US & World Daily Markets Financial Briefing 30-12-2010

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Stocks Nearly Flat Despite Drop In Jobless Claim

With traders shrugging off a bigger than expected drop in weekly jobless claims, stocks are nearly flat in early trading on Thursday. The major averages are lingering near the unchanged line after ending the previous session modestly higher.

The choppy trading comes even though the Labor Department released a report before the start of trading showing that initial jobless claims fell by much more than expected in the week ended December 25th, falling to their lowest level in well over two years.

The report showed that initial jobless claims fell to 388,000 from the previous week's revised figure of 422,000. Economists had expected jobless claims to edge down to 415,000 from the 420,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims fell below the psychologically important 400,000 level and dropped to their lowest level since coming in at 385,000 in the week ended July 12, 2008.

Peter Boockvar, equity strategist at Miller Tabak, said, "While the last two weeks of the year are impacted by the holidays, the Labor Department said there were no unusual impacts seen and thus believe the seasonal adjustments were accurate."

"We'll know for sure in January, but if so, the state of the labor market continues to get better in terms of firings and we'll see next week's December payroll figure to gauge net hirings."

Next Friday, the Labor Department is due to release its report on the employment situation in the month of December. Employment is expected to increase by about 111,000 jobs, while the unemployment rate is expected to remain at 9.8 percent.

At 9:45 a.m. ET, traders will be presented with the results of the Institute for Supply Management - Chicago's business activity survey for the Chicago area for December. Economists expect the business barometer index to edged down to 62.0 for the month.

Shortly thereafter, the National Association of Realtors will release its report on pending home sales for the month of November at 10:00 a.m. ET. Economists expect a 1 percent increase in pending sales for the month following an unexpected 10.4 percent month-over-month surge in October.

In corporate news, Endo Pharmaceuticals (ENDP) announced after the bell Wednesday that the FDA has approved its treatment for low testosterone, also known as hypogonadism.

Most of the major sectors are showing only modest moves, although notable strength is visible among natural gas stocks. The NYSE Arca Natural Gas Index is currently up by 0.8 percent, rising to a two-year intraday high.

The major averages currently remain nearly unchanged on the day, posting slim losses. The Dow is down 7.76 points or 0.1 percent at 11,577.77, the Nasdaq is down 1.04 points or less than a tenth of a percent at 2,665.89 and the S&P 500 is down 0.27 points or less than a tenth of a percent at 1,259.51.

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TSX Poised To Extend Gains At Open

Toronto stock may extend gains at open Thursday amid firm commodities prices. Base-metals stocks
are likely to move up for a second session as copper prices surged to a fresh record. Yesterday, metal stocks rallied after China said it is reducing the export quota of rare earths.

Traders were also digesting today's data from the U.S., where weekly jobless claims fell below 400,000 to their lowest level in well over two years.

Global stocks moved in a narrow range Thursday in thin trade ahead of the New Year holiday. Japanese stocks fell on the last trading day of the year amid a firm yen.

U.S. stock futures were pointing to a flat open.

On Wednesday, the S&P/TSX Composite Index rose 66.02 points or 0.49% to 13,449.17, its highest level in 28 months.

The price of crude oil edged down as traders await the official crude weekly oil inventories data from the EIA. Analysts expect crude oil inventories to dip by 2.85 million barrels and gasoline stocks to move up by 1.5 million barrels. Crude for February was down $0.43 to $90.69 a barrel.

The price of gold was steady above $1,400 amid a weak U.S. dollar. Gold for February edged down $4.0 to $1,409.50 an ounce.

In corporate news from Canada, gold mining company Goldcorp Inc. said it has finalized the acquisition of Andean Resources Ltd and the new Goldcorp shares issued as consideration will commence trading on the TSX and NYSE on December 30, 2010.

Solar power producer Etrion Corp. announced the completion of the Borgo Piave solar park in Italy, which would contribute the company about 2 million euros of earnings before interest, taxes, depreciation and amortization per year. Notably, the company had reported nil revenues for the past three years and the stock closed Wednesday's session at C$0.70.

Protective products company Pacific Safety Products said it obtained necessary approvals to acquire Zuni Holdings Ltd. in an one for one share exchange ratio.

In brokerage updates, Raymond James upped its target on Dollarama Inc. to C$32 from C$30 and that of Mullen Group to C$17 from C$15.75.

