US & World Daily Markets Financial Briefing 24-01-2007

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

Stocks open higher on earnings news

NEW YORK - Stocks rose in early trading Wednesday after profit reports from Yahoo Inc. and Sun Microsystems Inc. helped shore up investors' flagging confidence in the technology sector.
   
Tech stocks have borne most of Wall Street's concern about the health of corporate earnings in recent weeks. Restive investors, taking their cues from a flurry of profit reports, have been at turns pleased and concerned about the prospects that profit growth will help drive stocks higher following a sharp run-up in 2006.
   
Investors could also keep tabs on the energy and health sectors Wednesday following President Bush's State of the Union address in which he called for expanded health insurance coverage and a 20 percent reduction the country's consumption of gasoline over the next 10 years.
   
In the first hour of trading, the Dow Jones industrial average was up 35.49, or 0.28 percent, at 12,569.29.
   
Broader stock indicators were also higher. The Standard & Poor's 500 index was up 4.00, or 0.28 percent, at 1,431.99 and the Nasdaq composite index was up 15.42, or 0.63 percent, at 2,446.83.
   
Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.80 percent from 4.81 percent late Tuesday.    

Light, sweet crude was down 39 cents at $54.65 per barrel in premarket electronic trading on the New York Mercantile Exchange. The move comes after oil rose more than $2 per barrel Tuesday on word the United States plans to double the size of its Strategic Petroleum Reserve. The increase is expected to occur over decades, however.

Stocks in focus
   
In corporate news, Yahoo jumped $1.79, or 6.6 percent, to $28.75 after the Internet-search company's fourth-quarter profit topped Wall Street's estimates. The company unveiled a search technology and said it expects to draw more revenue from each page view during the year.
   
Sun Microsystems, a maker of server and storage products, rose 50 cents, or 8.8 percent, to $6.16 after the company reported its first quarterly profit in years as revenue increased. Earnings were above what Wall Street expected.   

The Russell 2000 index of smaller companies was up 3.15, or 0.40 percent, at 788.53.   

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.

Pound slips further as UK rate expectations recede; Aussie dollar falls

LONDON - The pound slipped further after news this morning revealed that the Bank of England's decision to raise interest rates earlier this month was made thanks to an unexpectedly close 5-4 vote.   
   
The news led market players to scale back their expectations for further interest rate hikes in the coming months -- which had become ever more hawkish after January's surprise rate hike and very strong inflation data -- with a back-to-back rise in February looking increasingly unlikely.
      
Prior to today, interest rate futures had not only fully factored in a further 25 basis point rise to 5.50 pct in the coming months, but they had also "begun toying" with the idea that rates could hit 5.75 pct later this year, he noted.
   
However, the minutes suggested instead that the debate centred on the matter of timing, rather than whether more than one hike might be needed. Forecasts for the next interest rate rise are likely to be revised to the end of the first quarter or the beginning of the second, he added.
   
The dovish minutes, however, were somewhat offset by stronger-than-expected UK GDP figures, which showed the economy posted the strongest growth since the second quarter of 2004. The UK has now posted five consecutive quarters of above-trend growth, which still point to a need for higher interest rates.
   
The pound fell below the 1.97 level against the dollar to hit a six-day low of 1.9661 usd. This in turn weighed on the euro, which dropped back below the 1.30 usd mark.
 
Elsewhere, the Australian dollar was sharply lower, falling to its lowest level in 12 days against the US dollar after data overnight showed a sharp fall in Australian CPI data, making it much less likely that the Reserve Bank of Australia will need to raise interest rates again in the coming months.
   
"Futures markets have now slashed the prospects of further rate hikes in Australia and have all but abandoned the notion that a move is in the offing at the Bank's first policy meeting of the year on February 6," the Bank of New York's Mellor said.

Follow the futures and FX markets with our trading experts and read their analysis.  Click here to sign up now!

