US & World Daily Markets Financial Briefing 23-08-2010

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Initial Optimism Fades On Wall Street

Stocks have come well off of their early highs and are only modestly higher in mid-morning trading on Monday, struggling to sustain some early euphoria driven by the latest merger and acquisition news. The tech-heavy Nasdaq turned briefly negative before bouncing back to the upside, while the Dow and the S&P 500 are looking to hold on to modest gains.

The Nasdaq is currently up 1.68 points or 0.1 percent at 2,181.44, while the Dow is up 37.01 points or 0.4 percent at 10,250.63 and the S&P 500 is up 4.45 points or 0.4 percent at 1,076.14.

Early news from the M&A front generated some positive sentiment as Hewlett-Packard (HPQ) made a $1.6 billion bid for U.S. data storage firm 3PAR (PAR). HP's offer of $24 per share is roughly 33 percent higher than Dell's (DELL) competing offer of $18 per share.

HSBC Holdings Plc (HBC) also announced plans to acquire control of Nedbank Group Ltd, a South Africa-based bank presently controlled by South Africa-based insurance company Old Mutual.

Additionally, Brookfield Infrastructure Partners L.P. (BIP) and Prime Infrastructure said that they have entered into a definitive merger agreement to create a global infrastructure company, in a transaction with an implied value of $1.4 billion for Prime Infrastructure.

Canada-based Potash Corp. (POT), which was targeted by BHP Billiton (BHP) through a hostile offer last week, has also reportedly received interest from unnamed third parties.

Bloomberg reported that China's Sinochem Group and Brazil's Vale (VALE) have emerged as the most likely rivals to BHP's bid. Rio Tinto (RTP) and Chinese private equity fund Hopu Investment Management are also rumored to be preparing an offer.

Sector News

Utility stocks are showing notable gains in mid-morning trading, with the Philadelphia Utility Sector Index up by 1.3 percent. The index is seeing further strength as it bounces back from last week's one-month closing low.

Strength is also visible among electronic storage and trucking stocks, while weakness among gold and semiconductor is offsetting some of the upside.

The NYSE Arca Gold Bugs Index is down by 0.9 percent, moving further off last week's roughly seven week closing high. The move comes even as the price of gold is seeing little conviction on the day. Gold is currently up by $0.70 at $1,229.50 an ounce.

Stocks Driven By Analyst Comments

Universal Travel (UTA) is trading lower after Brean Murray lowered its rating on the stock from Buy to Hold. Shares are currently down by 6.1 percent and are on pace for a seven-week closing low.

On the other hand, Rosetta Resources (ROSE) is up after Sun Trust Robinson Humphrey upgraded shares from Neutral to Buy. The stock has gained 3 percent, moving further off of last week's five-month closing low.

United Stationers (USTR) is also trading higher after FBR Capital Markets boosted its rating on shares from Perform to Outperform. The stock is currently up by 4.1 percent after setting a two-week intraday high in earlier trading.

Other Markets

Overseas, stock markets in the Asia-Pacific region closed mostly lower on Monday. Japan's benchmark Nikkei 225 Index fell by 0.7 percent and Hong Kong's Hang Seng Index slid by 0.4 percent.

The major European markets remain up by varied margins. The U.K.'s FTSE 100 Index and the French CAC 40 Index are both up by 1.2 percent, while the German DAX Index is up by 0.6 percent.

In the bond markets, treasuries are seeing modest weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 2.632 percent, posting a gain of 2 basis points.

Open an account with CMS Forex with at least $500 and you will receive a 100% deposit bonus.  Every time you trade 10 lots you will get $50 until you have received all 100% of your deposit.  There is no maximum - deposit $100,000 and you can earn up to $100,000. Already have a CMS account?  You can still get the 100% bonus on your next deposit. Click Here

TSX Looks To Edge Higher As Big Banks Prep Earnings

Toronto stocks are poised for a marginally higher open Monday amid recovery in commodities and firm cues from the global equity markets.

