US & World Daily Markets Financial Briefing 24-11-2010

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Stocks Posting Strong Gains After Flood Of Economic Data

Stocks are up by substantial margins in mid-morning trading on Wednesday, as the markets are reacting to the positive portion of the day's influx of economic data, including the lowest jobless claims number since July of 2008.

Consumer sentiment also offered an upbeat surprise, while data on new home sales and durable goods disappointed but offered no red flags, helping to maintain the day's risk appetite.

The major averages have seen further upside in recent trading, rising to new highs for the session. The Dow is currently up 127.45 points or 1.2 percent at 11,163.82, the Nasdaq is up 44.23 points or 1.8 percent at 2,539.18 and the S&P 500 is up 13.71 points or 1.2 percent at 1,194.44.

In a freshly released report, Reuters and the University of Michigan said that their consumer sentiment index for November was upwardly revised to a reading of 71.6 from the previous estimate of 69.3. The upward revision came as a surprise to economists, who had expected the index to be unrevised.

With the upward revision, the reading on consumer sentiment for November is well above the October reading of 67.7. The index is also at its highest level since coming at 76.0 in June.

Rounding out the day's influx of data from the Commerce Department, a report on new home sales showed a 8.1 percent drop to an annual rate of 283,000 in October from the revised September rate of 308,000. Economists had been expecting new home sales to rise to an annual rate of 314,000 from the 307,000 originally reported for the previous month.

Earlier, the Labor Department reported that initial jobless claims fell by 34,000 to 407,000 during the week ended November 20th, the lowest figure since 2008. Economists had expected claims to edge up to 442,000 from the 439,000 originally reported for the previous week.

Meanwhile, the Commerce Department reported that orders for durable goods fell by 3.3 percent in October following an upwardly revised 5.0 percent increase in September. Economists had expected orders to edge down by 0.3 percent compared to the 3.5 percent growth that had been reported for the previous month.

Excluding a 5.2 percent decrease in orders for transportation equipment, durable goods orders still fell by 2.7 percent compared to a 1.3 percent increase in the previous month.

Sector News

Airline stocks are among the day's best performers thus far, with the NYSE Arca Airline Index posting a 2.8 percent gain. The index remains in a range near November's three-year closing high.

Semiconductor stocks are also posting strong gains, lifting the Philadelphia Semiconductor Index up by 2.4 percent. The upward move has the index on pace for its best close since April.

Internet, housing, trucking and defense stocks are also moving markedly higher, offsetting yesterday's steep losses.

Additional upside is visible among software, biotechnology, steel and commercial real estate stocks, reflecting the day's broad-based buying interest.

Stocks Driven By Analyst Comments

Synopsys (SNPS) is trading higher after being upgraded at JP Morgan Chase from Neutral to Overweight. The stock has gained 3.4 percent and has set its best intraday price since June of 2008.

Meanwhile, Watsco (WSO) is under pressure after Morgan Stanley lowered their rating on the stock to equal weight. Shares are down by 0.6 percent, slipping from the seven-month closing high set in the previous session.

Other Markets

In overseas trading, stock markets in the Asia-Pacific region ended on mixed note Wednesday. Hong Kong's Hang Seng Index gained 0.6 percent, while Japan's benchmark Nikkei 225 slid by 0.8 percent.

Meanwhile, the major European markets remain up by varied margins. The German DAX Index is up by 1.8 percent, while the U.K.'s FTSE 100 Index and the French CAC 40 Index are up by 1.3 percent and 0.5 percent, respectively.

In the bond markets, treasuries are moderately lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 2.842 percent, posting a gain of 8 basis points.

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TSX May Edge Up At Open

Toronto stocks may edge up at open Wednesday amid marginal recovery in commodities prices. While tension in Korea appeared to be subsided, euro zone debt worries continued to weigh on trader sentiment that could cap any big upside in stocks.

