US & World Daily Markets Financial Briefing 28-10-2009

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

Market Skepticism Over Recovery Likely to Keep Sentiment Subdued

The major U.S. index futures are pointing to a lower opening on Wednesday, with sentiment largely reflecting the skepticism of traders over a sustained recovery. The skepticism gained momentum following the release of a bleak consumer confidence reading yesterday. However, a report released earlier in the day showed an increase in durable goods orders, in line with expectations. A key gauge of capital spending also showed an increase.

Notwithstanding the fairly positive report, commodity prices are moving to the downside. Now the markets may look ahead to the new homes sales report for September and the oil inventory report from the EIA.

After a fairly positive housing report led to a higher open on Wall Street on Tuesday, a downbeat consumer confidence reading led to a sell-off in early trading. Although the Dow Industrials rebounded on stock-specific buying interest, the Nasdaq Composite Index declined steadily to close the session notably lower. Meanwhile, after showing volatility throughout the session, the S&P 500 Index ended modestly lower.

The Dow Industrials closed up 14.21 points or 0.14% at 9,882, while the Nasdaq lost 25.76 points or 1.20% to close at 2,116 and the S&P 500 Index receded 3.54 points or 0.33% to 1,063.

Among the Dow components, Exxon Mobil and Chevron rose 2.29% and 1.51%, respectively. American Express rallied 3.07% and Verizon gained 1.96%. On the other hand, Alcoa fell 3.54%, Boeing ended down 1.12% and Disney lost 1.68%.

The Dow Jones Transportation Average fell 1.83% compared to a 1.58% loss by the S&P Retail Index and a 1.39% drop by the Philadelphia Housing Sector Index. The NYSE Arca Securities Broker/Dealer Index and the KBW Bank Index ended down about 1% each. In the resource space, the NYSE Arca Gold Bugs Index and the Dow Jones U.S. Basic Materials Average ended down about 1%.

Among technology indexes, the Philadelphia Housing Sector Index declined 2.52%, the NYSE Arca Disk Drive Index slipped 2.97% and the NYSE Arca Computer Hardware Index moved down 2.06%. The NYSE Arca Networking Index fell 1.37% compared to a 1.58% decline by the NYSE Arca Internet Index.

On the economic front, the S&P Case-Shiller's home price index showed an 11.32% year-over-year decline in August, less than the 11.9% drop expected by economists. The recent month's reading marked the smallest decline since January 2008. On a monthly basis, house prices rose 1.18%, with 17 of the 20 cities showing monthly gains.

The Conference Board's consumer confidence index fell to 47.7 in October from 53.4 in September. The present situation index fell to its lowest level since February 1983 and the expectations index declined 8 points to 65.7. Weak labor market conditions are apparently behind the sinking confidence, as reflected by a 0.2 percentage point dip in people who said jobs were plentiful and a 2.6 point increase in people who said jobs were hard to get.

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

Resource Stocks Drag TSX Down 130 Points

Canadian stocks have been moving steadily lower since the opening bell Wednesday morning, extending their big losses from the previous session as a stronger US dollar dented commodity prices.

The S&P/TSX Composite Index has fallen 131 points to 10,928.18. Shares of resource producers are down for a third day.

Still, the TSX is up around 50 percent from lows reached during the throes of the worst global economic downturn since the Great Depression.

Approaching mid-day, gauges of all but one of the major TSX sectors were in the red, led by energy stocks, which has been hurt by a drop in the price of oil and some disappointing earnings news. Crude slipped toward $78 a a barrel on demand concerns and dollar strength.

The Energy Index is down 1.6 percent, with EnCana shares slipping 1.7 percent.

Oil company Nexen said third-quarter profit plumeted on lower crude prices. Net income dropped to C$122 million, or 23 cents a share, from C$886 million, or C$1.66, a year earlier.

Nexen's revenue plunged to $1.1 billion from $2.2 billion. Shares are down more than 2 percent.

OPTI Canada Inc. said its third-quarter net earnings was C$12 million or C$0.04 per share compared with a loss of C$32 million or C$0.16 per share in the prior year period. Shares have dropped almost 8 percent.

