US & World Daily Markets Financial Briefing 13-09-2006

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Wall Street opens narrowly mixed

NEW YORK - Stocks were narrowly mixed in early trading Wednesday as oil prices showed a modest rebound after seven days of losses.
   
Wednesday's quiet opening was to be expected after Wall Street rallied sharply Tuesday, carrying the Dow Jones industrials up more than 100 points. Investors were hoping the drop in oil would boost consumer spending and corporate profits.
   
Oil prices rose 44 cents to $64.20 a barrel ahead of a report on crude inventories Wednesday.

In the first hour of trading, the Dow Jones industrial average fell 2.24, or 0.02 percent, to 11,495.85. Broader stock indicators showed modest gains. The Standard & Poor's 500 index rose 0.68, or 0.05 percent, to 1,313.79, and the Nasdaq composite index gained 4.83, or 0.22 percent, to 2,220.65.

Stocks in focus
   
Hewlett Packard Co., which hit a new 52-week high Tuesday, came under pressure after California's attorney general warned Tuesday that company officials involved in a scandal over leaks to the media could face criminal charges. The company announced Tuesday that Patricia Dunn would step aside as chairwoman in January.

She apologized for inappropriate techniques used by private investigators in the inquiry, which delved into phone records of HP board members and reporters.
   
Lehman Brothers Holdings Inc. slipped after reporting a better-than-expected third-quarter profit despite a slowdown in its investment-banking business. A strong profit report Tuesday from Goldman Sachs Group Inc. led brokerage stocks higher.

Ford is aiming to slash its white-collar costs by nearly a third as part of a stepped-up restructuring plan, according to a report in the Wall Street Journal reported.
   
BP climbed 0.7 percent in London after America President Bob Malone told U.S. lawmakers that the company is on the brink of a deal with the Department of Interior that would resolve the agency's concerns about flawed Gulf of Mexico drilling leases.
   
The Gap Inc. was upgraded to overweight from equal-weight at Lehman Brothers, saying denim is being revamped for the fourth quarter and the Old Navy chain has begun to improve year-over-year. The broker told clients that if same-store sales don't turn positive soon, however, a management change could happen with Chief Executive Paul Pressler leaving before the end of his contract in September 2007.

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Dollar holds gains; Paulson speech awaited

LONDON - The dollar held on to recent gains, benefiting from declines in oil and commodity prices. Its gains were limited, however, amid some caution ahead of US Treasury Secretary Henry Paulson's much awaited speech this afternoon.
   
Benchmark oil prices in both New York and London stayed near six-month lows, some 20 pct off their peaks close to 80 usd. Gold and base metals were also mostly lower. Lower oil prices are expected to help US growth prospects.
   
Falling commodity prices may well boost consumer confidence and in turn provide US growth with a boost.
   
At the margins, easing inflationary pressures in the euro zone also helped the dollar gain on the euro.
   
Analysts said consumer prices data from Germany, France and Spain show that euro zone inflation is under control despite continuing pressures from high oil prices, economists said.
   
But things are unlikely to go in just the one direction. The dollar faces downside risks as well. There is some speculation that the G7 meeting this weekend will end up weighing on the currency if there is a call for greater currency market flexibility.
    
Ahead of the G7 meeting, US Treasury Secretary, Henry Paulson is due to speak on the international economy today. But anyone looking to bet on dollar falls ought to beware.
   
"There is some risk that dollar bears could be disappointed if Paulson seems to push more for trade or financial market liberalisation rather than currency flexibility from China," said Daniel Katzive at UBS.
   
Additionally, some press reports and official comments this week have suggested currency markets may not be a major focus of this week's G7 meeting after all, he added.
   
Elsewhere, the yen found some buying support after a mildly hawkish set of minutes from the Bank of Japan's last rate setting deliberations on Aug 10 and 11. The minutes showed that all nine members of the policy board shared the view that the Japanese economy will continue to expand moderately and that consumer prices will continue to follow a positive trend, even though they left the benchmark rate unchanged at 0.25 pct.
   