Traders are also digesting a mixed batch of economic data from the U.S., Canada's largest trading partner.

On Tuesday, the S&P/TSX Composite Index lost 135.26 points or 1.05% to 12,793.75, amid

The price of crude oil edged up as traders await cues from the official weekly inventories data due out later during the session from the U.S. Crude for January was up $0.44 to $81.69 a barrel.

The price of gold was holding on to its previous session's sharp gain even as the U.S. dollar remained firm versus a basket of currencies. Gold for December edged down $3.70 to $1,373.90 an ounce.

In corporate news from Canada, natural gas extraction and transmission company AltaGas Ltd. said it would issue $175 million of senior unsecured medium term notes, mainly to reduce outstanding bank indebtedness and for general corporate purposes.

Real-estate operator Parkbridge Lifestyle Communities said its fourth quarter funds from operations rose to C$8.4 million or C$0.123 per share from C$7.54 million or C$0.120 per share in the year-ago period.

Intelligent IP video solutions provider March Networks reported second quarter net GAAP earnings of C$284,000 or C$0.02 per share, compared to a net loss of C$1.0 million or C$0.06 per share a year earlier. Non-GAAP operating earnings rose to C$1.2 million from C$43,000 in the previous year quarter. The company guides 10% year over year revenue growth in the second half of fiscal 2011.

Oilfield services company Energy Services swung to profit in third quarter, reporting net income of C$437,000 or C$0.01 per share, compared to a loss of C$1.06 million or C$0.21 per share last year. The company announced the appointment of Donald Copeland to board of directors.

Gold and silver explorer Petaquilla Minerals said it would privately place 30 million units at a price of C$1.00 per unit.

China based sports goods company Zungui Haixi reported lower third quarter net income of C$7.05 million or C$0.11 per share compared to C$7.65 million or C$0.15 per share in the year ago period.

Gold miner Avion Gold reported higher third-quarter net profit of $13.6 million or $0.04 per share compared to $0.44 million or break even per share prior year.

In economic news from south of the border, the U.S. Commerce Department said that orders for durable goods fell by 3.3% in October following an upwardly revised 5.0% increase in September. Economists had expected orders to edge down by 0.3% compared to the 3.5% growth that had been reported for the previous month.

In a separate release, the Commerce Department said that personal spending increased by 0.4% in October following an upwardly revised 0.3% increase in September. Economists had been expecting spending to increase by 0.6% compared to the 0.2% growth originally reported for the previous month. Additionally, the personal income rose by 0.5% in October after coming in unchanged in the previous month. Income had been expected to increase by 0.4%.

In another report, the U.S. Labor Department said that initial jobless claims fell by 34,000 to to 407,000 during the week ending November 20. Economists were expecting initial claims to drop by only 4,000 from the 439,000 first reported for the previous week.

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Shares holding on

Shares remain in the blue after some well-received company updates this morning, although the euro crisis is still looming in the background.

Credit ratings agency Standard & Poor’s (S&P) has cut its debt rating for Ireland as the Irish government puts the finishing touches to a four-year plan to slash its deficit. Banks are here are mixed with Lloyds and Royal Bank of Scotland higher, but Barclays is in the red.

Among today’s risers on the back of company updates is Compass, which has upped its dividend by a third as cash and new business flowed through the contract caterer's door over the past year. Revenues rose by 7.6% to £14.5bn in the year to September, with underlying growth of 3.2%.

Platinum giant Johnson Matthey is showing a bit of sparkle after it saw good growth in most of its markets in the first half, especially catalysts for cars in North America and Asia. Profit before tax rose to £144.1m in the half-year to 30 September from £109.5m the year before.

Capital Shopping Centres, formerly part of Liberty International, is slightly lower after has confirmed it is close to agreeing the purchase of Manchester’s Trafford Centre in a deal worth £1.6bn.

Interim results from water supplier United Utilities were slightly ahead of management expectations. In the six months to 30 September the company made an underlying profit before tax of £196.2m, down from £258.2m the year before.

