US & World Daily Markets Financial Briefing 30-11-2010

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Stocks Move Sharply Lower At The Start Of Trading

While the markets recovered from an early sell-off seen in the previous session, stocks showed a notable move back to the downside at the start of trading on Tuesday. The major averages all moved sharply lower, adding to the modest losses posted in the previous session.

The renewed weakness in the markets reflects continued concerns about debt problems in Europe as well as worries about the U.S. housing market following the release of a report showing a continued slowdown in the annual rate of home price growth.

The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index rose at an annual rate of 0.6 percent in September compared to the 1.7 percent growth seen in August. Economists had expected the annual rate of price growth to slow to 1.0 percent.

While prices rose on an annual basis in September, S&P noted that its S&P/Case-Shiller Home Price Index, which covers all nine U.S. census divisions, fell by 2.0 percent in the third quarter following a 4.7 percent increase in the second quarter.

Compared to the same quarter a year ago, the S&P/Case-Shiller Home Price Index was down by 1.5 percent in the third quarter.

S&P said that the end of the tax incentives and still active foreclosures appear to be weighing down the market, although it noted that housing prices are still above their spring 2009 lows.

Oil service stocks are helping to lead the way lower in early trading, with a decrease by the price of crude oil contributing to the weakness in the sector. Computer hardware, railroad, and health insurance stocks  are also posting substantial losses.

The major averages have edged up off their lows for the young session in the past few minutes but remain firmly in the red. The Dow is down 81.06 points or 0.7 percent at 10,970.90, the Nasdaq is down 30.14 points or 1.2 percent at 2,495.08 and the S&P 500 is down 10.88 points or 0.9 percent at 1,176.88.

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TSX May Open Lower; Q3 GDP Growth Slows

Toronto stocks may dip at open Tuesday after a latest report revealed Canada's third quarter economic growth slowed more than economists predicted.

Oil prices drifted lower, while gold moved back above $1,380 for the first time in three weeks.

While most Asian markets ended in the red, European stocks were trading lower amid continued worries over the euro zone debt situation.

U.S. stock futures were pointing to a sharply lower open.

On Monday, the S&P/TSX Composite Index edged up 2.94 points or 0.02% to 12,895.65.

The price of crude oil edged down as traders await cues from today's economic releases from the U.S. Crude for January was down $0.81 to $84.92 a barrel.

The price of gold moved back above $1,370 amid lingering concerns over the euro zone debt situation. Gold for February, the most actively traded contract, added $17.50 to $1,385.00 an ounce.

In corporate news from Canada, Inmet Mining  said it, along with an affiliate, would acquire 30% indirect equity interest and subordinated sponsor loans in the Cobre Las Cruces copper mine in Spain for $552 million.

Bell Canada, a unit of BCE Inc., said it will offer C$1 billion of Medium Term Debentures under its medium term debenture program.

Junior oil and gas firm Wild Stream Exploration swung to profit in third quarter, reporting net earnings of C$580,000 or C$0.01 per share compared with a net loss of C$447,000 or C$0.25 per share in the previous year quarter.

Natural gas distribution company Changfeng Energy reported higher third-quarter net income of C$0.3 million or C$0.005 per share, compared to C$0.09 million or C$0.001 per share in the last year quarter.

Gold explorer Conquest Resources turned to profit in third quarter, reporting net income of C$1.85 million or C$0.023 per share compared to loss of C$0.22 million or C$0.003 per share in the year ago quarter.

In economic news, Statistics Canada said real gross domestic product (GDP) rose 0.3% in the third quarter compared to the second quarter, when the economy grew 0.6% from the first three months of the year.

GDP advanced at a 1% annualized rate in third quarter, after expanding 2.3% and 5.6% in the previous two quarters. Economists predicted a 1.5% gain this quarter.

On a monthly basis, real GDP declined 0.1% in September, short of expectations for 0.1% growth.

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Banks Lead French Market Down

The French market is falling in afternoon trading Tuesday, led by banks, as the sovereign debt fears continue to hurt sentiment.

In economic news, the producer price index for the French market rose 0.8% on a monthly basis in October, faster than a 0.3% rise in the previous month, statistical office Insee said. Economists had predicted 0.4% rise.