In the UK the pound got another modest lift after some positive job market figures this morning, showing a fall in the number Britons making jobless claims.
   
The reaction to the data was somewhat muted given that Prime Minister Tony Blair had already hinted at the figures in a speech yesterday. However, the pound remains well-bid after the pick up in the annual CPI rate was revealed yesterday.

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The European Markets at 11.30 GMT

London - Leading shares remained up at midday, albeit off morning highs, with better-than-expected interim results fuelling firm gains in both Next and BAE Systems, but with Wall Street expected to open lower this afternoon.
   
At 11.59 am, the FTSE 100 was 4.5 points stronger at 5,900.0, off its midmorning high of 5,913.4, while the broader indices were also in positive terrain.

Frankfurt - Shares were higher in midday trade following solid gains on Wall Street overnight and as the price of oil remained below 64 usd a barrel, with MAN rising sharply as it said it is interested in combining its truck business with that of Swedish rival Scania.
   
At 12.01 pm, the DAX 30 index was 18.80 points or 0.32 pct higher at 5,892.65, having moved between 5,880.71 and 5,906.98 so far this session.

Paris - Share prices were up slightly at midday, supported by the strong performance on Wall Street yesterday, but most of the action was being seen among midcap stocks, where trading was volatile in the wake of a raft of corporate news.
   
At 12.18 pm, the CAC-40 index was 7.63 points higher or 0.2 pct at 5,133.60, on volume of 1.4 bln eur.

Amsterdam - Shares were higher at midday, buoyed mainly by heavyweight financials, while oil-related shares dropped and staffing companies fell after a mixed report on the Dutch staffing market.
   
At 12.04 pm, the AEX was up 2.45 points or 0.52 pct to 471.43, after trading in a range of 470.53-472.03.

Milan - Share prices were slightly lower in midday trade, with Alitalia and Mediaset leading the decline on disappointing outlooks.
   
At 12.49 pm, the Mibtel index was down 0.11 pct at 29,036 points and the S&P/Mib was off 0.09 pct at 37,886, while volumes were 1.78 bln eur. Decliners outnumbered advancers 155 to 138, and 19 shares were unchanged.
 
Madrid - Share prices were higher in thin midday trade as firmer US futures boosted European markets and oil prices continued to drift lower, with Iberia and Gamesa leading the gainers, traders said.
   
At 12.12 pm, the IBEX-35 index rose 18.2 points to 12,183.1, after trading in a range of 12,167-12,225, on thin turnover of 827 mln eur.

Stockholm - Shares were firmly higher in midday trade, led by Scania on hopes for a takeover by Germany's MAN and with Ericsson and engineering stocks gaining on indications of a positive start on Wall Street later today, brokers said.
   
At 12.45 pm, the OMX Stockholm index was up 0.80 pct at 328.56 points, while the OMX Stockholm 30 index was up 0.70 pct at 1,018.80 points. 

Helsinki - Shares were higher in midday trade, with Neste Oil leading the advancers and as gains on Wall Street overnight and recent falls in crude prices fuelled widespread bargain-hunting.
   
At 1.07 pm, the OMX Helsinki 25 was 0.58 pct firmer at 2,545.30 points and the OMX Helsinki was up 0.55 pct at 8,715.86 points, with volume at 355 mln eur.

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Asian shares close mostly higher on Wall St, but Japan nervous

HONG KONG - Shares across the Asia-Pacific region closed generally higher on Wall Street's rise and lower oil prices, but Tokyo was beset by fears of foreign investor selling.
   
Tokyo shares ended mixed after early gains inspired by Wall Street's climb were offset by losses due to fear among investors that foreigners would step up their selling, dealers said.
   
