US & World Daily Markets Financial Briefing 08-02-2011

No Hunches.  No Guesswork.  No Opinions.   Analyze Any Stock Free!  www.VectorVest.com

Stocks Showing A Lack Of Direction In Early Trading

Stocks are turning in a lackluster performance in early trading on Tuesday, with traders reluctant to make any significant moves amid a lack of U.S. economic data. The major averages are lingering near the unchanged line after ending the previous session at multi-year closing highs.

The choppy trading comes as traders digest the latest batch of quarterly results along with news that China's central bank has raised interest rate for the third time since October in an effort to curb inflation.

The People's Bank of China said the one-year lending rate will increase to 6.06 percent from 5.81 percent and the one-year deposit rate will increase to 3 percent from 2.75 percent, effective Wednesday.

Chinese consumer prices rose 4.6 percent annually in December after rising 5.1 percent in November. However, rising food prices suggest that inflation is likely to accelerate further.

On the earnings front, Beazer Homes (BZH) reported a first quarter loss from continuing operations of $0.66 per share compared to a profit of $1.17 per share a year ago, as revenues fell to $110.3 million from $213.07 million last year. Analysts estimated a loss of $0.46 per share on revenues of $164.30 million.

Sara Lee (SLE) said its second quarter adjusted earnings from continuing operations fell to $0.24 per share from $0.27 per share in the year-ago period. Net revenues edged down 0.4 percent to $2.3 billion. Analysts estimated earnings of $0.25 per share on revenues of $2.63 billion.

For full year 2011, Sara Lee reaffirmed its adjusted earnings from continuing operations guidance of $0.85 to $0.89 per share, while analysts estimate earnings of $0.89 per share.

Fast food giant McDonald's (MCD) also reported a 5.3 percent increase in its January global comparable sales, exceeding analyst estimates for an increase of about 4.5 percent. The company benefited from strong demand in Europe.

While there is no major economic data due to be released today, traders may keep an eye on speeches by Richmond Federal Reserve President Jeffrey Lacker, Atlanta Fed President Dennis Lockhart, and Dallas Fed President Richard Fisher

While most of the major sectors are showing only modest moves, early weakness has emerged among oil service stocks, which are moving lower along with the price of crude oil. On the other hand, strength is visible among healthcare provider and gold stocks.

The major averages are currently posting modest losses, with the Dow just below the unchanged line. The Dow is down 4.09 points or less than a tenth of a percent at 12,157.54, the Nasdaq is down 5.96 points or 0.2 percent at 2,778.03 and the S&P 500 is down 2.13 points or 0.2 percent at 1,316.92.

Click Here

TSX May Open Lower; Commodities Dip On China Rate Hike

Bay Street stocks may open lower Tuesday amid falling oil and copper prices as China hiked its key rates hurting demand for commodities.

China, the top commodities consumer, raised interest rate for the third time since October to cool off its red hot economy, which cemented speculation that demand for commodities would ease.

U.S. stock futures were pointing to a flat open.

On Monday, the S&P/TSX Composite Index added 20.08 points or 0.15 percent to 13,811.93.

The price of crude oil moved down near $86 Tuesday morning amid concerns over demand growth after China hiked its key lending rates in an effort to curb inflation. Traders also preferred to stay on the sidelines ahead of U.S. weekly crude oil inventories reports. Crude for March was down $1.10 to $86.38 a barrel, its two-week low.

Meanwhile, the price of gold moved up to a three-week high, with gold for April adding $14.30 to $1,362.50 an ounce.

In corporate news from Canada, industrial equipment dealer Strongco Corp. said it would buy Chadwick-BaRoss, a heavy equipment dealer, for about $11.5 million.

International energy company Gran Tierra Energy said its total proved oil reserves increased 7 percent to approximately 23.6 million barrels of oil in 2010.

Bio pharmaceuticals company Valeant Pharmaceuticals said its subsidiary Biovail Laboratories International has obtained the Canadian rights to AcZone, an acne treatment.

Arcelor Mittal announced Monday that it and Nunavut Iron Ore Acquisition Inc., have taken-up over 90 percent of the outstanding common shares of Baffinland Iron Mines Corp.

Gold and copper miner Seabridge announced new gold and copper resource at its KSM project.

Base-metals miner Selwyn Resources said it would acquire ScoZinc Ltd. for $10 million from Acadian Mining.

In economic news, Canada Mortgage and Housing Corp. said housing starts increased to 170,400 compared with the prior revised estimate of 169,000, but below median estimates of 173,500.

