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Tuesday, March 10, 2009

ADVFN World Daily Markets Bulletin - Mar 10, 2009

US Stocks at a Glance

Major Averages Hovering Firmly In Positive Territory

Stocks are seeing substantial strength during mid-morning trading on Tuesday as investors react positively to comments from the CEO of Citigroup and mull over remarks from Fed Chairman Ben Bernanke as well as the Commerce Department's monthly report on wholesale inventories.

In a letter to company employees, Citigroup CEO Vikram Pandit said that the company is profitable through the first two months of 2009 and is having its best quarter-to-date performance since the third quarter of 2007.

Pandit also said that he is disappointed with Citigroup's current stock price and the broad-based misperceptions about company and its financial position. Pandit stated that he doesn't believe it reflects the strengths of Citi.

On the economic front, the Commerce Department released its monthly report on wholesale inventories, showing that inventories fell 0.7 percent in January following a revised 1.5 percent decrease in December. Economists had expected inventories to fall 1.0 percent compared to the 1.4 percent decrease originally reported for the previous month.

The major averages have moved roughly sideways in recent trading, hovering near their best levels of the day. The Dow is currently up 250.49 at 6,797.54, the Nasdaq is up 60.15 at 1,328.79 and the S&P 500 is up 28.69 at 705.22.

Casey's General Stores jumped to a 2 1/2 month high on Tuesday after the convenience store operator said its third quarter earnings rose from last year. Shares rallied to $23.40, up $4.52 on the session.

The company reported net income for the third quarter of $14.0 million or $0.28 per share, compared to $13.0 million or $0.26 per share for the year-ago quarter.

Forex

Dollar Slightly Weaker versus Other Majors Tuesday morning

The dollar was slightly weaker versus other major currencies Tuesday morning in New York as the mood improved on Wall Street, fueling a bit of risk appetite.

Despite evidence that the economic situation in the Eurozone continues to worsen, traders drove up the value of the euro on hopes that financials may lead a turnaround for equities. Higher-yielding currencies such as the euro have fallen sharply over the last few months, with traders looking to safer, low-yielders like the dollar and yen as a safer haven.

Finance ministers from the 16 nations sharing the euro rejected a U.S. call for additional economic stimulus measures to help combat the global crisis, media reports said Tuesday.

On the economic front in the US Tuesday, the Commerce Department is due to release its wholesale inventories report at 10 AM ET. Economists expect wholesale inventories at the end of January to show a 1% decline.

Prior to that, Fed Chairman Ben Bernanke is scheduled to speak on reforming the financial system to the Council on Foreign Relations in Washington at 8:30 am ET.

The dollar continued its run of choppy trading versus the euro this morning, falling to 1.2725 from an overnight level near 1.2670. The pair has been bouncing around between 1.2400 and 1.2800 for the past few weeks, with the dollar unable to break above its nearly 3-year high of 1.2328, set last fall.

Tuesday, data released by the French customs office showed that the country's trade deficit swelled to EUR 4.55 billion in January from a revised EUR 2.95 billion in December. Economists had forecast a deficit of EUR 3 billion. Initially, the December trade deficit was reported as EUR 2.45 billion.

The dollar drifted very slightly lower versus the sterling Tuesday morning, slipping to 1.3875 from yesterday's 6-week high of 1.3741. A move above 1.3501 would take the dollar to its highest level in 23 years.

Housing sales in the UK fell to the lowest level in at least 31 years, a recent study by the Royal Institution of Chartered Surveyors, or RICS revealed Tuesday.

The dollar also lost a bit of ground versus the yen after once again failing to break through the elusive 100 mark. The buck fetched 98.30 approaching mid-morning, having replaced the yen as the world's premier safe haven currency over the past few weeks. Earlier this year, the dollar hit a 13-year low of 87.08 versus the yen, but has risen sharply amid evidence the global recession has crippled the Japanese economy.

Tuesday, a report from Japan's Economic and Social Research Institute showed that the leading index fell to 77.1 in January from 79.4 in December. Economists expected the index to come in at 77.4. The leading index has been on a declining trend since August 2008.

