US & World Daily Markets Financial Briefing 07-09-2006

Start trading successfully today
Click here  to find out more

Stocks down on economic slowdown worries

NEW YORK - Stocks fell for a second straight session Thursday as concerns about inflation and an overall economic slowdown continued to weigh on investors.
   
Wall Street, already armed with recent economic data pointing to a housing slowdown, was forced to digest sour anecdotal evidence as well. Beazer Homes USA Inc., Hovnanian Enterprises Inc. and KB Home warned that the home-building sector is facing difficulties including cancellations and spikes in inventories.
   
The major indexes, which all showed declines Wednesday, gave up further ground Thursday. The Nasdaq composite index on Wednesday posted its largest single-day point drop in more than a month amid concerns of rising labor costs and slowing growth in some of the nation's regions.
   
In the first hour of trading, the Nasdaq fell 8.77, or 0.40 percent, to 2,159.07.
   
The Dow Jones industrial average fell 46.34, or 0.41 percent, to 11,359.86, and the Standard & Poor's 500 index was off 3.85, or 0.30 percent, at 1,296.41.

Crude-oil futures advanced 37 cents to $67.87 a barrel after recent declines. Weekly energy inventory data is due later.

Stocks in focus

Palm Inc. may slide after the handheld devices maker warned quarterly sales won't meet expectations due to lower-than-expected shipments of Treo devices.
   
KB Home may decline after lowering its fiscal-year earnings guidance.
   
But investors may warm to a 34 percent profit decline from fellow homebuilder Hovnanian Enterprises, as the profit fall wasn't as steep as analysts had expected. Hovnanian also stuck to its profit forecast for the year.
   
Also on the housing front, U.K. engineering group Tomkins warned it wouldn't meet profit forecasts for the third quarter, citing weakness in the U.S. housing and automotive markets.
   
Alcatel shareholders later on Thursday are expected to approve a merger with Lucent Technologies.
   
A number of European companies reported earnings Thursday, with U.S. and Dutch supermarkets owner Ahold rising in Amsterdam after reporting a 70 percent profit rise.
   
Brewer InBev also rose after reporting a better-than-forecast 12 percent profit rise.

VantagePoint's market forecasts are nearly 80% accurate. Take a look at actual forecasts, become eligible for a Complimentary VantagePoint Market ($750 value!) and see the difference they will make. Click here to see two recent forecasts now.

Yen surges on confirmation G7 will discuss currency

LONDON - The yen surged across the board after Germany's deputy finance minister confirmed that the G7 group of leading industrialised nations will discuss the recent weakness of the Japanese currency at its upcoming meeting in Singapore.
   
In comments to reporters in Berlin, Thomas Mirow said it has become an "source of concern" that the euro has hit record highs against the yen almost on a daily basis. As a result, European ministers would like to talk about it, he added.
   
"Comments from the German deputy finance minister have finally put the September G7/IMF meetings into the spotlight and instead of the (Chinese) yuan, the yen has become a focal point for policy makers," said Divyang Shah, global strategist at IDEAglobal.com.
   
In contrast to expectations earlier in the year, the BoJ is set to keep borrowing costs unchanged tomorrow.
   
Daniel Katzive, currency strategist at UBS, thinks the yen may enjoy a recovery over the coming days and weeks.
   
"We continue to view upcoming G7 risk, a retreat in risk appetite back towards more moderate levels, and potential for more hawkish BoJ commentary as likely to keep yen-funded carry trades nervous, and see scope for some further yen recovery at the expense of higher yielding currencies in the near-term," he said.
   
Elsewhere, the pound remained on the backfoot for the second day running as the pressure on Prime Minister Tony Blair to resign mounts.
   
Following yesterday's seven resignations from the government, Blair is today set to front up to his critics and outline his plans for leaving office.
   
Many commentators doubt that the expected confirmation that he will leave office by the time of the Labour Party conference in autumn 2007 will be enough to placate his opponents.
   
Over the course of the last couple of days, the pound has slumped from 1.90 usd, while the euro has climbed above 0.68 stg.

