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Friday, February 27, 2009

ADVFN World Daily Markets Bulletin - Feb 27, 2009

US Stocks at a Glance

US UPDATE: BEFORE THE BELL
Among the companies whose shares are expected to actively trade in Friday's session are Synta Pharmaceuticals Corp. (SNTA), Autodesk Inc. (ADSK) and Dell Inc. (DELL).

Synta Pharmaceuticals
said late Thursday it was suspending a late-stage trial for its treatment of metastatic melanoma because of safety concerns raised by an independent monitoring group that saw greater number of deaths occurring in the combined treatment of Synta's elesclomol and paclitaxel than in the control arm of paclitaxel alone. The company added that all of its other studies on elesclomol are suspended pending further analysis of the melanoma study.

Autodesk swung to a fiscal fourth-quarter loss on lower sales and margins as well as a goodwill write-down. Shares fell 7.5% to $13 in pre market trading as the design-software maker forecast fiscal first-quarter results below Wall Street's expectations.

Dell's fiscal fourth-quarter net income slumped 48% as shipments fell globally and the economic slowdown continued to hurt information-technology spending. Shares climbed 2.3% to $8.40 in pre market as the company promised to cut $4 billion in costs by the end of fiscal 2011, about $1 billion more than its previous target.

Athenahealth Inc.'s (ATHN) fourth-quarter net income surged on a $16.7 million tax benefit as revenue grew on continued strength in the company's business-services segment. Shares rose 1.8% to $34.77 in post-market trading.

Kohl's Corp.'s (KSS) fiscal fourth-quarter net income dropped 18% as the challenging retail environment hurt the company's bottom line. The department-store chain also offered disappointing outlooks for the first quarter and fiscal year, sending shares down 6.1% in after-hours trading to $32.60 even though the fourth quarter's results topped muted Wall Street expectations.

Watch List

Calpine Corp. (CPN) posted a narrower fourth-quarter loss on higher margins as revenue rose modestly. The loss was slightly worse than expected.

Gap Inc
.'s (GPS) fiscal fourth-quarter net income fell 8.3% on lower sales and margins. The company has struggled with sluggish sales in all its brands amid the recession, but Gap's troubles started before that, when its attempt to appeal to a younger demographic with trendier clothes fell flat.

Endo Pharmaceuticals Holdings Inc.'s (ENDP) fourth-quarter net income soared 48% amid milestone fees paid a year earlier as results solidly topped analysts' expectations.

Leap Wireless International Inc. (LEAP) reported a wider fourth-quarter loss on losses related to new market launches, though the prepaid wireless services company nearly tripled its net customer additions and customer cancellations declined.

Mentor Graphics Corp.'s (MENT) fiscal fourth-quarter net income dropped 9.6% on lower sales and margins. The chip software design maker posted its first quarterly profit in a year.

Novell Inc.'s (NOVL) fiscal first-quarter net income fell 36% on sharply lower interest income as invoicing fell short of expectations. Demand for open-source programs continues to grow, despite weakness for information technology in general as IT organizations and data centers shift their focus to more-complex systems and seek software that can handle them.

Packaging Corp
. of America (PKG) halved its quarterly dividend payment to 15 cents to help boost liquidity amid a recession that could be "deeper and longer than originally anticipated."

Sotheby's (BID) swung to a fourth-quarter loss amid impairment charges and a 52% drop in sales. Meanwhile, the company outlined its cost-cutting plans in response to the downturn in the art market.

Asia News

Japan's Nikkei stock average gained 1.5 percent on Friday, rising on defensive shares such as KDDI Corp with banks getting a brief boost on news of a likely agreement between the U.S. government and Citigroup. The benchmark Nikkei finished the week up 2.1 percent, snapping a two-week losing streak, despite falling to within sight of a 26-year low just below 7,000 early in the week.

But it lost 5.3 percent on the month and has fallen 14.6 percent so far this year on top of the 42 percent it plunged in 2008, its worst postwar performance.

After the close, Sony Corp said company President Ryoji Chubachi would step down and CEO Howard Stringer would double up as president. The move comes about a month after the company warned it would post a record annual operating loss. A person familiar with the Citigroup deal said that under its terms, up to $25 billion in U.S. government-held preferred shares will be converted to common stock and the deal will give the government a stake of 30 to 40 percent.

"There's likely to be a positive impact from the Citigroup news, but it's not really any surprise," said Katsuhiko Kodama, senior strategist at Toyo Securities.

"But there's just one problem after another, and we'll simply have to work through them one by one," he added, noting that auto giant General Motors posted a quarterly loss on Thursday and said its auditors were likely to cast doubt on its viability.

Banks briefly jumped on the news before paring gains in tandem with the Nikkei, which fell from highs in late afternoon trade as U.S. stock futures edged down.

Additional pressure may have come from the yen's rebound from a three-month low against the dollar as speculators pocketed their dollar profits after the greenback's steep run up against the Japanese currency.

The dollar fell 1.2 percent on the day to 97.33 yen before clawing slightly higher.

The Nikkei gained 110.49 points to 7,568.42, while the broader Topix , which earlier this week marked its lowest close since 1983, gained 1.9 percent to 756.71.

