US & World Daily Markets Financial Briefing 20-12-2010

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Stocks Posting Modest Gains Amid Light Trading Activity

Stocks are seeing modest strength in early trading on Monday, with the major averages adding to the gains that they posted last week. Trading activity remains relatively subdued, however, with some traders getting a head start on the holiday weekend.

While buying interest has remained limited, the early strength in the markets lifted the tech-heavy Nasdaq to its best intraday level in almost three years.

Gold stocks have shown a notable move to the upside, regaining some ground along with the price of the precious metal. Oil service, biotechnology, and telecom stocks are also seeing early strength.

The light trading activity comes amid a lack of major economic data as well as a light day on the corporate news front ahead of the long weekend.

Although there is no significant economic data on tap for today, reports on existing and new home sales, durable goods orders, personal spending and third quarter GDP data are all due to be released on Wednesday and Thursday of this week.

Meanwhile, geopolitical concerns regarding rising tensions on the Korean peninsula, movements in the currency markets as well as developments in the euro zone continue to be in the spotlight as the year winds to a close.

In Europe, Greece and Ireland accepted hefty aid packages from the European Union and the International Monetary Fund, while prospective issues remain in Spain and Portugal.

Traders are also likely to mull over the prospects for sustaining economic growth in the 2011 after President Obama signed the extension of the Bush tax cuts for another two years.

The major averages have moved off their highs for the young session but are currently holding on to slim gains. The Dow is up 12.94 points or 0.1 percent at 11,504.85, the Nasdaq is up 7.57 points or 0.3 percent at 2,650.54 and the S&P 500 is up 3.21 points or 0.3 percent at 1,247.12.

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TSX May Edge Up At Open

Bay street stocks are poised for a higher open Monday amid firm commodities prices and mixed cues from the global equity markets. While most Asian stocks ended lower, European stocks were lingering in positive territory.

Trading volumes are likely to be very low ahead of Christmas holidays.

U.S. stock futures were pointing to a marginally higher open as the U.S. approved a plan to extend tax cuts and unemployment benefits.

On Friday, the S&P/TSX Composite Index snapped its three-day losing streak, adding 20.23 points or 0.15% to 13,201.46.

The price of crude oil edged up as unusually cold weather across Europe placing a floor. Crude for January moved up $0.46 to $88.48 a barrel.

The price of gold moved up for a second session Monday morning despite a firm U.S. dollar. Gold for February added $6.70 to $1,385.90 an ounce.

In corporate news from Canada, ArcelorMittal said it has agreed to increase the offer price for Baffinland Iron Mines Corp. to C$1.25 per share, which represents a premium of about 14% to the original offer and was approved by the latter's board.

International energy company Gran Tierra Energy announced a 2011 capital spending of $299.2 million for exploration and production development operations in Colombia, Peru, Argentina and Brazil. In addition, production in 2011, excluding potential exploration success, is anticipated to range between 21,500 to 23,500 barrels of oil equivalent per day gross, or 16,000 to 18,000 BOEPD net after royalty.

Gold explorer Kirkland Lake Gold said t has been added to the S&P/TSX Composite Index effective at market open on Monday.

Base-metals miner Duluth Metals said it would acquire Franconia Minerals in exchange of cash and or Duluth shares, subject to pro-ration, with an aggregate maximum cash consideration of C$37.98 million and an aggregate maximum of 13.84 million Duluth shares. The total value of this transaction would be about C$77 million.

Multinational specialty pharmaceutical Company Valeant Pharmaceuticals International said Philip Loberg, its former senior VP and corporate controller, has been named to the role of interim CFO, effective immediately.

Precipous and base-metals miner Minefinders Corp. said it has placed 13.65 million common shares for C$151.51 million with a syndicate of underwriters for sale to the public at a price of C$11.10 per common share.

Industrial instrumentation and controls company Titan Logix swung to profit in fiscal 2010 ended August 31, reporting net income of C$34, 900 or breakeven per share, compared to a loss of C$830,200 or C$0.03 per share.

Russia focused gold explorer Fortress Minerals said it divested remaining property interests and related assets within the Russian Federation to Inter Geo Recources LLC. for $500,000 in cash. Friday, the stock had rallied nearly 12% to C$4.250.

In economic news, Statistics Canada said wholesale sales remained at C$44.9 billion in October, after advancing 0.7% in September. Meanwhile, Inventories declined 0.7% in October to C$52.5 billion.

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Construction Stocks, Lenders Lift French Market

The French market is notably higher in afternoon trading Monday, led by construction stocks and lenders. The market shrugged off debt worries concerning Europe and tension on the Korean peninsula, which had hurt the Asian markets, as investors became upbeat about global economic recovery.

In economic news, German producer price index rose 4.4% year-on-year in November, the Federal Statistical Office said. Economists had forecast 4.5% rise following October's 4.3% increase. On a monthly basis, the PPI climbed 0.2% after rising 0.4% in the previous month.

The Confederation of British Industry said the UK economy would grow just 0.2% in the first three months of 2011, down from the previous forecast of a 0.3% growth, as public sector job cuts and a rise in the Value Added Tax rate slow the recovery.

The CAC 40 opened at 3,901 and has been trading in a range of 3,869 to 3,917. The index is currently advancing 1.09%.

Building materials maker Saint-Gobain is adding 2.9%, thus leading the gainers. Cement giant Lafarge, builders Bouygues and Vinci, real estate investment trust Unibail-Rodamco and steel manufacturer ArcelorMittal are notably higher.

Lenders Natixis, Societe Generale and BNP Paribas are advancing between 1.9% and 1.2%. However, Credit Agricoleis losing 1.3%.

Car manufacturer Peugeot is advancing 1.8% and Renault is gaining 0.85%.

