US & World Daily Markets Financial Briefing 23-10-2009

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

Traders Eye Housing Report Even as Earnings Boost Sentiment

The major U.S. index futures are pointing to a higher opening on Friday, with positive earnings by bellwether companies such as Microsoft (MSFT) and Amazon (AMZN) lending support to recovery hopes. That said, sentiment largely depends on the existing home sales report to be released shortly after the markets open, especially after recent housing data relayed mixed messages. At the same time, the economic picture was blurred further after the U.K. economy unexpectedly contracted in the third quarter. The data may increase anxiety among traders, who are hoping for a gradual and slow global economic recovery beginning in the third quarter.

After showing indecision in morning trading on Thursday, as a disappointing jobs data weighed on stocks, the major U.S. averages rallied to close notably higher. The Dow Industrials moved into positive territory after the first hours of trading and advanced thereafter to close up 131.95 points or 1.33% at 10,081. Meanwhile, the S&P 500 Index traded close to the unchanged line till early afternoon trading before picking up momentum to end the session at 1,093, representing a gain of 11.51 points or 1.06%.

After languishing below the unchanged line till the afternoon, the Nasdaq Composite Index moved into positive territory in the afternoon and stayed above the flat line in the last two hours of trading. The technology-weighted average rose 14.56 points or 0.68% to 2,165.

Twenty-six of the thirty Dow components ended the session higher, with Travelers Company (TRV) (up 7.66%), American Express (up 3.82%) and 3M Co. (MMM) (up 3.22%) leading the index higher. McDonald's (MCD) and JP Morgan (JPM) gained more than 2% each. On the other hand, General Electric (GE) and Kraft Foods (KFT) fell over 1% each.

Among the sector indexes, the KBW Bank Index gained 3.35% and the NYSE Arca Securities Broker/Dealer Index moved up 2.50%, while the Dow Jones U.S. Basic Materials Average rose 1.15%. The S&P Retail Index and the Philadelphia Housing Sector Index rose 1.67% and 3.46%, respectively. In the commodity space, the NYSE Arca Oil Index and the Philadelphia Oil Service Index advanced about 1% each. Even as the Nasdaq Composite Index underperformed the other two major averages, the Philadelphia Semiconductor Index rose 1.29%.

Tidings from the chip sector have been good, which bodes well for the Philadelphia Semiconductor Index. The index has had a good run up since the beginning of the year, recording year-to-date gains of 54.05%. The price-weighted index of 18 chip stocks has been consolidating and rallying in intervals, while also keeping its primary uptrend intact.

On Wednesday, chip equipment makers Novellus (NVLS) and Lam Research (LRCX) reported strong results and yesterday, Lattice Semiconductor (LSCC) reported third quarter revenues that fell 15% year-over-year to $49.1 million, but its loss per share narrowed to 4 cents per share from 6 cents per share last year. The company expects fourth quarter revenues to rise 6%-10% sequentially and to return to profitability in the quarter. The Philadelphia Semiconductor Index seems to have strong support at its 50-day moving average, which is currently at 315.45. On the upside, it has to break above 334.54 to make its next leg upwards.

On the economic front, the Labor Department said weekly initial jobless claims rose to 531,000 in the week ended October 17th from an upwardly revised reading of 520,000 for the previous week. At the same time, continuing claims fell by 98,000 in the week ended October 10th. While those receiving emergency unemployment compensation rose by 41,000, those getting extended benefits fell by 16,000.

The Conference Board said its leading indicators index advanced for the sixth straight month, rising 1% month-over-month in September compared to a downwardly revised 0.4% gain in August. Except average workweek and building permits, all the components of the leading indicators index contributed positively. Meanwhile the coincident index remained unchanged in September following a 0.1% advance in the previous month. However, the lagging indicators index fell 0.3%.

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

Commodities May Drive TSX Higher

Higher commodity prices could lead Canadian stocks to some early gains on Friday morning. U.S. futures are pointing higher, while stocks in Europe are seeing strength.

Crude oil edged up 30 cents to $81.49 per barrel after it had erased most of an early slump yesterday. Gold rose $7.90 to $1,066.50 per ounce and silver added 37.5 cents to $17.50.

However, in corporate news, Agrium (AGU.TO) announced that it expects third quarter 2009 earnings to be 90% to 95% below last year's third quarter results, in line with results previously reported from industry peers for the third quarter. Analysts polled by Thomson Reuters expects the company to report earnings of US$0.79 per share for the third-quarter.

Meanwhile, TransForce (TFI.TO) reported that its third-quarter net income was C$17.0 million, or C$0.19 per share, compared to C$26.5 million, or C$0.31 per share, in the third quarter of 2008.

Celestica (CLS.TO) announced that its third-quarter net loss was US$0.6 million, compared with net earnings of US$32.1 million reported for the year-ago period. On a per share basis, earnings broke even for the quarter, compared with US$0.14 per share reported last year.

Shaw Communications (SJR.B.TO) reported fourth quarter net income of C$124 million or C$0.29 per share, compared to C$132.38 million or C$0.31 per share for the same quarter last year.

