US SUMMARY: Portfolio Managers In A Mood To Buy
DJIA 11464.15 gain 83.00 up 0.7%
NASDAQ 2193.16 gain 9.41 up 0.4%
S&P 500 1311.01 gain 7.19 up 0.6%
Dow Future 12483.00 gain 81.00 up 0.7%
NASDAQ Future 1593.25 gain 2.75 up 0.2%
S&P Future 1313.25 gain 0.75 up 0.1%
Euro-USD 1.2867 gain 0.0024 up 0.2%
10-Yr US Treasury: 4.73% unchanged
(Futures values, Treasury, EUR/USD Data as of 0450 GMT)
Wall Street investors, encouraged by recent economic data are expected to shift money into the stock markets when they return from Monday's Labor Day holiday. Treasurys may suffer as a result.
STOCKS: Portfolio managers and traders will end their vacations and actually come back to a pretty decent market. Stocks have inched their way up leading into September, and the major indexes are at three month highs as investors remain confident about the economy.
And, with oil spending most of last week below $70 per barrel, investors are expected to use the next few days to take positions ahead of upcoming third-quarter earnings reports.
"With energy on the sidelines, corporate earnings staying strong, and the Federal Reserve on the back burner, you're going to see a lot of reluctant money chasing returns during the week," said Peter Dunay, an investment strategist with New York-based Leeb Capital Management.
Last Friday, Wall Street ended an erratic week with stocks rallied after the Labor Department said employers added 128,000 jobs in August, signaling that an economic slowdown might be less severe than feared.
"I think they were just what the Fed was looking for," Jeffrey Kleintop, chief investment strategist for PNC's wealth management department, said of the employment figures. "(The) data moved the markets from thinking the Fed's done to predicting a rate cut by the middle of next year," he said, citing a drop in fed funds contracts for next July.
"You've got a lot of people who are just waiting to get back from Labor Day to start taking positions," said David Sowerby, chief market analyst at Loomis, Sayles & Co. "Things will pick up (this week), but don't look for there to be any major swings."
On Wednesday, investors might get a little more of an idea about what the Fed is thinking. The central bank will release its Beige Book, which summarizes regional economic activity. Also Wednesday, investors will get preliminary second-quarter productivity numbers, the Institute for Supply Management's August services figures, and crude inventories for September.
FOREX: The dollar opens lower and is likely to see volatile trading again this week, with the U.S. off Monday and little data for the market to trade on. But the euro also has its problems, having failed to crack $1.2900. On Friday, the dollar fell against its major counterparts after surrendering its gains from a modest rally earlier in New York.
BONDS: Investors could use the light data calendar this week to correct what some analysts believe has become an overbought market.
"The market is way ahead of itself though. We've moved too far, too fast," said Raymond Remy, head of fixed income at Daiwa Securities America in New York.
Remy said he sees prices dropping lower in the next few weeks and yields climbing, with the 10-year possibly reaching a yield of 4.95%. It closed at 4.73% Friday, unchanged.
Greg Habeeb, senior portfolio manager at Calvert Funds, has a different view. With more investors coming back to the market from summer vacation, the market is likely to see a second round of buying, sending the Treasurys even higher. But the market still "seems pricey to me," Habeeb said.
Wednesday's Fed Beige Book, though a little bit backward looking, "can give you a good feel" for current economic conditions, said Remy of Daiwa Securities America.
OIL: Prices slipped below $70 a barrel, in part as a U.N. deadline regarding Iran's nuclear ambitions expired without immediate consequence. Crude oil settled at $69.19 a barrel, down $1.07, on the New York Mercantile Exchange Friday.
