US SUMMARY: Markets Await Bernanke Testimony
DJIA 10892.32 loss 26.73 dn 0.2%
NASDAQ 2239.81 loss 22.07 dn 1.0%
S&P 500 1262.86 loss 4.13 dn 0.3%
Dow Future 10925.00 gain 9.00 up 0.1%
NASDAQ Future 1656.50 gain 3.50 up 0.2%
S&P Future 1267.00 gain 1.25 up 0.1%
10-Yr US Treasury: 4.58% unchanged
(Futures values as of 0550 GMT)
Stocks ended a lethargic session moderately lower Monday as a lack of economic news returned investors' focus to interest rates and inflation ahead of comments from new Federal Reserve Chairman Ben Bernanke later this week. Treasurys closed little changed.
STOCKS: Reports that Merrill Lynch & Co. is in talks to buy nearly half of BlackRock Inc. drew a positive reaction from the market, but an article warning of intensifying competition for Google Inc. saddled the tech sector and sent the Nasdaq composite index sliding about 1 percent.
Trading was quiet while investors anticipated Bernanke's first testimony before Congress on Wednesday, said Jack Ablin, chief investment officer for Harris Private Bank. Many thought January's interest rate hike would be the last for a while, but recent signs of economic growth have renewed debate over whether the Fed will go further to stifle inflation, he said.
"Right now, the transparency we had with (former Chairman Alan) Greenspan is gone. We're trying to get some semblance of which way the Fed is going to go," Ablin said, adding that a strong first-quarter gross domestic product figure would likely guarantee another rate increase at the Fed's May meeting.
Energy prices slumped despite a heavy weekend snowstorm that blanketed the northeastern states, a major consumer of heating oil. A barrel of light crude lost 60 cents to settle at $61.24 on the New York Mercantile Exchange.
BONDS: U.S. Treasury prices ended unchanged, having spent the session range bound, ahead of Bernanke. Investors are likely to parse Bernanke's speech and the following question-and-answer exchange with members of Congress.
"There's no question - Bernanke's testimony is the central focus for the market," said Jason Evans, head of government bond trading at Deutsche Bank in New York.
Still, there is some doubt as to how forthcoming Bernanke will be about future policy, particularly as he was absent from the previous meeting of the Fed's Open Market Committee held Jan. 31.
With several European countries set to issue new debt this week and the U.S. government bond market recovering from a late afternoon selloff on Friday, "the backdrop is somewhat negative for Treasurys," Deutsche Bank's Evans said.
That tone may intensify should Bernanke underscore the determination of the Fed in keeping the threat of inflation at bay.
As evidence mounts the economy could record growth in the region of 5% for the first quarter, and core inflation measures flirt with the 2% ceiling amid resource constraints, "Bernanke's testimony may have a hawkish tone," noted economists at Bear Stearns in New York.
ASIAN SUMMARY: Tokyo Shares Rebound But Market Cautious
USD-Yen 117.40 loss 0.34 dn 0.3%
AUD-USD 0.7375 gain 0.0003 up 0.4%
Nikkei 225 16119.52 gain 241.80 up 1.5%
Hang Seng 15355.05 gain 42.96 up 0.3%
Taiwan Index 6612.97 gain 50.68 up 0.8%
S.Korea Kospi 1327.72 gain 6.93 up 0.5%
JGB Yield 1.5800% up 0.0250
(All values as of 0550 GMT)
STOCKS: Japanese stocks Tuesday reversed losses from earlier and traded higher toward the close. Investors, though, were cautious ahead of fourth-quarter economic growth figures to be released later this week.
BONDS: Prices of Japanese government bonds were down but off their session lows after the latest 5-year auction proceeded better than expected, traders say.
OIL: Crude oil prices extended their decline Tuesday, falling 20 cents to $61.04, as traders expected a midweek U.S. supply report to show higher crude inventories.
"The price is completely oversold and has reached quite an important level now - $60 a barrel is a psychological support level, if we get more bearish information we may see another huge decline to $55," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures.
FOREX: The yuan's rapid rise recently was due to market forces, People's Bank of China Vice Governor Wu Xiaoling said Tuesday. The yuan isn't responsible for China's growing trade surplus, but foreign exchange can be used as a tool to help balance the country's trade, Wu told Dow Jones Newswires on the sidelines of a U.S.-China Business forum.