In economic news from south of the border, the U.S. Labor Department said that initial jobless claims fell to 388,000 from the previous week's revised figure of 422,000. Economists had expected jobless claims to edge down to 415,000 from the 420,000 originally reported for the previous week.

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French Market Moderately Lower

The French market is moderately lower in afternoon trading Thursday, dragged down by banks. In the absence of any significant economic reports from the region, market shrugged off firm cues from Asia even as volumes remained thin.

On a light day for economic news, think tank ISAE's business sentiment index, an indicator of Italian manufacturing sentiment, rose to 103.0 from 101.7 in November. ISAE said the improvement was mainly due to a continued revival of demand, especially from the domestic front, and stable production levels.

After opening slightly higher at 3,894, the CAC 40 index moved into negative territory and is currently losing 0.91%.

Lender Societe Generale is leading the losers by falling 1.5%. Peers BNP Paribas, Credit Agricole and Natixis are sliding between 1.2% and 0.3%.

Carmaker Peugeot is declining 1.4% and Renault is down about 0.5%.

Building materials maker Saint-Gobain is losing 1%. Builders Vinci and Bouygues are moderately lower. Cement giant Lafarge is down 0.9%.

Those making notable losses include Schneider Electric, gas utility GDF Suez, commodity chemicals maker Air Liquide and drugmaker Sanofi-Aventis.

Elsewhere in Europe, the UK's FTSE 100 is losing 0.25% and the German DAX is sliding 1.16%.

Across Asia/Pacific, most major markets ended in the green. Australia's All Ordinaries added 0.31% and China's Shanghai Composite Index gained 0.29%. Hong Kong's Hang Seng and India's BSE Sensex advanced 0.13% and 0.66%, respectively. However, Japan's Nikkei 225 lost 1.12%.

In the U.S., futures point to a slightly lower open on Wall Street. In the previous session, the Dow ended up 0.1%, the Nasdaq rose 0.2% and the S&P 500 edged up 0.1%.

In commodities, crude for February delivery is sliding $0.49 at $90.63 per barrel and gold is dropping $1.0 to $1412.5 a troy ounce.

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Asian Markets End Mixed

Asian markets ended mixed on Thursday, the penultimate trading session for the calendar year 2010 in light trading day characterized by thin volumes. The market in Japan ended in negative territory on profit taking, while the markets in Australia, China, Hong Kong, India, Indonesia, Singapore, and Taiwan ended in positive territory ended in positive territory with modest gains.

In Australia, the benchmark S&P/ASX200 Index advanced 15.20 points, or 0.32%, and closed at 4,790 points, while the All-Ordinaries Index ended at 4,887, representing a gain of 15.10 points, or 0.31%.

Light sweet crude oil futures for February delivery was trading at $91.20 a barrel in electronic trading, up $0.08 per barrel from previous close at $91.20 a barrel in New York on Wednesday.

Resource stocks ended higher on higher commodity prices in the international market. BHP Billiton advanced 0.88%, Rio Tinto added 0.26%, Fortescue Metals gained 1.04%, Gindalbie Metals remained unchanged from previous close, Iluka Resources climbed 1.54%, Macarthur Coal was higher by 0.55%, Mincor Resources increased 1.33%, Minara Resources rose 0.53% and Oz Minerals was up by 1.45%.

Mixed trading was witnessed among oil related stocks. Santos Ltd added 0.08%, ROC Oil climbed 2.50%, and Origin Energy was higher by 0.18%. Woodside Petroleum remained unchanged from previous close. However, Oil Search ended in negative territory with a loss of 0.14%.

Mixed trading was also witnessed among the major banks. ANZ Bank slipped 0.21%; and Westpac Banking Corp. declined 0.44%. Commonwealth Bank remained unchanged from previous close. However, National Australia Bank added 0.04%.

Gold related stocks ended in positive territory. Newcrest Mining added 0.49% and Avoca Resources climbed 2.38%.

In Japan, the benchmark Nikkei 225 Index lost 115.62 points, or 1.12% to 10,229, while the broader Topix index
of all First Section issues dropped 9.21 points, or 1.01% to 899.