Among miners, Sherritt reported that net income fell to $55.9 million or 19 cents per share in the third quarter, down from $133.1 million or 45 cents per share a year earlier. Shares are down 5 percent.

Currency, Commodity Futures

After rising $0.87 to $79.55 a barrel on Tuesday, crude oil futures are currently moving down $0.51 to $79.04 a barrel. Gold futures are currently receding $1.40 to $1,034 an ounce. In the previous session, the precious metal fell $7.40 to $1,035.40 an ounce.

Among currencies, the U.S. dollar is trading at 91.14 yen after strengthening to 91.7965 yen at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.4797 compared to yesterday's $1.4805.

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

The Asian markets extended their declines on Wednesday, with participants indulging in some heavy selling following the mixed close on Wall Street overnight. With a slew of earnings and economic reports due for release over the course of this week, investors trimmed their long positions and fearing a further correction in stock prices.

The Japanese market fell for a second straight day, weighed down by a stronger yen. The benchmark Nikkei fell 137 points or 1.35% to 10,075, representing a two-week low. Camera maker Canon fell 3.35% on disappointing earnings and Toshiba slumped 4.60% after revealing plans to invest 25 billion yen to build a new lithium-ion battery plant in northern Japan. However, Honda Motor advanced 3.34% after surprising analysts with better-than-expected annual profit forecasts.

Ship operators declined on poor earnings. Mitsui OSK Lines fell 2.18%, Kawasaki Kisen Kaisha tumbled 4.53% and Nippon Yusen ended down 2.59%.

After a nearly 3% drop yesterday, China's benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, rose a modest 0.33% or 10 points to 3,031, boosted by gains in auto, coal and securities stocks.

However, Hong Kong's Hang Seng index fell by 408 points or 1.84% to 21,762, dragged down by property and auto stocks. Weak overseas cues on concerns China may reverse its accommodative monetary policy weighed on market movement. Wynn Macau fell over 7% after its parent Wynn Resorts gave a gloomy outlook. Market heavyweight HSBC Holdings fell 1.25%.

South Korea's benchmark KOSPI fell 40 points or 2.41% to 1,610, marking its lowest closing level since October 7th, weighed down by heavy selling by foreign funds. Shipbuilders such as Hyundai Heavy bore the brunt of the selling following disappointing earnings. Blue chip stock Samsung Electronics fell 3% and LG Electronics tumbled 3.8%. Automakers, including Kia Motors and Hyundai Motor, and steel makers such as POSCO also ended sharply lower.

The Australian market fell sharply, dragged down by financial and materials stocks. The benchmark S&P/ASX200 fell 68 points or 1.44% to 4,685 and the broader All Ordinaries index closed at 4,687, down 1.42%.

In economic news, Australia's consumer prices rose at a slower yearly pace in the three months ended September, the Australian Bureau of Statistics said Wednesday. However, on a sequential basis, consumer prices climbed at a faster pace than in the previous quarter.

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

The major European markets are receding on Wednesday after closing on a mixed note in the previous session. The French CAC 40 Index and the German DAX Index are receding 1.33% and 1.44%, respectively, while the U.K. FTSE 100 Index is moving down 1.45%.

In corporate news, German software maker SAP reported a 12% increase in its third quarter net income to 435 million euros. However, revenues declined to 2.5 million euros from 2.8 billion euros in the year-ago period. The company lowered its 2009 software and related service revenues, adjusted for Business Objects acquisition, saying it expects revenues to fall 6%-8% compared to its earlier forecast for a 4%-6% drop.

Arcelor Mittal reported a profit of $903 million for its third quarter, although it was lower than $3.8 billion last year. Revenues also declined to $16.2 billion from $35.2 billion in the year-ago period. For the fourth quarter, the company expects core EBITDA of $2 billion to $2.4 billion.

