US & World Daily Markets Financial Briefing 25-05-2006

Start trading successfully today
Click here  to find out more

U.S. stocks open higher as GDP report eases inflation fears

NEW YORK - U.S. stocks rose in early trading Thursday as a smaller-than-expected upward revision in first-quarter economic growth soothed inflation fears, with broker upgrades for Wal-Mart Stores Inc and Internet sector bellwether eBay Inc. also lending support.
   
The Dow Jones Industrial Average rose 43 points to 11,160. The Nasdaq Composite Index climbed 16 points to 2,185 while the S&P 500 Index added 7 points to 1,266.
   
Stocks on the move
   
Shares in Wal-Mart Stores Inc. rose 1.7% to $48.82 after Bank of America upgraded the world's largest discount retailer to buy from neutral. The broker said the change in recommendation reflected early success from the company's current merchandise initiatives, hopes for slowing future square footage growth and improved margin expectations.
   
Shares in Yahoo Inc. and eBay Inc shares rallied after the two companies said they have entered into a multi-year partnership.
   
Yahoo will become the exclusive third-party provider of graphical advertising on eBay's site and eBay's PayPal will become the exclusive payment system on Yahoo's sites. The companies also agreed to a co-branded version of eBay's toolbar, which will include links to Yahoo's search and mail functions.

In addition, the companies will develop "click-to-call" advertising technologies, in which consumers can use a link included inside an advertisement to directly call that advertiser. Yahoo and eBay said they do not expect the relationship to have a material impact on 2006 financial results.
   
Broker Prudential also upgraded the Internet sector and eBay to overweight from neutralweight, with the broker saying the steep drop in the stock since the beginning of the year makes the valuation attractive. EBay shares shot up 8.1% to $32.65 while shares of Yahoo climbed 4.1% to $33.08.
   
Shares of Sirius Satellite Radio Inc. climbed 5.4% to $3.87 after the company's chief financial officer said it may make sense to merge with its rival XM Satellite Radio Inc , although he is not sure regulators would approve the deal.
   
XM shares were off 6.3% at $12.88 as it continues to suffer from the fallout over its revised 2006 subscriber forecast.
   
Separately, CBS Corp. and Sirius Satellite's shock jock Howard Stern have settled a breach-of-contract lawsuit the company filed against Stern, according to the disc jockey's lawyer.

VantagePoint's market forecasts are nearly 80% accurate. Take a look at actual forecasts, become eligible for a Complimentary VantagePoint Market ($750 value!) and see the difference they will make. Click here to see two recent forecasts now.

Dollar falls vs. yen on weaker GDP, housing data in focus

NEW YORK - The dollar fell against the yen and was little changed against the euro early Thursday after a revision of U.S. gross domestic product estimates came in short of expectations.
   
The U.S. economy grew at a 5.3% annual rate in the first quarter, faster than the 4.8% estimated a month ago, the Commerce Department said. Economists were predicting a revision to about 5.6%. The inflation picture was unchanged. The core personal consumption expenditure price index rose 2.0%, unrevised from the initial estimate.
   
The number "is not really generating that much activity in the market" as the Fed is looking at current developments, said Brian Dolan, head of currency research at Gain Capital. "However, to the extent that it came in below expectations, it's slightly dollar negative."
   
"The more key point for today is going to be the existing-home sales report that is likely to generate far larger reaction in the market," he said.
   
In early New York trading, the euro was at $1.2768 from $1.2755 late Wednesday. The dollar was fetching 112.08 yen, compared with 112.79 yen. The British pound was quoted at $1.871 from $1.868. The dollar changed hands at 1.2186 Swiss francs from 1.2174 francs late Wednesday. The euro traded at 143.12 yen from 143.9 yen.
   
Existing-home sales probably fell to 6.74 million in April from 6.92 million, according to a survey conducted by MarketWatch.
   
"U.S. housing data remain of primary concern to the currency market and yesterday's [Wednesday] new-home sales report, while better than expected, is also known to be notoriously inaccurate, subject to vast revisions," said Boris Schlossberg, senior currency strategist at FXCM.
   
"Therefore, today existing-home sales data may provide a much better picture of true housing demand in U.S," he said, in a note.
   
