US & World Daily Markets Financial Briefing 13-10-2006

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Stocks turn mixed on retail-sales data

NEW YORK - Stocks were narrowly mixed early Friday after the government said September retail sales fell by the largest amount in three months and General Electric Co.'s third-quarter profit failed to dazzle investors.
   
Oil prices, whose recent lows for the year helped drive the Dow Jones industrial average past 11,900 to a record close Thursday, rose after heating oil inventories declined. Uncertainty also remained about whether OPEC's members would be able to agree on an immediate production cut.
   
Investors were waiting see whether sharp gains recorded Thursday would continue. The Dow had its fifth record close in two weeks on Thursday and set a new intraday high. A strong profit forecast from McDonald's Corp. and overall bullish sentiment about the health of corporate earnings helped drive stocks as did mostly positive comments about the economy from the Federal Reserve.
   
In the morning trading Friday, the Dow Jones industrial average fell 11.85, or 0.10 percent, to 11,935.85.
   
Broader stock indicators were mixed. The Standard & Poor's 500 index was down 0.12, or 0.01 percent, at 1,362.71 and the Nasdaq composite index was up 1.99, or 0.08 percent, at 2,348.17. The Russell 2000 index of smaller companies was down 0.66, or 0.09 percent, at 756.43.
     
The markets were caught off guard by a 0.4 percent decline in retail sales last month. The drop reported by the Commerce Department was largely due to a 9.3 percent decline in spending on gasoline, which did leave more money in consumers pockets for spending in other areas.

Stocks in focus   

GE, the conglomerate whose products range from light bulbs to turbines, reported a 6 percent increase in its third-quarter profit, matching Wall Street expectations, and turned in better-than-expected revenue. GE was down 44 cents at $35.78.
   
Home builder Centex Corp. said late Thursday that it sees second-quarter earnings from continuing operations of 65 cents to 75 cents a share, compared with its July view of $1.40. It said net sales tumbled 28 percent from last year.
   
La-Z-Boy after Thursday's close cut its fiscal second-quarter earnings forecast to a range of a penny to 4 cents a share from its previous view of 11 cents to 15 cents a share because of weaker sales.
   
Pawnshop operator EZCorp raised its fourth-quarter earnings forecast to a range of 61 cents to 64 cents a share. EZ Corp. previously forecast earnings of 43 cents to 46 cents a share. Additionally, it sees 2006 per-share earnings of $2.05 to $2.08 and 2007 per-share earnings of $2.40 to $2.45, ahead of Wall Street's view.
   
Also late Thursday, Aetna said it will lay off 650 staff, or about 2 percent of its total workforce, in a move to cut administrative costs.

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Dollar steady ahead of US retail sales data

LONDON - The dollar remains relatively well-supported ahead of today's US retail sales data for September, which are likely to further cement expectations that the US Federal Reserve will not be cutting borrowing cost any time soon.
   
Analysts see retail sales rising 0.2 pct in September for the second consecutive month. Excluding autos, retail sales are expected to have fallen 0.1 pct against August's 0.2 pct rise.
   
Daniel Katzive, currency strategist at UBS, anticipates an even worse outcome but doubts it will prompt too much dollar selling.       
   
The main reason why the dollar has managed to garner widespread support in recent days is the growing expectation that the US Federal Reserve will not be tempted to cut borrowing costs any time soon.
   
That view was reinforced overnight with the publication of the Fed's Beige Book into economic activity around the US. It gave few indications that the slowdown occurring in the economy is spreading across the country.
   
Elsewhere, the yen was little changed by the expected Bank of Japan decision to keep borrowing costs unchanged.
   
Meanwhile, the BoJ's governor Toshihiko Fukui said he is not ruling out a possible interest rate increase before the end of the year, noting that the Japanese economy is expected to continue its recovery led by solid domestic demand and brisk exports.
   
"Financial markets will continue to have to wait and watch for further signals but are likely to make the not necessarily wise assumption that the next rate hike is unlikely to materialise before Q1," said Marc Ostwald, analyst at Insinger de Beaufort.

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The European Markets at 11.30 GMT

London - Leading shares moved higher at midday, recovering morning losses ahead of the US open when Wall Street is expected to build on yesterday's record high, and with UK miners offering support on firming commodity prices.
   
At 11.45 am, the FTSE 100 index was 18.8 points stronger at 6,140.1, picking up momentum after dipping to 6,105.3 midmorning, while the broader indices also traded higher.

Frankfurt - Shares were a touch higher midday after the DJIA closed at a new record high last night and with tech stocks back in favour, although the lack of newsflow is capping gains. At 12.24 am, the DAX was up 15.66 points at 6175.94.

Paris - Share prices were flat to slightly lower late morning as the market took a breather ahead of the weekend after recent gains and as US futures pointed a little lower after the Dow last night set another record close. At 11.05 am the CAC-40 index was down 4.70 or 0.09 pct at 5,356.81.

Amsterdam - Shares were slightly higher in early afternoon trade, in line with indecision seen on other European markets, as investors awaited direction from US markets. At 1.40 pm, the AEX index was up 0.03 pct or 0.13 point at 492.97 after opening near its highs at 494.03 but off a low of 491.29.

