US SUMMARY: Stocks May Lose Some Sizzle
DJIA 11120.04 loss 96.46 dn 0.9%
NASDAQ 2339.02 loss 22.15 dn 0.9%
S&P 500 1295.50 loss 13.54 dn 1.0%
Dow Future 11175.00 loss 9.00 dn 0.1%
NASDAQ Future 1738.50 loss 1.25 dn 0.1%
S&P Future 1303.00 loss 1.00 dn 0.1%
10-Yr US Treasury: 4.96% up 0.07
(Futures values as of 0450 GMT)
Wall Street's rally could already be fizzling. But Treasurys may find some footing after last week's price losses.
STOCKS: On a technical basis, the major indexes last week failed to meaningfully break out of their recent trading ranges. For the market's number crunchers, such technical resistance is a bad omen.
And while earnings season starting this week is customarily a boon to stocks, some analysts fear that bullish profit forecasts and outlooks issued last month have pushed investors to buy up the stock ahead of the actual reports. That means the stock prices we're seeing now already have positive earnings priced in. That could result in modest selloffs even if earnings are good.
On Friday, solid employment data renewed Wall Street's inflation worries and sent stocks skidding, with a bond selloff overshadowing a fresh drop in oil prices. The major indexes ended the week little changed.
The economic reports coming out this week are unlikely to help the market out of its funk. Perhaps the most telling number will be the University of Michigan's closely watched consumer sentiment index, due Thursday. The index is expected to come in at 88.5, slightly lower than March's 88.9 reading. If it's above that, investors might stoke their interest rate fears, while signaling only a short-term benefit for the economy given consumers' high debt and lack of savings.
The nation's trade deficit is expected to narrow slightly, from $68.5 billion in January to $68 billion in February. The Commerce Department report, due Wednesday, could pressure stocks if the deficits continue to climb.
The first-quarter earnings season officially kicks off Monday, with the first Dow Jones industrial, Alcoa Inc., reporting its results.
BONDS: U.S. Treasury prices endured big losses Friday in the wake of a report on hiring during March that aided the case for more Federal Reserve rate hikes. The government reported Friday morning that the U.S. economy added 211,000 jobs last month, amid a drop in the unemployment rate to 4.7% from 4.8% in February, it greased the wheels for more selling in Treasurys.
The figures reinforced the case for the Fed to lift its overnight target rate to 5% when it meets on May 10, from the current level of 4.75%.
Still, some reckon Treasurys could find some footing soon. "We are not looking for the recent selloff to be sustained, but watch for signs that the Fed will tighten more aggressively, since that would accelerate a liquidity withdrawal," said Deutsche Bank analysts.
ASIAN SUMMARY: Japan Stocks Lower; Crude On The Rise
USD-Yen 118.05 loss 0.10 dn 0.08%
AUD-USD 0.7278 gain 0.0020 up 0.3%
Nikkei 225 17409.30 loss 154.00 dn 0.9%
Hang Seng 16409.83 loss 61.95 dn 0.4%
Taiwan Index 6782.54 gain 0.60 0.0%
S.Korea Kospi 1392.45 loss 9.91 dn 0.7%
JGB Yield 1.8900% up 0.0050
(All values as of 0450 GMT)
STOCKS: Japanese stocks dipped Monday after rising to near 6-year highs last week, with traders remaining cautious ahead of key economic data, including February machinery orders, and the start of the central bank's two-day policy meeting.
OIL: Crude oil prices rose 26 cents to $67.65 as market participants fretted over supply threats posed by Iran's nuclear standoff with the international community and shrinking U.S. gasoline inventories.
EUROPEAN OUTLOOK: Markets Face Early Pressure
Euro-USD 1.2114 gain 0.0007 up 0.05%
Stlg-USD 1.7444 gain 0.0020 up 0.1%
USD-Franc 1.2998 loss 0.0016 dn 0.1%
(All values as of 0450 GMT)
European assets, including stocks, government debt and the euro, are likely to open under pressure.
STOCKS: European shares are set to dip at the open, as investors continue to weigh improving economic growth against the prospect of higher interest rates.
U.K. spreadbettor CMC Markets is calling the FTSE down 3 points at 6023, the DAX down 8 at 5944 and the CAC down 10 at 5165.
In the news, Compass Group said it will sell its travel-concession business to investors led by Macquarie Bank Ltd. and EQT Partners AB for GBP1.8 billion. On Friday, European stock markets gave up most of the week's gains in the space of a few hours, as markets went into profit-taking mode after an initial benefit from U.S. jobs data.
BONDS: Bunds open under some pressure Monday, while gilts may show light gains.
Analysts said the diverging outlook for interest rates between the Bank of England and the European Central Bank explains why gilts have managed to outperform bunds.
