US & World Daily Markets Financial Briefing 30-04-2009

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 May Overlook Fundamental Problems and Focus on Earnings Strength

The major averages have moved roughly sideways in recent trading, hovering near their best levels of the day. The Dow is currently up 107.36 at 8,293.09, the Nasdaq is up 37.40 at 1,749.34 and the S&P 500 is up 12.50 at 886.14.

The major U.S. index futures are pointing to a higher opening on Thursday. Global cues are positive, with the Asian markets advancing strongly in the day, while the European markets are also seeing buoyancy, having turned into the black for the year. Earnings are continuing to be a positive precursor, with most companies managing to beat on the bottom line through stringent cost control.

Reports over a potential Chrysler liquidation also may keep sentiment subdued. On an encouraging note, jobless claims dipped in the recent reporting week, although claims still remain at elevated levels. The trading direction may also hinge on the manufacturing survey results of the Chicago region to be released later in the day.

U.S. stocks opened Wednesday’s session higher despite a worse-than-expected drop in first quarter GDP and the continuing uncertainty. The major averages showed a steady advance until a little while after the Fed decision was announced. Thereafter, they pulled back slightly, although ending with gains in excess of 2% each.

The Dow Industrials jumped 168.78 points or 2.11% to 8.186 and the Nasdaq Composite gained 38.13 points or 2.28% to close at 1,712, while the S&P 500 Index ended up 18.48 points or 2.16% at 874.

Twenty-six of the thirty Dow components ended higher, with the financials leading the way. Citigroup (C) rallied 7.96%, Bank of America (BAC) rose 6.50%, JP Morgan Chase (JPM) moved up 5.15% and American Express (AXP) advanced 3.29%. Among the other notable gainers were Boeing (BA) (up 4.38%), Disney (DIS) (up 7.69%), Merck (MRK) (up 3.15%), Alcoa (AA) (up 3.29%) and Wal-Mart (WMT) (up 4.09%).

Among the sector indexes, the KBW Bank Index rallied 5.02%, the Dow Jones Transportation Average rose 3.85%, the Amex Airline Index gained 3.05% and the Amex Biotechnology Index moved up 2.67%. The Amex Oil Index rose 2.38% compared to a 4.28% jump by the Philadelphia Oil Service Index.

In the technology space, the Amex Disk Drive Index jumped 5.37% and the Amex Networking Index gained 4.15%. Semiconductor and hardware stocks also showed some strength.

On the economic front, the Commerce Department said first quarter GDP fell by 6.1% compared to the 4.7% drop expected by economists. Personal consumption rose 2.2%, higher than the estimated 0.9% increase. However, the sore spot was inventories, which deducted 2.8% off growth. The GDP price index was up 2.9%, faster than the 1.8% increase expected by economists.

The results of the FOMC meeting came as no surprise, as the Fed maintained its key fed funds target rate unchanged at a range of 0%-0.25%. The FOMC noted that the economy continued to contract, with the pace of contraction slowing somewhat. Despite the stabilization in consumer spending, the committee noted that spending continued to be constrained by job losses, lower housing wealth and tight credit.

Overall, the central bank is of the view that economic activity is likely to remain weak for a time. That said, the committee expects sustained economic growth will resume gradually due to policy actions, fiscal and monetary stimulus and market forces. Additionally, the fed suggested that inflation may remain below rates that are consistent with economic growth and price stability.

Currency, Commodity Futures

Crude oil is rising $0.65 to $51.62 a barrel after rising $1.05 to $50.97 a barrel in Wednesday’s session. The increase came despite the weekly oil inventory report of the EIA showing a build in crude oil stockpiles. The report for the week ended April 24th showed that crude oil inventories rose by 4.1 million barrels to 374.7 million barrels and were above the upper half of the average range.

Distillate inventories increased by 1.8 million barrels and were above the upper boundary of the average ranger. Notwithstanding a 4.7 million barrel-decline in gasoline stockpiles, they stayed in the upper half of the average range. Refinery capacity utilization averaged 82.1% over the four-weeks ended April 24th compared to 81.8% in the previous week.

