US & World Daily Markets Financial Briefing 28-03-2007

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

Stocks fall on weak durables report

NEW YORK - U.S. stocks opened lower Wednesday as investors awaited congressional testimony from Federal Reserve Chairman Ben Bernanke about the economy and analyzed a weaker-than-expected rise in orders for large manufactured goods.
   
Stocks had rallied last week after interpreting language from the Fed as opening the way to the possibility of a reduction in interest rates. Bernanke's testimony before a joint Congressional committee on the country's economic outlook comes a day after renewed concerns about the housing market helped send stocks lower.
   
The Dow Jones industrials had their biggest pullback in two weeks Tuesday after a report showing a drop in prices of single-family homes had investors theorizing that the housing market might continue to sour and hurt consumer spending. News of probes into Beazer Homes USA Inc. was likely to weigh on homebuilder stocks Wednesday.
   
In morning trading, the Dow industrials fell 59.20, or 0.48 percent, to 12,338.09. Broader stock indicators also fell. The Standard & Poor's 500 index fell 6.18, or 0.43 percent, to 1,422.43, and the Nasdaq composite index fell 11.53, or 0.47 percent, to 2,425.90.
   
Bonds rose as stocks slid again Wednesday. The yield on the benchmark 10-year Treasury note fell to 4.59 percent from 4.61 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

The Russell 2000 index of smaller companies fell 4.43, or 0.55 percent, to 797.93.
   
In afternoon trading, Britain's FTSE 100 fell 0.21 percent, Germany's DAX index fell 0.56 percent, and France's CAC-40 declined 0.58 percent.
   
Economic data appeared to weigh on stocks. Orders for durable goods increased 2.5 percent in February amid an increase in sales of commercial aircraft and autos after a 9.3 percent falloff in January. Wall Street had expected the Commerce Department report would show a 3.5 percent gain.

The weak reading for January helped contribute to a Feb. 27 global selloff that cut the Dow industrials by 416 points. Excluding the volatile transportation sector, orders fell 0.1 percent, the fourth drop in five months.
   
Beyond concerns about housing, Wall Street is watching as oil prices rise amid political tensions in the Middle East over the detention by Iran of British sailors. Light, sweet crude on Tuesday settled at its highest level since December on the New York Mercantile Exchange and rose $1.49 to $64.42 Wednesday. Weekly government domestic crude inventory figures from are due Wednesday.   

Stocks in focus

In corporate news, homebuilder Beazer Homes is under investigation for its mortgage lending practices as well as other financial dealings by a host of government agencies. Beazer, which fell $3.09, or 9.8 percent, to $28.32, said it is complying with a request for documents from a federal prosecutor.
   
Vyyo Inc., which makes communications equipment, jumped $1.41, or 18.9 percent, to $8.88 after receiving $35 million in funding from Goldman Sachs & Co.

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 slightly lower ahead of Bernanke testimony

LONDON - The dollar was slightly lower at midday, ahead of US Federal Reserve chairman Ben Bernanke's Congressional testimony and as worries over political tensions with Iran intensify.
   
Investors will be looking for clarification in Bernanke's testimony of last week's rate-setting FOMC statement which appeared to take a softer tone than previous releases.
   
"We expect him to note that downside risks to growth have increased somewhat, particularly risks related to sub-prime mortgages and to recent softness in business investment but to indicate that the Fed continues to project moderate economic growth this year," said analysts at Barclays.
   
Bernanke is also set to be quizzed about the US housing and sub-prime sectors. Talk of trouble in these markets sparked the recent equities rout and the consequent pressure on the dollar.
   
"He will doubtless say that there are risks from housing market trends and sub-prime lending, but they do not expect these to spill over into the broader economy," said Marc Ostwald at Insinger de Beaufort.
   
Also out this afternoon in the US are February durable goods orders, which are seen rising 3.1 pct in February after dropping 7.8 pct in January.
      
Elsewhere, the pound was steady after earlier falls following the release of GDP data which showed real household disposable income fell by 0.7 pct in the fourth quarter compared with the previous quarter.
   
The latest figure is the lowest since the third quarter of 1999. For 2006 as a whole, the picture looked worse, with real household disposable income growing by just 1.3 pct -- the smallest rise since 1982.
   
Fourth quarter GDP growth was also revised down to 0.7 pct from the earlier estimate of 0.8 pct, though analysts said the significance was diminished by the upward revisions to the first two quarters of 2006.
   
