US & World Daily Markets Financial Briefing 23-09-2008

Previously featured on ABC News BusinessNow, B-TV, in BusinessWeek, Popular Mechanics and local news papers. Click here for the free StocksJournal analyst's report.

US STOCKS-Techs lift Wall St on spending optimism

NEW YORK - U.S. stocks rose on Tuesday led by a jump in technology bellwethers including Microsoft Corp on hopes the proposed $700 billion financial sector bailout would help loosen up lending and boost business and consumer spending.

Even so, investors were cautious and trading was choppy, a day after the broader market slid nearly 4 percent as investors fretted about the economy's outlook.

The debate over the measure to mop up bad mortgage debts from the banks' balance sheets and stabilize the financial sector intensified before Congress in Washington, with Federal Reserve Chairman Ben Bernanke appearing before a congressional committee.

Microsoft, a Dow component, jumped nearly 3 percent, putting it among the top boosts to both the Nasdaq and the S&P 500.

Computer maker Hewlett-Packard jumped more than 2 percent. Investors also snapped up shares of big manufacturers, including plane maker Boeing, up 2.4 percent.

The loosing up of credit will help shore up the economy, analysts said. "It does seem like both sides are coming together and want to get a deal done quickly that will inject a lot of capital into the economy and free up lending," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

"Lending had ground to a halt in the credit markets. If they can free up lending as a result of this package, I think that will spur business. If you want to capitalize on a recovery in the fourth quarter, you're going to go into growth stocks and that's in tech."

The Dow Jones industrial average climbed 96.38 points, or 0.87 percent, to 11,112.07. The Standard & Poor's 500 Index gained 10.87 points, or 0.90 percent, to 1,217.96. The Nasdaq Composite Index rose 26.14 points, or 1.20 percent, to 2,205.12.

Microsoft shares rose to $26.15 on Nasdaq. The software maker on Monday announced plans of a $40 billion share repurchase and raised its quarterly dividend.

HP shares rose to $48.36 on the New York Stock Exchange, while shares of iPod and iPhone maker Apple Inc jumped more than 3 percent to $135.04.

Shares of financial services companies, including banks also headed higher, recovering from Monday's slide that drove the broader market down nearly 4 percent. Shares of JPMorgan Chase climbed 2.5 percent to $41.79.

The S&P financial index was up 1.4 percent. In prepared testimony to the Senate Banking committee, a copy of which was obtained by Reuters, Bernanke said, "Action by Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and our economy."

Led by Treasury Secretary Henry Paulson, officials are working on a solution to mop up hundreds of billions of dollars worth of bad mortgage debt on the books of financial institutions.

Paulson, will be joined by Bernanke, Securities and Exchange Commission Chairman Christopher Cox and James Lockhart, director of the Federal Housing Finance Agency, in testifying before the committee.

Subscribers benefit from features such as: advanced search and reading functionality.
Click here for all the action.

Sterling erases gains vs dlr after Paulson comments

LONDON - Sterling was steady against the dollar on Tuesday, erasing earlier gains in volatile trade as U.S. Treasury Secretary Henry Paulson urged Congress not to delay in approving the $700 billion planned
bailout of the floundering financial system.
  
In testimony prepared for delivery to the Senate Banking Committee, Paulson said: "We must now take further, decisive action to fundamentally and comprehensively address the root cause of this turmoil".
   
U.S. Federal Reserve Chairman Ben Bernanke also urged immediate action and said markets are under "extraordinary stress".
   
The news caused the pound to come off session highs against the dollar of $1.8633. At 1137 GMT, the UK currency was steady at $1.8565. The euro was down 0.1 percent at 79.55 pence .
  
Worries that political wrangling over the costly package will drag on into next week have resulted in volatile trading on currency markets.
   
"There is a great deal of nervousness among traders in the market, which will remain until the clouds surrounding the bailout plan have been cleared up," said James Hughes, market analyst at CMC Markets.
  
Markets are now awaiting the question and answer session that will follow Paulson and Bernanke's testimonies, scheduled at 1330 GMT.
   
The pound earlier came under pressure after data from the British Bankers' Association showed UK mortgage approvals slumped to a record low in August as the housing market continues to suffer the effects of the credit crunch.
   
The news caused shares in HBOS Plc to fall by over 10 percent as analysts said the slump in mortgage lending is raising concerns that a takeover by Lloyds
TSB will not solve its funding problem.
   
