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Wednesday, March 11, 2009

ADVFN World Daily Markets Bulletin - Mar 11, 2009

US Stocks at a Glance

Nasdaq Jumps To A New High For The Session

Stocks are seeing considerable strength in mid-morning trading on Wednesday, extending the strong upward move that was seen in the previous session. The continued strength comes as traders continue to go bargain hunting despite a lack of significant news.

Traders continue to react to positive comments from Citigroup CEO Vikram Pandit, who said yesterday 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.

However, some analysts have suggested that the recent strength in the markets is due in large part to short covering, and it remains to be seen if the markets have found a bottom or are only experiencing a momentary bounce before heading back to the downside.

On the economic front, the Mortgage Bankers Association revealed that its market index of mortgage application volume jumped 11.3 percent on a seasonally adjusted basis for the week of March 6th, following a few weeks of decline.

In recent trading, the tech-heavy Nasdaq has jumped to a new high for the session, while the Dow and the S&P 500 are holding onto strong gains. The Dow is currently up 64.20 at 6,990.69, the Nasdaq is up 26.39 at 1,384.67 and the S&P 500 is up 11.07 at 730.67.

Forex

Dollar dips on rising risk appetite

The dollar came under pressure Tuesday as US stocks staged an impressive rally after comments from Fed chairman Ben Bernanke.

"I think there is a good chance the recession will end later this year and 2010 will be a period of growth," Bernanke said.

However he warned, “Until we stabilise the financial system, a sustainable economic recovery will remain out of reach."

The dollar index, which measures the currency against six others, fell to 88.627 from 89.177 on Monday in late US trading.

An upbeat internal memo from Citigroup boss Vikram Pandit also boosted market confidence and increased risk appetite. Pandit said the bank was profitable in the first two months of 2009.

The euro rose to $1.2679 from $1.2602 late Monday although analysts said the euro’s advance was limited by ongoing concern about the European banking system’s exposure to fragile emerging European banks.

The euro rose to a fresh 5 week high against sterling amid further concern about the UK outlook. Data out Tuesday showed manufacturing in the UK suffered its biggest decline in decades while separate figures from the Office for National Statistics showed the recession is getting worse and its impact shows no sign of lessening in the near-term.

The greenback was down slightly against the yen to 98.70 yen from 98.79 yen late Monday although the Japanese currency remains under pressure on concern about the country’s economic outlook following a string of gloomy economic data.

Commodities

Oil settles under $46, gold under $900

US crude oil fell on Tuesday after the US government lowered its forecast for global demand in 2009 and said prices are expected to fall further.

US light crude oil for April delivery fell $1.36 to settle at $45.71 a barrel on the New York Mercantile Exchange.

The monthly report by the Energy Information Administration said oil is expected to average around $42 a barrel in 2009, down from a previous forecast of $43.

The statistical group also cut its forecast for prices next year to $53 from $55. The report also lowered its forecast for global consumption in 2009 by around 430,000 bpd to 84.27m.

The EIA has reduced its monthly estimates eleven times in the last year and concern about this demand deterioration has brought oil prices over $100 lower from record highs seen in July 2008.

Otherwise market onlookers will be keeping an eye on Wednesday’s weekly inventory data from the EIA.
Gold slipped below $900 an ounce on Tuesday as a 400-point rally on Wall Street reduced its appeal as an alternative investment.

COMEX gold for April delivery fell $22.10 to settle at $895.90 an ounce the New York Mercantile Exchange. Copper for May rose 5 cents to $1.68 while silver for the same month lost 40 cents to $12.54 an ounce.

European Shares

European markets expected to open firm

The major markets across Europe are expected to open slightly higher on Wednesday primarily led by financial stocks following positive comments from Citibank's CEO Vikram Pandit that helped the U.S markets to rally and the Asian markets to follow suit in Asian trading.

However, economic data from the China revealing that exports declined sharply by 25% for the second month this year in February following an 18% drop in January might act as a dampener, triggering further concerns regarding the outlook for the global economy as a whole. The Chinese Shanghai Composite Index is reacting negatively to the economic data which overshadowed the buoyancy across the financial sector in major markets.

The Future value of DJ Euro Stoxx 50 point is up 3 points, while the future indices of CAC 40 10 Euro and Dax are up 7.50 points and 0.50 points respectively.

On Tuesday, the FTSEurofirst 300 index of pan-European blue chips closed 5.11% higher at 690.89 points, while the narrower DJ Stoxx 50 index rose 5.44% to 1,703 points.

