US & World Daily Markets Financial Briefing 17-01-2011

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MARKETS CLOSED FOR BANK HOLIDAY

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TSX Poised For Mixed Open

Bay Street stocks are poised for a mixed open Monday amid easing commodities prices and lack of cues from the U.S. markets, which are closed for a holiday. Profit taking at higher levels, as the main index closed at a fresh 2-year peak, may weigh on trader sentiment.

While Asian markets ended mixed, European shares were trading mostly lower.

On Friday, the S&P/TSX Composite Index added 62.58 points or 0.47% to 13,464.06, a fresh 28 month high. Last week the main index added nearly 200 points or 1.5%, after registering its first gain in 2011 on Tuesday.

The OPEC in its Monthly Oil Market Report released today, said global oil consumption will grow by 1.2 million barrels a day to average at 87.3 million barrels a day this year, mainly driven by demand from emerging economies led by China. Crude for February was down $0.55 to $90.99 a barrel.

The price of gold was lingering below $1,360 amid a mixed U.S. dollar. Gold for February edged down $1.0 to $1,359.50 an ounce.

In corporate news from Canada, property and casualty insurance services provider Fairfax Financial Holdings said that First Mercury Financial Corp.'s stockholders have voted in favor of its acquisition of First Mercury for $16.50 per share in cash.

Broadband services provider Craig Wireless Systems reported a narrower first quarter net loss of $2.7 million or $0.05 per share compared to $4.1 million or $0.08 per share in the year ago quarter..

Metals mining company Platinum Group Metals slipped in to the red in first-quarter, reporting net loss of C$4.34 million or C$0.03 per share, compared with a net profit of C$592,000 or C$0.01 per share in the prior year quarter. The gain in the comparative period was due to the sale of investments.

Green structural building technology services provider Genesis Worldwide stated that it has made application to voluntarily delist its common shares from the TSX, effective February 12 or earlier.

Specialized broadband wireless systems provider Redline Communications swung to profit in third quarter 2010, reporting net income of $1.1 million or $0.05 per share, compared with a loss of $2.9 million or $0.14 per share in the same period last year.

Heavy oil development company Ivanhoe Energy said it has made a second natural gas discovery in less than a month at its subsidiary Sunwing in southwest China.

International technology and services company Pure Technologies aid that Dallas City Council has awarded three-year service contract worth up to $8.5 million to its wholly-owned subsidiaries, Pure Technologies U.S. Inc. and Pressure Pipe Inspection Company (USA) Inc.

 In economic news from Canada, Statistics Canada said non-residents added a further $8.0 billion to their portfolios in November, again focusing on bonds. Meanwhile, Canadian acquisitions of foreign securities reached an 8-month high of $5.8 billion in November, led by the largest investment in foreign bonds since March 2007.

In a notable move, Canada tightened mortgage lending rules to curb household debt. The maximum amortization period for government-insured mortgages will be reduced to 30 years from 35 years and that of the maximum loan amount to 85% from 90% of the value of the property.

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Banks, Construction Stocks Drag French Market Down

The French market is modestly down in afternoon trading Monday, as European finance ministers are meeting in Brussels to discuss measures to strengthen the economic resilience of the region. Sentiment was influenced by mixed cues from Asia and falling commodity prices. Banks and construction stocks are moving to the downside, while carmakers are rising.

In economic news, UK house prices rose for the first time in three months in January, as a shortage of properties for sale boosted values, a fresh survey suggested. Asking prices for English and Welsh homes rose 0.3% month-on-month following a 3% decline in the previous month, reports said citing property website Rightmove.

The CAC 40 index edged up one point to open at 3,984 and has been seeing volatile trading. The index is currently losing 0.10%.

Lender Societe Generale is leading the decliners by falling 1.8%. Credit Agricole, BNP Paribas and Natixis are losing between 0.6% and 0.3%.

Steel producer ArcelorMittal is losing 1.6%. Builders Vinci and Bouygues are declining 1.2% and 0.4%, respectively. Cement giant Lafarge, real estate investment trust Unibail-Rodamco and building materials maker Saint-Gobain are losing moderately.

Carmakers are seeing upside. Peugeot is adding 2.3% and Renault is rising 0.7%.

Those making notable gains include tire firm Michelin, beverages company Pernod-Ricard and utility EDF.

Elsewhere in Europe, the UK's FTSE 100 is falling 0.01% and the German DAX is slipping 0.03%.

Across Asia/Pacific, major markets ended mixed. Australia's All Ordinaries lost 0.73%, China's Shanghai Composite Index retreated 3.02% and Hong Kong's Hang Seng slipped 0.52%. On the other side, Japan's Nikkei 225 and India's BSE Sensex managed to close in positive territory, gaining 0.04% and 0.12%, respectively.