In an otherwise quiet week for UK data, the next release of note will be the latest retail sales survey from the Confederation of British Industry on Wednesday.

For stock market quotes, company information, stock charts, historical quarterly reports and historical annual reports, click here

Banks push European stocks down; U.S. testimony eyed

LONDON - European shares fell by midday on Tuesday as scepticism persisted about Washington's bailout plan ahead of Congressional testimony by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke on the proposals.

At 1039 GMT, the pan-European FTSEurofirst 300 index was down 2.1 percent at 1,103.44, extending Monday's 2.1 percent fall after a record 8 percent surge on Friday.

Banks were the top weighted losers, with BNP Paribas, Royal Bank of Scotland, HBOS and UBS down between 4.2 and 10.3 percent.

"No-one knows what to make of the world. The whole nature of the financial system and regulation is changing. Everyone is running around in circles not knowing what to do," said Jim Wood-Smith, head of research at brokerage Williams de Broe.

"Investors are still reacting to the enormous gains last Friday and the rise in the oil price Monday, whether it is too premature to write off inflation and whether or not the economic scenario could get worse. I think it is also a bit of profit taking," said Wood-Smith.

Bernanke told the U.S. Congress that financial markets are under severe stress and urged immediate action to buy up hundreds of billions of dollars worth of tainted mortgage assets.

Investors were awaiting more details of Washington's $700 billion bailout plan as U.S. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke start two days of congressional hearings to hasten approval of the plan, aimed at purging banks of bad mortgage-related debt and tackling the U.S. housing crisis.

There has been increasing nervousness about how Washington's plan can restore confidence in the U.S. financial system when the economy may be facing a recession.

Underlining concerns over growth, data on Tuesday showed that Euro zone services and manufacturing activity contracted for a fourth consecutive month in September, pointing to an economy at best in stagnation even though the figures beat expectations.

Away from financials, commodity stocks were on the downside as oil and metal prices retreated. Crude CLc1 was down 2.8 percent weighed by doubts about the U.S. bailout and as investors booked profits after a historic one-day rise in the previous session. Copper was 2.5 percent lower.

In the mining sector, Anglo American, Vedanta Resources, Eurasian Natural Resources and Rio Tinto were between 5.1-12.3 percent lower.

Among energy stocks, BG Group, BP, Royal Dutch Shell and Total were down around 1.2-2.8 percent. Across Europe, the FTSE 100 index was down 2 percent, the German's DAX was down 0.6 percent and France's CAC 40 index was 1.4 percent lower.

Investors were seeking the safe haven of defensive sectors.Pharmaceuticals gained with Roche, GlaxoSmithKline and Novartis up 0.7-1.9 percent, with Novartis benefiting from a Credit Suisse upgrade.

"Basically we've got a flight to safety, and funds which may have sold in areas like banks and need to be invested in equities are looking to the least volatile areas of the market," said Paul Mumford, senior fund manager at Cavendish Asset Management. "It's a classic move to defensives, and a much more pronounced move than we've seen recently."

Among other major movers, German chipmaker Infineon gained 4.2 percent on renewed market talk that it has found a buyer for its memory chip unit Qimonda. Infineon said it did not comment on rumours and stuck to its position that it wanted to reduce its stake to below 50 percent by the next annual shareholder meeting in 2009.

The FTSEurofirst 300 has fallen nearly 27 percent this year, heading for its first loss since 2003, when it fell more than 32 percent. "Last week was a big step forward, although we are seeing the aftershocks now," said Wood-Smith, adding that he expected markets to rise rather than fall in the longer term because systemic risk had been reduced.

Fast-loading, feature-rich and highly customizable interfaces for reading and posting messages. click here

Asian stock market summary

SOUTH KOREA
The Korea Composite Stock Price Index closed up 1.44 percent at 1,481.37, after earlier falls on fears a $700 billion bailout for the U.S. financial sector may not resuscitate the economy, with active buying by domestic institutions supporting Korean shares.

AUSTRALIA
The benchmark S&P/ASX 200 index ended down 1.9 percent at 4,923.5, breaking a sharp two-session rebound, as doubts grew about whether a $700 billion U.S. financial bailout package would work, weighing down on major bank stocks.

CHINA
The benchmark Shanghai Composite Index finished down 1.56 percent at 2,201.51, on profit-taking led by property developers and liquor producers, after the key index surged more than 17 percent in the previous two sessions.
   