The European markets at 12.45 GMT

London - Leading shares extended gains midday to hit session highs, as the minutes from the latest Bank of England meeting raised hopes among investors that rates may stay on hold next month, and ahead of a rally among US tech issues following solid earnings from Yahoo and Sun Micro. At 11.50 am, the FTSE 100 index was 71.5 points stronger at 6,299.1, while the broader indices also traded ahead.

Frankfurt - German shares were higher midday after a firmer close on Wall Street, led by MAN amid rumours that VW and Investor AB are bidding at 85 eur a share for the German truck manufacturer.  At 12.00 pm, the DAX rose 37.81 points or 0.57 pct to 6,716.74, while it traded between 6,681.66 and 6,721.56 in the morning. The MDAX added 61.75 points or 0.64 pct, with the TecDAX climbing 5.46 points or 0.68 pct higher to 802.84.

Paris - Shares were higher at midday as gains for Arcelor Mittal and positive sentiment following yesterday's rise on Wall Street outweighed disappointment with STMicroelectronics' fourth-quarter results and technology names as a whole. At 12.00 noon, the CAC-40 index was up 40.54 points or 0.73 pct at 5,615.61 on volume of 2.0 bln eur.

Amsterdam - Shares in Amsterdam were slightly higher at around midday as Dow futures pointed to a higher opening of Wall Street, while Vopak fell on the back of a broker downgrade. At 13.05 pm, the AEX was up 0.39 pct or 1.96 points at 504.78, after opening at 504.44.

Milan - Share prices were slightly higher at midday, with banking shares in the spotlight amid continued analyst optimism regarding the profit outlook and Fiat boosted ahead of the release of full-year results tomorrow. At 12.50 pm, the Mibtel index was up 0.56 pct at 32,531 and the S&P/Mib gained 0.64 pct to 42,377, while volumes were 2.58 bln eur.

Madrid - Share prices were higher in early afternoon trade, with main banks in demand after upgrades by JP Morgan, and Abengoa gaining after US President George W Bush called for a hike in bioethanol targets. At 12.57 pm, the IBEX-35 index gained 123.6 points to 14,491.1, on volume of about 3.4 bln eur.

Zurich - Share prices moved higher in afternoon trade as heavyweight pharma stocks extended gains and with Lonza still on the rise after forecast-beating full-year results. At 12.05 pm, the Swiss Market Index was 35.32 points higher at 9,140.82, and the Swiss Performance Index was 33.39 points up at 7,229.91.

Stockholm - Shares remained in slightly positive territory in early afternoon trade, little changed from morning levels, with Nordea outperforming on merger speculation, and medical equipment supplier Getinge higher after its fourth-quarter results. At 1.00 pm, the OMX Stockholm index was up 0.28 pct at 385.13, and the OMX Stockholm 30 was up 0.26 pct at 1,178.16.

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!

Asian shares close higher on positive economic news

HONG KONG  - Shares across the Asia-Pacific region closed higher on positive economic data and optimism about corporate earnings, dealers said.
   
Tokyo shares closed firmer, with investors heartened by a rebound on Wall
Street overnight and expectations that Japanese companies will increase their
forecasts of earnings. The blue-chip Nikkei 225 Stock Average closed 98.83 points or 0.57 pct higher at 17,507.40, off a high of 17,553.03. The TOPIX index of all first-section issues ended the session 7.85 points or 0.45 pct higher at 1,738.61, off a high of 1,745.88
   
Australian shares closed at a third consecutive record high as investors bought resource stocks after base metal prices jumped in London trading overnight.
   
Early gains were extended following consumer inflation data for the December quarter which fell 0.1 pct against the market consensus of a 0.2 pct rise. The annual rate fell to 3.3 pct from 3.9 pct over the year to September.
   
Investors' sentiment was also boosted by the Reserve Bank of Australia's core inflation measures, the weighted median and trimmed mean, both rising just 0.5 pct in the fourth quarter from the 0.8 pct and 0.7 pct respective increases in the September quarter.
   