EUROPEAN OUTLOOK: Markets Seen Little Changed
Euro-USD 1.1910 gain 0.0010 up 0.08%
Stlg-USD 1.7418 gain 0.0005 up 0.03%
USD-Franc 1.3068 loss 0.0007 dn 0.06%
(All values as of 0550 GMT)
Prices of European stocks and government bonds may open a few notches lower, while the euro opens fairly steady.
STOCKS: Markets are likely to suffer slight losses at the open following Wall Street's lead.
Matthew Buckland at U.K. spreadbettor CMC Markets is calling the Frankfurt DAX index down 10 points at 5746, the Paris CAC down 4 at 4953 and the London FTSE unchanged at 5794.
Equity strategists at J.P. Morgan noted that the trend for investors to choose European equities over U.S. is ongoing. "European equity markets...are hitting new highs, supported by the continued preference of institutional investors for the old continent over the U.S. equity markets," said these strategists.
The strategists said that for investors with little tolerance for risk, a move from overall positive market exposure towards individual exposure to buy-out targets should now prove to be "a valuable strategy shift."
European automotive stocks rallied for the second session a row on Monday, as investors poured into the sector on news of Renault and Volkswagen's restructuring attempts. As a result markets closed in positive territory.
BONDS: New supply and strong data may pressure government debt prices lower to start, but technicals may offer some support.
The European Central Bank remains on track to hike rates in March, Commerzbank said. At the beginning of December, the ECB raised interest rates 25 basis points to 2.25%, its first hike in five years. Most market participants expect another 25-basis-point hike at the central bank's next meeting in March.
On the supply front, hefty issuance of around EUR25 billion is scheduled for this week. The Netherlands, Germany, Italy, Spain and France are all due to add new supply to the long end of the curve.
"This is likely to weigh on the market, in particular on the back end despite coupon and redemption inflows," said ING Bank's fixed-income strategist Padhraic Garvey.
Looking ahead, investors will turn their focus to German and euro-zone fourth-quarter gross domestic product releases Tuesday. Below-consensus readings in both measures would keep bunds under pressure. While euro-zone fourth-quarter GDP is expected to have grown 0.4% on the quarter, the German figure is seen climbing a quarterly 0.1%.
Beyond that, Tuesday will see the release of Germany's ZEW sentiment survey. Economists have forecast an unchanged reading in February from 71.0 in January.
In the U.K., after input producer prices were higher than expected, investors now watch for Tuesday's inflation report. The stronger price increase in input prices "won't persuade the (Bank of England's) Monetary Policy Committee that lower rates are merited over the near term," said Richard McGuire, fixed-income strategist at RBC Capital Markets.
"Tuesday's consumer price inflation report and more importantly, Wednesday's inflation report, will provide more indicators as to the MPC's future policy stance," he said.
Strong Italian production data and the prospect of heavy supply kept European bond prices under pressure Monday, while worries about any upcoming hawkish statement by new Federal Reserve Chairman Bernanke compounded the trend.
FOREX: The euro starts Tuesday in a holding pattern against the dollar, while players wait for key U.S. events to shape currency movements this week.
That leaves the key focus for this week on U.S. retail sales Tuesday and Bernanke's testimony on Wednesday. Retail sales are expected to have risen at 0.8% in January, and at 0.7% excluding food and cars.
Markets seem to be expecting a fairly hawkish tone to Bernanke's first testimony to Congress, suggesting that the Fed could continue to raise interest rates as economic data continue to show solid U.S. growth.
But with markets taking such a positive view, some say that recent dollar gains are vulnerable if Bernanke is less than clear about the Fed's intentions, which could very well happen as the Fed is focusing on economic data to guide its policy decisions these days.
The dollar was little changed to lower Monday after trading in tight ranges and holding on to gains it etched Friday as traders await what are expected to be dollar-positive events this week.
