US & World Daily Markets Financial Briefing 02-12-2010

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Stocks Posting Modest Gains In Early Trading

Stocks have moved modestly higher in early trading on Thursday, adding to the standout gains posted in the previous session. The major averages have all climbed above the unchanged line, although buying interest remains relatively subdued.

The early strength in the markets may be partly due to the release of generally upbeat November sales results from major retailers, which has helped to offset any negative sentiment generated by a bigger than expected increase in weekly jobless claims.

The Labor Department released a report showing that initial jobless claims rose by more than expected in the week ended November 27th after falling to a two-year low in the previous week.

Jobless claims rose to 436,000 from the previous week's revised figure of 410,000. Economists had been expecting jobless claims to increase to 422,000 from the 407,000 originally reported for the previous week.

At 10:00 a.m. ET, the National Association of Realtors will release its report on pending home sales for the month of October. Economists expect that pending home sales remained unchanged after a 1.8 percent in September.

The retail sector is also in focus today, with most major U.S. retailers reporting November sales figures above analyst estimates.

Bon-Ton (BONT) said its November same-store sales rose by 2.9 percent, Target's (TGT) same-store sales increased 5.5 percent, Costco Wholesale Corp. (COST) saw a same-store sales jump of 6 percent and Abercrombie & Fitch Co. (ANF) said its same-store sales surged up by 22 percent.

In other corporate news, food and beverage giant PepsiCo, Inc. (PEP) announced that it has agreed to acquire 66 percent of Russia's leading branded food and beverage company Wimm-Bill-Dann Foods (WBD) for $3.8 billion. The total enterprise value of the deal is nearly $5.4 billion.

Metal stocks are turning in some of the market's best performances, with steel and gold stocks posting notable gains. Banking stocks have also shown a strong move to the upside, while most of the other major sectors are showing more modest moves.

The major averages have seen some further upside in the past few minutes, climbing a little more firmly into positive territory. The Dow is up 32.43 points or 0.3 percent at 11,288.21, the Nasdaq is up 9.71 points or 0.4 percent at 2,559.14 and the S&P 500 is up 4.50 points or 0.4 percent at 1,210.57.

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TSX May Struggle To Extend Gains Amid Mixed Earnings

Bay Street stocks may open mixed Thursday as commodities prices continued to hold on to their recent gains amid a mixed dollar and positive cues from the global equity markets.

However, stock specific action may not be ruled amid a mixed bag of earnings reports from major companies.

Financial stocks may be in play after lenders CIBC and TD Bank reported lower earnings, a day after NBC said it net earnings jumped 19%.

Meanwhile, the ECB has left it rates unchanged at 1% in its today's meeting, as widely expected.

U.S. stock futures were pointing to a lower open amid weekly jobless data.

On Wednesday, the S&P/TSX Composite Index rallied 195.47 points or 1.51% to 13,148.35, it fresh 2-year peak.

The price of crude oil was little changed, holding on to its prior session's gains. Crude for January was down $0.10 to $86.65 a barrel.

Gold for February edged down $1.90 to $1,386.40 an ounce.

In corporate news from Canada, lender CIBC reported lower fourth-quarter net income of C$466 million or C$1.19 per share, compared to C$609 million or C$1.59 in the previous year.

TD Bank reported a decline in its fourth-quarter adjusted net income at C$1.21 billion or C$1.38 per share compared to C$1.26 billion or C$1.46 per share a year earlier. The bank declared a quarterly dividend of C$0.61 per common share.

Oil and natural gas explorer Canadian Natural Resources said it is targeting 2011 production volumes per barrel of oil equivalent to grow by 6% and anticipates capital spending to range between $5.6 billion and $6.0 billion in 2011. The company also said it will be investing over C$2.4 billion on long-term growth initiatives that will provide sustainable long-term returns in 2012 and beyond.

Crude oil and natural gas distribution company Enbridge Inc. declared a quarterly dividend of $0.49 per common share, in line with its current policy is to pay out between 60% and 70% of its adjusted earnings as dividends. The company also guided adjusted operating earnings of $2.75 to $2.95 per share for 2011.

Construction and infrastructure development company Aecon Group said its Infrastructure division was granted a $16.2 million highway contract by the Ontario Ministry of Transportation.

Healthcare services provider SXC Health Solutions said it would acquire MedfusionRx, LLC for $100 million in cash, and expects the acquisition to generate $0.15 to $0.17 in adjusted earnings per share in 2011.