The S&P/ASX 200 advanced 33.8 points or 0.59 pct to a record close at 5,768.8, beating yesterday's record closing level of 5,735.0. The key index closed off a new intra-day record high of 5,776.1 and above the low of 5,742.2.
   
The broader All Ordinaries index ended up 35.0 points to a fresh record close of 5,749.1, also beating yesterday's previous record close of 5,714.1 and setting a fresh intra-day record of 5,755.9.
   
Hong Kong shares were higher in afternoon trade but off their fresh all-time high of 20,971.46 touched in the morning, as China Mobile extended its gains on the back of some broker upgrades and hopes of strong earnings. At 3.20 pm the Hang Seng Index was up 38.25 points or 0.18 pct at 20,807.95.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on the back of sustained capital inflows with financial stocks and real estate developers in favor. The Shanghai A-share Index rose 27.82 points or 0.90 pct to 3,125.38 and the Shenzhen A-share Index was up 4.36 points or 0.60 pct at 732.55, a new all time high.
   
Seoul shares closed sharply higher, backed by heavy program buying and further interest by foreign investors. Steel makers, retailers and brokerages posted solid gains.
   
The KOSPI index closed up 19.97 points or 1.47 pct at 1,383.07, after moving
between 1,369.02 and 1,383.75.

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

LONDON - Gold edged lower as the market consolidated after climbing yesterday to its highest levels this year, and as the dollar recovered slightly from yesterday's large sell-off.
   
At 2.18 pm, spot gold, which earlier hit a low of 640.40 usd an ounce, was quoted at 641.35 usd, up from the 646.50 usd level seen in late New York trades yesterday.
      
"Metals traders should be wary of this release following the sharp sell-off last week (after) large, unexpected stock builds," said UBS Investment Bank analyst John Reade.
   
He said he remains positive on the precious metals overall. "We view the past few days' moves in precious metals as very positive. We will readdress out short-term forecasts for all precious metals on Thursday," he said.
   
In other precious metals, silver was down at 13.10 usd an ounce against 13.21 usd in late New York trades, platinum was down at 1,164.00 usd against 1,173.00 usd, while palladium was up at 344.50 usd against 350.00 usd.

At 11.47 am, LME nickel for three-month delivery was at 38,150 usd a tonne, after earlier hitting a record high of 38,500 usd. Tin was at 12,400 usd a tonne, off an all time high of 12,500 usd, which it hit earlier today.
   
Both metals hit record highs yesterday, although nickel has been soaring to new records for the past six trading sessions, supported by possible strike action at Xstrata's Sudbury mine in Ontario.
   
"I don't think anybody will go short at the moment. Sudbury is one of the biggest nickel producers in the world, it produces roughly 4 pct of nickel supply," Calyon analyst Michael Widmer said.
   
The nickel market can ill afford another supply disruption as available LME stockpiles, which stand at just under 4,000 tonnes, currently account for just under a day's worth of global consumption.
   
Yesterday, prices for cash nickel broke through the critical 40,000 usd a tonne level, putting premiums for the cash metal over the three month price at 3,200 usd by the close of trade.
   
Standard Bank analyst Michael Skinner said the 40,000 usd a tonne level for
three-month nickel is now in sight, noting prices have gained about 25 pct since
the start of the year. Since the start of last year, nickel prices have gained around 180 pct.
   
Elsewhere, tin was soaring on continued concerns over the security of supply
from Indonesia, where the government has issued regulations limiting refined tin
exports.
   
In other metals, aluminium was up at 2,838 usd a tonne, against 2,815 usd a
tonne, holding above the key 2,800 usd level amid supply concerns in South Africa and a strike in Guinea that is affecting bauxite exports.
   
Bauxite is used to produce alumina and Widmer said while there is no shortage of alumina on the market, the strike in Guinea is nevertheless helping underpin prices.
   
Copper was up at 5,730 usd a tonne against 5,660 usd at the close yesterday, lead was up at 1,690 usd a tonne against 1,673 usd, while zinc rose to 3,750 usd a tonne against 3,700 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