US & World Daily Markets Financial Briefing 29-04-2009

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

Markets Focusing on Positives as They Await Fed Decision

The major averages have continued to move higher in recent trading, rising to new highs for the session. The Dow is currently up 134.37 at 8,151.32, the Nasdaq is up 32.17 at 1,705.98 and the S&P 500 is up 15.70 at 870.86.

Although early indications suggest a positive start for the U.S. markets, there is likely to be a negative bias, given the multiplicity of negative news confronting the U.S. markets and apprehensions over the outcome of the Fed meeting. A report released earlier in the day showed that the U.S. economy shrank by much more than the economists had expected in the first quarter. Additionally, reports are swirling around that some of the big 19 U.S. banks, which were subject to stress tests, were found wanting in capital.

Crude oil has been moving higher ahead of the release of the weekly inventory data, as traders seem to be pushing it up on bargain hunting. Notwithstanding the fact that the Fed has depleted most of the armor in its chest to tackle the downturn, it is still believed that the central bank may have some more aces up its sleeve. Trading direction may also hinge on what the Fed has to say following the end of its 2-day monetary policy meeting.

U.S. stocks opened Tuesday’s session notably lower amid apprehensions over the capital adequacy of banks following reports that the stress test results had unearthed problems at Bank of America (BAC) and Citigroup (C) and weighed down by the uncertain economic outlook. However, better-than-expected consumer confidence helped the major averages cut their early losses.

Notwithstanding the emergence of buying interest, the major averages showed a significant degree of indecision throughout the session before they decisively dipped into the negative zone in late trading to end with modest losses.

The Dow Industrials fell 8.05 points or 0.10% to 8,017 and the S&P 500 Index closed with a loss of 2.35 points or 0.27% at 855, while the Nasdaq Composite Index ended down 5.60 points or 0.33% at 1,674.

Nineteen of the thirty Dow components ended the session lower, with General Motors (GM), Bank of America and Citi leading the slide with declines of 11.27%, 8.63% and 5.86%, respectively. Alcoa (AA) fell 3.07%, while IBM (IBM) and Kraft Foods (KFT) gained close to 2%.

Among the sector indexes, KBW Bank Index slipped 2.92% and the Amex Airline Index fell 2.55%. The Philadelphia Housing Sector Index ended the session down 2.29% despite a 15% jump by Meritage Homes (MTH), which rose in reaction to the narrower first quarter loss reported by the company.

The Philadelphia Oil Service Index was off 1.77%, while the Amex Gold Bugs Index dropped 3.05%. In the technology space, the Philadelphia Semiconductor Index declined 1.65%, while Internet, hardware, software and disk drive stocks also showed weakness. On the other hand, the Amex Networking Index rose 1.50%.

On the economic front, the S&P Case/Shiller home price index showed aN 18.63% year-over-year decline in February, slightly better than the 18.7% decline predicted by economists. The January index was revised to show a 19% drop from the 18.97% decline estimated initially. All 20 cities surveyed showed year-over-year as well as month-over-month declines.

Meanwhile, the Conference Board said its consumer confidence index for April rose to 39.2 from 26.9 in March. Economists had expected a reading of 29.9 for the month. The April reading marked the highest since November 2008. The expectations index climbed 19.3 points, while the present situation index was up about 2 points.

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

Bay Street Looks To snap Out of Funk Wednesday

Early signals were mostly positive Wednesday morning on Bay Street as traders looked across the border to the US for a pivotal round of gross domestic product data and the Federal Reserve's latest monetary policy statement.

Bay Street stocks closed modestly lower for a second straight session on Tuesday amid swine flu fears. The S&P/Composite Index declined 46.77 points or 0.49% to 9,348.03. Bay Street's main index recovered some of its earlier losses after hitting a six-day low earlier in the day.

In earnings news from the oil patch, Talisman Energy Inc. reported first quarter net income of C$455 mln or C$0.45 per share, compared to C$466 mln or C$0.45 per share in the same period last year.

Net loss from continuing operations for the quarter was C$84 mln or C$0.08 per share, versus income of C$412 mln or C$0.40 per share in the prior year period.

Meanwhile, Oilexco Inc. said it received an extension of the court order for protection under the Companies' Creditors Arrangement Act. The new order will now expire May 29, 2009. The order permits Oilexco to remain in possession and control of its property as it continues to restructure

Wood product maker Norbord Inc. announced first quarter net loss of US$22 mln or US$0.05 per share, compared to a loss of US$31 mln or US$0.21 per share last year. Net sales for the quarter fell US$156 mln from US$234 mln in the prior year quarter.

Ballard Power Systems Inc. reported net loss for the first quarter of US$18.6 mln, or US$0.22 per share, compared to a net income of US$81.0 mln or US$0.87 per share in the same period last year. Rogers Communications reported first quarter EPS of C$0.49 versus C$0.54 in the prior year.