ASIAN SUMMARY: Shares Rise As Japan Govt Bonds Fall
USD-Yen 116.40 loss 0.60 dn 0.6%
AUD-USD 0.7701 gain 0.0034 up 0.5%
Nikkei 225 16392.84 gain 258.50 up 1.6%
Hang Seng 17519.48 gain 95.76 up 0.6%
S&P/ASX 200 5089.20 gain 25.30 up 0.5%
Taiwan Index 6760.64 gain 109.10 up 1.3%
S.Korea Kospi 1362.78 gain 6.11 up 0.5%
JGB Yield 1.6800% down 0.0400
(All values as of 0450 GMT)
STOCKS: Japanese stocks surged Monday as traders bought real estate and brokerage issues.
FOREX: The yen gained against the dollar and euro as European players covered short-yen positions, according to traders. The action came after the government reported that capital investment spending by Japanese corporations jumped 16.6% from a year earlier during the April-June quarter, suggesting second-quarter economic growth figures could be revised up.
BONDS: Prices of Japanese government bonds tumbled after the Capex survey results, rekindling worry that faster economic growth could prompt higher interest rates.
METALS: Gold is expected to hold in a narrow range Monday as U.S. players take the day off. Spot gold was last at $626.50, up around $1 from Friday's close.
Copper futures rose slightly as the market set aside recent mining labor strife as a concern. JPMorgan's Jon Bergtheil says "the strike season may soon be over for copper" and "we can therefore look forward to a more settled supply profile."
OIL: Prices recovered 10 cents to $69.28 in Asian trading Monday, after falling to a 10-week low in the previous session. The Iran nuclear issue continues to worry the market as Iran refuses to halt enrichment of uranium.
EUROPEAN OUTLOOK: Stocks Set For Slightly Higher Open
Euro-USD 1.2867 gain 0.0024 up 0.2%
Stlg-USD 1.9077 gain 0.0015 up 0.8%
USD-Franc 1.2280 loss 0.0014 dn 0.1%
(All values as of 0450 GMT)
European shares are poised for opening gains, with government debt little changed and the euro higher against the dollar.
STOCKS: Equities are likely to edge higher Monday, but investors will watch carefully for initial trends in flows of funds in the new quarter.
U.K. spreadbettor Cantor Index is calling the FTSE up 2 points at 5951, the DAX up 17 at 5893 and the CAC up 10 at 5193.
Peter Kysel, head of European equities at MFC Global Investment Management, said higher confidence seen recently in the European equity market to some extent stemmed from indications that the U.S. Federal Reserve may be close to, or finished, with its rate-hike program.
"The market has been drifting higher from fairly low levels," he said.
In corporate news, Warner Music Group, Viacom and Universal Music Group are among those to have bid for BMG Music Publishing, according to people familiar with the situation.
European stock markets ended at a three-month high on Friday. U.S. economic data went some way to relieve rate-rise fears and French drugmaker Sanofi-Aventis basked in a favorable ruling in a patent case covering the Plavix blood-thinning treatment.
FOREX: The euro starts slightly higher against the dollar, but faces stiff resistance at $1.2900. Currently around Y150.00, the euro has support at around Y149.90, but if that level gives way, the euro might test Y149.60, with the help of stop loss orders waiting in the wings, dealers say.
BONDS: Government debt in Europe may see a bit of profit-taking on Monday, with the U.S. off on holiday, though some technical support should cushion any losses.
"Bonds are pricing in a lot of good news now so it's going to take some extremely weak data or an admission that U.S. rates have peaked to push them higher," the European bank dealer said.
Traders and investors get very little data this week. But to gauge Europe's economic health, they may look for clues in German industrial production and manufacturing orders, as well as euro-zone retail sales and the purchasing managers index for the service sector.
For the euro zone, "the news flow over the past month has not been favorable, with evidence of slower growth in the U.S. having continued to build, while the pace of (European Central Bank) policy tightening has quickened," BNP Paribas economists say.
European government bond prices were flat to higher Friday.