Inflation picked up in September in Europe as both areas show fragile economic growth. Just as in the U.S., rising energy prices are to blame. Read free, daily market reports available only at CMS Forex and open your free demo trading account today. Click here

FTSE 100 risers

Yell Group 582 up 49 - Competition Commission relaxes price cap; Brokers positive

Tesco 371-3/4 up 3/4 - Upbeat numbers from Ahold, Carrefour; increase in index weighting to 100 pct

J Sainsbury 357-1/2 up 1-3/4  - Upbeat numbers from Ahold, Carrefour lift sector sentiment

Morrison Supermarkets 221-3/4 up 1-3/4 - Upbeat numbers from Ahold, Carrefour lift sector sentiment

Scottish & Southern Energy 1,235 up 20 - Citigroup 'buy' from 'hold' with 1,350 pence target

Centrica 308-3/4 up 1-1/2 - Bid speculation persists
   

FTSE 100 fallers

PartyGaming 106-1/4 down 11 - In-line interims; Sportingbet non-exec chairman US arrest hits sentiment

Wolseley 1,120 down 30 - US housing market concerns; KB Home cut guidance last night

BT 245-1/2 down 4 - Goldman Sachs place 30 mln shares at 246 pence apiece

Old Mutual 161-1/4 down 4-3/4 - Adverse market trend, Citigroup lowers target to 183 pence

Anglo American 2,272 down 55 - Metals fall back aftr recent gains, IMF warns commodity boom unsustainable 

BHP Billiton 996 down 20 - Metals fall back aftr recent gains, IMF warns commodity boom unsustainable

Amvescap 525-1/4 down 8-3/4 - Adverse market trend

Gallaher 892-1/2 down 6-1/2 - Goldman 'sell' with ests cut; UBS 'reduce' from 'neutral'

Vodafone 112-1/2 down 1-3/4 - Lehman 'equal-weight' from 'overweight' with tgt cut to 135 pence from 155

Frankfurt

At 2.57 pm, the DAX 30 index was 37.18 points or 0.64 pct lower at 5,775.88, having moved between 5,762.63 and 5,792.64 so far this session.
   
The MDAX was at 8,106.51, down 85.25 points or 1.04 pct, while the TecDAX was at 635.85, down 7.40 points or 1.15 pct. The DAX futures contract was at 5,781.00, down 25.00 points or 0.43 pct, while bund futures were at 116.81, down 0.22 point.

Continental AG led large-caps lower, sliding 2.43 eur or 2.97 pct to 79.38, as a profit-warning from British auto components peer Tomkins dampened sentiment towards the sector.
   
Tomkins warned that underlying profits will be lower than expected for the third quarter due to poor trading in July and August.
   
MAN slipped 1.60 to 59.66, pulling back from recent gains, while Infineon dipped 0.18 to 8.94.
   
Auto stocks were a weak feature, with DaimlerChrysler dropping 0.64 to 39.95, after its Chrysler unit said overnight it was recalling about 145,000 2006 Dodge Ram 1500 pickups to replace the passenger air bag pack and reprogramme the air bag's computer system.
   
The automaker said it would also replace the front passenger seat belt assembly in the same vehicles, because it may not allow an owner to properly secure a limited number of child restraint systems.
   
The recall outweighed news that August unit sales at DaimlerChrysler's Mercedes Car Group division totalled 88,600, up 1.2 pct from the same month last year.

Get a Completely Free $50,000 FX Demo!
Instant execution with: no slippage, no partial fills and no debits – all Guaranteed. Click the bid or offer with instant fills. Zero commissions – Period! All at XPRESSTRADE.com

Asian shares close lower on Wall St;  Tokyo suffers a sharp fall

HONG KONG - Shares across the Asia-Pacific region closed lower in response to Wall Street's fall overnight on fears that US interest rates will rise, dealers said.
   
Tokyo shares finished sharply lower, with the benchmark Nikkei index down by more than 270 points, market sentiment having been dampened by Wall Street, dealers said.
   
They said technically driven selling before the expiry of special quotation futures contracts tomorrow also weighed on the market.
   
The blue-chip Nikkei 225 Stock Average closed 271.68 points or 1.7 pct lower at 16,012.41, off a low of 15,944.03. The broader TOPIX index of all first-section issues lost 29.36 points or 1.8 pct at 1,613.46, after touching a low of 1,611.04.
   
Hong Kong shares were sharply lower in afternoon trade as economic data renewed worries over US inflation and interest rates, dealers said.
   
