US & World Daily Markets Financial Briefing 22-02-2007

The world's most trusted name in professional trader education. Click Here

Wall Street higher on techs, takeovers

NEW YORK - Wall Street advanced in early trading Thursday, buoyed by the end of a trademark agreement between Apple Inc. and Cisco Systems Inc. and more takeover news.
   
Investors, who largely pulled back in the previous session, were encouraged by a government report that showed the labor market remains resilient. Oil prices were a concern after surpassing $60 on questions about gasoline supplies in the summer.
   
The advance in U.S. markets followed a rally across world markets triggered by further signs of economic recovery in Japan. Tokyo's Nikkei 225 stock index reached its highest close in nearly seven years.
   
Apple rose after the personal computer and iPod maker settled with Cisco over the iPhone trademark. Also boosting technology stocks was chip maker Analog Devices Inc., which gave an optimistic outlook about improving business conditions.
   
There was also further encouragement about acquisition activity so far this year after Whole Foods Market Inc. said it will buy rival Wild Oats Markets Inc. in a $565 million deal.    

In the first hour of trading, the Dow Jones industrial average rose 18.59, or 0.15 percent, to 12,757.00.
   
Broader stock indicators were also higher. The Standard & Poor's 500 index was up 3.78, or 0.26 percent, at 1,461.41, and the Nasdaq composite index added 12.73, or 0.51 percent, to 2,531.15. The Russell 2000 index of smaller companies was rose 2.20, or 0.27 percent, to 829.53.
   
Bonds weakened, with the yield on the benchmark 10-year Treasury note rising to 4.71 percent from 4.70 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices fell.
       
Oil prices edged slightly higher as traders remained cautious ahead of U.S. government inventory data expected to show crude stockpiles rose. A barrel of light, sweet crude rose 4 cents to $60.03 in premarket trading on the New York Mercantile Exchange.
   
Investors also were encouraged after the Labor Department said fewer Americans applied for unemployment benefits last week after filings jumped in the prior week by the most since 2005. Jobless claims fell to 332,000.
   
Stocks in focus

Apple rose $1.33 to $90.53 after a deal with Cisco will allow it to use the iPhone name when it rolls out the new mobile telephone that is combined with a music player. Cisco rose 16 cents to $27.54.
   
Techs were also bolstered by semiconductors, which broadly advanced after Analog Devices said there are improving trends in some of its business segments. Shares surged $2.08, or 6.2 percent, to $35.40.
   
Whole Foods jumped $3.44, or 7.7 percent, to $49.14 after it backed its forecast for same-store sales growth between 6 percent and 8 percent. The company, which also unveiled its acquisition of Wild Oats, received a number of analyst upgrades before the opening bell.
   
Wild Oats share rose $2.68, or 17 percent, to $18.40.

VantagePoint's market forecasts are nearly 80% accurate.  Take a look at actual  forecasts and see the difference they can make in your trading. Click here to see two recent forecasts now.

Dollar remains firm as Fed points to steady rate outlook

LONDON - The dollar remained buoyed by renewed talk of further interest rate hikes this year from the US Federal Reserve.

That was fuelled overnight by the release of the minutes to the last rate-setting meeting of the Fed on Jan 30/31.

Analysts said the minutes showed that the Fed retains a tightening bias as worries about inflation were in the forefront.

Coupled with relatively hawkish comments from Fed officials, currency markets have taken the view that borrowing costs will stay where they are for quite a while.

Meanwhile, the overnight resignation of Italy's Prime Minister Romano Prodi did not have too much of an impact on the euro.

Stuart Bennett, analyst at Calyon, noted that it is still interest rate differentials that are driving the euro."We don't expect the European Central Bank will step to back from two rate hikes we expect by the end of Q2 simply because of internal Italian problems," he said.

Elsewhere, the yen remained on the back foot, having failed to garner any support from the Bank of Japan's interest rate hike yesterday.

The Japanese currency fell after the central bank sought to downplay the implications of the quarter-point increase in its overnight lending rate to 0.5 pct. It argued the monetary environment in Japan remains "very accommodative" and conducive to growth, and that inflation is likely to remain near zero.

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!