Whiterock Real Estate Investment Trust (WRK_U.TO) announced that it has entered into a binding contract to acquire 460 Two Nations Crossing, located in Fredericton, for $9.7 million before closing costs.

On Thursday, the S&P/TSX Composite Index jumped 91.35 points or 0.79% to close at 11,533.37. Stocks moved higher in the afternoon and challenged a monthly high

Currency, Commodity Futures

Crude oil futures are easing $0.04 to $81.15 per barrel after edging down $0.18 to $81.19 a barrel on Thursday. Gold futures are currently firming up by $2.40 to $1,061 an ounce. In the previous session, the precious metal fell $5.90 to $1,058.60 an ounce.

On the currency front, the U.S. dollar is trading at 91.845 yen after it strengthened to 91.2975 yen in New York trading on Thursday. Currently, the U.S. dollar is valued at $1.5041 versus the euro. With the euro having successfully tested and taken out the $1.50 level, it is very likely that it continues to have upside potential, given the fact that interest rates in the U.S. are very low and the overall sentiment towards the dollar is one of negativity.

However, Commerzbank rules out the possibility of large gains for the euro, as the firm anticipates a pullback in the equity markets, which is likely to drive traders back to safe havens like the dollar. Additionally, the large-scale build up in the dollar short positions may also support the greenback to some extent.

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

Asian Markets End In Positive Territory On Wall Street Gains

The markets open for trading in Asia ended in positive territory on Friday, taking cues from Wall Street where major averages ended sharply higher in the previous session led by better-than-expected results from Dow components and other major companies overshadowing the weak jobless claims numbers.

In Japan, the benchmark Nikkei 225 Index ended in positive territory with a gain of 15.82 points, or 0.15% to 10,283, while the broader Topix index of all First Section issues ended in negative territory with a loss of 6.57 points, or 0.72% at 902.

Most of the stocks,which gained in early trading taking cues from Wall Street, declined in late-trading session as traders preferred to lock-in gains and move to sidelines ahead of key earnings from Japanese companies starting from next week.

The struggling airliner, Japan Airlines declined the most in late-trading session following reports in the press that some of the carrier's creditor banks have suggested to the government that the number of the firm's outstanding common shares be reduced. The stock plunged 8.80%.

Banking stocks ended in negative territory on profit taking. Sumitomo Mitsui Financial declined 2.17%, Resona Holdings slumped 3.80%, Mizuho Financial shed 2.78% and Mitsubishi UFJ Financial lost 2.54%.

Automotive stocks also ended in negative territory despite weaker yen and positive results from the U.S, on profit taking ahead of key earnings from Japanese companies next week. Toyota Motor Corp lost 0.83%, Honda Motor shed 0.88%, Mazda Motor fell 1.40% and Mitsubishi Motor slipped 0.72%.

Mixed trading was witnessed among the realty stocks. While Sumitomo Realty & Development gained 1.35% and Tokyu Land Corp. climbed 3.32%, Mitsui Fudosan slipped 0.25% and Mitsubishi Estate declined 1.32%.

In Australia, the benchmark S&P/ASX200 Index advanced 46.60 points, or 0.97% to close at 4,859, while the All-Ordinaries Index ended at 4,860, representing a gain of 40.90 points, or 0.85%.

Bank and financial stocks led the gains in the market. Among the banks, ANZ Bank gained 1.36%, Commonwealth Bank of Australia rose 3.12%, National Australia Bank added 0.62% and Westpac Banking climbed 3.02%. Investment banker Macquarie Group edged up 0.26%.

Metals and mining stocks also ended in positive territory on expectations of higher demand. BHP Billiton advanced 1.36%, Rio Tinto added 1.05%, Fortescue Metals gained 1.26%, Gindalbie Metals rose 1.62%, Minara Resources climbed 4.32% and Orica Ltd increased 1.92%. However, Oz Minerals bucked the trend and ended weaker with a loss of 1.59%.

Oil related stocks ended mixed. Woodside Petroleum declined 1.78%, Santos lost 0.70% and Oil Search edged down 0.33%. However, Origin Energy bucked the trend and added 0.30%.

Mixed trading was also witnessed among gold stocks. While Lihir Gold ended in positive territory with a gain of 0.62%, Newcrest Mining slipped 0.03% and Sino Gold Mining shed 0.58%.

Wesfarmers surged up 6.88% after the company announced that its wholly-owned business unit, Coles, has reported a solid performance for the recent quarter and also closing the sales gap with its rival Woolworths. Among the other retail stocks, David Jones added 1.05% and JB Hi-Fi climbed 3.06%. However, Woolworths shed 0.34% and Harvey Norman lost 1.44%.

In Hong Kong, the Hang Seng Index ended in positive territory with a sharp gain of 379.21 points or 1.71% at 22,590, taking cues from Wall Street ended the previous session sharply higher led by positive earnings from U.S companies for the recently concluded quarter reviving hopes that the world's largest economy is on the mend. Better results reported by Amazon.com after the markets closed for trading, as well as positive trading across other markets in the region also lifted market sentiment.