Around Europe, the U.K.'s FTSE 100 index rose 4.88% to 3,715, while France's CAC 40 index climbed 5.73% to 2,664 and Germany's DAX index surged up 5.28% to 3,887.

On the economic front, the UK trade balance and German factory orders are expected to dominate the news flow later in the day.

Among the individual stocks, Deutsche Lufthansa is expected to react after Bombardier Aerospace said that Deutsche Lufthansa AG has signed a firm purchase agreement for 30 CSeries model CS100 single-aisle aircraft. Based on list price, the contract value for the 30 CS100 aircraft is approximately US$1.53 billion.

Asia Markets

Asian markets advance on hopes of recovery in banking sector

Wednesday, the major markets across Asia-Pacific region advanced on hopes that the banking sector across the world will recover earlier than expected after the Citibank CEO Vikram Pandit said on Tuesday that the bank made profit in the first two months of 2009, and is poised to report better results for the first quarter. Fed Chairman Ben Bernanke's assertion that large banks would not be allowed to fail also lifted the sentiment.

In the Asian session Wednesday, crude was up modestly in electronic trading. Oil closed Tuesday's session down $1.36 at $45.71 a barrel on the New York Mercantile Exchange, after hitting an intra-day low of $45.33 and a high of $48.32 after U.S. Energy Information Administration or EIA, in its short-term outlook, lowered forecast for global energy demand for 2009 by 430,000 barrels to 84.27 million barrels per day.

Banking stocks led the gains across the markets. Mining stocks also advanced after the commodity prices rose in the London Metal Exchange. While copper prices rose 3%, nickel and zinc prices advanced 3.3% and 2.7% respectively. The positive sentiment in the market lifted almost all the stocks, which were in an oversold state following huge sell-offs in the recent past. However, the strength of the rally may not sustain long as a recovery and bottom is nowhere in sight.

Mixed economic data from China also raised fresh concerns. While Fixed Asset Investment rose sharply, aided partially by the stimulus plans, export from the country declined sharply by more than 25% during February following an 18% drop in January, raising doubts whether the growth story of the Chinese economy will fizzle out or could not be sustainable. The Chinese Shanghai composite index discounted the weak economic data and closed in negative, bucking the uptrend in the rest of the major markets in the region.

The markets in India were shut for a public holiday. In Japan, the benchmark Nikkei 225 Index surged up 321 points or 4.6%, to close at 7,376 in Tokyo, while the broader Topix index added 19 points, or 2.7%, to 722.

On the economic front, the Bank of Japan said on Wednesday that Japan's domestic corporate goods price index was down 0.4% in February compared to the previous month, posting an index score of 105.0. That was better than analyst expectations that had called for a 0.6% fall on month after the 1.0% decline in January. On an annual basis, the CGPI eased 1.1% slightly better than forecasts that had predicted a decline of 1.2% after the 0.2% fall in the previous month.

Meanwhile, the Cabinet Office said that core machinery orders in Japan were down 3.2% in January compared to the previous month, marking the fourth consecutive month of decline. That came in higher than analyst expectations for a 4.8% monthly decline following the 1.7% drop in December.

Banking stocks led the rally in the market. Mitsubishi UFJ advanced 5.57%, Sumitomo Mitsui gained 4.83% and Mizuho Financial rose 0.57%.

Resona said it will retire about 160 billion yen in preferred stock owned by the government ahead of the April 1 deadline for converting the holdings into common stock. Also, the company's market capitalization surpassed that of Mizuho Financial on Tuesday for the first time. Following the news, the stock slid 4.75%.

Toshiba shares surged up 9.50% after a business daily reported that the company will likely secure an operating profit of about 100 billion yen for the year ending March 2010, rebounding from the 280 billion yen operating loss expected this fiscal year.

Among exporters, Canon gained 6.56%, Sharp rose 5.33% and Sony advanced 4.53%. Meanwhile, automaker Honda surged 6.25% andToyota added 2.11%.

In the oil sector, Inpex and Showa Shell advanced about 4% each while Nippon Oil gained 4.30%. Trading house Mitsubishi Corp. surged up 2.96%, Sumitomo Corp gained 2.24% and Itochu advanced 0.72%.

Seiko Epson is up 6% on news that it plans to consolidate three production bases of LCD panel subsidiary Epson Imaging Devices into one by September and stop production at a chip making plant as early as 2011 as part of restructuring.

In Australia, the benchmark S&P/ASX200 Index gained 60 points, or 1.88%, to close at 3244, while the broader All Ordinaries Index advanced 56 points or 1.78% to close at 3199. The major averages opened higher and rose further in early trading before moving sideways for the rest of the session.