They said that data showing a higher-than-expected increase in US wages in the second quarter and faster than forecast growth in the services sector in August sparked concerns that the Federal Reserve may resume its interest rate increases at its meeting later this month.
   
At 3.57 pm the Hang Seng Index had fallen 174.82 points or 1.01 pct to 17,083.69
   
In mainland China, A-shares in Shanghai and Shenzhen closed lower on profit-taking after a three-day rise, despite China Petroleum & Chemical Corp (Sinopec) jumping nearly 4 pct when it resumed trading, dealers said.
   
The Shanghai A-share Index fell 11.48 points, to 1,746.58 and the Shenzhen A-share Index was down 6.53 points at 433.95.
   
Seoul shares closed lower as foreign investors turned net sellers, with sentiment undercut by Wall Street's weaker close, dealers said.
   
Investors also found little comfort in the Bank of Korea's cautious comment on economic conditions and downbeat consumer confidence data, they added.
   
The KOSPI closed down 5.84 points or 0.43 pct at 1,351.42, off a high of 1,353.67 and a low of 1,342.57.
   
The central bank kept its benchmark call rate target for September unchanged at 4.5 pct, as expected, with worries over recent economic data and uncertainty about oil prices and the direction of the US economy outweighing inflation fears.
   
The consumer expectations index , which measures consumer sentiment six months in advance, eased to 93.7 from 94.3 in July, falling for a seventh consecutive month and also hitting its lowest level since January 2005.

Trade with RCG fxtrader™, the platform offering instant access to 12 major FX trading pairs with low spreads (2 pips EURUSD, USDJPY) and global news from 3 major sources.  Trade with a registered and regulated company in business for 80 years. Smart money trades here – Get your FREE Trial Today!

Copper dips as mkt consolidates after climbing above 8,000 usd
     
LONDON - At 12.15 pm, LME copper for three-month delivery was at 7,970.00 usd a tonne, down from 8,040.00 usd at the close yesterday, while nickel was up at 28,525.00 usd a tonne against 28,400.00 usd.
   
Other metals were mixed. Zinc was at 3,655.00 usd against 3,720.00 usd, lead was at 1,335.00 usd against 1,343.00 usd, aluminium was at 2,660.00 usd against 2,634.00 usd and tin was at 9,200.00 usd against 9,175.00 usd.
   
Numis Securities analyst John Meyer said the market is anticipating stocks will not be able to meet demand. "In proportion to the growing levels of demand, inventories would appear to be at an all-time low," he said.
   
He added that the large copper mines are underperforming in terms of production targets. "It's looking as if the market is likely to remain in deficit for the next 6-12 months," he said.
   
Escondida, the world's largest copper mine, announced yesterday it will return to full production this week following a 25-day strike that resulted in 3,500 tonnes of lost production.
   
Gold prices fell after touching 4 week highs yesterday and silver dipped further off yesterday's 3 month highs as the precious metals rally of the past few days ran out of steam amid a strengthening US dollar.
  
At 2.20 pm, spot gold, which earlier hit a high of 636.00 usd, was quoted at 625.40 usd, down from 633.20 usd at the time of the COMEX market close in New York yesterday. Other precious metals were lower.
   
Spot silver was at 12.87 usd an ounce against 13.05 usd yesterday, platinum was at 1,252.50 usd against 1,268.00 usd while palladium was at 348.00 usd against 352.00 usd.
   
"There were signs early today and late yesterday that the precious metals rally was beginning to lose momentum.... I guess the most notable external factor is the strength of the dollar," said SG CIB analyst Stephen Briggs.
   
The dollar rose against most major currencies yesterday after government data showed an uptick in labour costs, supporting the case for an interest rate hike at the Federal Reserve's next meeting.
   
Higher rates boost the dollar by making certain types of investments more attractive. A stronger dollar tends to weigh on gold as the precious metal is seen as an alternative investment to the US currency.
    
Gold hit a 4 week high above 640 while silver touched a 3 month peak above 13 usd earlier this week as strong investor and fund buying emerged after the US Labor Day holiday Monday and dealers saw increased physical demand ahead. 

Increase the odds for Forex Trading success with this free online course. Learn to build a solid Forex Trading foundation and discover proven strategies for continued success.  Access this wealth of knowledge here absolutely free.

Online Trading Academy - Learn more to earn more.