CALENDAR: Tuesday, Feb 14: German ZEW; UK CPI; US Retail
GMT Expected Previous
0700 GER 4Q GDP, prelim +0.1%QQ +0.6%QQ
0900 GER Feb ZEW Sentiment 71.0 71.0
0930 UK Jan CPI -0.4%MM +0.3%MM
0930 UK Jan Core CPI +1.4%MM +1.3%YY
0930 UK Jan Retail Prices -0.3%MM +0.3%MM
0930 GER German Chamber of Commerce press
conference on spring 2006 economic
1000 EU 4Q Euro zone GDP +0.4%QQ +0.6%QQ
1015 GER ECB allocates main refi ops bids
1245 US Feb 11 ICSC Store Sales Index +2.0%
1330 US Jan Retail & Food Sales +0.8% +0.7%
1330 US Jan Retail & Food Sales, ex-autos +0.7% +0.2%
1355 US Feb 11 Redbook Retail Sales Index +0.4%
1400 GER ECB weekly gold, forex reserves
1500 US US Senate Banking Committee begins
hearings on Kroszner, Warsh nominations
to be Federal Reserve Board governors;
Lazear nomination to be CEA chairman
1500 US Tsy Secy Snow testifies before US
Senate Budget panel on FY07 budget in
1500 US Dec Business Inventories +0.4% +0.5%
1745 US Dallas Fed Pres Fisher speaks on "What
does globalization mean for the U.S.
economy" in Little Rock, Ark
2200 US Feb 12 ABC/Washington Post Consumer Confidence -13
N/A UK Dec MM24: Monthly review of external trade
-By Dennis Baker; Dow Jones Newswires; firstname.lastname@example.org
(MORE TO FOLLOW) Dow Jones Newswires
February 14, 2006 01:00 ET (06:00 GMT)
Copyright (c) 2006 Dow Jones & Company, Inc.
14 Feb 2006 06:00 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events
AWD Holding (AWD.XE): 4Q Earnings
Average net profit (DJ, 5 analysts): EUR7.0M (EUR16.7M)
Average revenues: EUR167M (N/A)
Average EBIT: EUR8.8M (EUR24.6M)
Average FY net profit: EUR32.5M (EUR50.5M)
Average sales: EUR616.9M (EUR716.4M)
Note: The data are expected to reflect sluggish German life policy sales in 05 after strong 4Q04 demand prior to new 2005 tax on such policies. Full-year earnings will also reflect costs for integrating Chase de Vere and expansion of foreign operations. Investors will want to see confirmation of EUR1 dividend, and to receive a more detailed earnings outlook for 2006.
BHP Billiton (BHP): 1H Earnings
Average net profit (DJ, 15 analysts): $4.4B ($2.8B)
Note: Prices seen driving profits, with volumes contributing to a lesser extent, says an analyst. "I think we'll see cost inflation all over" the business. The market is watching for a capital management program. Analyst reckons a pay out is unlikely, given the company's debt position and capital expenditure program. A lack of a pay out may disappoint, he adds. BHP Billiton releases earnings first to Australian market, at 2130 GMT Tuesday. (JZR)
Bilfinger Berger (GBF.XE): FY Earnings
Average net profit (DJ, 6 analysts): EUR67M (EUR51M)
Average dividend: EUR1.08 (EUR1.0)
Average building output: EUR7B (EUR6.11B)
Note: Profit up despite incurring losses at its Australian business. Net profit seen helped by strong performances at its services unit, civil engineering unit and concessions unit. Cost overruns in Australia seen posing one-off cost of EUR30M.
British Land (BLND.LN): 3Q Earnings
Note: Results will be eyed for "NAV growth in the City," says an analyst, with additional eye on breakdown between capital gains and rental yield as approaching Real Estate Investment Trust legislation puts focus on yield. Looking as well at progress of disposal program for lower yielding assets and reinvestment strategy in context of competitive property market.
Depfa Bank (DEP.XE): FY Earnings
Average net profit (DJ, 6 analysts): EUR502M (EUR534M)
Average pretax profit: EUR635M (EUR655M)
Average operating revenues: EUR840M (EUR837M)
Note: Analysts will be looking at segmental reporting for the bank, which will be introduced for the first time. Say additional reporting could lead to new ratings for the stock.
France Telecom (FTE): FY Earnings
Average net profit (First Call, 26 analysts): EUR5.19B (EUR3.21B)
Average EBITDA: EUR18.50B (EUR17.92B)
Average revenue: EUR48.63B (EUR46.16B)
Note: Company will follow earnings statement with a presentation on how it intends to defend itself against lower-cost rivals that are eroding its earnings, particularly in its fixed-line operations.
"Investors will focus on shareholder return," said SG analyst Thierry Cota in a note to clients. France Telecom has already said it will pay a dividend of EUR1 per share on its 2005 earnings.
"Canceling the share buyback program would be understandable but disappointing if the pre-announced 2005 dividend of EUR1 per share were not increased, or there was no specific guidance on the 2006 dividend," SG's Cota wrote.
