US & World Daily Markets Financial Briefing 19-01-2011

Click Here

Stocks Posting Modest Losses In Early Trading

Stocks are seeing modest weakness in early trading on Wednesday, although selling pressure remains subdued, limiting the downside. While the Nasdaq and the S&P 500 have slipped into negative territory, the Dow is posting a modest gain.

The early weakness comes as traders shrug off upbeat earnings news from tech giants Apple (AAPL) and IBM (IBM). A sharp drop in earnings from Goldman Sachs (GS) may be generating some negative sentiment even though the financial giant's quarterly earnings came in above analyst estimates.

Goldman Sachs reported fourth quarter earnings of $3.79 per share, down from $8.20 per share a year ago but above expectations for earnings of $3.76 per share. Meanwhile, quarterly revenues totaled $8.64 billion, trailing forecasts for revenues of $9.00 billion.

After the markets closed for trading on Tuesday, traders looked to Apple, which said its first quarter profit jumped 78 percent from last year, driven by record sales of Mac computers, iPhones and iPads due to strong demand during the holiday period.

Apple's quarterly earnings and sales both breezed past Wall Street expectations. The company's forecast for second quarter revenue and earnings also exceeded the current consensus estimates.

Diversified computing giant IBM also reported fourth quarter earnings and revenues that came in ahead of analysts' estimates. Looking ahead, the company provided guidance for full year 2011, with earnings expected to beat market projections.

On the economic front, the Commerce Department released a report showing a steeper than expected drop in housing starts in the month of December, although the report also showed a much bigger than expected increase in building permits.

Healthcare provider stocks have shown a notable move to the downside in early trading, dragging the Morgan Stanley Healthcare Provider Index down by 1.3 percent. Electronic storage and health insurance stocks are also seeing early weakness.

The major averages are currently mixed, with the Dow just above the unchanged line. While the Dow is up 4.62 points or less than a tenth of a percent at 11,842.55, the Nasdaq is down 6.55 points or 0.2 percent at 2,759.30 and the S&P 500 is down 2.96 points or 0.2 percent at 1,292.06.

Click Here to learn more

TSX May Open Higher On Commodities

Toronto stocks may extend gains at open Wednesday amid rising commodities prices and strong cues from the global equity markets. However, financial stocks may be under pressure after U.S. financial giant Goldman Sachs posted disappointing quarterly numbers.

U.S. stock futures were pointing to a lower open after Goldman Sachs said its fourth quarter profits dipped 53%, hurt by lower fixed income trading.

On Tuesday, the S&P/TSX Composite Index added 119.09 points or 0.89% to 13,559.20

The price of crude oil moved up Wednesday morning, with crude for February adding $0.57 to $91.95 a barrel.

The price of gold was moving higher for a third day amid a weak U.S. dollar. Gold for February gained $8.20 to $1,376.40 an ounce.

In corporate news from Canada, base-metals miner Teck Resources said it expects coal sales to range from 5 million to 5.5 million tonnes in the first quarter, mainly impacted by poor weather conditions in southeast British Columbia. The mining company said that compares to 5.25 million tonnes in the year ago period. For the full year, the company expects sales to come in at 24.5 million to 25.5 million tonnes.

Global energy company Nexen Inc. said it would divest all of its 65% stake in Canexus Income Fund at C$6.40 per unit for total proceeds of $482 million. Canexus closed Tuesday trading session at C$6.80.

Mineral exploration company NovaGold Resources said it has filed its formal offer to acquire Copper Canyon Resources Ltd., in exchange of 0.0425 of a its share for every share of the latter.

Specialty potash fertilizers producer Migao Corp. announced the start of production at the newly constructed potassium nitrate joint venture in China. The company also said production will commence at its 40,000 tonne per year potassium sulphate facility at its wholly owned subsidiary, Shanghai Migao.

Broadband communications solutions provider Norsat International said it would acquire Sinclair Technologies Holdings Inc., a provider of antenna and RF conditioning products for $19.25 million.

Interior design and furniture manufacturing software company 20-20 Technologies reported fourth quarter net income of $0.7 million or $0.04 per share, unchanged from the year-ago period.

Development stage mineral explorer Firestone Ventures said it closed a non-brokered private placement of 13.45 million units at of $0.10 per unit for gross proceeds of C$1.34 million.

