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Wednesday, March 18, 2009

ADVFN World Daily Markets Bulletin - Mar 17, 2009

US Stocks at a Glance

Nasdaq Moves Firmly Positive, Dow Lingers Near Unchanged

With traders expressing some uncertainty about the near-term outlook for the markets, stocks are showing a lack of direction in morning trading on Tuesday. The major averages have had difficulty sustaining any significant moves.

The lackluster performance by the broader markets comes after stocks saw considerable late-day weakness in the previous session, bring an end to their recent 4-day winning streak.

Investors now seem to be questioning whether the markets will see any further upside or move back to the downside to retest the multi-year lows set earlier this month.

Nonetheless, some positive sentiment was generated by a report from the Commerce Department showing an unexpected increase in housing starts in the month of February. The growth was largely due to a significant jump in new construction of multi-family structures.

While the Nasdaq and the S&P 500 have moved firmly into positive territory in recent trading, the Dow is lingering near the unchanged line. The Dow is currently down 6.37 at 7,210.60, while the Nasdaq is up 12.49 at 1,416.51 and the S&P 500 is up 4.26 at 758.15.

Canadian Market

Bay Street Stocks Slightly Lower After Five-Session Streak Of Gains

Canadian stocks are slightly lower in early trading on Tuesday after gaining in each of the last five sessions. Gold-related stocks pulled the market lower as the precious metal fell on the Comex.

The S&P/TSX Composite Index dropped 38.03 down 0.45% to move at 8,348.68. The market had closed yesterday at a monthly high.

Gold stocks are leading the decliners with a 3.1% drop, while materials stocks are down 2.7%. April gold has dropped $5.50 to $916.50.

Kirkland Lake Gold is down 6.3% after the company reported third quarter net loss of C$4.69 million or C$0.08 per share, compared to a loss of C$1.89 million or C$0.03 per share in the year-ago quarter.

New Gold has lost 1.5% after the company reported fourth-quarter net earnings of US$41.1 million. Consolidated revenue for the quarter of 2008 was US$59.0 million.

Mining stocks have dropped 2.2% as Inmet is down 4.25%, Teck Cominco is down 3.4% and First Quantum has lost 3%.
Ensign Energy is flat after the stock was downgraded to Underweight from Market Weight by Thomas Weisel Partners.

OPTI Canada is down 1.13% after the company said president and chief executive officer Sid Dykstra, will step down, effective April 28. He will be replaced by Christopher Slubicki.

Meanwhile, Nokia Corp. announced it will cut about 1,700 jobs globally to increase cost-efficiency and acclimatize to the market situation.

On the economic front, Canadian manufacturing sales decreased 5.4% to $41.7 billion in January, falling to the lowest level in almost 10 years, according to data released by Statistics Canada.

The S&P/TSX Composite Index rallied 83.32 points or 1% to end at 8,386.71. The market closed at its highest level in more than one month

European Shares

FTSE recovery fizzles out
Market Movers
techMARK 1,132.52 -1.08%
FTSE 100 3,811.68 -1.35%
FTSE 250 6,200.98 -1.11%

FTSE made a brief move towards the blue late in the morning but is now firmly in the red, with an update from Shell and adverse broker coverage of other stocks weighing on the index.

Oil heavyweight Royal Dutch Shell is a drag on the index after the group’s strategy update. The group said it has balance sheet flexibility to maintain investment and grow dividends in the downturn and to fund future growth projects. The group said it is continuing with plans to build new upstream and downstream capacity, while managing the near-term challenges of the global economic slowdown.

Shell’s value is also hit by the lower oil price, which is usually good news for Carnival, but the cruise operator falls back after seeing its price target cut at RBS. The broker is worried that low bookings in January will affect the company’s results next week.

Caterer Compass is also hit by unfavourable broker coverage, with Deutsche Bank moving the stock to ‘hold’ from ‘sell’ after a share price rally. Cash call talk continues to dominate sentiment. Barclays is off the pace a little after yesterday's surge on news it may consider selling iShares to avoid joining the asset protection scheme.

Life and pensions group Friends Provident reported full-year underlying profits in line with expectations and said it expects new business in early 2009 to be below the 2008 comparatives.

Department store chain Debenhams is sharply lower after it said first half pre-tax profit will be ahead of previous year but there was no mention of the cash-call expected by some. The group said the combined impact of higher gross transaction value, gross margin and tight management of costs will result in first half profit before tax and EBITDA being ahead of the previous year.

JJB Sports has agreed a further extension of the standstill arrangements with its lenders and confirmed it is considering a company voluntary arrangement to help it ease some of its crippling debt problems.

Thomas Cook Group climbs after it said Karl-Gerhard Eick will succeed Thomas Middelhoff as non-executive chairman with immediate effect. Eick joined the Thomas Cook board in December 2008 as an Arcandor nominated non-executive director.

Component distributor Diploma has warned that a tough time for its seals business in the US and the adverse effects of the pound's weakness have hit both sales and profits in the past six months.