In South Korea, the KOSPI Index ended in positive territory with a gain of 9.84 points, or 0.60%, to 1,640, taking cues from Wall Street where the major averages recovered from early weakness and ended with strong gains in the previous session on increasing confidence about the recovery prospects for the economy and positive results from major US companies. Automakers led the gains on expectations of improvement in demand from the U.S, the major export destination for South Korean automakers.

The Indian market failed to take cues from the strong global markets and better-than-expected earnings on Friday. After witnessing reasonable amount of buying till mid-afternoon, the Indian market slipped into the red for a while before finishing modestly higher for the day. The BSE Sensex finished at 16,811, up 21 points or a mere 0.13%, while the S&P CNX Nifty edged up 8 points or 0.17% to 4,997.

All the other major markets in the region ended in positive territory on positive Wall Street cues. China's Shanghai Composite Index advanced 56.44 points, or 1.85% to 3,108, Taiwan's Weighted Index rose 41.53 points, or 0.54%, to 7,649, Singapore's Strait Times Index added 33.37 points, or 1.24% to 2,715 and Indonesia's Jakarta Composite Index rose 34.76 points, or 1.43% to close at 2,468.

Use the following reports to help guide you through these earnings announcements: Intel (NASDAQ: INTC), Johnson and Johnson (NYSE: JNJ) Click here.

European Stocks May Retreat

The major European markets are advancing after they declined in the previous session, with the positive close on Wall Street overnight generating some buying sentiment. While the French CAC 40 Index and the German DAX Index are rising 1.10% and 1.10%, respectively, the U.K.'s FTSE 100 Index is moving up 1.46%.

On the economic front, the Markit / CDAF Flash Composite Output Index, indicating conditions in the private sector in France, stood at 58.4 in October, up from 54.8 in the previous month. Meanwhile, the French statistical agency, INSEE released a report, showing that French consumer spending grew at its fastest rate in 21 months. Consumer spending in France rose 2.3% month-on-month in September after falling 1% in August.

Another report released by Markit/Economics showed that the Flash Germany Composite Output Index stood at a two-month high of 52.6 in October, up from 52.4 in the previous month. October marks the third straight month in which the private sector has expanded.

The Munich-based Ifo Institute for Economic Research said today that its business climate index rose to 91.9 in October from 91.3 in September, while economists had forecast a reading of 92. The current assessment index climbed to 87.3 from 87.1 and the expectations index jumped to 96.8 from 95.7.

At the same time, in an unexpected development, the U.K. Office for National Statistics reported that the U.K. economy contracted 0.4% sequentially in the third quarter after shrinking 0.6% in the second quarter. Economists were expecting the economy to exit recession in the third quarter by expanding 0.2%.

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!

Microsoft Corp. (MSFT) may be in focus after it reported that its first-quarter net income was 40 cents per share compared with 48 cents per share in the same quarter last year. The company's non-GAAP net income was $0.52 per share, ahead of the 32 cents per share consensus estimate. Revenues were $12.92 billion, down from $15.06 billion in the prior year quarter.

Amazon (AMZN) could rally after it reported third quarter earnings were 45 cents per share compared to the 30 cents per share consensus estimate. Revenues rose 28% to $5.45 billion, also exceeding the mean analysts' estimate of $5.03 billion. For the fourth quarter, the company expects revenues of $8.13 billion to $9.13 billion, while analysts estimate revenues of $8.11 billion.

American Express (AXP) could be in focus after it reported earnings available to common shareholders of 53 cents per share for its third quarter compared to 70 cents per share last year. The company's adjusted earnings of 43 cents per share surpassed analysts' estimate of 38 cents per share.

Capital One Financial (COF) may also react to its announcement that it posted a profit of 94 cents per share for its September quarter compared to net income of $1 per share in the year-ago period. Analysts estimated earnings of 14 cents per share for the quarter.

Emulex (ELX) receded in Thursday's after hours trading after reporting first quarter revenues of $85.5 million, down 23% year-over-year. The company's non-GAAP net income fell 64% to 8 cents per share. Analysts, on average, estimated earnings of 8 cents per share on revenues of $111.7 million. For the second quarter, the company estimates non-GAAP earnings of 10-12 cents per share on revenues of $88 million to $92 million, while the Street estimates earnings of 10 cents per share on revenues of $81.26 million.

Meanwhile, Emulex's suitor Broadcom's (BRCM) reported that its third quarter net revenues fell 3.4% to $1.254 billion. While the company's GAAP earnings fell to 16 cents per share from 31 cents per share, its adjusted earnings of 40 cents per share were ahead of the 33 cents per share consensus estimate.

Compuware (CPWR) is likely to see activity after reporting second quarter revenues of $217.9 million compared to $269.8 million last year. The company's earnings rose to 12 cents per share from 8 cents per share last year. Analysts estimated earnings of 8 cents per share on revenues of $201 million.

Affiliated Computer Services (ACS), which has agreed to be acquired by Xerox (XRX), is likely to be in focus after it reported first quarter adjusted earnings of 95 cents per share, higher than the year-ago's 89 cents per share. Revenues were 1.68 billion, up 5% year-over-year. The consensus estimates had called for earnings of 94 cents per share on revenues of $1.69 billion.

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