Canada's big six banks may be in play ahead of their fiscal third quarter earnings results, which are due out this week.

On Friday, the S&P/TSX Composite Index picked up 11.89 points or 0.10% to 11,722.07, gaining 193.82 points or 1.68% over the week.

The price of crude oil was leveling off from its 6-week low amid recovery in global equities. Crude for October moved up $0.47 to $74.29 a barrel.

Meanwhile, the price of gold was trading almost flat amid a mixed dollar. Gold for December delivery edged up $1.10 to $1,229.90 an ounce.

In global M&A news, HSBC Holdings plc said that it is in talks with insurer Old Mutual for the purchase of a majority stake in South Africa's Nedbank.

Hewlett-Packard launched a $1.6 billion bid for data storage company 3PAR Inc, which was about 33% more than the offer by rival Dell Inc. In corporate news from Canada, electricity transmission systems company Brookfield Infrastructure Partners  said it would takeover Australia based Prime Infrastructure for $1.4 billion. Prime security holders will receive 0.24 Brookfield units for each Prime stapled security held, representing AUD$4.60 per Prime security and also entitled to cash in lieu of Brookfield units up to a limit of 4,000 units per holder.

Meanwhile, fertilizer maker Potash Corp. said it has been approached by a number of third parties who have expressed interest in bidding for it. Media reports indicated China's Sinochem Group, Brazil's Vale and Chinese private equity fund Hopu Investment Management are in the race to take control of Potash. Last week, Potash rejected an unsolicited $130 per share takeover offer from the Australian mining company BHP Billiton.

Petroleum and natural gas focused investment company Crescent Point Energy Corp. said it acquired Steel fabrication and oil distribution company Ryland Oil in exchange of 0.0117 of its share for each Ryland share.

Digital visualization software company RenoWorks Software reported a net loss for the second quarter of C$38,641 or C$0.001 per share, compared to a net loss of C$96,040 or C$0.004 per share for the year-ago quarter.

Forest products company Ainsworth Lumber said it has reached a new four year labor agreement with unionized workers at its mill in British Columbia.

Base metals mining company Anvil Mining announced the appointment of Philippe Monier as its Vice President Corporate and Chief Financial Officer, effective October 1, 2010.

With a light economic calendar, traders will look to the movements in the commodities markets to get clues.

Trade Forex, Stock Indices and More - Open a Demo account now

Click here

Asian Markets End In Negative Territory

Most of the Asian markets open for trading on Monday, the first day of trading week, ended in negative territory on concerns about global economic recovery, taking cues from Wall Street where the major averages ended ended in negative territory for the second consecutive week on concerns about economic recovery. Inconclusive results in Australian elections and disappointment over measures to arrest strengthening of Yen against the dollar and the euro impacted market sentiment, as most of the traders turned cautious and stayed in the sidelines awaiting more cues on global economic recovery.

In Japan, the benchmark Nikkei 225 Index lost 62.69 points, or 0.68% to 9,117, while the broader Topix index of all First Section issues was down 4.80 points, or 0.58%, to 825.

Textile related stocks led the losers in the market. Toray Industries declined 2.95%, Nisshinbo Holdings slipped 0.71%, Unitika Ltd fell 2.86%, Toyobo Co. Ltd shed 1.43% and Teijin Ltd was down 0.38%.

Precision machinery stocks also declined on concerns about economic recovery and strengthening local currency. Nikon Corp. declined 1.94%, Terumo Corp. slipped 0.35%, Olympus Corp. shed 0.42%, Konica Minolta Holdings fell 0.80% and Citizen Holdings was down 0.89%.

Pulp and paper related stocks also ended in negative territory. Nippon Paper Group declined 1.09%, Oji Paper Co. lost 1.45% and Hokuetsu Kishu Paper Co. fell 1.39%. Mitsubishi Paper Mills remained unchanged from previous close.