Transportation company Bombardier Inc. reported lower third quarter net income of $141 million or $0.08 per share compared to $167 million or $0.09 per share in the prior-year quarter.

Gildan Activewear reported improved fourth-quarter net earnings of $56.8 million or $0.47 per share compared to $42.4 million or $0.35 per share last year. On an adjusted basis, earnings
before the restructuring charge $58.3 million or $0.48 per share, higher than $42.4 million or $0.35 per share a year earlier. Analysts were expecting the company to report earnings of $0.45 per share for the quarter.

Precious metals miner Mines Management reported a wider third quarter net loss of $2.7 million or $0.12 per share compared to $2.3 million or $0.10 per share in the year-ago quarter.

Business-critical software and services provider Redknee Solutions swung to profit in fourth quarter, reporting net income of C$358,786 or C$0.01 per share compared with net loss of C$247,642 or breakeven per share last year. Analysts were expecting the company to report earnings of C$0.01 per share for the quarter.

In economic news from south of the border, the U.S. Labor Department said that jobless claims rose to 436,000 in the week ended November 27 from the previous week's revised figure of 410,000. Economists were expecting jobless claims to increase to 422,000 from the 407,000 originally reported for the previous week.

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French Market Moderately Up

The French market is rising moderately in afternoon trading Thursday, led by banks. Sentiment was influenced by speculation that the European Central Bank may take measures to tackle the sovereign debt fears.

In economic news, the ILO jobless rate in metropolitan France was 9.3% in the third quarter, unchanged from the previous quarter and lower than economists' expectation of a 9.4% rise, Insee said.

Eurozone GDP rose 0.4% sequentially in the third quarter following a 1% growth in the second quarter, Eurostat said. Separately, Eurostat said Eurozone's producer price inflation rose to 4.4% in October from an upwardly revised 4.3% in September.

UK construction activity rose to 51.8 in November from 51.6 in October, higher than the expected reading of 51.3, a survey from Markit Economics showed.

The CAC 40 opened slightly higher at 3,695. The index has been above the flat line during the session, and is currently adding 0.94%.

Oil & gas services firm Technip is leading the gainers by adding 3.4%. Tire firm Michelin is up 3.15 and Schneider Electric is adding 2.7%.

Banks Societe Generale, BNP Paribas and Natixis are gaining between 2.4% and 1.8%. Credit Agricole is marginally up. Insurer Axa is rising 1.7%.

Car manufacturers Renault and Peugeot are advancing 2.3% and 1.7%, respectively.

Those making notable gains include building materials maker Saint-Gobain, luxury goods conglomerate LVMH, department stores operator PPR, brewer Pernod-Ricard, steel giant ArcelorMittal and yoghurt maker Danone.

Metal fabrication firm Vallourec is losing 3.2% and electric utility EDF is losing 2.3%. Chipmaker STMicroelectronics and pharmaceutical giant Sanofi-Aventis are down 1.7% and 1.4%, respectively.

Elsewhere in Europe, the UK's FTSE 100 is rising 0.90% and the German DAX is advancing 0.27%.

Across Asia/Pacific, key markets closed higher. China's Shanghai Composite Index gained 0.7% and Japan's Nikkei 225 rose 1.8%. Hong Kong's Hang Seng added 0.86% and India's BSE Sensex climbed 0.72%. Australia's All Ordinaries climbed 1.82%.

In the U.S., futures point to a higher open on Wall Street. In the previous session, the Dow jumped 2.3%, the Nasdaq gained 2.1% and the S&P 500 rose 2.2%.

Crude for January delivery is trading up $0.11 at $86.86 per barrel and February gold is rising $2.5 at $1390.8 an ounce.

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Asian Markets Extend Gains On Economic Outlook

Asian markets open for trading on Thursday ended in positive territory, extending the rally for the second successive day on optimism about global economic recovery. Better than expected ADP employment report in the US and sharp gains on Wall Street lifted market sentiment. Easing of debt concerns in Europe and expectations that the European Central Bank might unveil quantitative measures to further ease concerns favorably impacted market sentiment.

In Australia, the benchmark S&P/ASX200 Index surged up 89.60 points, or 1.96%, and closed at 4,676 points, while the All-Ordinaries Index ended at 4,762, representing a gain of 85.00 points, or 1.82%.

On the economic front, a report released by the Australian Bureau of Statistics revealed that retail sales in the country declined a seasonally adjusted 1.1% in October compared to the previous month, standing in at A$20.232 billion. That was well below forecasts for a 0.4% increase following the revised 0.1% gain in September. The report further noted that among the individual components, restaurant sales added 0.2%, while food sales were flat, clothing was down 0.5% and household goods were down 0.1%.