KGHM Polska Miedz (KGH.WA): 4Q Earnings
Average net profit (DJ, 5 analysts): PLN691.2M (PLN172.3M)
Average total revenues: PLN2.21B (PLN1.56B)
Average EBITDA: PLN820.8M (PLN276M)
Note: Analysts say a rise in profits is down to a surge in copper prices but costs remain a worry, especially losses on copper hedging and a high wage bill.
Michelin (12126.FR): FY Earnings
Average net profit pre-minority interests (Co, 15 analysts): EUR836M (EUR645M)
Average operating profit before items: EUR1.34B (EUR1.30B)
Note: Analysts are looking for signals on truck tire sales, and how effectively price increases are offsetting raw material costs. Report due premarket.
MOL (MOL.BU): 4Q Earnings
Average net profit (DJ, 9 analysts): HUF52.83B (HUF55.16B)
Average revenues: HUF611.6B (HUF621.91B)
Average operating profit: HUF68.64B (HUF59.55B)
Average EBITDA: HUF96.32B (HUF92.46B)
Note: Profit depressed by a weak performance at its natural gas segment and foreign exchange losses. . Performance at its natural gas segment is forecast between a loss of HUF8B and break-even because of a firming HUF versus USD. Upstream profits to rise nicely year-on-year but come lower than in 3Q on lower crude prices. Downstream profit to fall in both comparison on lower crack spreads.
Norsk Hydro (NHY): 4Q Earnings
Average net profit (DJ, 6 analysts): NOK2.57B (NOK3.64B)
Note: A higher tax rate, write-downs in the Aluminum segment and an estimated 1.5% decline in total petroleum production at 582,000 boe/d is seen eroding operating profits inflated by strong oil and aluminum prices.
OTP Bank (OTP.BU): 4Q Earnings
Average net profit (): HUF39B (4Q: HUF26.8B; 3Q: HUF41B 06)
Average net interest income: HUF78B (4Q: HUF66.4B; 3Q: HUF74.8B)
Average operating profit: HUF49.72B (HUF27.7B)
Note: Net interest income is forecast +18% as interest margin benefitted from strong consumer credit growth and slight deposit growth. But some analysts see NII falling q-q on lower margins. Mortgage lending is expected to remain sluggish. Costs and provisioning are eyed and expected to fall Q-Q.
Premiere (PRE.XE): FY Earnings
Average net profit (DJ, 7 analysts): EUR44.7M (EUR80.6M loss)
Average sales: EUR1.10B (EUR0.98B)
Average EBTIDA: EUR137M (EUR79.3M)
Note: Sales seen rising amid strong subscriber additions during the period. Analysts are keen to hear company comments on future strategy and subscriber numbers in light of Premiere's loss of exclusive live soccer-TV rights. Still, analysts do not expect company to give any guidance at all for FY06.
Sogecable (SGC.MC): 4Q Earnings
Average net loss (DJ, 3 analysts): EUR43.3M (EUR46.6M loss)
Average sales: EUR409.3M (EUR449.5M)
Average EBITDA: EUR40M (EUR69.1M)
Note: Improvement seen based on lower restructuring expenses at Digital+ pay-TV division. Sales seen -8.9% on lower extraordinary revenue and subscriber fees. Focus is on expected weak subscriber numbers, contributions from recently launched Cuatro channel.
TomTom (38705.AE): 4Q Earnings
Average net profit (DJ, 5 analysts): EUR34.3M (EUR12.4M)
Average sales: EUR276M (EUR89.6M)
Note: Profit and sales surge as navigation equipment has moved to a mass market. Eyes on margins, average selling prices which are expected to drop as market competition is increasingly rising. Therefore analysts focus on '06 comments from a company that will be included in the AEX as of March.
UBS (UBS): 4Q Earnings
Average net profit from continuing operations (DJ, 10 analysts): CHF2.46B (N/A)
Average revenue: CHF11.10B (CHF11.94B)
Note: Year-earlier figures are unavailable, however, as the number strips out profits earned at three private banks and GAM, which were sold to Julius Baer (BAER.VX) in 4Q. Beyond the earnings, analysts will focus on a possible new share buyback - which could exceed CHF6B, says Sarasin - from disposal proceeds as well as "special," or at least sharply-hiked, dividend. Market also eyes net new assets, especially at private banking unit, which Helvea pegs at CHF12B. Also in focus is cost-to-income ratio in all units and investment banking pipeline.