Mixed trading was witnessed among stocks of trading companies. Mitsubishi Corp. declined 1.01%, Sumitomo Corp. lost 1.87%, Toyota Tsusho Corp. slipped 0.63% and Mitsui & Co. edged down 0.17%. However, Itochu Corp. ended in positive territory with a modest gain of 0.15%, Marubeni Corp. was up 0.22% and Sojitz Corp. climbed 0.72%.

Shipping transport related stocks also witnessed mixed trading. While Mitsui OSK Lines managed to end in positive territory with a gain of 0.35%, Kawasaki Kisen Kaisha declined 0.59% and Nippon Yusen edged down 0.29%.

In Australia, the benchmark S&P/ASX200 Index slipped 1.90 points, or 0.04%, and closed at 4,429 points, while the All-Ordinaries Index ended at 4,460, representing a loss of 1.70 points, or 0.04%.

Mixed trading was witnessed among the resource - related stocks as traders speculated the outcome of the controversial resources tax and how the same will be handled by the new incumbent Government, as the political results remained inconclusive. BHP Billiton added 0.55%, Rio Tinto advanced 0.67%, Iluka Resources edged up 0.37%, Mincor Resources gained 1.08%, Murchison Metals rose 0.64% and Oz Minerals climbed 2.06%. Fortescue Metals and Gindalbie Metals remained unchanged from previous close. However, Macarthur Coal declined 0.64%, and Minara Resources fell 1.95%.

Mixed trading was also witnessed among oil-related stocks. Woodside Petroleum edged down 0.05%, and Oil Search Ltd slipped 0.17%. Origin Energy remained unchanged from previous close. However, Santos Ltd ended in positive territory with a modest gain of 0.43% and ROC Oil gained 1.32%.

Gold related stocks ended in positive territory as bullion prices gained in the international market. Lihir Gold was up 0.45% and Newcrest Mining gained 0.48%.

Bank stocks also witnessed mixed trading as traders sold off shares of Westpac Banking after the company reported better than expected results for the third quarter but its net interest margins were below expectations. Shares of Westpac Banking declined 2.56%. Among others, National Australia bank shed 1.05%. However, ANZ Bank ended in positive territory with a gain of 0.75%, and Commonwealth Bank of Australia advanced 0.40%.

The major gainer in the market is Fosters, which surged up 7.56% on speculation that SAB Miller, a major brewery giant, is considering plans to take over the beer unit of Fosters.

The Indian market ended an extremely volatile session modestly higher on Monday, with consumer durable, public sector, telecom and healthcare stocks leading the gainers. However, defensive FMCG stocks like Hindustan Unilever, Colgate Palmolive and ITC fell between 0.5% and 2%, limiting the gains. After moving choppily in a narrow range, the 30-share BSE Sensex finally ended up 8 points at 18,409, while the 50-share Nifty rose by 13 points or 0.23% to 5,543.

Among the other major markets open for trading, China's Shanghai Composite Index ended in negative territory with a loss of 2.94 points, or 0.11% at 2,639, and Singapore's Strait Times Index declined 10.49 points, or 0.36%, and closed at 2,926. However, Taiwan's Weighted Index edged higher by 48.62 points, or 0.61%, to 7,976, and Jakarta Composite Index in Indonesia ended in positive territory with a gain of 11.01 points, or 0.35%, at 3,129.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European averages are advancing strongly on Monday after an uncertain start. Traders have looked past the weak signals relayed by Wall Street stocks last Friday, as a rebound in commodity stocks and deal news have given rise to some optimism.

The French CAC 40 Index and the German DAX Index are rising 0.65% and 0.30%, respectively, while the U.K.’s FTSE 100 Index is advancing 0.75%.

In corporate news, HSBC Holdings (HBC) announced its intention to buy a stake in South Africa’s Nedbank, in which Old Mutual holds about a 52% stake. The eurozone's private sector growth decelerated slightly in August as both manufacturing and services activity slowed. The Markit eurozone composite purchasing managers' index, an indicator of health at 4,500 companies across the region, fell to 56.1 from 56.7 in July.

Worryingly, growth in the euro area's private sector continued to be dependent upon the region's two biggest economies, France and Germany, suggesting increasing divergence in the region's two-speed recovery.

