      techMARK 1,750.61 -0.04%
      FTSE 100 5,714.38 -0.32%
      FTSE 250 10,866.36 +0.36%

Footsie has turned lower as the relief over the EU bail-out of Ireland fades.

Miners got a boost on hopes the bail-out will stabilise the global economy but are now mixed. Xstrata is slightly higher but BHP Billiton and Rio Tinto are among the fallers.

It’s a slow start to the week on the company front. But Rolls-Royce has picked up a morale boosting $1.8bn (£1.1bn) engine order from China just weeks after the problems that grounded Airbus A380 super-jumbos around the world.

Defence group Qinetiq has nabbed a $2bn five-year deal to provide engineering services to the Kennedy Space Centre in Florida. The contract, with US space agency NASA, is a cost-plus-award-fee contract to begin next March and will run for five years.

Go-Ahead chief financial officer Nick Swift is swapping trains and buses for planes as he takes up the same position at British Airways, replacing Keith Williams who becomes chief executive of BA when it merges with Spanish peer Iberia.

Mining heavyweight Anglo American has puts its Callide thermal coal mine up for sale. The mine in Central Queensland, a low cost coal producer, will go as part of Anglo’s focus on growing its metallurgical coal and high margin export thermal coal businesses.

Mitie has grown interim profit by 12% and the outsourcing and asset management group is confident of meeting expectations for the full-year and picking up new government work next year. Profit before tax and one-off items was up to £47.5m in the six months to 30 September from £42.3m a year ago on revenue 15% higher at £918.7m.

Estate agent chain Winkworth expects to beat full-year profit forecasts after growing revenue by 20% in the first nine months, but 2011 is expected to be another low volume year, like 2010. Franchise offices enjoyed a strong third quarter, it said Monday, despite low transaction volumes, especially outside London, and a drop in prices compared with the first half.

Education solutions provider RM reported record full year profit as growth continues in each of its three divisions. Pre-tax profit rose to £24m for the year to 30 September 2010 from £16.3m the year before. Revenue increased to £380.1m from £346.9m the year before.

FTSE 100 - Risers
TUI Travel (TT.) 206.30p +2.74%
Compass Group (CPG) 538.50p +1.80%
Vedanta Resources (VED) 2,243.00p +1.59%
Severn Trent (SVT) 1,460.00p +1.46%
Capital Shopping Centres Group (CSCG) 371.00p +1.45%
Kingfisher (KGF) 248.00p +1.35%
Pearson (PSON) 942.00p +1.24%
Scottish & Southern Energy (SSE) 1,170.00p +1.21%
InterContinental Hotels Group (IHG) 1,153.00p +1.05%
Sage Group (SGE) 263.00p +0.77%

FTSE 100 - Fallers
Royal Bank of Scotland Group (RBS) 40.54p -2.94%
Legal & General Group (LGEN) 95.70p -1.90%
ICAP (IAP) 466.00p -1.89%
Lloyds Banking Group (LLOY) 65.50p -1.83%
Standard Life (SL.) 219.30p -1.62%
Prudential (PRU) 605.50p -1.46%
Autonomy Corporation (AU.) 1,398.00p -1.27%
Admiral Group (ADM) 1,536.00p -1.16%
BG Group (BG.) 1,209.50p -1.02%
Inmarsat (ISAT) 684.00p -1.01%

FTSE 250 - Risers
Yell Group (YELL) 12.42p +4.90%
Spirax-Sarco Engineering (SPX) 1,844.00p +4.77%
Kesa Electricals (KESA) 166.80p +4.32%
Taylor Wimpey (TW.) 25.49p +4.04%
Mitie Group (MTO) 208.40p +3.68%
Enterprise Inns (ETI) 110.10p +3.28%
Premier Foods (PFD) 17.39p +3.08%
Brown (N.) Group (BWNG) 292.40p +2.60%
Devro (DVO) 265.30p +2.47%
QinetiQ Group (QQ.) 115.00p +2.40%

FTSE 250 - Fallers
Gartmore Group Ltd. (GRT) 106.10p -3.46%
SIG (SHI) 117.60p -3.21%
Fenner (FENR) 298.00p -2.30%
Daejan Holdings (DJAN) 2,531.00p -2.24%
Xchanging (XCH) 120.10p -1.96%
Melrose Resources (MRS) 240.40p -1.88%
Redrow (RDW) 105.40p -1.50%
Aquarius Platinum Ltd. (AQP) 334.50p -1.33%
Shanks Group (SKS) 118.90p -1.25%
Fidessa Group (FDSA) 1,481.00p -1.20%

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Asian Markets Mostly End Higher

Asian markets open for trading on Monday, the first day of the trading session, ended mostly in positive territory, lifted by optimism about solution for Ireland's debt crisis from the International Monetary Fund and the European Union. Positive closing on Wall Street on Friday amid optimism about sustaining economic recovery also lifted market sentiment, with resource stocks leading the gains. The markets in China and Hong Kong, however, ended in negative territory following tightening controls imposed by China to cool-down its economic growth.

In Australia, the benchmark S&P/ASX200 Index advanced 14.30 points, or 0.31%, and closed at 4,643 points, while the All-Ordinaries Index ended at 4,732, representing a gain of 14.10 points, or 0.30%.