Away from the FTSE 100, buy-to-let mortgage lender Paragon reported a sharp increase in full year profit on strong rental demand, a decrease in its provision for losses and as the turmoil of the credit market crisis continues to fade.

Sportingbet, the online bookie, is higher after saying it continues to see strong growth in the ‘in play’ side of the business. Amounts wagered in the three month period to 31 October – the group’s first quarter – rose 10.9% to £513.9m from £463.2m the year before, with the sums bet on sporting events in play rising 27%.

HaiKe Chemical, a China-based manufacturer of petrochemicals, speciality chemicals and biochemicals, has seen a 'material improvement' in trading in all of its businesses since its last half-year. The company posted an interim loss of $21.2m, against a profit of $10.8m, but following the recent improvement HaiKEe expects to recoup most of the first half deficit by the year-end.

FTSE 100 - Risers
Intertek Group (ITRK) 1,859.00p +6.05%
Compass Group (CPG) 553.00p +4.83%
Capita Group (CPI) 676.00p +2.97%
Burberry Group (BRBY) 1,032.00p +2.38%
Schroders (SDR) 1,614.00p +2.28%
Essar Energy (ESSR) 505.50p +2.27%
Kazakhmys (KAZ) 1,421.00p +2.16%
Experian (EXPN) 741.00p +2.14%
Rolls-Royce Group (RR.) 611.00p +2.09%
Xstrata (XTA) 1,293.00p +1.81%

FTSE 100 - Fallers
Capital Shopping Centres Group (CSCG) 344.20p -3.18%
Aviva (AV.) 377.80p -1.43%
BAE Systems (BA.) 334.80p -1.18%
African Barrick Gold (ABG) 518.00p -0.86%
Barclays (BARC) 262.05p -0.83%
Fresnillo (FRES) 1,414.00p -0.77%
Resolution Ltd. (RSL) 225.10p -0.75%
Imperial Tobacco Group (IMT) 1,937.00p -0.72%
Prudential (PRU) 586.50p -0.68%
United Utilities Group (UU.) 613.50p -0.65%

FTSE 250 - Risers
Provident Financial (PFG) 831.00p +7.23%
Yell Group (YELL) 12.82p +3.81%
Paragon Group Of Companies (PAG) 164.80p +3.32%
Aberdeen Asset Management (ADN) 178.40p +2.88%
Dixons Retail (DXNS) 25.78p +2.55%
Talvivaara Mining Company (TALV) 521.50p +2.46%
Yule Catto & Co (YULC) 238.90p +2.44%
Unite Group (UTG) 192.90p +2.33%
COLT Group SA (COLT) 124.80p +2.30%
Kenmare Resources (KMR) 24.54p +2.25%

FTSE 250 - Fallers
Taylor Wimpey (TW.) 23.52p -3.01%
Atkins (WS) (ATK) 692.50p -2.88%
Grainger (GRI) 91.00p -2.88%
International Personal Finance (IPF) 300.00p -2.82%
Cable & Wireless Worldwide (CW.) 63.20p -2.62%
Barratt Developments (BDEV) 69.35p -2.26%
Rightmove (RMV) 735.00p -2.00%
Premier Foods (PFD) 16.99p -1.85%
Jupiter Fund Management (JUP) 265.20p -1.78%
Mondi (MNDI) 462.80p -1.74%

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Japanese Market Ends In Negative Territory

The Japanese market ended Wednesday's trading session in negative territory on geopolitical concerns involving North Korea and South Korea. Weaker local currency and the sharp drop in euro also impacted market sentiment, dragging the indices sharply lower at open. However, select buying at lower levels limited the losses in late trading session.

The benchmark Nikkei 225 Index fell 85.08 points, or 0.8%, to 10,030, while the broader Topix index of all First Section issues also fell 8.91 points, or 1.0%, to 867.