OTHER SCHEDULED EVENTS:
Aker Yards (AKY.OS): 4Q Earnings
Aldata Solution (ALS1V.HE): FY Earnings
Alti (7429.FR): AGM
Banca IFIS (IF.MI): 4Q Earnings
Biesse (BSS.MI): 4Q Earnings
Bigben Interactive (7407.FR): 3Q Revenue
Budapest Stock Exchange (): EGM
Cairo Communication (CAI.MI): 1Q Earnings
Cellular (CTSC): webcast
Cembre (CMB.MI): 4Q Earnings
Cementerie del Tirreno (CEM.MI): 4Q Earnings
Centrale Latte Torino (CLT.MI): 4Q Earnings
Client Center Alliance (7833.FR): FY Revenue
Conseptor (CNS.OS): 4Q Earnings
Cremonini (CRM.MI): 4Q Earnings
CS Communication & Systemes (7896.FR): FY Revenue
D+S Europe (DSJ.XE): FY Earnings
Debica (DBC.WA): 4Q Earnings
DiaGenic (DIAG.OS): 4Q Presentation
Ekornes (EKO.OS): 4Q Presentation
Emak (EM.MI): 4Q Earnings
Eniro (ENRO.SK): FY Earnings
Euronext NV (24151.AE): 4Q Revenue
Fidia (FDA.MI): 4Q Earnings
Finarte-Sem C D'Aste (FCD.MI): 4Q Earnings
Fotex (FOTEX.BU): 4Q Earnings
F-Secure Corp (FSC1V.HE): FY Earnings
FullSIX (FUL.MI): 4Q Earnings
Gecina (1004086.FR): 4Q Revenue
Granitifiandre (GRF.MI): 4Q Earnings
Hexagon (HEXA-B.SK): FY Earnings Conference
HiQ International (HIQ.SK): FY Analyst Meeting
Iberia (IBLA.MC): January Traffic Data
Imecom Group (6491.FR): FY Earnings
Indesit Company (IND.MI): 4Q Earnings
Indutrade (INDT.SK): FY Earnings
Inficon Holding AG (IFCN.EB): 4Q Earnings
Inmobiliaria Colonial (COL.MC): 4Q Earnings
International Maritime (IMAREX.OS): 4Q Earnings
Interpump Group (IP.MI): 4Q Earnings Conference Call
Irce (IRC.MI): 4Q Earnings
IT Way (ITW.MI): 1Q Earnings
Itera Consulting Group (ITE.OS): 4Q Earnings Presentation
KABE Husvagnar (KABE-B.SK): FY Earnings
Kongsberg Gruppen (KOG.OS): FY Earnings
Mandator (MAND.SK): FY Earnings
Mariella Burani (MBFG.MI): 4Q Earnings
Matrix Communications (MXC.LN): FY Earnings
Millicom International (MICC): FY Earnings
Natural (NTL.OS): 3Q Presentation/Webcast
NIBE Industrier (NIBE-B.SK): FY Earnings
Niloerngruppen (NILG-B.SK): FY Earnings
Nokian Tyres (NRE1V.HE): FY Earnings
Pan Fish (PAN.OS): 4Q Presentation
Pankl Racing Sys (PKL.XE): 1Q Earnings
Ponsse (PON1V.HE): FY Earnings
Qiagen (QGEN): FY Analyst Meeting
Rica Hotels (RIC.OS): FY Earnings
Richard-Ginori 1735 (RG.MI): FY Earnings
Sabaf (SAB.MI): 4Q Earnings
Scana Industrier (SCI.OS): 4Q Earnings
Socotherm (SCT.MI): 4Q Earnings
Sodifrance (7256.FR): FY Revenue
Sogefi (SO.MI): 4Q Earnings
SQLI (404554.FR): FY Revenue
Stefanel (STEF.MI): FY Earnings
Stonesoft (SFT1V.HE): FY Earnings
Techem (TNH.XE): 1Q Earnings Conference Call
Tecnomen Corp (TEMIV.HE): FY Analyst & Media Briefing
Telecom Reseaux Services (7176.FR): 3Q Revenue
Tomra Systems (TOM.OS): 4Q Earnings
Dunedin Smaller Cos Investment (DNDL.LN): FY 2005 Dividend Payment Date
(END) Dow Jones Newswires