Gold futures, which rose $6.90 to $900.50 an ounce in the previous session, are currently down $18.30 at $882.20 an ounce.

On the currency front, the U.S. dollar, which strengthened to 98. 405 yen in Wednesday’s New York session, is currently easing to 97.579 yen. The dollar is currently valued at $1.3230 versus the euro.

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

Canadian stocks look to extend gains from previous session

Early signals were pointing to another solid session for Canadian stocks Thursday morning as equities markets worldwide have cheered a largely encouraging batch of earnings results amid signs of hope for global economy.

Bay Street stocks closed higher for the first time in three sessions on Wednesday. The S&P/TSX Composite Index gained 68.28 points or 0.73% to end at 9,416.31. Resource stocks led the way as commodities prices rose.

In corporate news, diversified miner Teck said it signed non-binding memorandum of understanding with Sumitomo Metal Mining Co. Ltd. regarding the proposed sale of Teck's 40% interest in the Pogo mine in Alaska for US$245 mln subject to adjustment for working capital.

Gold producers Agnico-Eagle Mines Ltd. reported that its first-quarter net earnings increased to US$54.341 mln or US$0.35 per share from US$28.908 mln or US$0.20 per share last year. On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of US$0.09 per share for the quarter.
 
Preparations are on to announce on Thursday that automaker Chrysler LLC will be placed into Chapter 11 liquidation, even as the company continued to hold last-minute negotiations with lenders and the Treasury Department aimed at staving off liquidation, media reports said Wednesday.

The Globe and Mail reported this morning that the Canadian government will "backstop the company with financing that will enable it to keep making and selling cars while it restructures."

Earlier this morning, the Canadian dollar jumped to a new multi-month high against the US dollar and new multi-day highs against the yen and the euro.

Click Here

Rally gains momentum
 
Market Movers
techMARK 1,246.96 +1.56%
FTSE 100 4,277.05 +2.09%
FTSE 250 7,558.51 +2.73%

Leading shares power forward, boosted by expectations of a firm start on Wall Street. Banks lead the charge, after a relatively upbeat review of the sector by RBS, which followed hot on the heels of HSBC’s favourable comments about the sector yesterday.

RBS reckons that, with the exception of Lloyds Banking, the major UK banks should return to profit this year. Royal Bank of Scotland itself is sharply higher while Barclays also notches up a double-digit percentage gain despite the RBS analyst suggesting that the bank may need to raise fresh funds.

RBS has raised its rating on Barclays from ‘sell’ to ‘buy’ and boosted the price target from 110p to300p Lloyds is downgraded from ‘hold’ to ‘sell’ but is still firmer on the day. It’s been a busy day for corporate announcements from the big guns, with the majority of updates being well received by the market.

Strong sales of cardiovascular treatments helped drug giant AstraZeneca lift revenues and post a sharp rise in profits in the first quarter. Pre-tax profits in the first quarter of 2009 jumped to $3.20bn from $2.65bn in the same period the previous year, as revenues edged up to $7.70bn from $7.68bn. Core earnings per share came in at $1.58.

Aero engine group Rolls-Royce has reiterated it expects flat profits in 2009 with tough conditions in the civil aircraft market offsetting growth elsewhere.

Britain’s withdrawal of troops from Iraq has claimed 500 jobs at BAE Systems after the defence giant decided to shut three factories.

Sites at Telford, Leeds and Guildford are scheduled to close by the end of the year, while jobs will also go in Newcastle and Barrow.

Kazakhmys said first quarter ore output has been reduced 13% to 7.8m in line with its policy of reducing output for 2009. The miner said it produced 82 kt copper cathode equivalent from own material in the first quarter. “Pricing and demand for copper in the first few months of this year have been encouraging,” said boss Oleg Novachuk.