European Shares

UK Industrial, Manufacturing Output Show Worst Declines Since 1981

British industrial as well as manufacturing production declined in January at the fastest pace since 1981 signaling that the economy entered a deeper recession at the start of 2009, official data showed Tuesday.

Industrial output slid 2.6% month-on-month in January, the Office for National Statistics or ONS reported, double the decline expected by economists. Production was forecast to drop 1.2% in January after falling 1.5% in December.

Mining and quarrying output decreased 3% in January. Meanwhile, energy supply output remained flat on the month with a fall in electricity supply being offset by a rise in the gas and water supply.

In January, annual decrease in industrial production was 11.4% compared to the 9.3% drop in the previous month. This was the biggest annual decline since January 1981. Economists were looking for a 9.9% fall.

In the three months to January, industrial output decreased 5.6% from the previous three months, taking the annual fall to 9.6%, the ONS said.

Manufacturing production dropped 2.9% on a monthly basis in January, severe than December's revised 1.9% decline. Economists had expected only a 1.4% decrease. Output declined in nine of the 13 sub-sectors and increased in four sub-sectors during the latest month.

The most significant decreases in output were reported in transport equipment industries with a 10% fall, followed by a 6.1% drop in electrical and optical equipment industries and a 7% slump in the machinery and equipment industries.

From January 2008, output of the manufacturing industries was down 12.8%, larger than the 11.7% decline expected by economists.

Commenting on the January manufacturing figures, the British Chambers of Commerce said the bigger-than-expected fall in manufacturing output signals that the sector failed to benefit from the sharp deterioration in sterling. David Kern, Chief Economist at BCC said, "The critical priority is to ensure that the vital skills base within manufacturing is not lost during this recession."

Analyst at Commerzbank, Peter Dixon said in a note that the industrial sector will subtract 0.8 percentage points from the first quarter GDP growth even if industrial production remain flat in February and March. An earlier survey by the Confederation of British Industry suggested no rebound soon in manufacturing, while export orders continue to collapse on global slowdown.

Considering these factors, recent weakening of sterling will have little effect in stimulating the industrial sector and the economist sees further decline in the months to come as manufacturers reduce production on the back of rising inventories of unsold goods.

The UK economy shrank at the fastest pace since the second quarter of 1980 and entered its first recession since 1991. The economy contracted 1.5% sequentially in the fourth quarter of 2008, following a 0.7% fall in the third quarter.

Asia Markets

Most Asian Markets Advance; Nikkei Ends Down Off Lows

The major markets across the Asia-Pacific region, excluding Japan, advanced on Tuesday, led by financials and commodities despite the weaker closing of the U.S markets overnight.

Crude oil rallied sharply on Monday amid expectations the Organization of Petroleum Exporting Countries, or OPEC, will lower output again at its next meeting. Light sweet crude for April delivery closed at a 2-month closing high of $47.07 on the New York Mercantile Exchange, up $1.55 from the previous session. In the Asian session Tuesday, crude was up $0.26 at $47.33 a barrel in electronic trading.

HSBC Holdings, listed in the Hong Kong Stock Exchange, triggered the positive trend, rising more than 14% during the trading session after declining by over 24% on Monday. Higher oil prices and speculation that the Organization of Petroleum Exporting Countries will further reduce production levels at the meeting in Vienna helped oil stocks post gains.

Oversold conditions in many stocks across the region also helped the indices to rally; however, the markets are unlikely to sustain the momentum for want of additional data that could infuse confidence among the investors.

The stock market in Australia ended in positive territory on Tuesday, led by banks and oil stocks.

The benchmark S&P/ASX 200 Index gained 0.95% or 30 points to close at 3,184.50, while the broader All Ordinaries Index gained 0.69% or 21.50 points to close at 3143.20. However, volume was relatively thin, as most investors preferred to adopt a wait-and-watch approach amid a gloomy outlook for the global economy.

The Australian stocks, which opened weaker, staged a recovery in the afternoon, propelled by bank stocks. National Australia Bank gained 1.56%, and Commonwealth Bank surged up more than 4%. Westpac Banking gained 3.46%, and ANZ Bank advanced 1.68%.

Among energy stocks, Woodside Petroleum gained 3.29% and Santos was up 4%. Mining companies BHP Billiton and Rio Tinto also ended in the green, with gains of 0.55% and 1.68% respectively.