New-home sales rose 4.9% in April to a seasonally adjusted annual rate of 1.20 million, the highest level of the year, the Commerce Department said Wednesday. Economists had been expecting the pace of new-home sales to cool to 1.15 million units.
   
The dollar strengthened across the board Wednesday after a mixed batch of U.S. economic data prompted investors to square positions after the greenback's latest sell-off.
   
On Friday, the market will focus on the release of core personal consumption expenditure data, which is one of the Federal Reserve's favorite inflation measures, said Gain Capital's Dolan.
   
Earlier, the dollar also came under some pressure after news that Russia will invest 45% of its stabilization fund in euros, another 45% in dollars, and 10% in the British pound. The fund value was $66.7 billion at May 1 and is in addition to the $236.7 billion of foreign-exchange reserves, according to ABN Amro.

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

The European Markets at 12.00 BST

London - UK leading shares traded firmer at midday as Tate & Lyle and Antofagasta posted consensus-beating results, while investors returned to defensive stocks on continued caution ahead of a steady opening expected on Wall Street, dealers said.
   
By 12.07 pm, the FTSE 100 was 28.5 points firmer at 5,615.6, having hit an early low of 5,562.0, with the broader indices all lower.
   
Volume was average, with 1.01 bln shares trading in 124,439 deals.

Frankfurt - German shares edged higher at midday in quiet holiday trade, recovering from yesterday's losses, while Deutsche Boerse slumped as it went ex dividend, and Henkel fell on a downgrade from Credit Suisse, dealers said.
   
At 11.52 am, the DAX 30 index was 34.38 points or 0.62 pct higher at 5,621.61, having moved between 5,568.83 and 5,631.50 so far this session.
   
The MDAX was at 7,886.48, up 42.26 points or 0.54 pct, while the TecDAX was at 640.77, down 1.50 points or 0.23 pct.
   
The DAX futures contract was at 5,631.50, up 11.50 points or 0.20 pct, while bund futures were at 116.70, up 0.04.

Paris - Share prices were flat midday as the market awaited direction from Wall Street amid a quiet holiday session, dealers said.
   
At 12.15 pm, the CAC-40 index was up 1.17 points or 0.02 pct at 4,871.19. Volume was 1.190 bln eur. Of the CAC-40 stocks, 22 were lower and 18 were higher.
   
On the Matif, June CAC-40 futures were trading 2.0 points or 0.04 pct higher at 4,829.0.

Amsterdam - Shares were trading slightly down at midday in reduced volumes with the market quiet due to the Ascension day bank holiday, dealers said.
   
At 12.21 pm, the AEX was 0.49 of a point or 0.11 pct lower at 435.35 after opening at 435.84 and reaching an earlier low of 432.49.

Madrid - Share prices were slightly higher in thin midday trade, with Telefonica outperforming and Banco Sabadell higher after it acquired Urquijo, dealers said.
   
At 12.00 pm, the IBEX-35 index was up 8.4 points at 11,055.6, after trading in a range of 10,984-11,117, on turnover of 866 mln eur.

Milan - Share prices were flat at midday, after a choppy morning session, with Luxottica affected by a switch into Safilo, dealers said.
   
At 12.32 pm, the Mibtel rose 0.13 pct to 27,313 points, after reaching a high of 27,388 and a low of 27,174, and the S&P/Mib added 0.16 pct to 35,503.

Zurich - Market closed

Scandinavia -Stockholm, Copenhagen, Oslo, Helsinki markets also closed

Increase the odds for Forex Trading success with this free online course. Learn to build a solid Forex Trading foundation and discover proven strategies for continued success.  Access this wealth of knowledge here absolutely free.

Online Trading Academy - Learn more to earn more.

Asian shares close mostly lower on global economy fears, commodity price fall

HONG KONG - Shares across Asia Pacific markets closed lower on global economic fears and weak commodity prices, with foreign investors pulling out of the markets, dealers said.
   
Tokyo share prices ended sharply lower, with the benchmark Nikkei index losing more than 210 points as overseas investors pulled out of market on worries about increases in US interest rates, dealers said.
   
A worldwide slump in the prices of commodities such as oil and gold dampened commodities-related shares, they added. Commodity prices fell amid fears that higher interest rates will slow economic growth and end a five-year surge in demand for raw materials.
   
The blue-chip Nikkei 225 Stock Average closed 213.45 points or 1.3 pct lower at 15,693.75, off a low of 15,644.62.
   
