US & World Daily Markets Financial Briefing 01-11-2006

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Stocks rise on earnings, jobs report

NEW YORK - Stocks rose smartly in opening trading Wednesday on strong earnings from MasterCard Inc. and an upbeat forecast for private-sector jobs created in October.
      
In the first minutes of trading, the Dow Jones industrial average rose 27.62, or 0.23 percent, to 12,109.55.
   
Broader stock indicators were higher. The Standard & Poor's 500 index rose 2.41, or 0.17 percent, to 1,380.35, and the Nasdaq composite index rose 6.10, or 0.26 percent, to 2,372.81.
   
ADP-Macroeconomic Advisers said it anticipates a 128,000 increase in private-sector jobs when the Labor Department reports payroll figures Friday. The figure calms recent fears about the possibility of job losses as the housing market cools.

The Institute of Supply Management's manufacturing survey for October should get attention on Wednesday, after a Chicago-area survey on Tuesday reached a 14-month low. Economists polled by MarketWatch expect the ISM survey to rise to 53.2 percent from 52.9 percent last month. A figure above 50 indicates economic expansion. Pending home sales data also is due for release.
   
Automakers are expected to show an improvement in October U.S. sales compared to the same month a year ago, when the Big Three dropped their discounted employee pricing campaigns. Only the Chrysler unit of DaimlerChrysler is expected to show sales falling.

Stocks in focus
   
Media giant Time Warner posted sharply higher third-quarter earnings on Wednesday due largely to several asset sales and adjustments related to its deal to acquire cable systems from Adelphia, but earnings excluding items fell shy of analysts' expectations.
   
Tyco International and the owner of Putnam Investments, Marsh & McLennan Companies also are due to report quarterly financials.
   
Deutsche Bank reported a 25 percent profit rise in the third quarter, as one-off gains and lending growth offset a decline in trading revenue.
   
Baidu, the Chinese Internet company, may fall on its revenue forecast, and Chipotle Mexican Grill may be pressured by its below-forecast quarterly revenue.
   
On the M&A front CVS, the second largest drugstore chain in the U.S, is reportedly in talks to buy Caremark Rx, a leading pharmacy benefits manager.
   
The New York Times, citing people close to the negotiations, reported on its Internet site that CVS is in talks to buy Caremark for more than $21 billion. Exact deal terms weren't known, the report said.

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Dollar steady ahead of ISM report

LONDON - The dollar was little changed ahead of a key US manufacturing survey though trading was light given the public holiday across much of Europe.
   
The US currency yesterday fell to five-week lows against the euro and the yen and to 12-week lows against the pound, after a weak Chicago PMI reading and US consumer confidence data caused many to downgrade their estimates for today's ISM survey.
      
Ahead of that, the market had the latest employment report from Automatic Data Processing to digest ahead of Friday's official jobs report. ADP's survey of private non-farm employment reported a 128,000 gain in October, higher than the median estimate for a 108,000 rise.
       
As well as the payrolls data, the market will be focusing tomorrow on the monthly rate-setting meeting of the European Central Bank and the subsequent press conference from its president Jean-Claude Trichet.
   
Though the ECB is expected to leave interest rates on hold tomorrow at 3.25 pct, Trichet is set to sound a fairly hawkish tone and pave the way for a quarter point hike in December.
   
Elsewhere, the pound was little changed after a key survey released this morning of UK manufacturing activity dipped slightly below expectations.
   
The monthly purchasing managers' index for the manufacturing sector from the Chartered Institute of Purchasing and Supply fell to 53.7 in October from a revised 54.5 in September, against forecasts for a more modest decline to 54.0.
   
The weaker figure, however, will not alter the market's expectations that the Bank of England will raise interest rates again next week.
   
However, analysts noted that yesterday's market reaction to comments from the Bank of England governor Mervyn King suggest some vulnerability for the pound.

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The European Markets at 12.30 GMT

London - Leading shares pushed ahead at midday, with further gains across the mining sector and renewed strength in Hanson and AstraZeneca helping the FTSE 100 climb to session highs. By 12.20 pm, the FTSE 100 index was 33.8 points firmer at 6,163.0, its highest level of the day, while the broader index was mixed.

Frankfurt - German shares struggled to gain momentum this morning, but recovered a portion of yesterday's modest falls amid uninspiring results from Deutsche Bank and Continental. At 11.05 am, the DAX 30 was 7.94 points, or 0.13 pct higher at 6277.73, while the MDAX was up 25.46 points, or 0.29 pct higher at 8685.9.
   
Paris - Share prices drifted lower in light trading at midday, stabilising after three days of sharp declines, with the few investors at their desks looking to the US markets for direction. At 12.14 pm, the CAC-40 index was down 1.02 points at 5,347.71, on volume of just 917 mln euro on the All Saints Day public holiday.