CALENDAR: Monday, Sep 4: Euro Zone Producer Prices
GMT Expected Previous
0900 EU Jul Euro Zone Producer Prices 0.5%MM 0.2%MM
1300 GER Fin Min Steinbrueck, ECB Pres Trichet
speak at German-French cultural event, Berlin
2330 JPN 10-yr Govt Bond auction
N/A US Markets closed for Labor Day holiday
L'Air Liquide (12007.FR): 1H Earnings
Average net profit (DJ, 4 analysts): EUR485M (EUR436M)
Average EBIT: EUR811M (EUR774M)
Note: Operating margins are expected to decline slightly to 14.7%-14.8%, from 14.9% last year due to rising raw material and electricity costs, analysts say. But the company is expected to have passed these rises on to its customers.
Banca Intesa (BIN.MI): 2Q Earnings
Average net profit (DJ, 5 analysts): EUR647M (EUR580M)
Average revenue: EUR2.6B (EUR2.49B)
Average operating profit: EUR1.26B (EUR1.16B)
Average net commissions: EUR1B (EUR926M)
Average 1H net profit: EUR1.4B (EUR1.2B)
Note: Net profit seen higher thanks to higher revenue and increase in trading profit. Market hungry for more info on tieup with Sanpaolo IMI (SPI.MI) and how it affects expansion plans, asset management business. Also looking for numbers on loan provisions and possible announcement of the sale of its tax collection business. Results are due around 1100 GMT followed by conference call.
Hammerson (HMSO.LN): 1H Earnings
Average adjusted net asset value (DJ, 3 analysts): 1355p (1237p)
Note: Good results expected following recent positive figures from peers Slough Estates (SLOU.LN) and British Land (BLND.LN), driven by the strong property investment market. Analysts will be looking for a confirmation of REIT conversion and views on a possible slowdown in the retail market.
IMI (IMI.LN): 1H Earnings
Average pretax profit before restructuring costs/amortization (DJ, 4
analysts): GBP83.5M (GBP72.5M)
Note: The company issued a guidance figure of GBP84M-87M in its June trading statement. An update on the company's restructuring is expected aas well as details of further M&A activity after the acquisition of Truflo.
Intertek Group (ITRK.LN): 1H Earnings
Average pretax profit (Co, 6 analysts): GBP43.7M (GBP38.5M)
Average EPS: 20p (18.7p)
Note: Analysts expect strong revenue growth and a "reassuring outlook." Will focus on margins and margins outlook but say organic sales growth for Labtest is likely "to be uninspiring due to weak Textile year on year revenue."
Taylor Nelson Sofres (TNN.LN): 1H Earnings
Average EBITDA (DJ, 5 analysts): GBP39M (GBP41.8M)
Average Diluted EPS: 4.3p (N/A)
Average sales: GBP474M (GBP460M)
Note: Analysts will look for an update on the performance of the US business following a profit warning in July, with company reporting pricing pressure caused by competition from low-cost Internet based services. Update will also be sought on the impact of a restructuring of the US business under a new management team.
OTHER SCHEDULED EVENTS:
Amlin (AML.LN): 1H Earnings
Corporate Synergy (CSG.LN): 1H Earnings
Goldenport Holdings (GPRT.LN): 1H Earnings
Lookers (LOOK.LN): 1H Earnings
Murgitroyd (MUR.LN): FY Earnings
Pace Micro Technology (PIC.LN): FY Earnings
Precious Woods Holding (PRWN.EB): 1H Earnings
Robert Walters (RWA.LN): 1H Earnings
SDL (SDL.LN): 1H Earnings
Tarsus (TRS.LN): 1H Earnings
The Vitec Group (VTC.LN): 1H Earnings
Whitbread (WTB.LN): EGM
WSP Group (WSH.LN): 1H Earnings
ZI Medical (ZIM.LN): 1H Earnings
AXA Property Trust (APT.LN): 1Q 2006 Dividend Payment Date
Microgen (MCGN.LN): 1H 2006 Dividend Payment Date
Nutreco Holding (37540.AE): Special Ex-Dividend Date
Tribune UK Tracker (TBUK.LN): 1H 2006 Dividend Payment Date
Vastned Retail (28891.AE): 1H 2006 Dividend Payment Date
(END) Dow Jones Newswires
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