Milan - Share prices were flat at midday, weighed down by losses in Sanpaolo and Banca Intesa after the banks were downgraded by Credit Suisse. At 12.28 pm, the Mibtel rose 0.03 pct to 30,219 points and the S&P/Mib lost 0.01 pct to 39,602.

Madrid - Shares were higher early afternoon, with many players out for a long weekend, with main blue chips higher amid lingering M&A speculation. At 12.50 pm, the IBEX-35 index climbed 20.00 points to 13,427.7, after trading in a range of 13,346-13,430, on turnover of 1.4 bln eur.

Brussels - Shares were flat late morning as gains on Asia and Wall Street were offset by losses at Delhaize. At 11.09 am, the Bel 20 was down 3.05 points or 0.07 pct at 4178.69.

Zurich - Shares were trading lower in afternoon trade on profit-taking, with losses in heavyweight Nestle and banking stocks weighing on the index. At 1.27 pm, the Swiss Market Index was 25.39 points lower at 8,648.34, and the Swiss Performance Index was down 16.09 at 6,736.57 points.

Stockholm - Shares moved into slightly negative territory in midday trade, on profit-taking after recent strong gains. At 12.15 pm, the OMX Stockholm index was down 0.24 pct at 350.23 points, while the OMX Stockholm 30 index was down 0.28 pct at 1,094.24.

Helsinki - Shares were little changed in midday trade, as gains in Nokia and Neste Oil offset profit-taking in selected blue chip stocks, including Metso. At 1.07 pm, the OMX Helsinki 25 was 0.12 pct higher at 2,694.83 and OMX Helsinki was up 0.27 pct to 9,154.81 on 306 mln eur turnover.

Copenhagen - Share prices were virtually unchanged in quiet midmorning trade, with a fall in the AP Moeller-Maersk shares outweighed by a rise in Bang & Olufsen and TrygVesta. At 11.20 am, the OMXC20 index was 0.11 points lower at 413.79 while the OMXCB Benchmark index was up 0.13 points at 389.98.

Athens - Shares were higher in late afternoon trade, recovering from some mid session weakness, and led by Titan Cement. At 2.20 pm the ASE general index was 0.4 pct higher at 4,093.7 points.

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Asian shares close higher on Wall St record; ahead of earnings reports

HONG KONG - Shares across the Asia-Pacific region closed higher after Wall Street hit a new record high overnight, with some markets nudging key resistance levels.
   
Tokyo shares ended higher with sentiment buoyed by Wall Street and expectations that Japanese companies will soon start reporting strong earnings for the first half ended September.
   
The benchmark Nikkei 225 is likely to test the 16,800 level next week if US stocks continue to outperform, although dealers say some profit-taking may emerge. The Nikkei 225 Stock Average closed up 167.73 points or 1.02 pct at 16,536.54, after touching a high of 16,586.33. For the week, the index rose 0.61 pct.
   
The broader TOPIX index of all first-section issues rose 14.36 points or 0.89 pct to 1,628.00, just off its best level for the day of 1,637.17. The index fell 0.38 pct for the week.
      
The day's strong performers included consumer electronics' companies, chip makers and trading firms, which advanced sharply.
   
Australian shares closed higher as investor sentiment was buoyed by the overnight rise on Wall Street. Buying of bank and mining stocks supported the wider market higher, with the indices advancing nearer to the record highs reached in early May.
   
The S&P/ASX 200 rose 30.6 points or 0.58 pct to close at 5,290.0, below the day's high of 5,314.5 and above a low of 5,274.9. The key index was up 69.3 points or 1.33 pct over the trading week.
   
Hong Kong shares were stronger in afternoon trade, with the benchmark index crossing the key 18,000 point level early in the day in response to Wall Street's high.

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China financial stocks extended their gains as they continued to benefit from reports of strong institutional investor response to Industrial and Commercial Bank of China's initial public offering (IPO). At 3.26 pm the Hang Seng Index was up 111.25 points or 0.62 pct at 17,984.34.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on upbeat hopes for third quarter earnings with banks and metals stocks gaining ground.    The Shanghai A-share Index rose 6.54 points or 0.35 pct to 1,874.97 and the Shenzhen A-share Index was up 1.81 points or 0.39 pct at 463.92.
   
Seoul shares finished higher, with broad sentiment lifted by Wall Street and solid gains on other Asian markets. Steel makers and large cap IT stocks were among stocks that gained strongly.
   
The KOSPI index closed up 16.82 points or 1.26 pct at 1,348.60, after moving between 1,345.97 and 1,353.93. The index finished the week with a loss of 3.4 points.

Asian Bourse Round-Up

For a full list of closing figures, click here

Oil and Bonds
 
Light, sweet crude was up 90 cents at $58.76 a barrel in premarket electronic trading on the New York Mercantile Exchange.
   
Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.80 percent from 4.77 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.
 
 
Light, sweet crude was up 90 cents at $58.76 a barrel in premarket electronic trading on the New York Mercantile Exchange.
   
Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.80 percent from 4.77 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.
 

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