The TOPIX index of all first-section issues fell 21.30 points or 1.3 pct to 1,584.71, after dipping as low as 1,581.23.
   
Overseas investors sold 11.3 mln shares more than they bought before the opening bell this morning.
   
Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, said fears about higher interest rates in the US are sweeping the market.
   
"What is bad is that the market does not have confidence in (US Federal Reserve chairman Ben) Bernanke. If the interest rate hikes halt at the next meeting in June at 5.25 pct, it's acceptable. But many fear there may be further rate hikes. If so, it would certainly cool down the economy," he said.
   
Australian share prices closed lower as the short-lived metal price recovery ended overnight, weighing on the local resources sector and sending the key S&P/ASX 200 index below 5,000 points, dealers said.
   
The S&P/ASX 200 shed 60.9 points or 1.21 pct to close at 4,976.8, the first time the key index has closed below 5,000 points since March 23 and adding to the fall from the May 11 record high of 5,364.5.
   
The S&P/ASX 200 closed at the day's low and below the high of 5,025.0.
   
Hong Kong share prices were trading lower as US economic data failed to provide any clear clues on interest rate prospects, dealers said.
   
They said Chinese metals stocks were dragged down by a fresh fall in commodity prices overnight.
   
At 3.35 pm the Hang Seng Index was trading at 15,728.06, down 94.58 points or 0.60 pct from its close of 15,822.64.
   
In China, A-shares closed slightly higher, with bargain hunting offsetting IPO concerns, dealers said.
   
A-shares in Shanghai and Shenzhen closed slightly higher, as early weakness due to the first IPO announcement for more than a year was offset by some bargain hunting interest, dealers said.
   
Property developers and financial stocks were snapped up in particular, they added.
   
The Shanghai A-share Index rose 0.67 points to 1,671.61 on turnover of 22.86 bln yuan and the Shenzhen A-share Index was up 2.01 points at 411.06 on turnover of 14.01 bln yuan.
   
Seoul share prices finished sharply lower in volatile trade, falling below 1,300 points, with stocks posting losses across the board, dealers said.
   
This is the first time since Jan 23 that the index has closed below 1,300 points.
   
After a firm start, the market remained weak for much of the session to close near its low for the day as foreign investors continued to cut positions and massive program selling kicked in.
   
Foreign investors have been net sellers since April 25, except for one session, unloading more than 5.3 trln won worth of shares on the mainboard alone.
   
Sharp losses in Tokyo shares also pressured sentiment.
   
The KOSPI index closed down 37.62 points or 2.82 pct at 1,295.76, after moving between 1,333.65 and 1,295.47.

Asian Bourse Round-Up

For a full list of closing figures, click here

All it takes is 2 minutes a day to get your hands on some of the best stock option trades going! MICC - 1207%, AMR - 612%, HMY - 400%, GFI -177%, AEM - 1079%, VRTX - 192%, ALXN - 433%, ZRAN - 380%, ATHR - 326%, TKLC - 64%, TWTC - 540%

If you ever thought about trading options, now is the time to take a closer look. Click here

Gold futures edge up in morning trading

SAN FRANCISCO - June gold climbed $8, or 1.3%, to $645.50 an ounce in morning dealings on the heels of Wednesday's more than $36 drop.

"We suspect that a large portion of the weak-handed longs are already on the sidelines, and that could give the market a decent chance of respecting the recent consolidation low of $636, but the edge in the 'near term' goes to the bear camp," Nell Sloane, an analyst at NSFutures.com said in daily commentary.

July silver was down 2.5 cents at $12.49 an ounce, while July copper tacked on 2.1 cents to $3.66 a pound.

On the bond market, long-term Treasury prices rose, sending yields lower after the data soothed inflation worries. The benchmark 10-year note was up 1/32 at 100 21/32, with its yield at 5.03%.
   
Crude-oil futures rose slightly to trade above $70 a barrel after sliding nearly $2 on Wednesday after data showing domestic gasoline supplies up for a fourth week in a row. Crude for July delivery was last up 40 cents at $70.26 a barrel. 

HotSignals release a lite version of their highly successful US equity technical analysis package. We give YOU the edge! Did you sell Google at $444.91? We did and many more every trading day. Are you looking for something different in your trading armoury? Then look no further. Click here