Queensland freight railway company, QR National made an impressive in the market with a public float that eventually turned out to be the major trader with large volume and value, lifting the overall sentiment in the market, amid optimism about the strength of the Australian economy. The shares of the company, listed at A$2.54 ended at A$2.65 a share at close.

Mixed trading was witnessed among the major resource stocks. BHP Billiton added 0.62%, Rio Tinto advanced 0.50%, Gindalbie Metals climbed 3.06%, Iluka Resources gained 1.16%, Macarthur Coal rose 0.82%, and Minara Resources surged up 3.25%. However, Fortescue Metals ended in negative territory with a loss of 1.19%, Murchison Metals fell 2.05% and Oz Minerals shed 1.16%. Mincor Resources remained unchanged from previous close.

Mixed trading was also witnessed among banks and financial stocks. ANZ Bank slipped 0.04%, Commonwealth Bank of Australia declined shed 0.16% and National Australia Bank was down 0.29%. However, Westpac Banking Corp. bucked the negative trend and ended in positive territory with a gain of 0.46% and investment banking company Macquarie Group advanced 0.66%.

Gold mining stocks Newcrest Mining ended in negative territory with a loss of 0.60%.

Oil related stocks also witnessed mixed trading. Santos Ltd and Oil Search Ltd remained unchanged from previous close. ROC Oil Ltd ended in negative territory with a loss of 1.28%. However, Origin Energy ended in positive territory with a gain of 0.77% and Woodside Petroleum gained 0.98%.

In Japan, the benchmark Nikkei 225 Index advanced 92.80 points, or 0.93% 10,115.19, while the broader Topix index of all First Section issues rose 5.96 points, or 0.69%, to 875.

On the economic front, a report released by the Japan Chain Stores Association revealed that supermarket sales in the country fell 0.3% on an annual basis in October, the same rate of decline witnessed in September. The data further noted that sales before stores adjustment, were down 2.5% in October, following a 2.7% fall in the prior month.

Separately, a statement released by the Japan Franchise Association revealed that convenience store sales fell 5.9% year-on-year in October, following a 12.9% increase in the previous month. The report revealed that sales declined for the first time in four months. It has also revealed that the number of customers visiting convenience stores fell 4.4% year-on-year to 1,067,605 in October.

Inpex Corp., engaged in oil exploration and mining, ended in positive territory with a gain of 3.59%.

Glass and ceramics stocks advanced on optimism about economic recovery. Nippon Electric Glass Co., gained 2.68%, Asahi Glass Co. rose 1.85%, Tokai Carbon Co. advanced 1.87% and NGK Insulators added 0.72%.

Machinery stocks also ended in positive territory. Komatsu Ltd gained 2.89%, Hitachi Construction Machinery climbed 2.49%, Okuma Corp. surged up 4.34%, JTEKT Corp. advanced 1.99% and NSK Limited was higher by 2.30%.

After plunging to a two-month low last week, India's benchmark 30-share Sensex bounced back sharply on Monday, as investors lapped up bluechip stocks in the banking, IT, oil/gas, metals and auto space, tracking firm global cues after Ireland accepted an international bailout. Brisk short covering ahead of the expiry of near-month derivative contracts on Thursday also contributed to the sharp upmove. While the Sensex gained 372 points or 1.90% to end at 19,958, the broad-based Nifty index rose by 120 points or 2.03% to 6,010.

Among the other markets in the region, China's Shanghai Composite Index slipped 4.20 points, or 0.15% to close at 2,884, HongKong's Hang Seng Index declined 81.69 points, or 0.35% to close at 23,524, and Singapore's Strait Times Index ended in negative territory with a loss of 6.45 points, or 0.20%, at 3,191.

However, Jakarta Composite Index in Indonesia added 16.18 points, or 0.43%, to close at 3,741, Seoul Composite Index in South Korea ended in positive territory with a gain of 3.38 points, or 0.17%, at 1,944, and Taiwan Weighted Index advanced 68.79 points or 0.83% to close at 8,375.

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Dollar Rebounds, Ireland Accepts Bailout

With Ireland finally appealing to the EU and the International Monetary Fund for a financial aid package, the dollar wobbled against the euro and sterling Monday morning, fighting back from steep early losses amid concerns about the size and scope of the rescue.

European officials are looking to contain Ireland's debt crisis, but bond vigilantes are poised to target other debt-ridden nations like Portugal and Spain if plans for an Eur 80 billion bailout fall through at the the eleventh hour.

Ireland was reluctant to accept the bailout, fearing the conditions attached to aid would be odious.
Dollar Rebounds, Ireland Accepts Bailout

Rating agency Moody's said on Monday that Ireland may face a multi-notch downgrade as the EU/IMF aid package raises the country's debt burden.

The dollar improved to $1.3665 against the euro, having dipped toward $1.3800 in overnight dealing. Earlier in November, the dollar hit a 10-month low near $1.4300.

A similar pattern was seen against the sterling, with the dollar fighting back to $1.5975 from near $1.6100. British officials say their share of the bailout for Ireland would be around $11 billion. London lenders are heavily exposed to Irish banks, and are hoping to backstop the Irish banking system.

There was relatively little movement seen against the yen, with the pair staying near Y83.50. The dollar has stabilized since hitting a 15-year low of Y80.22 earlier this month.

Monday will be a quiet day on the economic front, with most of this week's data releases coming on Tuesday and Wednesday. The markets in the US are closed for Thanksgiving on Thursday.

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