Analysts said the fear of increased selling of Japanese stocks by foreign investors was fuelled by sustained declines in commodity prices and sharp drops in stock markets in emerging economies such as Russia -- the same kind of developments that preceded the sell-off in Japan during April and May.
   
The blue-chip Nikkei 225 index closed 30.71 points or 0.2 pct higher at 15,750.05.
   
But the broader TOPIX index of all first-section issues closed 2.43 points or 0.15 pct lower at 1,583.55.
   
Australian shares finished higher, rebounding on bargain-hunting in resource stocks which had been hit hard in recent sessions because of weakening commodity prices.
   
They said buyers returned to the market, encouraged by gains in New York yesterday, but more importantly seeking bargains among blue-chip resources stocks, which saw significant recoveries.
   
The S&P/ASX 200 closed up 42.8 points or 0.86 pct at 5,017.2, off a low of 4,985.4 but off a high for the day of 5,019.2.
   
Hong Kong shares were higher in afternoon trade as investor sentiment was buoyed by strong gains on Wall Street as oil prices continued to drop. At 3.26 pm the Hang Seng Index was up 114.02 points or 0.67 pct at 17,189.42.
   
In mainland China, A-shares in Shanghai and Shenzhen closed lower on profit-taking with metal and machinery stocks in particular losing ground.
   
The Shanghai A-share Index fell 6.55 points or 0.37 pct to 1,776.85 and the Shenzhen A-share Index was down 5.42 points or 1.23 pct at 434.25.
   
Seoul shares ended higher, recovering most of their losses in the previous session, as solid gains on Wall Street and a lower oil prices boosted investor sentiment. The market was firm throughout the session but closed off its high for the day on renewed caution in late trade ahead of triple witching tomorrow, they
noted.
   
The KOSPI index closed up 5.09 points or 0.38 pct at 1,333.13, after moving between 1,332.87 and 1,342.38.

Asian Bourse Round-Up

For a full list of closing figures, click here

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Commodities sell-off pressures copper; Gold hits lowest levels since end-June

LONDON - Copper fell as the red metals continued to come under pressure from the broad-based sell-off in commodities, but the other base metals rebounded as stocks remain tight and physical buying is expected to pick up this quarter.
   
At 14.30 BST, LME copper for three-month delivery was at 7,497.50 usd a tonne, down from 7,560.00 usd at the close yesterday. Other metals were stronger, however.
   
Nickel was at 29,400.00 usd against 29,295.00 usd, zinc was at 3,295.00 usd against 3,280.00 usd, aluminium was at 2,476.50 usd against 2,462.00 usd, tin was at 8,925.00 usd against 8,905.00 usd and lead was at 1,305.00 usd against 1,300.00 usd.

Gold prices prices fell, hitting their lowest levels since end-June, as the precious metal came under pressure from a steep decline in oil prices and from a strengthening US dollar.
   
A perceived lessening in geopolitical tensions over Iran's nuclear dispute are weakening gold's safe haven appeal, while falling oil prices are reducing investors' appetite for holding bullion as a hedge against inflation.
   
At 12.49 pm, spot gold, which earlier hit a low of 579.00 usd, was quoted at 586.35 usd, down from 587.30 usd at the time of the COMEX market close in New York yesterday. Other precious metals were mixed.
   
Spot silver was at 11.02 usd an ounce against 11.01 usd yesterday, platinum was at 1,188.50 usd against 1,201.00 usd, while palladium was at 313.00 usd against 309.00 usd.
   
Gold came under heavy selling pressure yesterday after oil prices fell to near 6 month lows while worse than expected US trade balance data failed to pressure the dollar.
   
The falls have continued today, but TheBullionDesk.com analyst James Moore said physical demand, which has seen a sharp increase since gold moved below 600 usd, should absorb some of the selling going forward.
    
Gold is down almost 55 usd from last week's high of 640.25 usd and the precious metal is a long way off a 25-year high of 730 usd an ounce touched in May this year.

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