On the economic front, Germany's Federal Statistical Office announced that Germany's import price index decreased 11% year-over-year in September compared to a 10.9% drop in the previous month. Economists expected a decline of 10.7%. On a monthly basis, import prices dropped 0.9% in September, reversing the 1.3% increase in the previous month.

Meanwhile, the export price index declined 3.2% year-on-year in September, unchanged from the preceding month. On a monthly basis, export prices were down 0.1% after rising 0.3% in August.

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!

Panera Bread could be in focus after it reported third quarter net income of 61 cents per share, including a charge of 4 cents per share, compared to 45 cents per share a year-ago. Analysts estimated earnings of 58 cents per share on revenues of $333.81 million. Total revenues rose 6% year-over-year to $335.02 million.
The company expects 2010 earnings per share of $3.05-$3.15, up 14%-18% from estimated earnings for 2009. For the fourth quarter, the company expects earnings of 85-87 cents per share. The consensus estimates call for earnings of 85 cents per share for the fourth quarter and $3.04 per share for 2010.

CIT Group may see activity after Carl Icahn offered to buy certain classes of debt from the company's bondholders. This is in a bid to convince small bondholders to reject the company's proposed restructuring plan.

Alcon is also likely to be in focus after it announced 5.9% third quarter sales growth to $1.61 billion, higher than the consensus estimate of $1.54 billion. The company's net earnings were $1.71 per share, up from $2.07 per share in the year-ago period. The company reaffirmed its 2009 guidance of mid-single digit organic sales growth, while it raised its adjusted earnings per share guidance to $6.60-$6.70 compared to the $6.44 per share consensus estimate.

Insurance broker Arthur J. Gallagher may see some activity after it reported third quarter earnings of 41 cents per share compared to 40 cents per share last year, while analysts estimated earnings of 42 cents per share. Revenues rose to $439.5 million from the year-ago's $428.2 million, but they fell short of the $455.54 million estimate. The company also announced that it would eliminate 400 positions. Meanwhile, ACE is likely to gain ground after it reported adjusted earnings of $2.07 per share for its third quarter, ahead of the consensus estimate of $1.75 per share.

Apollo Group could see weakness after it said that the SEC has initiated an enquiry into its revenue accounting practices. The company also reported that its fourth quarter earnings fell to 59 cents per share from $1.43 per share last year. On an adjusted basis, earnings were $1.06 per share compared to the mean analysts' estimate of $1.04 per share. Revenues climbed 24% to $1.08 billion.

Meanwhile, DeVry could also be in focus after it reported that its first quarter earnings rose to 76 cents per share from 48 cents per share last year. Revenues rose 42% to $431.1 million. The consensus estimates had called for earnings of 65 cents per share on revenues of $418.1 million.

AutoNation is likely to react to its announcement that it has signed agreements to acquire auto dealerships, Valley Honda and Valley Acura in Spokane, Washington.

E-Trade Financial could be in focus after it reported a third quarter loss of 5 cents per share on an adjusted basis, narrower than the 6 cents per share loss estimated by analysts. Revenues climbed 52% to $575.3 million.

ValueClick may also be in focus after it reported that its third quarter earnings rose to 29 cents per share from 2 cents per share in the year-ago period. The company's adjusted earnings were 34 cents per share, significantly higher than the 14 cents per share consensus estimate. Sales fell 12% to $130.2 million.

Norfolk Southern is likely to see activity after it reported a decline in its third quarter earnings to 81 cents per share from $1.37 per share last year, as revenues fell 29% year-over-year to $2.06 billion. The consensus estimates called for earnings of 78 cents per share on revenues of $2.07 billion.

RF Micro Devices could move to the upside after it reported second quarter non-GAAP earnings of 13 cents per share. The Street estimated earnings of 9 cents per share on revenues of $233.91 million. Revenues fell to $254.8 million from the year-ago's $271.7 million. The company expects sequential growth in revenues and earnings for the third quarter.

DreamWorks Animation is also expected to see buying interest after it reported third quarter adjusted earnings of 20 cents per share, ahead of the mean analysts' estimate of 16 cents per share. For the full year, the company expects earnings of $1.57 per share, flat with last year.

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