Anglo American believes it is “positioned strongly” to weather the recession as it reported first quarter numbers this morning. It increased equivalent refined platinum production by 18.6% over the same time last year to 613,000 ounces, although that was down 6.1% on the last quarter of 2008. Refined production of 404,000 ounces was down 5.8% year on year and 52% lower than the previous quarter.

Satellite TV giant BSkyB posted a sharp rise in revenue and profits as an increase in subscribers to its Sky+ and Sky+HD digital TV services offset a decline in broadband subscribers. In the nine months to March 31, pre-tax profits soared to £339m from £20m over the same period the previous year as revenue climbed to £4bn from 32.7bn.

Oil explorer BG saw total operating profit for the first quarter slide 9% due to lower oil prices and production volumes. Total operating profit came in at £1,275m against £1,402 last year, while earnings for the period fell 13% to £690m.

Knee and hip joint supplier Smith & Nephew said its business is proving resilient, though not immune to the weak global economy as it posted a rise in first quarter revenue and profit. Reported trading profit in the period jumped 12% on an underlying basis to $183m, on revenue that rose 4% to $865m.

Insurer Standard Life saw worldwide life and pension sales slump 20% in the three months to 31 March, with UK sales down more than a quarter. The group reported global sales of £3.6bn, down from £4.5bn a year ago, while net outflows were £28m versus net inflow of £931m in 2008.

Chocolate firm Cadbury was down despite a 2% rise in revenues due to weakness in mainland Europe and North America. The Dairy Milk maker left its revenue growth guidance for the full-year unchanged at 4% to 6%.

Electical goods retailer DSG International has announced a placing and rights issue to raise more than £300m. The Currys and PC World owner intends to raise £100m through a placing of 333.3m shares at 30p each and £210.6m through a for five-for-seven rights issue of about 1.5bn shares at 14p a share.

Property firm Hammerson said market conditions remain difficult with property values showing further weakness in the first quarter but added the fundamentals of the business remain sound. The occupancy rate in the investment portfolio at 31 March 2009 was 92% compared with 95% at 31 December 2008.

Trading in 2009 at construction and regeneration firm Morgan Sindall has been in line with expectations, with the company seeing a slight increase in its forward order book.

Household products group McBride said overall trading has been ‘satisfactorily ahead of expectations’ after particularly strong sales in France and Italy.

Logica’s strong reliance on the public sector helped the IT contracting company maintain good revenue growth in the first quarter. Sales in the three months to March 31 climbed to £954m from £856m over the same period the previous year.

Drug developer Puricore shots higher after saying that studies indicate its Sterilox solution is effective against human and animal influenza. In similar vein, shares in AIM-listed Lipoxen more than doubled after the bio-pharma company reported positive test results on a vaccine that may work on swine flu.

FTSE 100 - Risers
Royal Bank of Scotland Group (RBS) 42.40p +15.22%
Barclays (BARC) 282.25p +10.04%
Invensys (ISYS) 197.50p +9.54%
Legal & General Group (LGEN) 56.20p +8.91%

FTSE 100 - Fallers
Fresnillo (FRES) 531.50p -3.45%
Smith & Nephew (SN.) 470.00p -2.89%
Standard Life (SL.) 188.40p -2.23%
Compass Group (CPG) 327.50p -2.02%

FTSE 250 - Risers
Enterprise Inns (ETI) 166.00p +15.88%
DSG International (DSGI) 42.75p +14.00%

FTSE 250 - Fallers
HMV Group (HMV) 144.00p -4.16%
Daejan Holdings (DJAN) 2,109.00p -3.26% 

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!

Asian markets extend gains on signs of economic recovery

The markets across the Asia-Pacific region closed stronger for a second day in a row after an upbeat report from the U.S. central bank and a sharp rise in Japanese industrial output hinted that the global economic slowdown might be bottoming out. Data released Wednesday also showed that business inventories in U.S. fell by a record amount in the first three months of the year.