The U.S. markets are closed today. In the previous session, the Dow advanced 0.5%, the Nasdaq moved up 0.7% and the S&P 500 rose 0.7%.

In commodities, crude for February delivery is sliding $0.37 to $91.17 per barrel and gold is slipping $1.2 to $1359.3 a troy ounce.

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Indian Market Ends Volatile Session Modestly Higher

The Indian market ended a volatile session modestly higher on Monday, with IT, consumer durable, banking, FMCG and auto stocks leading the gainers. However, high-beta realty and metal stocks continued to face selling, weighed down by weakness in other Asian markets and domestic rate hike worries.

The Reserve Bank of India, which held rates in December, is now forecast to hike rates three times by mid-2011, starting with the January 25 policy meet, to tackle soaring inflation, specially the food inflation which rose to a 23-week high of 18.32% in late December.

The benchmark 30-share Sensex moved in a range of 18,779-19,019 before ending up 22 points or 0.12% at 18,882, while the 50-share Nifty closed barely changed at 5,655. The BSE mid-cap and small-cap indexes lost around 1.40% each and in the broader market, declining shares outpaced gaining ones in the ratio of 2.3:1 on the BSE.

ADAG (Anil Dhirubhai Ambani Group) shares bore the brunt of the selling on concerns related to corporate governance after market regulator SEBI charged Reliance Infrastructure (down 7.84%) and Reliance Power (down 6.13%) with Rs. 50 crore penalty, as settlement charges in a case related to alleged violation of foreign investment norms and trade practices. Other stocks in the group such as Reliance Capital, Reliance Communication and Reliance MediaWorks also ended deep in the red, losing between between 5% and 8.5%.

Infrastructure firm Jaiprakash Associates slumped 5.55%, copper producer Sterlite fell 3.80%, property developer DLF declined 3.19%, aluminum maker Hindalco eased 1.83% and two-wheeler manufacturer Hero Honda Motors ended down 1.49%. Engineering & construction firm Larsen & Toubro fell 1.65% even after reporting a 10.5% rise in its third-quarter net profit.

In the banking sector, ICICI Bank lost a percent, while HDFC Bank gained 1.09% and SBI closed up 0.57%. Private sector lender Axis Bank rose 2.18% after its quarterly net profit grew 36% from a year earlier. Mortgage lender HDFC climbed 3.15% on bargain hunting after falling nearly 6% in the past two sessions.

IT stocks closed firm after the recent sell-off on a weaker rupee. TCS advanced 1.74% ahead of its third-quarter results due later in the day., Infosys rose 2.06% and Wipro added 0.67%. Cipla (up 1.87%), Bajaj Auto (up 1.62%), Bharti Airtel (up 1.43%), ITC (up 0.88%) were the other prominent gainers. Tata Steel edged up 0.19% after it fixed a price band of Rs.594-610 a share for its upcoming follow-on public offering, opening on Wednesday.

Aviation stocks such as Kingfisher, Jet Airways and SpiceJet fell between 1% and 5% after state-owned fuel retailers raised jet fuel prices by 2%, effective January 16 midnight. IndusInd Bank edged down 0.72% despite reporting a 75% rise in quarterly net profit.

ONGC shed 0.70% after it reportedly hired six banks to manage its upcoming follow-on public offering. Glenmark Pharmaceuticals slumped 6.46% after it reportedly lost a patent case against US-based Abbott Laboratories over hypertension drug Tarka.

SAIL fell 2.60%, extending its recent losses on disappointing results. Hindustan Construction Company plunged nearly 6% after the Environment Ministry reportedly received extension to submit a report on the controversial Lavasa project.

Tata Coffee climbed 7%, extending its 20% gain on Friday, after it announced a new alliance with U.S. coffee giant Starbucks. Kavveri Telecom Products soared 6.82% after the company proposed to issue shares and warrants to its promoters on a preferential basis. Essar Oil rose 1.62% on posting turnaround results.

Elsewhere, other Asian stock markets closed mostly lower on Monday in reaction to a weekend announcement of a hike in banks' reserve-ratio requirement in China to rein in inflation. There were fears that further monetary policy tightening and a possible slowing economic growth in China would dent demand for resources.

China's Shanghai Composite led the declines in the region, tumbling a little over 3% to 2,707, as a rise in lenders' required reserves for the fourth time in just over two months and reports that a property tax is in the pipeline kept financial and property shares under pressure. The Chinese city of Shanghai is to do preparatory work this year for a trial property tax amid rising asset prices, the city's mayor was quoted as saying on Sunday.

European stocks fluctuated between gains and losses in early trading Monday and the euro fell broadly ahead of a two-day meeting of euro zone finance ministers starting today that is expected to discuss measures to strengthen the region's rescue fund. The U.S. markets will be shut on Monday for the Martin Luther King Jr. Day.

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