Earlier today, China hiked its interest rates by 25 basis points in an effort to curb inflation. The benchmark one-year lending rate will increase to 6.06 percent from 5.81 percent and the one-year deposit rate will increase to 3 percent from 2.75 percent, effective February 09.

Click Here

European Markets Trading Mixed

Mixed trading is being witnessed among the major European markets Tuesday afternoon. Mixed cues from Asian markets and an unexpected decision from the Chinese Central Bank to further tighten the monetary policy measures through a 25 basis point hike in interest rates is presently impacting the market sentiment, even as traders are buoyant about sustaining global economic recovery lifted by positive corporate earnings.

On the economic front, a statement released by the Federal Ministry of Economics and Technology in Germany revealed that German factory output decreased by 1.5% month-on-month in December following a revised 0.6% decline in November. Economists had forecast an increase of 0.2%. On an annual basis, there was an increase of 10% in factory output. That compares with 11.1% rise in November. Economists had forecast growth to accelerate to 11.5%.

Results of a survey conducted by the British Retail Consortium revealed that retail sales in the United Kingdom improved in January, The BRC said retail sales on a like-for-like basis improved 2.3 percent from January 2010. Retail sales fell 0.7 percent in January 2010, the BRC noted. On an overall basis, retail sales were up 4.2 percent on year, versus a 1.2 percent gain seen in January 2010. Non-food, non-store (online, mail order and phone order) sales were up 12.3 percent on year, slowing from the 18.0 percent growth rate seen in December.

Results of a latest survey conducted by the Bank of France revealed that business sentiment among French industrial and service sectors rose in January. The industrial sentiment index climbed to 110 in January after staying unchanged at 107 in December. Business managers forecast activity to continue growing in February, albeit at a moderate pace than in January. Activity in the services sectors strengthened compared to that of December. The corresponding indicator climbed to 101 in January from 99 in December. Service providers expect their business to continue growing.

In the UK the FTSE 100 opened at 6053, the same as per the previous close. Fpllowing weak trading cues from Asian markets and unexpected interest rate decision from China, the market is presently trading in the red, losing around 0.24%.

Resource related stocks are trading weaker following China's interest rate decision. BHP Billiton is down more than 1.4% while Antofagasta, Kazakhmys and Rio Tinto are also trading lower.

Fresnillo is also trading weaker, losing in excess of 3%, Among energy stocks, Essar energy is shedding more than 2%.

In Germany, the DAX index opened slightly weaker at 7,274 compared to previous close at 7,284. Amid volatile trading following weak cues from Asian markets, the index is presently trading in the green with a modest gain of 4.40 points, or 0.06%.

Automotive stocks are leading the gainers. BMW is gaining more than 3.60%, Daimler is up more than 2.0% and Volkswagen is advancing more than 2.30%.

Mixed trading is being witnessed among the major lenders. In France, the CAC 40 index opened sharply lower at 4055 compared to the previous close at 4090 on weak Asian cues.

However, the market recovered the most and is presently trading in the green with a modest gain of 1.00 point, or 0.03%.

Across Asia/Pacific, mixed trading was witnessed among the major markets open for trading. While the Chinese market is still closed for Lunar New Year celebrations, the markets in Japan and Australia ended in the green lifted by banking stocks. The other markets, including Hong Kong, Singapore, South Korea, Indonesia, India and Taiwan ended in the red with modest losses.

In the U.S., futures point to a lackluster open following weak trading across Asian markets after the Chinese central bank decided to further tighten the monetary conditions to rein in the economy.

In commodities, crude for March delivery is losing $1.10 to $86.32 per barrel and April gold is losing $2.00 to $1345 a troy ounce.

Click Here

No Respite For Indian Market

After barely averting a negative close yesterday, the Indian market fell sharply on Tuesday, with mixed Asian cues and concerns over high inflation and FII selling underpinning sentiment. Reports of a possible probe into two new cases involving the allocation of telecom spectrum also kept many investors on the sidelines.

Ending near the day's lows, the benchmark 30-share Sensex closed down 261 points or 1.45 percent at a fresh multi-month low of 17,776, while the 50-share Nifty lost 83 points or 1.55 percent. Second-line stocks tumbled, dragging the BSE mid-cap and small-cap indexes down by 2.42 percent and 3.23 percent, respectively. About four shares declined for every one share advanced on the Bombay Stock Exchange.