Earlier, a survey suggested that the Bank of England's three interest rate hikes since last August are beginning to hit the UK's housing market. In its monthly survey of the sector, the Nationwide said house prices were up just 0.4 pct in March, down on February's 0.6 pct and below market expectations for a 0.7 pct increase.
   
Meanwhile the euro was slightly higher after the release of euro zone money supply data which showed M3 growth accelerated to 10.0 pct year-on-year in February from a revised 9.9 pct in January, reaching double figures for the first time since 1990. The data reinforced market expectations for further European Central Bank rate hikes.

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 BST

London - The UK economy grew by less than previously estimated during the fourth quarter of 2006 but the full year growth rate was revised up in the wake of upward revisions to the first two quarters, official figures showed today.
 
The Office for National Statistics revealed that UK GDP growth in the final three months of 2006 has been shaved to a quarterly 0.7 pct from the previous estimate of 0.8 pct due to a downward adjustment to the services sector expansion.

J Sainsbury PLC, the UK supermarket chain at the centre of intense bid speculation, reported fourth-quarter sales figures which were better than the market expected. Like-for-like sales excluding petrol increased by 5.9 pct in the 12 weeks to March 24. Analysts' expectations had ranged between 4-5.75 pct.

British Airways PLC is mulling a 1 bln stg bid for low-cost rival bmi, reports in the Times and The Telegraph said. The chairman of bmi, Michael Bishop, who is also a 50 pct shareholder, is understood to have received a number of approaches from airlines looking to buy his stake.

Stockholm - Swedish fashion retailer Hennes & Mauritz AB posted a first quarter profit after financial items of 3.411 bln skr, up 27 pct from 2.680 bln in the same period last year, supported primarily by stronger gross and operating margins. Gross margins rose to 58.9 pct from 56.5 pct, as sales excluding VAT grew 11 pct to 16.772 bln skr. With comparable exchange rates, the increase in sales was 11 pct, and for comparable stores the increase was 5 pct.

Milan - Enel SpA said its full year net profit slipped to 3.036 bln eur from 3.895 bln a year earlier, due to lower capital gains and a 400 mln eur restructuring charge. The company added the 2005 net profit benefited from a 1.153 bln eur capital gain from the sale of a 43.85 pct stake in Terna and that excluding one-off gains the 2006 net profit rose 1.4 pct.

Frankfurt - Porsche AG said it now holds 30.94 pct of the voting rights in Volkswagen AG and is therefore launching a mandatory takeover offer at 100.92 eur per ordinary share and around 65.45 per preference share. It said the documents regarding its cash offer would be published following approval of its publication by the BaFin Federal Agency for Financial Services Supervision.

DaimlerChrysler AG chief executive officer Dieter Zetsche has set a goal of 9 bln eur for the group's operating profit by 2009, but the assumption excludes its loss making unit Chrysler, according to a pre-release of Capital magazine, citing sources. Last year, operating profit for the whole group including Chrysler was at 5.517 bln eur, with the US unit posting a loss of 1.118 bln eur.

Zurich - Swiss retailer Valora Holding swung into a full year net profit of 65.0 mln sfr, from a loss of 56.3 mln sfr in 2005 when restructuring-related costs weighed on results. EBIT rose to 82 mln sfr from 27 mln sfr after restructuring costs, while sales rose to 2.863 bln sfr from 2.846 bln.

Vienna - Raiffeisen International Bank said pretax profit grew 160 pct in 2006 to 1.48 bln eur from 569 mln the previous year thanks to one-off gains from the sale of Raiffeisen Ukraine and the Austrian bank's stake in Bank TuranAlem last year. Pretax profit excluding one-offs grew almost 57 pct to 891 mln eur in 2006 compared with 569 mln, Raiffeisen said.

Paris - Gaz de France and Algerian state-owned energy company Sonatrach are in talks over the operation of the Touat gas field, for which they share the operating rights, with options including the creation of a joint venture, La Tribune reported. The business daily quoted an unnamed Alegerian source as saying that the discussions "are moving towards the creation of a unit to be controlled 75 pct
by GDF and 25 pct by Sonatrach".

Lisbon - Brisa Autoestradas de Portugal will invest about 500 mln eur in its Portuguese highway network this year, Jornal de Negocios reported. Out of the total amount, 110 mln eur will be to maintain and expand existing roads and 117 mln eur will be for new highways.

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 mostly lower on China nerves, Wall St fall

HONG KONG - Shares across the Asia-Pacific region closed mostly lower on speculation of tightening measures in China and a fall on Wall Street overnight.
   