Higher production volumes and commodity prices pushed Venture Production profits up 82% in the year. Pre-tax profit rose to £184.2m from £101.2m last year as revenue rose 38% to £494.9m thanks to substantially higher oil prices especially in the first half of the year and strong UK gas markets.

Torotrak surged forward as Allison Transmission, the world leader in fully automatic transmissions for commercial vehicles, took a 10% stake at 16.5p per share and purchased technology rights for £8.4m.

Kirkland Lake Gold is upbeat after third quarter losses narrowed slightly from the previous quarter and as it sits on a pile of cash to fund mining operations in Canada.

Broadband and telecom systems company BATM Advanced Communications revealed a 20% increase in annual pre-tax profit but investors were disappointed and the shares fell back. The company said it is 'cautiously optimistic' about prospects for this year and beyond.

Banks and energy stocks are leading Europe’s main markets lower in midday trade, ending a five-day rise. BNP Paribas, France’s largest bank, Switzerland's Credit Suisse and Banco Santander are all among the main fallers.

Energy stocks, including Royal Dutch Shell and Total are down in line with the falling crude price. It has been announced today that Simon Henry will be the new chief financial officer at Royal Dutch Shell when he takes up his new position on 1 May.

He’ll move up from his current role as Executive Vice President Finance in Shell International Exploration to replace Peter Voser who’ll be the new chief executive as of 1 July.

Across the markets, the German DAX has dropped 61 points to 3,983, the French CAC is down 49 points at 2,742, while the Swiss market fell 35 points to 4,780.

German carrier Air Berlin said it is in advanced talks with travel company TUI Travel over a potential strategic cooperation for TUI's German charter airline TUIfly.

Under the planned deal, a group member company of TUI Travel will participate in Air Berlin with a minority interest which will not exceed 20%. Air Berlin would indirectly acquire a participation in the same percentage in TUIfly. Final approval of the TUI Travel and Air Berlin board was still outstanding, Air Berlin said.

Asia Markets

Financials prop up Asian markets for third day in succession

The major markets across the Asia-Pacific region advanced for the third day in succession on Tuesday led by financial stocks after Standard Chartered Bank plc, the second largest bank in the UK, joined the list of major banks reporting positive performance in the first two months of 2009. Expectations of stimulus from the BOJ, as well as indications of rate cuts by RBA as early as April, lifted sentiment across the markets overshadowing the weaker closing in the U.S market on Monday.

Crude oil traded modestly lower in Asian trading. Oil prices, which declined sharply following OPEC's decision not to change the output levels, rebounded on Monday on expectations that economic recovery might happen earlier than expected and closed at $47.35 after trading in a broad range of $43.62 to $47.63.

Commodity prices, measured by a group of six metals in the London Metals Exchange, gained 3% on Monday with April futures price in New York for copper surging up 5%. Resource related stocks advanced following higher prices.
The relief rally in the global markets seems to be losing steam after the markets discounted positive comments by officials of major banks such as Citigroup, JP Morgan, Bank of America and Barclays Bank that they expect positive results for the first quarter of 2009. Comments by Standard Chartered Bank, the second biggest bank in the UK, that it had a strong start to 2009, helped the banks rally for the fifth consecutive day.

The benchmark Nikkei 225 Index advanced 244.98 points or 3.18% to close at 7,949, while the broader Topix Index of all First Section issues gained 19.83 points to close at 762.

Japan's service sector output was up a seasonally adjusted 0.4% on month in January, the Ministry of Economy, Trade and Industry said on Tuesday, posting an index score of 106.4. The data came in sharply higher than analyst expectations for a 0.5% monthly decline following the revised 1.6% decline on month in December and the 1.1% fall in November.

Financial stocks advanced on expectations that the BOJ might announce new initiatives for stabilizing the banking sector and provide stimulus to the economy. Sumitomo Mitsui Financial soared 7.28% and Mitsubishi UFJ Financial advanced 6.35%. Mizuho Financial and Resona Holdings advanced 5.29% and 3.71% respectively.

Sumco Corp., the second largest manufacturer of silicon wafers in the world surged up more than 9% after brokerage firms, Nomura Holdings and KBC Securities, upgraded the stock to "buy" rating. Chipmakers Elpida Memory and Shin-Etsu Chemical also advanced.

Exporters posted gains helped by a weaker yen. Sony Corp advanced 4.13%, Canon gained 2.89% and Sharp ended up by 2.11%.

Automakers advanced after the Nikkei business daily reported that Toyota plans to slash the price of its current generation Prius hybrid car to 1.89 million yen from 2.33 million yen to match rival Honda's Insight. Toyota also plans to bring to market in 2011 a new hybrid that is more affordable than the Prius. Both Toyota Motor and Hondo Motor gained more than 3% each.

Hitachi said on Monday that it will spin off its money-losing automotive devices operations and digital consumer business and focus on heavy electric machinery, railway and social-infrastructure businesses in a bid to turn around its battered operations. The company also appointed the head of its plant technology firm as president of the parent company. The stock ended higher by 1.90%.

Oil-related stocks ended higher following the overnight gain in crude oil price. Nippon Oil advanced 4.47%, Inpex gained 2.80%, and Showa Shell rose 1.79%.