In Asian trading on Thursday, crude oil price rebounded to above $51 a barrel, boosted by firm equity markets and a sense of optimism that the recession in the U.S. may be abating. A U.S. Energy Information Administration report showing a surprise 4.7-million-barrel decline in nationwide gasoline inventories, also offered some support.

The Japanese market rebounded sharply after remaining closed on Wednesday for a national holiday. The Nikkei 225 index closed at 8,828, up 334 points or 3.94% and the broader Topix index of all First Section issues on the Tokyo Stock Exchange rose 26 points or 26 points or 838.

Investors picked up stocks across all 33 industrial sectors on the TSE amid stronger-than-expected Japanese industrial output data and an encouraging economic assessment by the U.S. Federal Reserve.

Banking stocks rebounded on short covering. Mitsubishi UFJ Financial Group jumped nearly 6%, Sumitomo Mitsui Financial Group soared 6.92%, Mizuho Financial Group advanced 3% and Resona Holdings closed up 0.38%.

High- technology stocks closed stronger encouraged by strong industrial performance. Advantest rallied 4.32%, Canon jumped 6.12%, Tokyo Electron surged up 8.74%, Kyocera jumped 7.48%, Fujitsu advanced 2.94% and Sony moved up 3.05%.

Auto stocks also showed significant gains. Honda Motor climbed 9.42%, Suzuki rose 2.28%, Toyota rallied 5.19%, Nissan Motor soared 9.21% and Mazda moved up nearly 4%. Industrial robots manufacturer Fanuc surged up nearly 7% after reporting better-than-forecast earnings for the last fiscal year.

Toshiba rose 3.38% after it has proposed to spend 10 billion yen ($103 million) for a 52 percent stake in nuclear fuel producer Nuclear Fuels Industries. Electronics maker Pioneer plunged 8.19% on worries about a dilution in per-share value after the company proposed to raise 40 billion yen to shore up its financial standing.

In economic news, the Bank of Japan retained its key interest rate as expected and downgraded its economic outlook. The Policy Board of the central bank unanimously voted to hold the uncollateralized overnight call rate at 0.1%. The previous change in interest rates was a 20 basis point cut implemented in December 2008.

Separately, Japan's housing starts declined 20.7% on a yearly basis in March, slower than the 24.9% decrease seen in February, the Ministry of Land, Infrastructure and Transport reported Thursday. Economists were expecting housing starts to drop 22.5%.
 
The Australian market closed sharply higher, helped by strong global cues and a rally in U.S. stock futures. The benchmark S&P/ASX200 index closed at 3,780, up 85 points or 2.31% and the broader All Ordinaries index rose 83 points or 2.26% to 3,745.

Among big miners, Rio Tinto rallied 5.02% but Iluka Resources fell 1.49%. BHP Billiton advanced 3.10% after announcing an in- principle agreement with the Suriname Aluminum Company (Suralco), a subsidiary of US giant Alcoa.

Bauxite miner and aluminum smelter Alumina was in a trading halt pending a capital raising involving retail and institutional investors. Gold Miner Lihir Gold closed up 0.33% after reporting its record first quarter gold output of 318000 troy ounces.

Oil and gas producer Woodside Petroleum rose 2.65% and Oil Search closed up 0.79%, but Santos slipped 0.24%. Origin Energy moved up 0.93% despite reporting an eight percent fall in its output for the third quarter.

Media stocks rose across the board. Fairfax jumped 6.76%, News Corp rallied 5.37%, and Seven Network gained 2.78%. Shopping centre owner and operator Westfield Group rose 1.23% after reconfirming its earnings and distribution guidance for the full year.

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!

Banking stocks bounced back after a sell-off on Wednesday. National Australia Bank rose 0.44%, ANZ advanced 3.25%, Commonwealth Bank gained 1.74%, Westpac Banking added 1.86% and investment bank Macquarie Group rallied 5.08%.

Among insurers, AMP rose 2.17%, QBE Insurance rallied 3.86%, Henderson Group moved up 1.69% and AXA Asia Pacific advanced 1.83%.