Light sweet crude oil futures for January delivery ended at $81.60 a barrel in electronic trading, up $0.35 per barrel from previous close at $81.25 a barrel in New York on Tuesday.

Exporters ended in negative territory. Sony Corp. declined 2.08%. Sharp Corp. fell 1.59%, Canon Inc. slipped 0.85%, and Panasonic Corp. lost 2.02%.

Automotive stocks also ended in negative territory on geopolitical concerns. Honda Motor Co., was down 1.79%, Toyota Motor Corp. shed 0.91%, Nissan Motor declined 2.11% and Mitsubishi Motor fell 2.52%.

Real estate stocks ended in negative territory. Mitsui Fudosan shed 1.69%, Sumitomo Realty & Development lost 1.36%, Mitsubishi Estate lost 1.37% and Heiwa Real Estate slipped 0.87%.

Mixed trading was witnessed among the stocks of trading companies. Sojitz Corp. surged more than 9% after the company said that it will soon announce a strategic partnership with Australia's Lynas on supply and development of rare earth materials. The other stocks, however, ended in negative territory. Mitsubishi Corp. declined 1.40%, Toyota Tsusho Corp. shed 1.16% and Mitsui & Co., slipped 0.75%.

In the U.S., stocks took a beating on Tuesday in light of news of flaring tensions between North and South Korea and the lack of a resolution to Ireland's debt woes. An upward revision to third quarter U.S. GDP and uneventful minutes from the Federal Reserve did little to alter the day's negative sentiment. The major averages moved roughly sideways in late-session dealing, ending with steep losses on the day. The Dow plunged by 142.21 points or 1.3% to 11,036, the Nasdaq fell by 37.07 points or 1.5% to 2,495 and the S&P 500 slid by 17.11 points or 1.4% to 1,181.

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Dollar Hits Fresh 2-Month Peak Versus Euro

The dollar continued to rally versus the euro and sterling Wednesday morning in New York, as the markets braced for a deluge of economic data ahead of the Thanksgiving holiday.

While Europe was still coping with the fallout from the controversial bailout of Irish debt, the dollar was supported by industry data showing a degree of resiliency in the housing market.

US mortgage applications for home purchases rose to their highest level in more than six months, the Mortgage Bankers Association said today.

"The increase in purchase applications last week aligns with other incoming data suggesting that consumers are feeling somewhat more confident with their financial situation," said Michael Fratantoni, MBA's Vice President of Research and Economics.

The dollar rose to a fresh 2-month high of $1.3283 against the euro, having picked up a full ten cents since hitting a 10-month low near $1.43 three weeks ago.

German business sentiment rose in November to its best level in almost 20 years, Germany's Ifo said Wednesday. Germany's relatively robust economy stands in stark contrast to some of its less competitive euro area cousins, fueling talk that the euro may be short lived.

Meanwhile, the dollar rose to a new monthly high of $1.58 versus the sterling.

Against the yen, the dollar improved to Y83.35, staying within a stubborn trading range. The buck touched a 15-year low of 80.22 three weeks ago, and has stalled in its rebound attempt.

The Commerce Department will release its durable goods orders report for the month of October at 8:30 a.m. ET. Economists expect a 0.3% drop in durable goods orders for October, following a sharp 3.5% month-over-month increase in September.

The Bureau of Economic Analysis will release its personal income & outlays report for October at 8.30 a.m ET. Economists expect the report to show that personal income rose 0.4% and personal spending increased 0.5% in the month.

The Labor Department will release its customary jobless claims report for the week ended November 19th at 8:30 AM ET. Economists expect a small increase in claims to 442,000.

At 9.55 a.m. ET, the Reuters/University of Michigan's final report on the consumer sentiment index for November will be released. The consumer sentiment index is expected to be upwardly revised to 69.4 from the mid-month reading of 69.3.

The Commerce Department will release its new home sales report for October at 10 AM ET.

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