Tokyo shares ended lower after falls on some of the Chinese stock markets rekindled fear among investors of another tumble in financial markets worldwide.
   
The blue-chip Nikkei 225 Stock Average closed 110.32 points or 0.64 pct lower at 17,254.73, off a low of 17,141.65. The TOPIX index of all first-section issues fell 12.80 points or 0.74 pct to 1,711.06, off a low of 1,701.74.
   
"There was some talk that speculation that the Chinese authorities will introduce some kind of a measure to prevent the Chinese stock market from overheating was behind the Chinese stock falls," said a trader at a European firm. And, this apparently prompted some players to short trades in Nikkei futures to hedge against downside risk."
   
Institutions and brokers kept to the sidelines to await the closing of their books at the end of the fiscal year on Saturday, and to await testimony to the US Congress later today by Federal Reserve chairman Ben Bernanke, which may give new insights into the direction of the US economy.
   
Australian shares closed lower as investors took a more cautious approach on sustained geopolitical concerns arising from the seizure of British sailors by Iran. Further weak US data released overnight is also worrying investors, while tonight's testimony by Federal Reserve chairman Ben Bernanke is likely to dictate the market's direction for the remainder of the week.
   
The S&P/ASX 200 closed down 41.0 points or 0.69 pct at 5,923.2 after trading between 5,917.3 and 5,979.2.
   
Dealers said all the major banks lost ground as markets increase their pricing for a Reserve Bank of Australia 25 basis point interest rate hike next week following its monthly meeting.
   
Hong Kong shares were down sharply in afternoon trade following a fall on Wall Street overnight and with local blue chip stocks pressured by trade related to expiry of March futures contracts tomorrow. At 3.20 pm the Hang Seng Index was down by 179.90 points or 0.91 pct at 19,526.89.
   
In mainland China, A-shares in Shanghai and Shenzhen closed mixed as early morning profit-taking was offset by strong capital inflows in afternoon trade with banking stocks and steelmakers gaining ground.
   
The Shanghai A-share Index was up 36.23 points or 1.10 pct at 3,334.57 while the Shenzhen A-share Index was down 6.26 points or 0.71 pct at 872.73.
   
Seoul shares finished lower due to heavy futures-linked program selling, with Wall Street's overnight retreat on fresh concerns about the health of the US economy weighing on sentiment.
   
Following a brief upturn in early trade, the market soon lost steam to slide into negative territory, with lackluster performances by major Asian markets adding to downward pressure. Builders, brokerages and lenders were among the major losers.
   
The KOSPI index closed down 13.49 points or 0.93 pct at 1,439.74, after moving between 1,433.12 and 1,456.78.

Get your free futures starter kit – metals, energies, grains, currencies, stock indexes, tropical softs, plus more! Click Here.

Copper gains on bargain hunting but analysts doubt rally will last

LONDON - At 1.55 pm, LME copper for three-month delivery rose to 6,725 usd a tonne, against 6,682 usd at the close yesterday.
   
"We are seeing investor demand (picking up) in the dips, given the 2.5 pct fall in prices yesterday," said UBS analyst Robin Bhar. "As we're moving into the peak demand season, consumers need to buy."
   
Positive price movement in other commodities is also encouraging investors into the market, analysts said.  "The run in oil and bullishness in precious metals is encouraging some bargain hunting in base metals," said BaseMetals.com analyst William Adams.
   
He added that he sees further downside potential for the metal going forward. Disappointing US economic data and concerns over the escalating geopolitical crisis over Iran have both weighed on copper in recent days.
   
The metal closed 170 usd lower yesterday after making a new high for the year, as the release of weaker than expected US consumer confidence data renewed concerns over the impact of slowing US growth on demand.

Nickel was higher at 43,700 usd a tonne against 42,800 usd at the close yesterday with concerns over low inventory levels continuing to boost prices even though supplies of the metal are picking up.
   
The LME said today that nickel stocks held in its warehouses increased again, this time by 126 tonnes to 5,496 tonnes. However, on warrant or available stocks are still equivalent to only about a day's worth of consumption.
   
Tin was down at 14,010 usd a tonne after closing at a new contract high of 14,595 usd yesterday on continued concern over supply from Indonesia, the world's second largest tin producer.
      
In other metals, aluminium was down at 2,740 usd a tonne against 2,750 usd at the close yesterday, while zinc edged up to 3,225 usd against 3,200 usd, and lead rose to 1,900 usd against 1,851 usd.
 
At 10.53 am, gold was at 665.10 usd per ounce, against 662.40 usd in late New York trade yesterday.

•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