A downturn on Wall Street and a big jump in oil prices made investors cautious. PetroChina posted sharp gains after news that its parent bought 60 million shares equivalent to a 0.03 percent stake. The group buyback is among the first announced by major state-run firms after the government called on them to prop
up share prices.
   
The Shanghai A-share Index was down 1.55 percent at 2,312.20, and the Shenzhen A-share Index fell 5.51 percent to 613.66. The Shanghai B-share Index fell 4.71 percent to 124.07, and the Shenzhen
B-share Index was down 5.84 percent at 296.51.

TAIWAN
The weighted index closed up 1.17 percent at 6,182.21, on the back of apparent buying from government-related funds following fresh volatility on international markets.
   
The market saw profit-taking in early trade following Wall Street's fall and a jump in oil prices overnight.
But apparent support from state funds and major shareholders powered large-cap stocks to extend their rally and helped the broad market finish in positive territory.

JAPANESE MARKETS WERE CLOSED FOR THE AUTUMNAL EQUINOX NATIONAL HOLIDAY.

HONG KONG
The benchmark Hang Seng Index closed down 759.35 points at 18,872.85 after gaining more than 11 percent in a two-day rally.

INDIA
The Bombay Stock Exchange's benchmark 30-share Sensitive Index closed down 424.65 points or 3.03 percent at 13,570.31 and the broader 50-share S&P CNX Nifty of the National Stock Exchange slipped 96.15 points or 2.28 percent to 4,126.90.

The most traded market in the world; 24 hr market platform with the latest news, prices and charts gives you the knowledge to invest in this exciting and fast moving market.
Click here

Gold slips on profit taking as dollar recovers

LONDON - Gold fell 1 percent in Europe on Tuesday as the dollar recovered some lost ground versus the euro and investors took profits after the previous session's gains.
      
But with concerns remaining about the impact of the U.S. government's proposed $700 bailout of the financial system, gold may be poised to trend higher, traders say.
      
Spot gold was at $889.90/891.90 an ounce by 0856 GMT, down 1 percent from $900.20 an ounce at the nominal New York close on Monday.
      
"Yesterday, we had a real up day in commodities in general, whether oil or gold," said Afshin Nabavi, head of trading at MKS Finance in Geneva. "Today, there is a bit of profit taking."
      
"We still have to wait and see what the stock markets will do in Europe and the States," he said.  "But buying on dips should be the name of the game."
      
The government's $700 billion rescue plan for the financial sector initially cheered the markets, but pressured equities and the dollar in later trade as investors worried about its budgetary implications and doubted it would prevent recession.
      
The weaker dollar boosted buying interest in gold and precious metals as an alternative investment. Volatility in the equity markets also prompted investors to switch out of stocks in favour of safer assets.
      
While investors are taking the opportunity to book profits, bullion is likely to turn higher if the dollar fails to recover.
      
"Despite its high volatility, gold's safe haven qualities are clearly attractive to investors, particularly in light of expected weakness of the U.S. dollar," Fairfax analyst John Meyer said.
      
Traders will be watching U.S. and euro zone economic data due out later in the session, and the testimony of U.S. Treasury Secretary Paulson and Federdal Reserve Chairman Bernanke before the Senate Banking Committee, for signs of where the dollar will move.
      
For the moment, the U.S. currency is near session highs against the euro after contracting euro zone manufacturing activity focused attention on weakness in the euro area.
       
Gold's losses mirrored those of crude oil, which slipped more than $2 a barrel on Tuesday after a record one-day rise in dollar terms in the previous session.
      
Pricier crude tends to push gold prices higher because the precious metal is often bought as a hedge against oil-led inflation. Rising oil prices also boost confidence in commodities as a whole.
      
Investment demand has been strong. The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust saw a 30.2-inflow on Monday that brought its gold holdings to a record 709.62 tonnes.
      
Buying for ETFs, which issue securities backed by physical bullion, represents a major source of demand for gold. Silver tracked gold lower, slipping 2.5 percent to a session low of $13.07 an ounce. Spot silver was later at $13.30/13.37 against $13.40.
      
Among other precious metals, spot platinum was trading at $1,213.50/1,233.50 against $1,244.50, while palladium edged down to $251.50/256.50 from $253.50.
      
"Momentum has slowed down overnight -- palladium therefore could be vulnerable to a slowdown in platinum group metals today," Standard Bank analyst Manqoba Madinane said in a note.

The latest streaming prices and news on major commodities from precious metals to crude oil, so you can keep up-to date and never miss a trading opportunity again.
Click here

Investors Hub Services