The South Korean market surged on fund buying after industrial output data for March surprised marketmen on the upside, showing a rise of 4.8 percent compared to the previous month. The benchmark KOSPI rose 31 points or 2.31% to the year's high of 1,369. Volume was significant at 794.67 million shares worth 8.42 trillion won (US$6.51 billion) and advancers outnumbered decliners by 660 to 192.

Among automakers, Kia Motor rallied 5.14%, Ssangyong Motor advanced 4% and Hyundai Motor moved up 4.26%. Shipbuilders closed mixed. Samsung Heavy Industries gained 3.05% and Hyundai Heavy added 2.68%, but Daewoo Shipbuilding closed unchanged.

Banking stocks closed sharply higher, helped by heavy buying from domestic funds. Korea Exchange Bank rose 4.14%, Woori Finance climbed 10.22% and KB Financial, the holding firm of Kookmin Bank soared 6.14%.
 
Telecom stock SK Telecom fell 1.87% after reporting an unexpected 17% decline in its first-quarter net income. On the other hand, KT closed up 1.08%. Airlines stocks, which had suffered sharp losses in recent sessions, closed firm. Asiana Air Line rallied 5.46% and Korean Air Line advanced 3.44%.

Among other notable stocks, oil stock SK gained 3.48%, energy stock KEPCO moved up 2.19%, steel maker POSCO rose 2.06%, market heavyweight Samsung Electronics rose 1.02% and LG Electronics added 1.92%, but technology stocks Hynix Semiconductor fell 1.37% and LG Display LCD closed down 0.63%.

In economic news, South Korean statistical office reported that the country's industrial output grew 4.8% month-over-month in March. The latest increase came after a revised 7.1% rise in the previous month. Year-over -year, industrial output declined 10.6% in March, worse than a 10% fall in February. Economists were looking for a 13% slump for March.

The New Zealand market rose to more than a two-month high amid strong global cues and a 50 basis points rate cut by the Reserve Bank of New Zealand. The central bank said that it is committed to keeping rates low until late 2010. The benchmark NZX-50 closed at 2,741, up 41 points or 1.51%, the highest closing since Feb 13.

Market heavyweight Telecom rallied 3.68%, Kiwi Income Property rose 2.20% and Property for Industry added 0.91%, as investors chased high-yielding stocks. Building materials maker Fletcher Building jumped 5.02% after it added NZ$20 million to its capital-raising plan.

Australia and New Zealand Bank rose 3.80% after plunging nearly 8% on Wednesday. NZX closed up 3.62% after it has entered into a conditional agreement to buy the energy and related assets of M-co, the Marketplace Company, for $13.1 million.

Discount retailer Warehouse Group rose 2.57%, Hallenstein Glasson closed up 0.79%, children's clothing retailer Pumpkin Patch rallied 4.35% and jeweler Michael Hill jumped 5.77%. Mainfreight rallied 4.12% and Freightways advanced 3.57% after posting a 4% rise in its nine-month profit.
 
Fisher & Paykel Appliances advanced 2.22%, Tower rallied 4.62%, Infratil rose 1.29%, Steel and Tube gained 2.88%, Nuplex surged up 9.09% and Vector closed up 0.93%.

Air New Zealand fell 1.87% on worries about swine flu but Auckland Airport moved up 0.61%. Among major decliners, electricity generator Contact Energy declined 1.38%, energy stock TrustPower slipped 0.14%, Tourism Holdings fell 2%, Sky City moved down 1.08% and Fisher & Paykel Healthcare drifted down 0.33%.

The Indian market was closed for trading due to elections in Mumbai. Friday will be a holiday for Labor Day.

Among the other markets in the region, China's Shanghai Composite index closed up 0.38%, Hong Kong's Hang Seng index rallied 3.77%, Singapore's STI Straits Times index advanced 3.82% and Taiwan's TWII Weighed index surged up 6.74%.

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