On the economic front, the Westpac/Melbourne Institute survey of consumer sentiment index for March showed that consumer sentiment in Australia declined slightly in March by 0.2% to 85.6 points. Readings below 100 indicate pessimists outnumbering optimists. Consumers' feelings about the economy over the next five years, however, jumped 15.2%.

Banks and mining stocks led the rally in the market. Commonwealth Bank of Australia gained 2.99% and ANZ Banking Group advanced 3.22%. Westpac rose 2.55% and investment bank Macquarie Group closed higher by 4.43%. National Australia Bank managed to close in the green, with a modest 0.12% gain after showing weakness earlier in the day.

Mining stocks advanced after a measure of six metals traded in the London Metals Exchange rose on Tuesday. While Copper gained 3%, zinc and nickel advanced 3.3% and 2.7% respectively. BHP Billiton advanced more than 4% while rival Rio Tinto gained about 3%.

Retail stocks also posted gains. David Jones moved up 4.59%. Woolworths gained 1.43% and Wesfarmers advanced 0.87%.

Mixed sentiment was witnessed among energy stocks, with Oil Search advancing, while Santos and Woodside Petroleum retreated slightly from their previous closes. Oil Search gained 3.24%, whereas Santos and Woodside shed 2.75% and 0.27%, respectively.

Gold miners also closed on a mixed note after gold closed lower on Tuesday. Lihir gold shed more than 6% while Sino Gold and New crest mining gained 4.12% and 0.52% respectively.

In Hong Kong, the benchmark Hang Seng Index gained 2% or 237 points to close at 11,931. Financial stocks led the gains. However, profit taking at higher levels and weaker economic data from mainland China dampened sentiment and limited the gains.

HSBC Holdings, which surged past HK$42 in early trading, ended the day with a gain of 2.25%, while Hang Seng Bank advanced 5.75%. Most stocks, which rose in early trading, gave back most of their gains post-release of economic data in mainland China.

In Seoul, the bench-mark KOSPI index advanced 3.23% or 35 points to close at 1,128. Banks, commodities and exporters led the gains. The sharp appreciation in the local currency against the U.S greenback and foreign buying spree also lifted the market sentiment.

Shipbuilding stocks advanced, with Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding posting gains in excess of 3% each.

Financial stocks also gained, led by KB Financial Group, the holding firm of Kookmin Bank, up more than 7%, while Woori Finance and Shinhan Group advanced 3.4% and 2% respectively.

In the automobile sector, Kia Motors gained more than 6% and Ssangyang Motor and Hyundai motor were up more than 2%, each.

Oil Stocks SK Holdings and S Oil also advanced, with gains of 2.5% and 1.7%, respectively.

Among the other markets, China's Shanghai Index slipped about 1% or 19 points to 2139, while Malaysia's KLSE Composite Index ended down 5 points to 855. Singapore's Strait Times Index advanced 1.33% to 1505, while Taiwan's Weighed Index gained about 1.9% or 89 points to 4760.

Canadian Market

Bay Street in Better mood After Dramatic Rebound

Canadian stocks will look to extend their strong gains from the previous session Wednesday morning after yesterday's positive news from Citigroup sparked a major relief rally.

On Tuesday, the S&P/TSX Composite Index jumped 313.47 points or 4.14% to finish at 7,880.41. The index had posted its lowest close since 2003 on Monday.

US stocks saw their biggest daily gain of 2009 on Tuesday, as traders went bargain hunting following some positive comments from the chief executive of Citigroup.

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. He added that the company is confident about its capital strength.

On the corporate front Wednesday, travel operator Transat A.T. Inc. reported a first quarter net loss of C$29.4 million or C$0.90 per share, compared to a net loss of C$7.9 million or C$0.23 per share in the year ago quarter. Transat also said it was suspending its quarterly dividend.

Canadian biopharmaceutical company AEterna Zentaris Inc. reported a wider than expected net loss in its fourth quarter. The results were hurt by lower quarter-over-quarter royalties related to the license agreement with Merck Serono.

Allen-Vanguard Corp. said it secured C$10.25 million contract addition from General Dynamics Armament and Technical Products for field service representatives in support of military operations in Iraq.

Bombardier Aerospace said that Deutsche Lufthansa AG has signed a firm purchase agreement for 30 CSeries model CS100 single-aisle aircraft. Based on list price, the contract value for the 30 CS100 aircraft is approximately US$1.53 billion.

On the economic front, Canadian new home prices decreased 0.6% between December and January, a slightly faster pace than the 0.1% decline observed the previous month. This resulted in a New Housing Price Index of 156.4.

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