In economic news Statistics Canada said manufacturing sales declined 0.8% in November to C$44.9 billion. Economists expected manufacturing sales to rise 1%, following the revised 1.2% advance recorded in October. Excluding the motor vehicle industries, manufacturing sales edged up 0.2% in November compared with October.

From south of the border, the U.S. Commerce Department said that housing stats fell 4.3% to an annual rate of 529,000 in December from the revised November estimate of 553,000. Economists were expecting housing stats to edge down to 550,000 from the 555,000 originally reported for the previous month.

Meanwhile, building permits, an indicator of future housing demand, jumped 16.7% to an annual rate of 635,000 from the revised November rate of 544,000. Building permits had been expected to show a more modest increase to 560,000.

Earlier today, Germany raised its 2011 economic growth forecast to 2.3% from 1.8%, on solid growth in exports and private spending.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

German Market Slips Into Red Amid Volatile Trading

The German market is trading in the red with marginal losses Wednesday afternoon amid volatile trading involving alternative bouts of buying and selling ahead of key earnings and economic data from the US.

In economic news, official figures from the Office for National Statistics in the U.K. Revealed that Jobless claims in the UK decreased for the third month in December, suggesting slight improvement in the labor market. Earnings growth remained subdued, easing the pressure on the central bank. Meanwhile, unemployment increased notably during the three months to November.

Germany's Federal Ministry of Economics and Technology on Wednesday raised its 2011 growth forecast for its economy. The ministry now sees 2.3% expansion this year, faster than the 1.8% growth it had predicted in October. According to preliminary estimate, Germany's gross domestic product, or GDP, climbed 3.6%.

Data released by the Eurostat revealed that Eurozone construction output declined 0.9% month-on-month on a seasonally adjusted basis in November. This follows an upwardly revised 0.3% rise in October. Year-on-year, output in Eurozone construction industry dropped a working day adjusted 6.8% compared to a revised 5.9% decline in the previous month. On a monthly basis, building construction decreased 0.9% after October's 0.5% growth. Output in civil engineering fell 2.8% after a 2.8% rise in October.

The DAX index opened slightly higher at 7,163 compared to previous close at 7,143. However, the market could not sustain the initial burst and slipped into the red on profit taking. Amid alternate bouts of buying and selling, the market is trading currently in the red, losing 0.13%,

Financials are trading in positive territory with modest gains. Deutsche Bank is adding 0.25%, and Commerzbank is gaining 0.40%.

Automakers are trading in the red amid profit taking. BMW is down 0.73% and Daimler is shedding 0.98%. Volkswagen is losing more than 1.10%.

Department stores operator Metro is also trading in the negative territory with a marginal loss of 0.95%

Elsewhere in Europe, the FTSE 100 index in the UK is down 0.34% while the CAC-40 index in France is losing 0.03%.

Across Asia/Pacific, markets extended gains for the second successive day, lifted by positive cues from Wall Street and better than expected earnings from Apple and IBM. Except India, Indonesia and Singapore, the other major markets in the region ended in positive territory.

In the U.S., futures point to a mixed open on Wall Street ahead of earnings from financial and technology majors including Goldman Sachs and Wells Fargo.

In commodities, crude for February delivery is adding $0.53 to $91.91 per barrel and gold is trading higher at $1,368.10 per troy ounce.

Click Here

Indian Market Ends In The Red

The Indian market ended a volatile session modestly lower on Wednesday, as talks of a Cabinet reshuffle this evening and a sharp rebound in the previous session prompted investors to take some profits at higher levels.

After fluctuating between gains and losses in early trading, the benchmark 30-share Sensex slipped to a low of 18,899 in the afternoon on the back of heavy selling in capital goods, IT, telecom, oil/gas and consumer durable stocks. However, short covering at lower levels helped the Sensex end off the day's low at 18,978, down about 115 points or 0.60%, while the 50-share Nifty ended down 33 points or 0.58% at 5,691.

The BSE mid-cap and small-cap indexes closed marginally higher, rising 0.15% and 0.09%, respectively. The market breadth was slightly positive, with 1416 gainers versus 1387 decliners on the BSE.

HCL Technologies climbed nearly 4% on surpassing expectations with a 34% rise in its second-quarter consolidated net profit. However, Wipro eased 0.85% ahead of its results today, Infosys fell 2% and TCS shed 0.58%.