Department stores operator PPR and grocery retailer Carrefour are losing moderately.

Elsewhere in Europe, the UK's FTSE 100 is adding 0.54% and the German DAX is advancing 1.06%.

Across Asia/Pacific, most major markets ended lower. Australia's All Ordinaries lost 0.49% and China's Shanghai Composite Index retreated 1.41%. Hong Kong's Hang Seng and Japan's Nikkei 225 dropped 0.33% and 0.85%, respectively. However, India's BSE Sensex added 0.12%.

In the U.S., futures point to a slightly higher open on Wall Street. The Dow slid by 0.1%, while the Nasdaq advanced 0.2% and the S&P 500 rose 0.1%.

In commodities, crude for January delivery is adding $0.57 to $88.59 per barrel and gold is rising $5.2 to $1384.4 an ounce.

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Asian Markets End In Negative Territory

Almost all the markets in Asia open for trading on Monday, except the Indian market, ended in negative territory in relatively light trading session amid fresh geopolitical concerns involving the Korean Peninsula. Profit trading on the penultimate trading week for the year amid cautious trading in a festive mood also impacted market sentiment.

In Australia, the benchmark S&P/ASX200 Index declined 26.50 points, or 0.56%, and closed at 4,737 points, while the All-Ordinaries Index ended at 4,829, representing a loss of 23.80 points, or 0.49%.

Light sweet crude oil futures for January delivery was trading at $88.10 a barrel in electronic trading, up $0.08 per barrel from previous close at $88.02 a barrel in New York on Friday.

In a day of light or no major economic data, traders preferred to lock in gains from recent gains and moved to the sidelines ahead of the Christmas and New Year holidays, churning the existing portfolios and refraining from fresh investments due to lack of fresh cues.

Banking stocks ended in negative territory. ANZ Bank declined 1.31%. National Australia Bank slipped 0.91%, and Westpac Banking Corp. lost 2.29%. Investment banking company Macquarie Group was down 0.77%. However, Commonwealth Bank of Australia bucked the trend and ended in positive territory with a gain of 0.06%.

Mixed trading was witnessed among resource related stocks. BHP Billiton declined 0.47%, Rio Tinto slipped 0.23%, Fortescue Metals fell 1.62%, Gindalbie Metals lost 2.26%, Murchison Metals shed 0.40% and Oz Minerals edged down 0.29%. However, Iluka Resources ended in positive territory with a gain of 0.82%, Macarthur Coal gained 0.64% and Mincor Resources climbed 1.62%.

Gold-related stocks ended in negative territory. Newcrest Mining declined 0.93% and Avoca Resources slipped 0.91%.

Oil related stocks also witnessed mixed trading. Woodside Petroleum slipped 0.67%, and ROC Oil Ltd plunged 2.47%. However, Santos Ltd climbed 4.09%, Origin Energy added 0.12% and Oil Search Ltd gained 0.43%.

In Japan, the benchmark Nikkei 225 Index dropped 87.42 points, or 0.85% to 10,216, while the broader Topix index of all First Section issues fell 4.59 points, or 0.51%, to 899

On the economic front, a statement released by the Cabinet Office revealed that the official leading indicator of the Japanese economy for October was revised up to 97.7 from 97.2. However, the leading indicator was still lower than the 99.1 reading recorded for September. The report further noted that the coincident index was revised up to 100.8 from 100.7, compared to the prior month's reading of 102.1. The report further noted that the lagging index climbed to 88.7 in October from 88.1 in the prior month.

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Mixed trading was witnessed among the large banks. Sumitomo Mitsui Financial added 0.07%. However, Mitsubishi UFJ Financial slipped 0.68%, Mizuho Financial fell 1.96% and Resona Holdings lost 1.17%.

Stocks closely related with Chinese stocks ended in negative territory. Komatsu Ltd declined 1.88%, Hitachi Construction lost 2.07% and Fanuc Ltd was down 1.78%.

Shares of exporters also ended in negative territory. Sony Corp. was down 1.15%, Sharp Corp. fell 1.18%, Panasonic Corp., edged down 0.52% and Canon Inc. declined 0.60%.

Shares of sea-transport companies also ended in negative territory. Kawasaki Kisen Kaisha Ltd declined 2.19%, Nippon Yusen declined 0.81% and Mitsui OSK Lines was down 0.35%.

Real estate companies also ended in negative territory on profit taking. Sumitomo Realty & Development declined 0.83%, Mitsubishi Estate Co. Ltd 0.74%, Tokyo Tatemono Co. lost 1.33%, Tokyu Land Corp. fell 1.01% and Heiwa Real Estate declined 1.56%.

After being subdued in early trading, the Indian market witnessed a sharp recovery in the afternoon before ending on a flat note Monday. While stock-specific buying in auto and IT stocks helped the 30-share Sensex end up about 0.12% higher at 19,889, the 50-share Nifty closed in the red with a marginal loss, with banking, telecom, healthcare and energy stocks leading the losses. Second-line stocks also ended on a mixed note with the BSE mid-cap index falling 0.13% and the small-cap index rising 0.40%. In the broader market, advancing shares outpaced declining ones by 1489 to 1317 share on the BSE.

Among the other markets in the region, China's Shanghai Composite Index declined 40.82 points, or 1.41% to close at 2,853, HongKong's Hang Seng Index fell 75.77 points, or 0.33% to close at 22,639, Jakarta Composite Index in Indonesia was down 12.76 points, or 0.36%, to close at 3,569, Seoul Composite Index in South Korea was down 6.02 points, or 0.30%, to close at 2,020. Singapore's Strait Times Index declined 20.05 or 0.64%, to close at 3,133 and Taiwan Weighted Index was down 49.18 points or 0.56% to close at 8,769.