Among the prominent decliners, Mahindra & Mahindra plunged nearly 6 percent after the utility vehicles manufacturer forayed into construction equipment business. State-run oil explorer ONGC slumped 5.58 percent on turning ex-bonus for a 1:1 bonus issue and ex-split for a 2-for-1 stock split. Anil Ambani-controlled telecom firm Reliance Communication ended down 4.20 percent at a record low. NTPC, which is facing acute coal shortage, fell 2.59 percent.

HDFC Bank, Jindal Steel, Larsen & Toubro, Sterlite Industries, Tata Motors, ICICI Bank, Tata Steel, Reliance Infrastructure, Hero Honda Motors and Jaiprakash Associates ended down between 2 percent and 5 percent.

On the positive side, Infosys posted a modest 0.24 percent gain after U.S.-based Cognizant reported forecast-beating fourth-quarter earnings. Cipla gained 0.83 percent, snapping a two-day fall. Bajaj Auto (up 1.69 percent), Tata Power (up 1.47 percent) and Hindalco Industries (up 0.82 percent) also ended in the green.

Wipro eased 0.25 percent on talks of business restructuring. TCS ended down 0.32 percent. Sugar manufacturer Bajaj Hindusthan fell nearly 4 percent on disappointing results. SpiceJet declined 3 percent even as the budget carrier called media reports about a CBI probe totally false, malicious, motivated, preposterous and per-se defamatory. Fertilizer stocks such as RCF, Chambal, Nagarjuna and FACT lost between 6 percent and 8 percent.

MIC Electronics and Ingersoll-Rand India lost around a percent each on disappointing results. Bharati Shipyard plunged 5.30 percent after announcing quarterly results.

Steel stocks such as Tata Steel (down 3.16 percent) and SAIL (down 1.50 percent) closed subdued after the world's largest steel maker ArcelorMittal said it swung to a $780 million loss in the fourth-quarter.

Punj Lloyd plummeted 11 percent after posting a net loss of Rs.62.13 crore for the December-quarter. Sun TV Network pared its early gains and ended down 0.24 percent after it hiked advertising rates.

Shares of plastic packaging companies such as Cosmo Films and Polyplex lost about 10 percent each after the environment ministry banned the use of plastic materials for packaging gutka and other tobacco products.

Elsewhere, most Asian stock markets edged lower on Tuesday and European stocks turned in a mixed performance in early trading due to profit taking following recent gains, while the Dow futures pointed to a higher open on Wall Street later in the global day owing to growing optimism surrounding the U.S. economic outlook.

Base metal prices were mixed and crude futures hovered weak near one-week lows on rising U.S. inventories, while several Asian currencies rose against the dollar ahead of Fed Chairman Bernanke's testimony about the U.S. economy before Congress on Wednesday.

We Have Two Picks for September Premium Newsletter Free to join! Click here

Dollar Mixed As China Tightens Again

The dollar was narrowly mixed in relatively quiet dealing Tuesday morning, after China unexpectedly raised interest rates for the second time in over a month.

Beijing is looking to cool off its red-hot economy in order to fight inflation. A number of other nations are likely to consider tightening monetary policy of inflationary pressures fail to subside.

However, the Federal Reserve in the U.S. is unlikely to follow suit, and is expected to keep interest rates as close to zero as possible in order to secure a fragile economic recovery.

The dollar was slightly weaker against the euro this morning, slipping a penny to $1.3670. With the loss, the dollar edged closer to last week's 3-month low near $1.3850.

German factory output decreased by 1.5% month-on-month in December following a revised 0.6% decline in November, the Federal Ministry of Economics and Technology said Tuesday.

The buck was down a bit versus the yen, but kept most of its gains from the previous few sessions to fetch Y82.20. Last week, the dollar edged close to November's 15-year year low of Y80.22 before firming up.

There was little movement against the sterling, with the buck holding near $1.61 for a third day.

With no first-tier economic data on tap from the U.S today, focus will turn to the Fed for a series of speeches from policy makers.

Richmond Federal Reserve Bank President Jeffrey Lacker is due to speak on the economic outlook at the University of Delaware at 8:45 AM ET.

At 12:30 PM ET, Atlanta Federal Reserve Bank President Dennis Lockhart is scheduled to speak in Alabama.

Dallas Federal Reserve President Richard Fisher is due to speak on the economy to the Stemmons Corridor Business Association in Dallas at 1:30 PM ET.

The People's Bank of China raised interest rate for the third time since October. The benchmark one-year lending rate will increase to 6.06% from 5.81% and the one-year deposit rate will increase to 3% from 2.75%, effective from Wednesday.

Chinese consumer prices rose 4.6% annually in December after rising 5.1% in November.

Click Here

Investors Hub Services