In Australia, the benchmark S&P/ASX200 Index advanced 103.50 points or 3.09% to close at 3,452, while the broader All Ordinaries Index gained 92 points, or 2.78% to close at 3,389.
The minutes of the recently concluded RBA meeting, in which the central bank paused, raised hopes that the RBA will cut interest rates as early as April to help the economy combat recession, which helped lift market sentiment despite lingering doubts about the global economic outlook. Economic data indicating a rise in lending by banks to corporate houses and households also generated some buying interest.

Commonwealth Bank of Australia advanced 4.84%; National Australia Bank rose 3.38%, Westpac Banking Group gained 3.08% and ANZ Bank added 2.42% during the day. Investment bank Macquarie Group soared 8.78%.

In the resources sector, index leader BHP Billiton rose 2.84% and Rio Tinto gained 2.36%. Gold

Among energy stocks, Santos advanced 3.09% and Woodside Petroleum added 1.86%, while Oil Search remained unchanged from previous close.

Airline stocks also advanced with Virgin Blue Holdings, which reported an increase in domestic and international traffic for January, advancing 7.07%, and Quantas Airways gaining more than 6%.

Retail stocks ended higher on positive sentiment across the markets. Wesfarmers advanced 3.77%, David Jones rose 2.02% and Woolworths gained 2.63%.

In Seoul, the benchmark KOSPI Index surged up more than 3.4% or 38.42 points to close 1,164, led by financials and foreign buying in select blue-chip stocks. The local currency continued to strengthen against the U.S green back, closing higher by 31.50 won at 1408.50.

Financials led the rally; Shinhan Financial surged up more than 9.5% and KB Financial, the holding firm of Kookmin bank, advanced 6.77%. Woori Finance ended higher by 7.26%.

Among the blue-chip stocks, Samsung Electronics added 2.1% and LG Electronics gained 2.94%.

Exporters advanced on the strengthening of the local currency. Among the automakers, Kia Motors soared 6.67% and Hyundai Motor advanced 2.64%. Ssangyong Motor gained 3.08%.

Shipbuilding stocks also gained with Hyundai Heavy Industries and Samsung Heavy Industries adding 5.28% and 5.30% respectively.

The stock market in Hong Kong ended lower on Tuesday, giving away most of the gains made intra-day, on profit booking and concerns about the global economic outlook.
The benchmark Hang Seng Index, which gained 450 points or 3.6% on Monday, closed at 12, 878, down 99 points or 0.76%.

Telecom stocks declined sharply; Hutchison Whimpoa is down 4.44% and China Mobile lost 3.59%.

Insurance stocks Ping An and China Life shed 4.73% and 4.94% respectively. China-related stocks also declined on profit taking. China Overseas declined 6.82%, while China Resources lost 2.21%.%. In the resource space, Aluminum Company of China decreased 3.42%, Petrochina lost 2.18% and CNOOC shed 0.56%.

Mixed trend was witnessed among utilities; While HK & China Gas declined 2.38%, HK Electric gained 2.60 Financial stocks also closed mixed. While HSBC Holdings gained 2.88%, Bank Comm advanced 0.59% and Hang Seng Bank added 0.64%, BOC Hong Kong declined 3.30%.

Among the other markets in the region, China's Shanghai Composite Index gained 3.02% or 65.04 points to 2,218 and Taiwan's Weighted Index advanced 1.41% or 70 points to 5,041. Indonesia's Jakarta Composite Index declined 0.96% or 12.76 points to 1,312 and Singapore's Strait Times Index declined 27.61 points to close at 1,559.

Commodities

Crude Oil Prices Move Higher Again

Crude oil prices gained again on Tuesday morning, adding to its recent surge. Traders are betting that an improved economic outlook will help energy demand.

Light sweet crude for April delivery rallied to $47.88, up 53 cents on the session. Earlier, oil reached a weekly intraday high of $48.20.

Traders looked ahead to the Energy Information Administration's inventory report on Wednesday. Last week, the EIA said crude oil inventories increased 749,000 barrels in the week ended March 6. This is a little higher than the expectations of economists, who were looking for a build of about 300,000 barrels.

On the economic front, the U.S. Labor Department revealed Tuesday that producer prices rose by 0.1 percent for February. This followed a rise of 0.8 percent in the previous month.

Economists had expected producer prices to rise by 0.4 percent.
Meanwhile, the Commerce Department reported that housing starts rose 22 percent to an annual rate of 583,000 in February from a revised January estimate of 477,000. Economists had expected starts to fall to 450,000 from the 466,000 originally reported for the previous month.

Oil prices turned higher on Monday as confidence in an economic turnaround out-weighed the Organization of Petroleum Exporting Countries' decision to leave output unchanged.

Light sweet crude for April delivery finished at $47.35 per barrel, up $1.10 for the day. Prices touched as high as $47.63 after earlier touching as low as $43.63.

OPEC decided Sunday to not reduce oil production below current levels, instead deciding to focus their efforts on getting member countries to abide by their current output quotas. The cartel's 152nd meeting was held in Vienna.

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