US SUMMARY: Investors Remain Reluctant
DJIA 10798.27 gain 4.65 up 0.04%
NASDAQ 2258.80 loss 3.78 dn 0.2%
S&P 500 1265.02 gain 0.99 up 0.08%
Dow Future 10824.00 gain 3.00 0.0%
NASDAQ Future 1670.50 gain 1.00 up 0.1%
S&P Future 1269.25 gain 0.50 0.0%
10-Yr US Treasury: 4.54% up 0.01
(Futures values as of 0550 GMT)
Stocks ended a listless session little changed Monday as cautious investors found few reasons to put money into the market, even as upbeat remarks on Alcoa Inc. and General Motors Corp. helped prop up the Dow Jones industrials.
STOCKS: Monday's aimless trading followed steep losses late last week, with Wall Street still uneasy about the possibility of more interest rate hikes from the Federal Reserve. On Friday, upbeat employment data fueled worries about economic strength, another reason for the Fed to stay its course. Treasurys weakened in price on new supply concerns.
Art Hogan, chief market strategist for Jefferies & Co., said data on jobless claims Thursday should draw a reaction from traders as they try to decipher the Fed's stance on inflation and the pace of domestic employment growth. For now, however, Wall Street will be idle without much news to drive it, he said.
"I think we're going through this natural vacuum in the news cycle where we have a quiet economic calendar and the fourth-quarter earnings reports are slowing down," Hogan said. "It's difficult to generate any interest in the market."
News that Iran has stopped cooperating with U.N. officials over its nuclear arms program sparked fears about disruptions from one of the world's biggest oil suppliers and drove crude futures above $66 early in the session. However, a barrel of light crude slid 26 cents to settle at $65.11 on the New York Mercantile Exchange.
Walt Disney Co.'s net income rose 7% in its fiscal first quarter, as strong performances from its U.S. theme parks and its ABC television network offset another tough quarter for the company's movie studio. Disney also announced a $2.7 billion deal to sell the bulk of its radio assets to Citadel Broadcasting Corp.
After the close of trading Tuesday, Cisco is expected to release its fiscal second-quarter results. The numbers could set the tone for tech trading on Wednesday.
BONDS: The 30-year Treasury bond headed higher Monday while the rest of the government securities market wilted, with looming supply and the outlook for interest rates the chief factors driving trade.
As the economic data calendar enters a dry spell, analysts say the impending sale of $48 billion in new government debt this week is weighing on two- through 10-year notes.
While the total amount of new government debt to be auctioned includes $14 billion of 30-year bonds Thursday, the novelty of this maturity - which hasn't been sold since 2001 - is drawing buyers off the sidelines.
"Some people are worried, given the recent price action and the stellar out-performance of the 30-year sector, that they are missing something and are rushing to get involved now," said Martin Mitchell, manager of government and agency debt trading at Stifel Nicolaus & Co. in Baltimore.
"There's a lot of concern about how well the auctions are going to go especially with the inverted curve we have right now," said Mary Ann Hurley, vice president of fixed income trading at D.A. Davidson in Seattle.
ASIAN SUMMARY: Tokyo Shares Sag On Profit-Taking
USD-Yen 118.94 loss 0.08 dn 0.07%
AUD-USD 0.7425 gain 0.0008 up 0.1%
Nikkei 225 16738.73 loss 9.03 dn 0.1%
Hang Seng 15479.38 loss 68.68 dn 0.4%
Taiwan Index 6720.08 gain 0.12 0.0%
S.Korea Kospi 1334.07 loss 7.57 dn 0.6%
JGB Yield 1.5700% up 0.0200
(All values as of 0550 GMT)
STOCKS: Tokyo stocks edged lower Tuesday, after the market touched a five-year high Monday. Investors took some profit in the major sectors.
BONDS: Prices of Japanese government bonds were lower on some caution ahead of the U.S. auction Thursday. Investors want to see how strong demand is for more government paper, dealers said.
OIL: Crude oil prices declined 30 cents to $64.81 as traders' fears eased over possible disruptions to Iranian oil supply linked to its nuclear ambitions.
"Between now and when the U.N. Security Council actually takes up the issue there will be some saber-rattling, but in the near term traders know there won't be any disruption to supply from it," said energy analyst Victor Shum of Purvin & Gertz in Singapore.
EUROPEAN OUTLOOK: Stocks Set For Modest Gains
Euro-USD 1.1975 gain 0.0010 up 0.08%
Stlg-USD 1.7491 gain 0.0015 up 0.08%
USD-Franc 1.3006 loss 0.0002 dn 0.02%
(All values as of 0550 GMT)
Prices of European stocks should open in positive territory, with government debt and the euro little changed.
STOCKS: European markets should enjoy a mildly firmer start to the session on an improved outlook for the U.S. open.
U.K. spreadbettor City Index is forecasting a 10-point rise on both the FTSE and CAC to 5782 and 4944 respectively, with the DAX up 15 to 5681.
The overriding theme of the markets, however, remains M&A.
"We expect takeover activity to continue to be buoyant in 2006," said Kamran Butt, at brokerage Louis Capital Markets. "Financing is still cheap in euroland and this is seen as the main driver for the markets."
"M&A in our opinion will be the single most important driver of relative performance in 2006, both on the positive side for possible targets and on the negative side for perceived acquirers," said Butt.
European stocks climbed on Monday as takeover speculation in the banking sector and elsewhere helped offset some mixed corporate news.
BONDS: Prices of euro zone government bonds may open slightly lower, while gilts tug higher. But analysts expect trading to remain subdued.
