US & World Daily Markets Financial Briefing 19-10-2006

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Stocks down in early trading

NEW YORK - Stocks were down in early trading, with mixed results in the technology sector from the likes of Apple Computer, Nokia Corp. and Advanced Micro Devices weighing on sentiment. Wal-Mart's expansion of a generic prescription program could also impact.
   
In the opening minutes, the Dow Jones industrials fell 2.72 points to 11,989.96, the S&P 500 slipped .53 of a point to 1,365.43, and the Nasdaq dropped 4.61 points to 2,332.54.
   
U.S. stocks finished mixed on Wednesday, with the Dow industrials closing higher but below the 12,000 level it broke for the first time. The Dow industrials rose 42 points and the S&P 500 rose 1.9 points while the Nasdaq Composite declined 7.8 points.

Stocks in focus
   
Citigroup reported a 23 percent profit fall in the third quarter on flat revenue, though the earnings decline wasn't as steep as analysts had feared. Bank of America and Coca-Cola are also among the giants reporting results.
       
Apple Computer shares rose 4 percent in Germany on a stronger-than-forecast 27 percent profit rise on the back of sales of iPod music players and Macintosh computers.
   
EBay Inc. edged 1 percent higher in Germany after reporting a 10 percent profit rise and 31 percent sales rise.
   
Advanced Micro Devices is likely to see pressure, however, after Intel's chief rival reported lower profit margins and average selling prices for its microchips.
   
The media sector also is likely to draw attention with a number of results in the sector.
   
Tribune Co. reported a sharply higher profit that nonetheless missed expectations, with overall revenue down 3 percent.
   
NBC Universal, a unit of General Electric, is expected to outline cost-saving measures including the slashing of around 700 jobs, The Wall Street Journal reported.
   
Wal-Mart Stores Inc. said it has expanded its $4 generic prescription program to 14 more states, after launching the service in Florida in early October. The retailer will now offer generic prescriptions in New Jersey, Alaska, Arizona, Arkansas, Delaware, Illinois, Indiana, Nevada, New Mexico, New York, North Carolina, Oregon, Texas and Vermont.

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Dollar reverses brief gains on solid jobless claims data

LONDON - The dollar was steady, reversing brief gains after US weekly jobless claims fell to their lowest level in almost three months, as investors stayed on hold ahead of the release of the latest Philly Fed survey later this afternoon.
   
The Labor Department announced that jobless claims fell 10,000 to 299,000 last week, the lowest level since July 22. Analysts had expected a rise in claims to around 310,000.
   
Trade is likely to stay quiet for the time being as the market awaits the Philly Fed survey of manufacturing activity in the Philadelphia region, due for release at 1600 GMT.
   
Elsewhere, the pound remained weak but came off earlier lows after this morning's disappointing UK retail sales data raised a questions over the outlook for UK interest rates.
   
Though the market still fully expects that the Bank of England will raise rates again at its next meeting on November 9, doubts are creeping in as to whether the bank will have scope for any further hikes after that.
   
"The fall in retail sales in September was too little, too late as far as a November rate hike is concerned. But it may go some way to reversing expectations that rates are set to rise further after November," said Paul Dales at Capital Economics.
   
UK retail sales fell by 0.4 pct in September from August, the figures showed. This was the first monthly fall since January and came well below analysts' expectations for a rise of 0.4 pct.

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The European Markets at 12.30 GMT

London - Leading shares continued to trade down at midday as weakness in heavyweight Vodafone offset well received numbers from Prudential and a flurry of M&A rumours, Wall Street is unlikely to help sentiment, set to open lower. At 12.13 pm, the FTSE 100 index was down 11.1 points at 6,122.3, off an earlier low of 6,113.1, with the wider market also weaker.

Frankfurt - German shares were lower midmorning, tracking drops on major European exchanges as a likely cut in oil output from OPEC members and a mixed bag of earnings news left investors sidelined, while SAP and Infineon followed a general downward trend in tech stocks and FMC gained on expected positive third-quarter results.
   
At 1.19 pm, the DAX was down 0.93 points of 0.02 pct at 6,181.85, the MDAX was up 10.63 points or 0.12 pct at 8625.47, and the TECDAX was down 2.36 or 0.35 pct at 672.39.

Paris - Share prices were lower late morning after a mixed close overnight in the US prompted investors to beat a retreat with the proceeds of recent five-year highs among French stocks. At 11.05 am the CAC-40 index was 26.10 or 0.49 pct at 5,335.19.

Milan - Share prices were slightly lower at midday on a bout of profit-taking, while Fiat and Seat PG outperformed on earnings prospects. At 11.34 am, the Mibtel was down 0.26 pct at 30,129 and the S&P/Mib lost 0.35 pct to 39,342.

Madrid - Madrid shares were slightly higher in thin trade ahead of key US data, with Banco Popular leading gainers after robust third quarter results. At 12.41 pm, the IBEX-35 index gained 24.49 points to 13.422.7, after trading in a range of 13,331-13,424 on turnover of 1.7 bln eur.

Stockholm - Shares were little changed in midday trade, as gains for Ericsson after its third quarter report offset wider market weakness amid expectations of a soft start on Wall Street later today. At 1.20 pm, the OMX Stockholm index was up 0.12 pct at 350.51 and the OMX Stockholm 30 up 0.13 pct at 1,092.73.

Zurich - Share prices were lower midmorning, tracking a mixed US closing, Japanese losses overnight and other European indices, on profit-taking, with Nestle the top faller after a lacklustre set of third quarter sales results. At 11.19 am, the Swiss Market Index was 49.08 points higher at 8,571.15, and the Swiss Performance Index down 35.46 points at 6,681.87.