Another report released by the Statistics Bureau revealed that the country posted a merchandise trade surplus of A$2.625 billion in October, higher than forecasts for a surplus of A$2.0 billion following the A$1.76 billion surplus in September. The report further noted that imports came in at a seasonally adjusted A$21.70 billion, down 3% from A$22.39 billion in the previous month. The country also exported A$24.32 billion in October, up 1% from A$24.15 billion a month earlier.

Light sweet crude oil futures for January delivery ended at $86.68 a barrel in electronic trading, down $0.07 per barrel from previous close at $86.75 a barrel in New York on Wednesday.

Banking stocks led the gains on optimism about easing debt concerns and quantitative measures from ECB to weather the storm. ANZ Bank climbed 3.40%, Commonwealth Bank of Australia gained 1.61%, National Australia Bank rose 2.61% and Westpac Banking Corp. was up 2.38%. Investment banking company Macquarie Group was up 1.55%.

Resource related stocks also gained on higher commodity prices in the international market. BHP Billiton gained 2.62%, Rio Tinto rose 2.30%, Fortescue Metals added 0.94%, Gindalbie Metals surged up 4.26%, Iluka Resouces soared 5.53%, Macarthur Coal advanced 0.82%, Mincor Resources was higher by 4.72% and Oz Minerals climbed 4.82%.

Oil related stocks ended in positive territory, lifted by higher crude oil prices. Woodside Petroleum gained 1.84%, Santos Ltd rose 1.53%, ROC Oil surged up 2.78%, Origin Energy climbed 2.82% and Oil Search Ltd was up 2.49%.

Mixed trading was witnessed among gold related stocks. Newcrest Mining gained 1.79%, while Avoca Resources ended in negative territory with a loss of 0.93%.

In Japan, the benchmark Nikkei 225 Index advanced 180.47 points, or 1.81% to 10,169. while the broader Topix index of all First Section issues rose 11.14 points, or 1.29%, to 877.

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On the economic front, a report released by the Ministry of Finance  revealed that capital expenditure by Japanese companies rose for the first time in over three years in the September quarter, boding well for the country's output growth in the December quarter. As per the report, capital spending rose 5% year-over-year between July and September, following the 1.7% fall in the preceding quarter. Analysts expected a 6% increase during the quarter. Excluding software, capital expenditure climbed 4.8% annually in the third quarter, following the 1.5% fall in the previous three months.

A statement released by the Bank of Japan revealed that monetary base jumped 7.6% on year in November, standing at 99.186 trillion yen. That follows a 6.4% annual surge in October. The central bank further noted that banknotes in circulation were up 1.8% on year, although coins in circulation declined an annual 0.4%. The current account balance surged 47.3% on year, including a 44.4% jump in reserve balances. Seasonally adjusted, the monetary base was up 16.9 percent in November, standing at 101.974 trillion yen.

Almost all the stocks across the 33 broad sectors ended in positive territory on increasing optimism about global economic recovery.

Machinery stocks led the gains in the market. Komatsu Ltd surged up 4.62%, Hitachi Construction Machinery climbed 3.04%, Daikin Industries advanced 1.82% and Chiyoda Corp. soared 6.44%.

Stocks of securities also ended in positive territory. Matsui Securities gained 2.86%, Nomura Holdings rose 2.72%, Daiwa Securities Group climbed 2.91% and Mizuho Securities surged up 3.61%.

The Indian market edged higher for a fourth consecutive session on Thursday, as firm global cues on the back of encouraging economic data from China, Europe and the U.S. offered support. After moving in a narrow range of 167 points, the 30-share Sensex ended up 143 points or 0.72% at 19,993, with 17 of its components advancing. The broader Nifty rose by 51 points or 0.85% and the BSE small-cap and mid-cap indexes added over a percent each. The market breadth was fairly positive.

Among the other markets in the region, China's Shanghai Composite Index added 20.16 points, or 0.71% to close at 2,844, HongKong's Hang Seng Index gained 198.98 points, or 0.86% to close at 23,449, Jakarta Composite Index in Indonesia rose 75.49 points, or 2.09%, to close at 3,695, Singapore's Strait Times Index advanced 16.02 points, or 0.50%, to close at 3,198, Seoul Composite Index in South Korea ended in positive territory with a gain of 20.94 points, or 1.09%, to close at 1,950, and Taiwan Weighted Index was higher by 65.66 points or 0.77% to close at 8,586.

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