Most in the market doubt the BoE's Monetary Policy Committee will alter its 4.5% rate for several months, while many analysts say they expect the ECB to hike rates by a 25 basis points to 2.75% in June.
"This (gilt outperformance) is related to the MPC leaving rates on hold," said Peter Fertig, a strategist at Dresdner Kleinwort Wasserstein. "The ECB is going to hike, it has just been postponed from May, which was the market expectation, to June."
Looking ahead on the supply front, the German federal government called for bids in Monday's auction of EUR6 billion of six-month discount bills. Bids for the Bubills, maturing Oct. 18, 2006, are due by 0900 GMT Monday and the results will be published shortly afterward.
On the data front, Monday sees the release of French industrial production data and U.K. producer prices numbers.
"The survey evidence and higher oil prices suggest that upside pressure on (U.K.) input and output prices intensified in March," HSBC said in a note.
Last Friday, European government bond prices were mixed, with gilts holding firm, while bund futures chalked up a new contract low after strong U.S. employment data fueled fears about higher Federal Reserve interest rates, analysts said.
FOREX: The euro starts under some weight after the U.S. jobs report Friday added to dollar strength, which had started last Thursday with dovish comments from the European Central Bank president. The euro could test levels as low as $1.20 while the market continues to focus on Fed rate hikes.
Volkswagen AG's Chief Executive Bernd Pischetsrieder said the company is encountering tougher competition from Japanese automobile producers as a result of the euro's recent gains against the yen.
CALENDAR: Monday, April 10: UK Prices; Fed Speakers
GMT Expected Previous
0500 JPN Feb Machinery Orders +3.1%MM -6.2%MM
0545 FRA Feb Mfg Production +0.2%MM +0.4%MM
0645 FRA Feb Indus Production Index +0.4%MM +0.3%MM
0830 UK Mar Core PPI
0830 UK Feb ODPM UK House Prices
0830 UK Mar PPI Input +0.4%MM +1.2%MM
0830 UK Mar PPI Output +0.4%MM +0.3%MM
0830 UK Feb ODPM House Price Index
0830 UK Mar BRC Survey +0.8%LFL +0.6%LFL
1215 US Fed Gov Olson speaks on
"enterprise-wide compliance risk
1245 US Fed Gov Bies speaks in Naples, Fla.
1515 US Tsy Asst Secy Warshawsky holds monthly
N/A JPN BOJ Policy Board mtg starts
N/A JPN UNICEF Executive Director Veneman to
meet Foreign Affairs Min Aso, other
senior officials in Japan
N/A US No indicators scheduled
Barry Callebaut (BARN.EB): 2Q Earnings
Average net profit (DJ, 4 analysts): CHF48M (CHF46.1M)
Note: This translates into CHF111.9M in 1H net profit, compared with CHF101.3M a year earlier. Sales seen 3% higher at CHF1.04B from CHF1.01B, boosted by currency swings. Kepler eyes signs that the German turnaround is gaining traction; company said in January it expects German consumer goods business to turn a profitable this year. Credit Suisse is focusing on capacity expansion plans in Asia and Russia and hazelnut prices. Kepler rates at buy, Credit Suisse at outperform. Earnings due pre-market.
OTHER SCHEDULED EVENTS:
Actelion (ATLN.EB): AGM
Aspocomp Group (ACG1V.HE): AGM
Business Interactif (7605.FR): FY Earnings
CAST (7289.FR): FY Earnings
Cenes Pharmaceuticals (CEN.LN): FY Earnings
Credito Artigiano (CRA.MI): AGM
Finnlines (FLG1S.HE): AGM
Fishworks (FSH.LN): 1H Earnings
IM Skaugen (IMSK.OS): 1Q Earnings
Investcom (INVT.LN): FY Earnings
Netgem (415406.FR): 1Q Sales
Severfield-Rowan (SFR.LN): FY Earnings
Surgical Innovations (SUN.LN): 1H Earnings
Telecom Italia Media (TME.MI): AGM
Wedins Norden (WED-B.SK): 2Q Earnings
Wyevale Garden Centres (WGC.LN): FY Earnings
eQ Corporation (EQO1V.HE): FY 2005 Dividend Payment Date
Etteplan (ETT1V.HE): FY 2005 Dividend Payment Date
Grupo Inmocaral (FFR.MC): FY 2005 Dividend Payment Date
Grupo Inmocaral (FFR.MC): FY 2005 Ex-Dividend Date
Koninklijke Philips Electronics (PHG): FY 2005 Dividend Payment Date
Lannen Tehtaat (LTE1S.HE): FY 2005 Dividend Payment Date
Morse (MOR.LN): 1H 2006 Dividend Payment Date
Sentera (SNR1V.HE): FY 2005 Dividend Payment Date
(END) Dow Jones Newswires