Brussels - Shares were lower in late morning trade as investors took profits on yesterday's gains. At 11.31 AM, the Bel 20 was down 23.85 points or 0.57 pct at 4,143.21. Imaging technology group Barco was down 1.10 eur or 1.51 pct at 71.75, whilst real estate group Cofinimmo dropped 1.60 eur or 1.08 pct to 146.40.

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Asian shares close mostly lower on profit taking

HONG KONG - Shares across the Asia-Pacific region closed mostly lower on profit taking, shrugging off a new record on Wall Street overnight.
   
Tokyo shares ended lower after profit-taking in technology shares erased earlier gains triggered by Wall Street. In addition, they said a downturn in Hoya, the world's largest maker of semiconductor photomask and mask blanks, also weighed on the market.
   
The Nikkei 225 Stock Average closed down 101.64 points or 0.61 pct at 16,551.36, off a low of 16,506.22 and a high of 16,688.96.
   
The broader TOPIX index of all first-section issues was down 2.97 points or 0.18 pct at 1,635.77, off a high of 1,647.33 and a low of 1,631.25.
   
Toshihiko Matsuno, a senior strategist at SMBC Friend Securities, said the Japanese market merely moved in step with the US, with the Dow higher and Nasdaq and S&P bearish. The downtrend in shares gathered momentum later in the day as Hoya tumbled in the afternoon despite reporting a 14 pct rise in net profit.
   
Australian shares closed lower as investors focused on the lackluster profit reports of US companies and core inflation data released in the US overnight, despite Wall Street's record close.
   
They said profit taking also weighed on the Australian share market following recent gains and investor caution ahead of the release of CPI data for the September quarter next Wednesday.
   
The S&P/ASX 200 retreated 27.9 points or 0.53 pct to close at 5,285.3, above the day's low of 5,278.8 and below the day's high of 5,319.3.
   
Hong Kong shares retreated in afternoon trade as many investors stayed out of the market after locking up funds in Industrial and Commercial Bank of China (ICBC)'s initial public offering.
   
They said there are worries that the market may see a correction after ICBC's listing as short-term investors cash in quick gains.  At 3.34 pm the Hang Seng Index was down 80.01 points or 0.45 pct at 17,967.08.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on follow-through buying and optimism over the coming listing of the A-share debut of the Industrial and Commercial Bank of China (ICBC).
   
The Shanghai A-share Index rose 5.41 points or 0.29 pct to 1,882.56 and the Shenzhen A-share Index was up 1.44 points or 0.31 pct at 468.49.
   
Seoul shares closed little changed, with many investors reluctant to build fresh positions amid ongoing geopolitical tensions arising from the North Korea nuclear test.
   
US Secretary of State Condoleezza Rice arrived in Seoul on the second stop of a four-nation tour, aimed at putting pressure on North Korea via the strict enforcement of UN sanctions.
   
After a firm start triggered by overnight gains on Wall Street, the market turned flat.
   
The KOSPI index closed down 0.20 points or 0.01 pct at 1,354.06, after moving between 1,350.36 and 1,358.95.

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Gold comes off earlier highs to trade steady ; oil edges up

LONDON - Gold steadied, having climbed marginally higher earlier when physical buying emerged in Asia, but analysts said the precious metals are set to remain stuck in recent ranges, with very little impetus to move either higher or lower.
   
Furthermore, as gold has exhibited a strong correlation with oil recently, analysts said market players are waiting to see what effect today's emergency OPEC meeting will have on oil prices.
   
At 12.23 pm, spot gold, which earlier hit a high of 591.50 usd an ounce, was quoted at 587.70 usd, down slightly from the 588.35 usd level touched when the COMEX market closed in New York yesterday.
   
Other precious metals edged lower. Spot silver was down at 11.67 usd an ounce against 11.74 usd, platinum edged down to 1,080.00 usd against 1,084.00 usd, while palladium was flat at 326.00 usd.
    
Oil prices edged up after falling yesterday to near their lowest points this year, as traders looked ahead to an OPEC emergency meeting in Doha today where the cartel is set to confirm plans to cut production in a bid to defend prices.
   
December-dated crude futures edged up 12 cents to $59.42 a barrel as the OPEC cartel met. It's expected to move to cut production to stem a recent oil price decline.
   
Meanwhile, November-dated US light crude futures were up 18 cents at 57.82 usd. Yesterday, US crude futures hit an intra-day low of 57.35 usd, near this year's all time low of 57.22 usd -- the lowest point since Dec 19.
   
Later today, OPEC is expected to announce a production cut of 1 mln bpd agreed in principle last week when oil prices fell below 58 usd - a drop of more than 25 pct from record highs above 78 usd struck in July and August.
   
The cartel, however, needs to overcome divisions analysts say are damaging its credibility. The divisions include how to divide the cuts -- which will inevitably result in lower oil revenues -- among different members.
   
Further, traders think the cartel might be divided on whether to cut its output ceiling of 28 mln bpd or slash actual output levels of around 27.5 mln bpd.
   
A 1 mln bpd cut in the official ceiling would in reality mean a reduction of just 0.5 mln bpd.
   
Yesterday, US government data showed crude oil stocks rose a surprise 5.1 mln bpd last week to total 335.6 mln barrels or 7 pct above year-ago levels. Analysts had expected a rise of just 1.5 mln barrels.
   
However, the data also showed distillates tumbled 4.5 mln barrels last week to 145.4 mln after heavy early snowfalls in the US northeast sparked a spike in demand for heating fuel.

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