Top Stories in Europe at 11.05 GMT

London - Business investment in the UK rose sharply in the fourth quarter, showing a rise of 3.3 pct from the third quarter for an 11.1 pct annual gain, official figures showed.The Office for National Statistics said business investment rose by 32.42 bln stg in the latest quarter, up from 31.4 bln in the third quarter. BAE Systems FY earnings up 32.7 pct to 1.2 bln stg, orders up 3 pct

Defence and aerospace group BAE Systems PLC reported a 32.7 pct rise in annual pretax earnings and a 3 pct increase in its order book and forecast a further year of good growth.
 
The Farnborough-based firm said full year earnings before interest, tax and amortisation (EBITA) were 1.207 bln stg against 909 mln stg last time while the order book lifted to 31.7 bln stg from 30.8 bln previously.

Munich - Allianz SE posted fourth quarter results ahead of expectations after a "particularly favourable" returns from its natural catastrophe insurance operations and as retail banking unit Dresdner Bank unit saw a strong rise in operating profit. Allianz also announced a steep rise in its annual dividend, to 3.80 eur per share from 2.00, and set bullish operating targets for the coming two years.

Frankfurt - German GDP grew 0.9 pct in seasonally, price and calendar-adjusted terms in the fourth quarter of last year compared with the third quarter, according to final figures from the Federal Statistics Office. The announcement confirmed preliminary data released on Feb 13.

Deutsche Boerse AG is studying its options for restructuring the exchange, but said that a full spin-off of any  of its units is not being considered.

Zurich - Nestle SA reported an expectations-beating full-year net profit of 9.197 bln sfr, up 13.8 pct on last year, citing its successful refocusing on the nutrition, health and wellness business as well as the impact of recent acquisitions and divestments. Analysts had forecast net profit to rise to 8.861-9.191 bln sfr, or 9.080 bln on average.

Paris - Axa reported a 20 pct rise in full-year underlying earnings to 4.0 bln eur, at the top end of analysts' forecasts and above its own long-term target, and said its focus this year will be integrating Winterthur, for which Axa raised its medium-term synergies target by 25 pct to 350 mln eur.
 
Adjusted earnings, another measure used by Axa to represent earnings before exceptional items and goodwill, reached 5.1 bln eur in 2006, up 20 pct on the previous year.

Madrid  - NH Hoteles SA said its Grande Jolly unit is offering 25 eur per share for the remaining 25.53 pct of Jolly Hotels SpA that the holding company does not already own. In a statement, NH said the outstanding stake in Jolly, currently in the hands of minority shareholders, is worth a total of 127.6 mln eur.

Endesa SA said net profit fell 6.7 pct to 2.969 bln eur in the full year to December from 3.182 bln eur a year earlier, in line with forecasts released by the company on Jan 24. In a statement, Endesa said EBITDA rose 18.6 pct to 7.139 bln eur from 6.020 bln, on total revenues of 20.580 bln, up 12.9 pct from 18.229 bln.

Altadis SA said EBITDA fell 6.8 pct to 1.148 bln eur in the full-year to December from 1.232 bln eur a year earlier, mainly due to the rise in tobacco excise taxes in Spain and tougher tobacco legislation. In a statement, Altadis said total revenues declined to 12.495 bln eur from 12.708 bln, while net profit slipped to 452.7 mln eur from 576.6 mln.

Brussels - Belgian financial services group KBC Group NV posted fourth-quarter and full-year net profits showing a 52 pct rise in full-year profit driven by central and eastern Europe, though fourth quarter underlying profit declined year-on-year.
 
Fourth-quarter net profit rose to 634 mln eur from 486 mln eur last year, comfortably in line with analysts' estimates of 514-682 mln eur.

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

Asian shares close higher as yen stays soft following BoJ rate hike

MANILA - Shares across the Asia-Pacific region closed mostly higher as investors greeted with relief the yen's soft performance in the wake of the Bank of Japan's (BoJ's) decision yesterday to hike its key overnight call rate target by 25 basis points to 0.5 pct.
   
There had been concerns an increase would push the yen up sharply, but after a small spike on the news the Japanese currency quickly retraced.  The rate hike decision also reinforced the view that Japan's economic revival remains on track, while investors welcomed BoJ governor Toshihiko Fukui's remarks that any further increases would be gradual, seemingly ruling out a further near term tightening.
   