HELP FROM DATA
The market received support from data showing Japan's industrial output in January was in line with a median market forecast, even though the 10.0 percent fall from the previous month was the biggest drop on record.

"There was also a little bit of encouragement from the fact that predictions for March output were positive, although that may well turn negative later on," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"There may also be buying on hopes that the government will actually start buying stocks in the market sometime next month. Whether the Nikkei will rise on this is hard to tell, but it does make it hard to sell."

A number of possibilities for government stock buying have been floated this week, including setting up a stock-buying agency as it did in the mid-1960s, while a newspaper reported that Tokyo was considering asking the central bank to buy stock exchange-traded funds (ETFs) to prop up Japanese share prices.

Exporters gained as a result despite the yen's rise, with Canon Inc up 3.7 percent to 2,540 yen and Sony up 2 percent to 1,668 yen. Panasonic Corp rose 1.4 percent to 1,154 yen.

Defensive shares boosted the market from morning, as investors sought sanctuary in issues seen as resilient in the face of economic turmoil.

KDDI rose 4 percent to 517,000 yen, while cosmetics maker Shiseido rose 3.7 percent to 1,447 yen and home products maker Kao Corp rose 2.5 percent to 1,867 yen.

But drugmaker Daiichi Sankyo fell 5.3 percent to 1,591 yen on an investigation into a U.S. Food and Drug Administration decision to remove a scientist from a panel that reviewed a key drug candidate.

Congressional investigators are probing the FDA's decision to remove a scientist from an advisory panel that reviewed Eli Lilly and Co and Daiichi Sankyo's proposed blood thinner prasugrel.
Trade was moderate on the Tokyo exchange's first section, with 1.97 billion shares changing hands, compared with last week's daily average of 1.78 billion.

Advancing stocks outnumbered declining ones by more than 2 to 1.

Forex

Global stocks fell sharply on Friday after the U.S. government said it will take a large stake in Citigroup, sowing more uncertainty over the fate of major banks and sending investors to the safety of bonds, gold and the dollar.

The U.S. dollar rose broadly, gold extended gains and European stocks fell further when the government announced before U.S. markets opened that it would boost its stake in Citigroup to as much as 36 percent.

Investors worried other banks might see similar action as Washington struggles to stabilize U.S. banks. But the Citigroup move, one of the most dramatic efforts to prop up ailing banks, pushed the benchmark S&P 500 to lows last seen April 1997.

The government will swap up to $25 billion of its preferred shares into common stock. Citigroup will stop paying dividends on its preferred and common stock, and promised to shake up its board of directors.

Before 10 a.m. New York time, the Dow Jones industrial average fell 108.40 points, or 1.51 percent, at 7,073.68. The Standard & Poor's 500 Index slid 13.74 points, or 1.83 percent, at 739.09.

he Nasdaq Composite Index declined 5.29 points, or 0.38 percent, at 1,386.18.

The FTSEurofirst 300 index of top European shares was down 2.5 percent at 714.15 points.

The benchmark 10-year U.S. Treasury note rose 12/32 in price to yield 2.95 percent.

The dollar gained against a basket of major currencies, with the U.S. Dollar Index up 0.55 percent at 88.321.

The euro fell 0.70 percent at $1.2641, while against the yen, the dollar was off 0.73 percent at 97.67.

Oil fell more than $2, halting three straight days of gains, but otherwise remaining on course to end the month up 5 percent from January, its first such gain since June.

Oil fell on data that showed the U.S. economy contracted more sharply in the fourth quarter than initially expected, falling at an annual rate of 6.2 percent, the deepest slide since December 1982.

U.S. light sweet crude oil fell $2.27 to $42.95 a barrel,

Commodities

Gold eased a touch as the dollar held onto gains against the yen on Thursday and investors took profit from an 11-month high hit last week.

The market has become more volatile after prices rose above the key $1,000 level last week, and though factors encouraging risk aversion remain, investors are choosing to cash in on the high prices now rather than chase them higher.

The gold market took its cue from the dollar's strength as it hit a three-month high against the yen. Market sentiment had improved somewhat after comments earlier in the week by Federal Reserve Chairman Ben Bernanke and U.S. President Obama, traders said.

Spot gold was trading at $945.60 an ounce as of 0620 GMT, down 0.7 percent from the notional close of $952.10 on Wednesday. Gold fell 4 percent over the previous three sessions.

"The dollar is firmer after Bernanke and Obama's comments eased some concerns about the economic outlook, helping some risk appetite to leave from the gold market," said a dealer at a European securities firm in Tokyo.

The yen tumbled also on concerns about Japan's economic outlook.

Gold typically moves in the opposite direction to the U.S. dollar, and is often bought as an alternative asset.

However, the two have moved in line in recent weeks as both have benefited from a flight to safety among investors. Gold gains when risk aversion is high as it is seen as a safe store of value for investors.

Traders said although light buying had aided prices, given talk of the global recession, some people may opt to sell gold to secure cash, causing the market to lack the momentum to push beyond $1,000 in the near term.

"Gold prices are still high. Some people may be capitalising on high prices," said Beh Hsia Wah, a dealer at United Overseas Bank in Singapore.

"Gold is seen as a safe haven, and overall the market is still bullish. But it's very hard to predict market direction because it's driven by psychological buying and selling," she said.

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