Mixed trading was witnessed among media stocks. While Consolidated Media gained 0.26%, Fairfax and News Corp. ended in negative territory.

Gold-related stocks declined following a drop in the price of bullion in the local market. The price of Gold in Sydney declined US$22.60 an ounce to US$914.40 per ounce, compared to its previous close at US$937.60.

Newcrest Mining as well as Newmont Mining shed 2% each, while Lihir Gold slipped 3.07%.

The stock market in Tokyo declined for the third consecutive day on concerns about the global economy. Concerns about rising oil prices and a drop in global demand impacting corporate profits outweighed the positive sentiment generated by a recovery in financial stocks, leading the indices to close in the red amid volatile trading.

The benchmark Nikkei 225 index closed at a fresh 26-year low of 7054.38, down 31.05 points or 0.4%, while the broader TOPIX Index declined 1% or 7.03 points to close at 703.50.

Utility companies and drug makers were the major losers in the market. However, banking stocks, real estate firms and insurance companies advanced.

Drug maker Astellas Pharma shed 5.30% and Takeda Pharmaceutical extended sharp losses from Monday by another 3.92% amid worries about the companies' competitiveness following Merck's deal to acquire Schering-Plough.

Utility companies such as Tokyo Electric and Tokyo Gas firm declined 3.6% each on concerns that rising oil prices might impact the profits.

Banks gained, helping to partially offset the slide in the markets and helped the benchmark Index close much above the psychological 7,000-mark. Mitsubishi UFJ Financial gained 3.67% and Mizuho Financial advanced 2.34% during the trading session. Sumitomo Mitsui Financial was up 1.7%.

The Hang Seng Index in Hong Kong gained 3.08%, or 349.47 points, to close at 11,694.05.

HSBC Holdings led the rally with a gain of about 14%. The stock declined sharply by more than 20% on Monday on concerns about its ability to raise funds in the market and weaker earnings results. News that the Hong Kong's Securities and Trading Commission will investigate into the sharp drop on Monday helped the stock to open stronger and rally in the session.

Hang Seng Bank also advanced during the trading session. CNOOC gained more than 6% on higher oil prices.

The benchmark KOSPI index in South Korea gained 2% to close at 1092.20, led by financial stocks. Woori Finance gained as much as 15% while other financial stocks such as KB Financial, the holding firm of Kookmin Bank, and Shinhan Financial also advanced.

The markets in India and Malaysia are closed for public holiday. Among other markets in the region, China' Shanghai Composite Index gained 1.88% or 39.82 points to close at 2,158.57; Singapore's Strait Times Index was up 1.98% or 28.80 points to close at 1,485.75; and Taiwan's Index advanced about 1% or 43 points to close at 4671.02.

Canadian Market

Bay Street Waking Up in Better Mood Tuesday

Canadian stocks will look to stop the bleeding on Tuesday, and early signals are somewhat positive after Toronto's main index closed the previous session at a new five year closing low.

The mood was slightly better this morning, as most Asian markets strengthened overnight and US stock futures rose sharply on speculation that the brutal recent sell-off may have been overdone.

Still, a steady drumbeat of dismal economic news is likely to give investors little reason to dive back into equities with both feet.

Energy stocks may be in play, with the price of crude continuing its charge back toward $50 a barrel. Crude prices rose to $48 in early dealing.

Financials may also come into focus after Citigroup CEO Vikram Pandit reportedly said company is profitable through the first two months of 2009 and having best quarter-to-date performance since the third quarter of 2007.

In corporate news from Canada, Iamgold, operator of mines in Africa and Canada announced it will sell about C$275 million in new shares.

Methanol maker Methanex revealed that CEO Bruce Aitken plans to buy as many as 40,000 additional common shares of the company.

Tuesday, TeraGo Inc. a wireless broadband service provider, reported a wider net loss for the fourth-quarter, reflecting increased future income tax expense and slightly lower profit margin. However, the company's revenues grew 22%.

Across the border, Dow Chemical Co. announced a settlement agreement with Rohm and Haas (ROH) to close the $15.4 billion buyout on substantially altered financial terms by April 1. The acquisition creates the world's leading specialty chemicals and advanced materials company.

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