In Tokyo the Nikkei and TOPIX indices hit multi-year highs as investors greeted with the relief the yen's lack of response to the rate hike news. The Nikkei 225 rose 195.58 points or 1.09 pct to a seven-year closing high of 18,108.79, while the TOPIX index of all first-section issues rose by 15.67 points or 0.88 pct to a 15-year closing high of 1,802.90, off a 15-year intra-day high of 1,806.38.
       
In Australia shares closed firmer with the key indices at fresh all time highs as investors snapped up banking stocks, ignoring a sell-off on the Dow Jones index overnight following stronger-than-expected January inflation data.
       
The S&P/ASX 200 closed up 65.3 points or 1.10 pct at a record finish of 6,017.1, marking the first time the index has closed above the 6,000 points level.
   
The broader All Ordinaries ended up 57.8 points or 0.97 pct at a new all-time closing high of 5,991.1. The S&P/ASX 200 closed while the broader All Ordinaries index lost 36.3 points to 5,933.1.
   
In Seoul, shares closed higher with investors shrugging off a lackluster Wall Street to focus on the strong performance in the Tokyo market and stable forex rates, dealers said.
   
The KOSPI index closed up 14.03 points or 0.97 pct at 1,465.41, off a high of 1,471.04 and a low of 1,452.71 while the KOSDAQ index closed up 2.25 points or 0.37 pct at 601.41, its strongest level  since Dec 20.
   
In Hong Kong shares also tracked up as follow-through interest in China Mobile and a firmer Tokyo market helped offset Wall Street's mixed performance overnight. They said properties were in focus given recent strong home sales.
   
The Hang Seng Index closed up 157.81 points or 0.76 pct at 20,809.23, off a low of 20,740.33 and high of 20,829.66.
   
In Manila prices closed slightly lower as the market took a breather to consolidate after recent sharp gains. Renewed concerns over US inflation -- with January consumer prices coming in stronger than expected --  was also cited as an excuse to cash out of the market.
   
The main index ended down 13.39 points or 0.40 pct at 3,365.53, after moving between 3,353.33 and 3,378.92.
   
Shares in New Zealand ended weaker as the market continued to be buffeted by corporate earnings results that have failed to meet expectations. The benchmark NZX-50 index dropped 6.01 points or 0.15 pct to 4,089.77.
   
In late trade in Singapore the main Straits Times Index was up 3.02 points or 0.09 pct at 3,296.63 and in Kuala Lumpur the KLSE index was down 2.61 points at 1275.61
   
Both the China and Taiwan stock markets remained closed for Lunar New Year holidays.

Get a FREE $50,000 Forex demo.  Free streaming quotes, guaranteed executions, 1% margins, and zero commissions! Click Here.

Gold stays close to nine-month high as investors flood back in

LONDON - Gold stayed close to nine-month highs as geopolitical concerns and energy prices increased, prompting banks to diversify some of their reserves.
   
Investors bought back into the gold as a safe-haven asset as the likelihood of US intervention in Iran grew. Iran has failed to meet a UN deadline Wednesday to halt its uranium enrichment programme.
   
Gold was also underpinned as investors hedged against possible inflationary threats from higher fuel prices -- which are testing the 60 usd level.
   
At 12.49 pm, spot gold was quoted at 678 usd an ounce, down a touch from the 679.75 usd level seen at yesterday's close.
   
Notably, gold has risen in spite of a stronger dollar. The precious metal's traditional relationship with gold showed signs of weakening. Gold usually moves in an opposite direction to the US currency as it is seen as an alternative asset.
   
"The gold market's character now shifts to high volatility and possible de-coupling from conventional drivers," said Kitco analyst, Jon Nadler. The 20 usd dollar surge in gold feeds analysts' expectations which, on the whole, call for a test of the 700 usd level.
      
"We may see further buying from those scared that they have missed the dip (in prices)" said UBS analyst, Robin Bhar. Bhar added India's newly launched gold traded fund is likely to tap banks and mutual funds looking to diversify their equities and fixed income portfolios, rather than retail consumers in the world's largest market, further lending support to gold.
   
In other precious metals, silver was at 14.23 usd an ounce against 14.28 usd in late New York trades yesterday, platinum was at 1219 usd against 1226 usd while palladium was at 341 usd against 342 usd.

•Perfect for technical day traders
•High leverages allows for more trading flexibility
•Limit risk with Guranteed Stop Losses

Join us today! FOREXYARD | trading made easy. Click Here