Germany's unemployment, according to the International Labor Organization concept, decreased a seasonally adjusted 340,000 persons or 10.6% year-on-year to 2.88 million in October, the Federal Statistical Office said. Compared to the previous month, the seasonally adjusted number of unemployed rose 0.2% in October.

Meanwhile, the euro area unemployment rate rose to 10.1% in October from 10% in September, in line with economists' expectation, Eurostat said. The jobless rate was 9.9% a year earlier. Separately, flash estimate from Eurostat showed that Eurozone annual inflation remained at 1.9% in November, matching economists' expectations.

An indicator of U.K. consumer confidence fell to a four-month low in November. The GfK NOP Consumer Confidence Index decreased by 2 points to -21, slightly below expectations for a score of -20, while the index gauging the economic situation over the next 12 months fell to -22 from -20 in October.

The CAC 40 opened at 3,644 and has been witnessing volatile trading. The index is currently losing 0.98%.

Lender Societe Generale is leading the decliners by falling 3.5%. Peers BNP Paribas, Credit Agricole and Natixis are losing between 3.1% and 2.4%.

Carmakers Peugeot and Renault are sliding 0.5% and 0.25%, respectively. Insurer Axa is down 2.6%.

Among construction-related stocks, Vinci, Saint-Gobain and Lafarge are dropping between 1.8% and 0.7%. However, Bouygues is adding 0.7%.

The gainers are being led by machinery and equipment maker Alstom, which is adding 3.2%. Contact lens maker Essilor International and steel giant ArcelorMittal are rising notably.

Elsewhere in Europe, the UK's FTSE 100 is slipping 0.23%, while the German DAX is adding 0.06%.

Across Asia/Pacific, most major markets closed lower. Australia's All Ordinaries lost 0.64% and China's Shanghai Composite Index lost 1.6%. Hong Kong's Hang Seng and Japan's Nikkei 225 retreated 0.68% and 1.9%, respectively. However, India's BSE Sensex bucked the trend and gained 0.60% on strong GDP data.

In the U.S., futures point to a negative open on Wall Street. In the previous session, the Dow slid 0.4%, the Nasdaq fell 0.4% and the S&P 500 declined 0.1%.

Crude for January delivery is sliding $0.67 at $85.06 a barrel and December gold is rising $5.7 at $1371.7 an ounce.

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Asian Markets Slip On European Debt Concerns

Asian markets open for trading on Tuesday, except the Indian market, ended sharply lower on European debt concerns, lower commodity prices and profit taking. The Indian market however bucked the trend and ended in positive territory lifted by buoyant GDP numbers for the second quarter. China's Shanghai Composite index witnessed sharp sell-off on inflation concerns.

In Australia, the benchmark S&P/ASX200 Index declined 34.20 points, or 0.74%, and closed at 4,584 points, while the All-Ordinaries Index ended at 4,676, representing a loss of 30.30 points, or 0.64%.

On the economic front, a report released by the Australian Bureau of Statistics revealed that the country's current account balance with the rest of the world saw a larger than expected shortfall in the three months through September. As per the report, a current account deficit of A$7.8 billion was recorded, up from A$5.4 billion deficit in the June quarter. Analysts predicted a shortfall of A$6.6 billion for the quarter. The report further revealed that the balance of goods and services saw a surplus of A$5.8 billion in the September quarter, down from a surplus of A$6.6 billion reported for the June quarter. However, the income account saw a deficit of A$13.2 billion, up from a A$11.5 billion shortfall in the June quarter.

Another report released by the Australian Bureau of Statistics revealed that the number of housing permits grants in the country rose for the first time in seven months in October. As per the report, total dwelling permits rose by a seasonally adjusted 9.3% to 13,541 during the month compared to the previous month. Analysts expected a moderate 1.4% rise in dwelling permits following a 5.3% decline in September. The report further noted that the number of private houses approved rose 1.5% to 8,284, while the number of private sector other dwelling units surged up 23.6%. On a year-over-year basis, dwelling approvals were up 1.2%. Approvals for private sector houses were down 15.7%, while those for private sector other dwellings increased 67.3%.

In a separate report, the Australian Bureau of Statistics revealed that the government's total spending between July and September increased 0.9% compared to the previous three months. General government final consumption expenditure rose by 0.5% in the September quarter and the general government gross fixed capital formation was up 1.6%. The report further noted that total public gross fixed capital formation increased 1.9% during the quarter.