On the economic front, data revealed that manufacturing activity in Japan continued its slump during December as well as activity contracted for the fourth successive month. The Markit-JMMA manufacturing Purchasing Managers' Index came in at a seasonally adjusted 48.3, up from 47.3 in November. Anything below 50 shows contraction. Overall new work received by factories fell markedly in December, as respondents continued to report underlying demand weakness. New export business fell at the fastest pace in 20 months in December, suggesting the strong yen was putting off clients. As a result of weakening demand, factory output contracted, albeit at the slowest pace in three months.

Automotive stocks ended weaker as traders resorted to profit taking on stronger yen. Honda Motor Co., declined 1.23%, Toyota Motor slipped 0.92%, Suzuki Motor lost 1.53%, Nissan Motor Co., also declined 1.53% and Mitsubishi Motor Corp. plunged 2.48%.

Stocks of securities also ended weaker. Mizuho Securities declined 2.51%, Daiwa Securities Group shed 1.55%, Nomura Holdings fell 1.72% and Matsui Securities was down fell 1.53%.

Stocks of real estate companies also ended weaker on profit taking. Sumitomo Realty & Development declined 1.82%, Mitsubishi Estate shed 1.57%, Mitsui Fudosan slipped 1.49% and Heiwa Real Estate edged down 0.39%.

The Indian market closed firm for a second straight session on Thursday, shrugging off data showing rising food inflation and mixed global cues. Second-line stocks also received good buying support on the last day of December series derivative contracts. Among large-caps, consumer durable, realty, IT and metal stocks led the market higher, while oil/gas and banking stocks closed on a mixed note. The benchmark 30-share Sensex moved in a range of 20,274-20,411 before closing up 133 points or 0.66% at 20,389, while the broader Nifty index ended at 6101.85, up 41.50 points, or 0.68%.

In China, the benchmark Shanghai Composite Index added 8.05 points, or 0.29%, to close at 2,760. In Hong Kong, the benchmark Hang Seng advanced 30.04 points, or 0.13%, and closed at 22,999.

Among the other markets in the region, Jakarta Composite Index in Indonesia edged higher by 4.30 points, or 0.12%, to close at 3,704, Singapore's Strait Times Index gained 4.55 points, or 0.14% to close at 3,212, South Korea's Seoul Composite Index was higher by 7.51 points, or 0.37% at 2,051, and Taiwan Weighted Index ended in positive territory with a gain of 41.56 points, or 0.47%, at 8,908.

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Dollar Ending 2010 With A Whimper

The dollar was mostly weaker Thursday morning in New York, ahead of the year's final batch of economic data from the United States.

With traders conceding that the latest readings on the US economy will not change the Federal Reserve's mind on historically low interest rates and a second round of asset purchases, the dollar has fizzled in the final week of 2010.

Today's economic calendar features releases on US jobless claims, pending home sales, and manufacturing. Markets overseas were quiet this morning, with many participants getting a head start on New Year's festivities.

The dollar continued its a run of choppy trading against the euro, slipping back to $1.3250. The pair has show little direction over the past month, wobbling back and forth around $1.32 as European officials looked to head off a growing sovereign debt crisis.

The dollar was stable against the yen after touching a nearly 2-month low of Y81.27 in the previous session. The dollar ended October at a 15-year low of 80.22, and has since struggled to make a meaningful move away from that mark.

Japan's manufacturing slump continued in December as activity contracted for the fourth successive month, survey data showed on Thursday.

The Markit-JMMA manufacturing Purchasing Managers' Index came in at a seasonally adjusted 48.3, up from 47.3 in November. Anything below 50 shows contraction.

The dollar lingered near yesterday's 28-year low of $1.0197 against its Australian counterpart, and touched a fresh record low of $0.9390 against the the Swiss Franc.

On the flip side, the dollar improved to $1.5440 against the UK's slumping sterling.

The Labor Department will table its customary report on weekly jobless claims for the week ended December 25th at 8.30 a.m. ET. Economists expect claims to remain unchanged at 420,000.

At 9.45 a.m. ET, traders will be presented with the results of the Institute of Supply Management-Chicago's business survey for December. Economists expect the business barometer index based on the survey to remain unchanged at 62.5 for the month.

The National Association of Realtors will release its report on Pending Home Sales for the month of November at 10.00 a.m. ET. Economists expect a 1% increase in pending home sales for the month following an unexpected 10.4% month-over-month increase in the previous month.

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