Click Here

The major European markets are rising solidly on Wednesday, with the French CAC 40 Index and the German DAX Index rising 1.34% and 1.32%, respectively, while the U.K.’s FTSE 100 Index is gaining 1.65%.

Arcelor Mittal (MT) reported a net loss of $1.06 billion, including a $12 billion writedowns related to the value of items in its inventory. Stung by the weak performance of its materials science division, Bayer reported a 44% decline in its first quarter profit to 425 million euros.

German engineering giant Siemens (SI) reported that its second quarter profits rose to 962 million euros from 384 million euros in the year-ago period. Sales rose 5% to 18.96 billion euros despite the order intake declining 11%. The company also lowered its 2009 operating profit forecast. Meanwhile, France Telecom (FTE) reported a 7.1% decline in its core EBITDA to 4.30 billion euros and sales fell 12.7 billion euros from 13 billion last year .

U.S. Economic Reports

The Bureau of Economic Analysis said that U.S. GDP shrank at a 6.1% rate in the first quarter compared to a 6.3% GDP decline in the previous quarter. The contraction was worse than the 4.7% decline expected by economists. On a year-over-year basis, the first quarter GDP declined by 2.6% compared to 0.8% decline in the first quarter.

The decline in fourth quarter GDP compared to the previous quarter reflected negative contributions from exports, private inventory investment, equipment and software, non-residential structures and residential fixed investment. The weakness was offset to some extent by positive contributions from personal consumption expenditures. Imports, which are a deduction from GDP calculations, declined.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 AM ET.

The weekly oil inventory report for the week ended April 17th showed that crude oil inventories rose by 3.9 million barrels to 370.9 million barrels. Crude oil stockpiles were above the upper bound of the average range for this time of the year.

Gasoline stockpiles rose by 0.8 million barrels and were above the upper bound of the average range. Distillate inventories also rose, increasing by 2.7 million barrels, and were above the upper bound of the average range. Refinery capacity utilization averaged 81.8% over the four weeks ended April 17th compared to 81.5% in the previous week.

The Federal Open Market Committee is scheduled to announce its policy decision at 2:15 PM ET.

At its two-day meeting in March, the Fed extended another lifeline to the famished financial sector in a bid to help them come out clean. Along with an announcement to keep interest rates unchanged at exceptionally low levels following the meeting, the Fed said it would purchase $300 billion worth of longer-term securities over the next 6 months. Additionally, the Fed said it will buy an incremental $750 billion worth of mortgage-backed securities and $100 billion of government sponsored enterprises - GSE debt. The Fed also said it intends to add $100 billion to its purchases of agency debt.

Earnings

Baker Hughes (BHI) said its first quarter net income fell to 63 cents per share from $1.27 per share last year. Revenues were flat at $2.67 billion. Analysts expected earnings of 76 cents per share on revenues of $2.58 billion.

Time Warner (TWX) reported that its first quarter declined to 55 cents per share from 64 cents per share in the year-ago period. On an adjusted basis, the company reported earnings from continuing operations of 46 cents per share, ahead of the 38 cents per share consensus estimate. Revenues were down 7% at $7.47 billion, ahead of the mean analysts’ estimate of $6.78 billion. The company said it expects 2009 earnings to be flat with last year.

Reynolds American’s (RAI) first quarter adjusted earnings were $1 per share on 7% sales decline to $1.92 billion. Analysts estimated earnings of 95 cents per share on revenues of $1.92 billion.

Barrick Gold (ABX) reported first quarter net income of 42 cents per share compared to 59 cents per share last year. The company’s adjusted net income fell to 34 cents from 62 cents per share in the year-ago period. The consensus estimate called for earnings of 36 cents per share.

Come Into the LIVE Online Trading Session and Watch Us Make at Least 1 Point ($500 - $2000 a Day). The LIVE Trading Session is Completely FREE! - Sign Up Now here!

The markets across the Asia-Pacific region saw broad based gains on Wednesday, as investors went bargain hunting following recent losses. Investors looked past the swine flu headlines and cheered reassuring U.S. economic data, which pointed to a turnaround in the world's largest economy. The Japanese market remained closed on account of Showa Day.

The Australian market closed lower, led by losses in the financial sector after ANZ bank reported a lower first-half profit and bigger provisions for bad debts. The benchmark S&P/ASX200 index closed at 3,695, down 13 points or 0.35% and the broader All Ordinaries index fell 10 points or 0.27% to 3,662.

ANZ plunged 7.40% after its first half profit fell more-than-expected on rising bad debts. Other banking stocks also followed through. National Australia Bank declined 3.48% after Citigroup cut its earnings estimate and rating on the stock to "sell" from "hold." Commonwealth Bank fell 2.73% and Westpac Banking tumbled 4.31%, but investment bank Macquarie Group rose 0.19% ahead of the release of its annual results on Friday.