Milan - Share prices were slightly higher in quiet midday trade, underpinned by gains in co-operative banks BPM, Popolare di Verona and BPI. At 12.05 pm, the Mibtel index was up 0.16 pct at 30,440 points and the S&P/Mib added 0.10 pct to 39,597.

Madrid - Madrid shares were higher in light midday trade on today's All Saints public holiday, tracking the broad European trend, with Telefonica leading gainers after bullish comments from the chairman. At 11.30 am, the IBEX-35 index gained 38.9 points to 13,791.9, after trading in a range of 13,765-13,796, on thin turnover of 757 mln eur.

Stockholm - Shares remained in slightly positive territory in midday trade, little changed from morning levels, with Tele2 soaring after its third-quarter results. At midday, the OMX Stockholm index was up 0.61 pct at 351.70 points, while the OMX Stockholm 30 index was up 0.71 pct at 1,093.31.

Zurich - Share prices were slightly higher in thin morning trade on an inert rebound after yesterday's sharp losses. At 10.38 am, the Swiss Market Index was 18.04 points higher at 8,587.76 and the Swiss Performance Index was 14.42 points up at 6,714.82.

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Asian shares close mostly higher;  Seoul rises on NKorea rejoining 6-party talks

HONG KONG - Shares across the Asia-Pacific region closed mostly higher, with Seoul rising after North Korea said it will return to the six-party nuclear disarmament talks.
   
Tokyo shares closed narrowly mixed after bargain hunters emerged following the morning's losses, which had been triggered by a weaker Wall Street and a stronger yen.
   
The Nikkei 225 Stock Average closed down 24.13 points or 0.15 pct at 16,375.26, after moving between 16,246.24 and 16,444.51. The broader TOPIX index of all first-section issues rose 5.09 points of 0.31 pct to 1,622.51, after moving in a range of 1,627.86 and 1,607.54.
   
"Traditionally the stock market advances in November. This year, while the adjustment may take longer as shares already rose in October, the market will still continue to rally toward the year end," said Hideo Mizutani, chief strategist at Sieg Securities.
   
Australian shares closed at fresh record highs with investor sentiment supported by an overnight rise in metal prices. The positive sentiment led to buying of banks, which are reporting their results this week.
   
The S&P/ASX 200 advanced 32.0 points or 0.59 pct to close at a record 5,416.4, above Monday's record close of 5,399.4, while the index reached an intra-day record of 5,419.1. The low for the key index was 5,384.4.
   
Hong Kong shares were higher in afternoon trade on follow-through interest in China Mobile and other blue chips and a fresh inflow of funds to the market.
   
The yuan's strength against other major currencies is attracting funds into Hong Kong. At 3.25 pm the Hang Seng Index was up 151.69 points or 0.83 pct at 18,476.04
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on continued fund inflows with blue chips and metal listings in favor. The Shanghai A-share Index added 18.64 points or 0.97 pct to 1,949.82 and the Shenzhen A-share Index was up 2.51 points or 0.54 pct at 465.26.
   
Seoul shares closed higher for a second day amid growing hopes for a peaceful resolution of the North Korean nuclear crisis, after Pyongyang said it will return to the six-nation nuclear disarmament talks.
   
The announcement of a return to talks emerged sooner than expected and investors quickly responded to the developments. Foreign investors remained sellers, however, amid calls for caution because the crisis has yet to be fully resolved.
   
The KOSPI index closed up 9.8 points or 0.72 pct at 1,374.35, off a low of 1,366.60 and a high of 1,378.11. The easing geopolitical concerns pushed the won through the 940/usd level, hitting a six-month high.

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LONDON - Gold prices rose back up to new seven-week highs, boosted by a weaker dollar, which slumped to five-week lows against the euro yesterday.
   
The US currency's sharp falls came after weak Chicago PMI and US consumer confidence data caused many to downgrade their estimates for today's ISM survey, as well as reigniting speculation that the Federal Reserve could start cutting interest rates next year.
   
At 14.44 am GMT, Gold futures rose $6 to $612.80 an ounce in electronic trading, continuing its recent strength on the back of dollar weakness.
   
Higher oil prices and a lower dollar tend to support gold prices as the metal is often used by investors as a hedge against inflation and against dollar denominated assets.
   
Meanwhile, silver prices were also at over seven-week highs, trading up 18 cents at 12.45 usd/oz.

World oil prices slid today as traders anticipated a healthy update on energy stockpiles in the US later in the day.
   
Market participants were also keeping an eye on the Organization of Petroleum Exporting Countries (Opec) oil cartel, which was to begin applying an announced output cut of 1.2 mln barrels per day (bpd).
   
New York's main contract, light sweet crude for delivery in December, fell 38 cents to 58.35 usd a barrel in electronic deals before the official opening of the US market.
   
In London, Brent North Sea crude for December delivery shed 31 cents to 58.72 usd a barrel in electronic trading.
   
The US Department of Energy (DoE) was due to publish its snapshot of oil reserves -- and the market was expecting a sharp rise in crude inventories.
   

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