A statement released by the Reserve Bank of Australia revealed that total credit provided to the private sector by financial intermediaries rose by a seasonally adjusted 0.1% in October compared to the previous month. That is slightly lower than expectations for a 0.2% rise after no growth in September. The statement further noted that housing credit increased by 0.5% month-on-month in October, matching September's growth rate. Business credit, on the other hand, was down 0.8%. On a year-over-year basis, total credit increased 3.3% in October. Housing credit was up 7.7%, while business credit was down 3.2%.

Resource related stocks led the decline on lower commodity prices in the international market. BHP  Billiton slipped 1.16%, Rio Tinto fell 1.94%, Fortescue Metals plunged 3.36%, Gindalbie Metals lost 2.07%, Iluka Resources shed 0.53%, Macarthur Coal was down 1.08%, Mincor Resources declined 1.43%, Murchison Metals eased 2.76% and Minara Resources was down 3.77%.

Retail stocks also ended in negative territory on lower demand growth. David Jones slipped 0.45%, MetCash Ltd declined 2.57%, Woolworths shed 0.63%, and Wesfarmers was down 1.50%.

In Japan, the benchmark Nikkei 225 Index lost 188.95 points, or 1.87%, to 9,937 while the broader Topix index of all First Section issues dropped 13.65 points, or 1.56%, to 861.

On the economic front, a report released by the Ministry of Internal Affairs and Communications revealed that unemployment rate in the country came in at a seasonally-adjusted 5.1% in October. That was higher than analysts' expectations for a reading of 5.0%, unchanged from September. As per the report, there were 3.34 million unemployed persons in October, down 100,000 or 2.9% on year. The number of employed persons was 62.86 million, an increase of 150,000 or 0.2% on year. The participation rate was 59.9%, while the job-to-applicant ratio matched forecasts at 0.56 after showing 0.55 in the previous month.

A preliminary report released by the Ministry of Economy, Trade and Industry revealed that industrial production in the country declined by a seasonally adjusted 1.8% in October compared to the previous month, declining for the fifth consecutive month. That was better than forecasts for a 3.2% monthly decline following the 1.6% contraction in September. On an annual basis, industrial production added 4.5% - again beating expectations for a 3.1% increase following the 11.5% gain in the previous month.

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A report released by the Ministry of Land, Infrastructure, Transport and Tourism revealed that housing starts grew 6.4% during October from the same period last year. Economists had expected it to increase 9.7% after recording an annual growth of 17.7% in September. The report further noted that annualized housing starts in October totaled 813,000 compared to 837,000 in the prior month. The latest figure was also smaller than the expected level of 840,000.

Almost all stocks in all the 33 sectors ended in negative territory on profit taking amid concerns about sell-off in China and other Asian markets.

Among the major losers, Komatsu declined 2.4%, and Hitachi Construction Machinery lost 3.1%. Asahi Glass fell 2.30%, while Canon Inc. was down 2.35%.

The Indian market closed higher for a second consecutive session on Tuesday , as robust second-quarter GDP data helped spur bargain hunting. An overwhelming response to Manganese Ore India initial public offering, which was subscribed about 12.4 times on the third day of issue today, also boosted sentiment. Despite a very adverse base effect from last year, the Indian economy grew a much higher-than-expected 8.9% in the July-September quarter versus the previous quarter's upwardly revised 8.9% rise and economists' forecasts of around 8% after factoring in the recent slowdown in manufacturing, government data showed today. After trading in the red in early trading, the 30-share BSE Sensex recovered sharply to hit a high of 19,610 before paring some gains and ending up 116 points or 0.6% higher at 19,521, with 19 of its components closing in the green. Likewise, the broader Nifty eased a little bit from the day's high to end up 33 points or 0.56% at 5,863.

Among the other markets in the region, China's Shanghai Composite Index plunged 46.17 points, or 1.61% to close at 2,820, HongKong's Hang Seng Index declined 158.23 points, or 0.68% to close at 23,008, Jakarta Composite Index in Indonesia shed 99.43 points, or 2.74%, to close at 3,531, and Singapore's Strait Times Index was down 13.51 points, or 0.43%, to close at 3,145. However, Seoul Composite Index in South Korea ended in positive territory with a gain of 9.09 points, or 0.48%, to close at 1,905, and Taiwan Weighted Index advanced 5.31 points or 0.06% to close at 8,372.

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