The decrease was mainly due to a drop by the manufacturing PMI, which fell to 55.0 from 56.7, a six-month low. Economists were looking for a score of 56.2. At the same time, the services PMI slid to 55.6 from 55.8, a two-month low. Economists had forecast a score of 55.5.

U.S. Economic Reports

Housing reports are likely to predominate proceedings on Main Street in the unfolding week. The National Association of Realtors' existing home sales report, the Commerce Department's new home sales report and the Federal Housing Finance Agency's house price index for June along with the durable goods orders report for July and the weekly jobless claims report are likely to be closely watched by traders.

The preliminary second quarter GDP report, the final reading of the Reuters/University of Michigan consumer sentiment index, the results of the Treasury auctions of 2-year, 5-year and 7-year notes and Fed speeches round up the other economic events of the week.

Existing home sales are expected to decline for the third straight month in July, with the softness stemming from the payback phenomena of stimulus-induced sales witnessed until April. Pending home sales declined yet again in June, although the decline was less severe than in the previous month. However, new home sales, which measure transactions rather than closings, could show a small bounce in July following a modest recovery in June. That said, a sustainable rebound in the sector is ruled out and stabilization is the best one can hope for.

Meanwhile, aided by a rebound in aircraft orders, durable goods orders are expected to show solid growth. However, non-aircraft orders could remain essentially flat. Boeing's (BA) order book indicates that it received 130 aircraft orders in July compared to 49 in June.

Economists expect second quarter GDP growth estimate to be downwardly revised from the advance estimate of 2.4%, primarily due to the June trade deficit widening by much more than expected. Capital Economics is of the view that the trade gap is so vast that it cannot be plugged by a rise in the growth rate of final sales to domestic purchasers.

Stocks in Focus

Hewlett-Packard (HPQ) and Dell (DELL) may be in focus after Hewlett-Packard came out with a competing offer for 3PAR (PAR), valuing the company at $24 per share or an enterprise value of $1.6 billion. Earlier Dell had offered $1.15 billion for 3PAR.

Potash Corp. of Saskatchewan (POT) could see some activity after it said its board said had voted unanimously to reject the unsolicited $130 per share cash offer by BHP Billiton (BHP). Meanwhile, reports suggest that Chinese private equity fund Hopu Investment Co. is studying the feasibility of making a bid for Potash.

Trade Forex, Stock Indices and More - Open a Demo account now

Click here

Dollar Back Near 15-Year Lows Versus Yen

The dollar was stuck in neutral versus most majors Monday morning in New York, coming under pressure against the resurgent yen amid talk of a double-dip recession for the US.

With no first-tier economic reports on tap from the US today, traders will focus on activity in stocks markets. Stocks are indicated to open higher on Wall Street as merger activity has picked up significantly over the past week.

Officials from the Federal Reserve will garner attention this week, beginning with Kansas City Fed President Thomas Hoenig's appearance on a panel hosted by the House Financial Services Oversight subcommittee.

Hoenig has called for the Fed to raise rates sooner than later, noting that near zero rates are having a negative impact on the economy.

Chairman Ben Bernanke speaks later this week on the economy at the Fed's annual retreat to Jackson Hole, Wyoming.

Looking at Monday's currency charts, the dollar fell sharply at around 7 am ET versus the yen, slipping to 85.10. With the loss, the dollar stayed within a hair of a 15-year low of 84.71, set earlier this month.

The buck was little changed versus the euro at $1.2700, consolidating its strong gains from last week.

The eurozone's private sector growth decelerated slightly in August as both manufacturing and services activity slowed, figures showed on Monday. Worryingly, growth in the euro area's private sector continued to be dependent upon the region's two biggest economies, France and Germany.

Meanwhile, German manufacturing growth slowed to a six-month low in August. Against the sterling, the buck was steady at $1.5550, up slightly from its overnight levels.

Our "Value Packed" online trading seminar will show you how you can.

Click Here To Find Out More

Investors Hub Services