Big miners closed mixed despite the declines in base metal prices overnight. While BHP Billiton rose 0.59%, Rio Tinto moved down 0.41% and Iluka Resources gained 1.82%. Energy stocks closed mostly higher. Oil Search rallied 4.52% and Santos rose 0.86%, but Woodside Petroleum slipped 0.21%.

Qantas Airways rose 3.19% after falling sharply recently on concerns about the swine flu outbreak. Agribusiness and automotive components supplier Futuris Corp added 2.41% as it begins trading on the ASX on Thursday under the old Elders name. Among retailers, Woolworths gained 1.14% and David Jones rose 0.67%, but Harvey Norman Holding fell 1.68%.

The South Korean market snapped a three-day losing streak on bargain hunting. Positive trade data released by the South Korean central bank also helped improve sentiment. South Korea saw a record current account surplus in March at $6.65 billion, the Bank of Korea said on Wednesday. That follows the $3.56 billion surplus in February.

The benchmark KOSPI closed at 1,338, up 38 points or 2.94%. Volume was at 591.29 million shares worth 5.58 trillion won (US$5.54 billion) and advancers outnumbered decliners by 681 to 134.

Hynix Semiconductor rallied 4.29% on reports about selling off part of its machinery in the assembly lines for around 500 billion won to ease the impact of a global slump in the microchip industry. LG Electronics jumped 4% after it was picked to supply third-generation (3G) mobile handsets to all three carriers in China. Market heavyweight Samsung Electronics rose 1.91% and LG Display LCD advanced 1.61%

Banking stocks bounced back after recent losses. Korea Exchange Bank rallied 4.94%, Woori Finance jumped 6.26% and KB Financial, the holding firm of Kookmin Bank, advanced 5.79%. Shipbuilder Hyundai Heavy Industries rose 2.99%, Samsung Heavy Industries gained 2.43% and Daewoo Shipbuilding added 2.71%. Among automakers, Ssangyong Motor closed up 1.69% and Hyundai Motor added 2.82%.

The Chinese market closed sharply higher after three consecutive days of declines. The benchmark Shanghai Composite Index, which tracks both A and B shares, rose 67 points or 2.78% to 2,468, the highest closing in more than a week. Trading volume for the Shanghai Composite Index rose to CNY123.5 billion ($18.1 billion) from CNY92.3 billion Tuesday.

Banks rose on bargain hunting, property shares recouped some of their recent losses, coal producers rose on higher prices and automakers gained on expectations that Beijing may cut car purchase taxes further.

The Hong Kong market snapped its two-day losing streak amid encouraging U.S. consumer confidence and house price data. The benchmark Hong Kong's Hang Seng closed at 14,957, up 402 points or 2.76%.

The Indian market rallied on the back of consistent buying in index heavyweights, helped by short covering and favorable cues from the other Asian and the European markets. IT and banking stocks led the rally, while capital goods and healthcare stocks showed modest gains. The benchmark for the Indian market, the Sensex closed at 11,403, up 401.50 points or 3.65% from its previous close.

Among the other markets in the region, Singapore's STI Straits Times index gained 2.28% and Taiwan's TWII Weighed index rose 0.31%.

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!

Gold Climbs Above $900 An Ounce Again

Gold turned higher early on Wednesday and re-crossed the key $900 an ounce mark. Traders considered weaker-than-expected gross domestic product data and looked ahead to the Federal Reserve's interest rate decision later today.

June-stamped gold rose to $900.70, up $7.10 on the session. The metal is looking to recover some of the modest losses it accumulated over the last two sessions.

The Commerce Department report showed that GDP decreased at an annual rate of 6.1 percent in the first quarter compared to a 6.3 percent drop in the fourth quarter. Economists had been expecting a more modest decline of about 4.7 percent.

Trading are looking ahead to the Federal Open Market Committee's announcement of the outcome of its two-day policy setting meeting this afternoon. While the Fed is widely expected to leave interest rates unchanged, traders are likely to pay close attention to the accompanying statement, looking for indications of the Fed's future plans regarding the capital markets as well as its outlook for the economy.
 
Elsewhere on the economic front, industry data showed that mortgage application volume decreased 18.1 percent last week, as refinance activity dropped 21.9 percent.

President Obama addressed the swine flu outbreak Wednesday as the first U.S. death from the influenza strain was confirmed. He assured the public that the government is fully dedicated to stopping the spread of the disease, noting the $1.5 billion request for emergency funding he sent to Congress on Tuesday.

The greenback recovered some early losses against its major counterparts. The buck hit a five-day low against the euro but rebounded modestly after the GDP report. The greenback also climbed away from a nine-day low reached in early trading against the sterling. Gold often moves opposite the dollar because of the precious metal's hedge appeal.

Gold had lost a little more than $20 over the last two days after rising in four of five sessions last week as swine flu fears pushed traders away from commodities. A better-than-expected consumer confidence report reduced the need to turn to the precious metal as a hedge investment.

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