Telecom stocks fell, as consumers eagerly awaited the nationwide launch of mobile number portability on Thursday. The facility allows consumers to change telecom operator while retaining their numbers. Bharti Airtel slipped 0.13% and Reliance Communication declined 0.87%, while Idea Cellular and Tata Teleservices closed unchanged.

Hindustan Construction Company rallied 3.64% after the environment ministry, which had halted construction of its Lavasa project, citing lack of environmental clearances, said it would consider the project on merits with the imposition of certain terms and conditions.

Nagarjuna Construction posted a modest 0.3% gain after it bought a controlling stake in power generation company Nelcast Energy Corporation for an undisclosed amount.

State-run oil explorer ONGC fell 1.20% amid reports that its fuel subsidy bill would rise 21% in the third quarter. Other state-run oil companies such as IOC, BPCL and Gail India ended down between 0.1% and 2%. Heavyweight Reliance Industries reversed its early gains and ended 1.32% lower.

Steel makers such as Bhushan Steel (up 1.10%), SAIL (up 4.76%) and JSW Steel (up 3.61%) closed firm on expectations that they will contemplate another price hike. Tata Steel gained 1.16% after launching its much-awaited follow-on public offering. Other metal stocks such as Sterlite and Hindalco rallied around 3% each after copper prices rose to a record high in London, bolstered by a weaker dollar and an expected shortfall in supply this year.

In the auto sector, utility vehicles manufacturer Mahindra & Mahindra, which has recently announced a re-branding campaign, closed 0.62% higher. Two-wheeler manufacturer Bajaj Auto rose 2% after it beat market expectations with a 40% rise in quarterly net profit. Tata Motors and Maruti Suzuki ended down about half a percent each.

ING Vysya Bank tumbled 4% despite reporting a 37% rise in quarterly net profit. Orchid Chemicals lost 0.33% despite posting turnaround Q3 results. Tata Chemicals edged down 0.20% after its U.K. arm signed a pact to buy British Salt for £93 million. Glenmark Pharmaceutical advanced 2.17% on receiving the U.S. FDA approval to market a malaria drug.

Elsewhere, strong earnings reports from companies in the U.S. helped the other Asian markets close mostly higher on Wednesday. The key benchmark indexes in Japan, Australia, South Korea and Hong Kong gained between 0.36% and 1.10%. China's Shanghai Composite average rose 1.86% on expectations that Chinese inflation numbers, due on Thursday, will not hinder growth.

However, European stocks fluctuated within a narrow range and the Dow futures were largely unchanged, as investors anxiously awaited earnings of internet auction firm Ebay, lender Wells Fargo and investment bank Goldman Sachs later in the day.

The dollar fell to an eight-week low against the euro ahead of official data on building permits and housing starts.

Click Here

Dollar Hits 2-Month Low Versus Euro

The dollar dropped to its lowest since Thanksgiving versus the euro Wednesday morning amid easing concerns about the severity of Europe's sovereign debt problems.

With European central bankers seemingly more concerned with inflation than supporting struggling economies through tough times brought about be needed austerity measures, the euro has pressured the dollar for five straight sessions.

A two-day meeting of European finance ministers failed to come up with any concrete steps to tackle the region's debt problems, but a recent string of successful bond auctions appears to have soothed market concerns for now.

The dollar dropped through support to hit a 2-month low of $1.3528 versus the euro.

Little movement was detected against the sterling, with the dollar lingering near yesterday's 2-month low of $1.6058.

Jobless claims in the UK decreased for the third month in December, suggesting slight improvement in the labor market. Earlier this week, data suggested inflation is heating up raised speculation the Bank of England would soon begin to tighten monetary policy.

The dollar remained in the doldrums versus the yen, dropping to a 2-week low of Y82.

Looking at the US economic calendar, a report on housing starts and building permits is slated to be released at 8:30 am ET. Economists estimate housing starts of 550,000 for December.

Meanwhile, the number of loan requests for home purchases fell slightly last week, but refinancing activity picked up as interest rates slipped to their lowest in the new year, industry data revealed Wednesday.

The Mortgage Bankers Association's seasonally adjusted index of mortgage application activity climbed 5 percent in the week ended January 14. The four week moving average for the seasonally adjusted Market Index is up 1.4 percent.