Meanwhile, the British Retail Consortium's monthly survey showed Tuesday that same-store sales in January were up 0.2% on the year, making it the weakest start to a year since the survey was first conducted in 1995. The increase in sales was significantly weaker than expected. Economists surveyed by Dow Jones Newswires had estimated that same-store sales rose 1.5% on the year.
Although data fueled renewed speculation about a rate cut by the Bank of England, HSBC expects the central bank to keep rates on hold at their meeting Thursday.
European government bond prices rose Monday after European Central Bank President Jean-Claude Trichet said the growth potential in the euro zone has declined.
But a reiteration of the central bank's stance that the ECB is ready to act on interest rates at any time upon receipt of new information capped the rise in prices.
FOREX: The euro opens little changed against the dollar, which remains supported by interest rates.
"The dollar is staying supported for now by expectations that the Fed will keep hiking interest rates under (new) Chairman (Ben) Bernanke. This theme will dominate in coming weeks, particularly against the yen and pound," said analysts at UBS in Stamford, Conn.
"The dollar has continued to grind out more strength and we doubt this is likely to stop. The source of strength should be perceptions of U.S. monetary policy while darker news for the dollar, such as another large trade deficit on Friday, should be brushed under the carpet," said Steve Barrow, chief currency strategist at Bear Stearns in London in an email.
The dollar advanced Monday following Friday's gains on optimism that the U.S. economy is strong and Federal Reserve policymakers will continue to raise interest rates.
CALENDAR: Tuesday, Feb 7: German Industry, US Credit
GMT Expected Previous
0745 FRA FY Budget Balance -43.9B
0930 UK 4Q Mergers & acquisitions involving UK
1100 GER Dec Indus Output +0.9%MM -0.3%MM
1245 US Feb 4 ICSC Store Sales Index -1.1%
1355 US Feb 4 Redbook Retail Sales Index -0.2%
1430 US Tsy Secy Snow tesifies before US Senate
Finance Committee on FY07 budget in
2000 US Dec Consumer Credit +5.0B -$649M
2200 US Feb 5 ABC/Washington Post Consumer Confidence -9
N/A UK Jan KPMG Retail Sales Monitor
Akzo Nobel (AKZOY): 4Q Earnings
Average net profit (DJ, 4 analysts): EUR195M (EUR153M)
Note: Excluding exceptional items analysts note that net profit dropped to EUR140M. Profit seen down on falling Organon sales, lower revenue of key product Remeron and higher R&D costs. Analysts also expect no or a very cautious outlook for 06, but probably more restructuring measures to be announced and are hoping to get more news about new product development. Figures due at 0700 GMT.
Amvescap (AVN.LN): FY Earnings
Average pretax profit (DJ, 3 analysts): GBP257.10M (GBP269.80M)
Forecast range: GBP255M - GBP258.2M
Note: Lower profits likely due to outflows from AIM business in the US. Analysts watching for recently-appointed CEO Martin Flanagan's comments on cost-cutting, profit margins, stemming outflows, and impact of January 23 PowerShares Capital Management acquisition. Amvescap to report for first time in US dollars. Results will be for the year ended December 31, 05. Results due at 1200 GMT.
Aviva (AV.LN): FY New Business Sales
Average total life and pensions new business sales (Co, 9 analysts): GBG22.12B
Forecast range: GBP21.68B - GBP22.55B
Note: Analysts will watch out for outlook comments and the company's performance in fast-growing markets in Southern Europe.
BP (BP.LN): 4Q Earnings
Average "clean" net profit (DJ, 5 analysts): $5.859B ($4.765B)
Note: "Clean" net profit excludes exceptional items. Higher oil and gas prices are expected to more than offset lost output from US hurricanes. Teather & Greenwood sees '06 share-buyback program possibly at $16B. Teather rates BP a buy, 655p target, saying its a preferred play among integrated oil companiess. ) Results due at 0730 GMT.
KPN (KPN): 4Q Earnings
Average net profit (DJ, 5 analysts): EUR343M (EUR539M)
Average sales: EUR3.11B (EUR3.01B)
Note: Profit hit by continued margin pressure due to severe competition in domestic market and mobile terminating rate cuts. Sales growth of Mobile unit, partly due to consolidation of Telfort, seen largely offset by fixed division sales decline. Analysts to focus on performance of German Mobile unit E-Plus, KPN's guidance for 06. Results due at 0700 GMT.
Mobistar (MOBB.BT): FY Earnings
Average net profit (Co, 17 analysts): EUR271M (EUR252.8M)
Average sales: EUR1.49B (EUR1.39B)
Note: While these are solid results and in line with the company's guidance, analysts are wondering whether it can keep the performance up in the coming year. "The focus will be on revenue guidance for 2006, as the market is reaching maturity and competition intensifies," said Nicolas Saillez at brokerage ING.
He says he will be happy with a guidance of 5% top-line growth for 2006 and a drop of 1% or so in EBITDA margin for 2005. However, if the company falls short of that it could trigger some re-ratings, he said. He has a hold rating on the stock and a EUR70 target price.
Another key question hangs on the company's dividend policy this year. Mobistar is expected to ring up a cash pile of around EUR200M and has ruled out share buybacks. Analysts are forecasting a dividend of up to EUR3 a share or 70% of the cash to be returned to shareholders.
Publicis Groupe (PUB): 4Q Revenue
Note: Publicis expected to report 4Q '05 organic revenue growth of between 8% and 9% after two quarters of new business wins, a Dow Jones survey of three analysts shows. FY '05 revenues seen +6.5% at EUR4.08B versus EUR3.83B.
Yell Group (YELL.LN): 3Q Earnings
Average EBITDA (Co, 6 analysts): GBP345M (GBP286M)
Average sales: GBP1.1B (GBP897.9M)
Note: Analysts will be looking for guidance on growth of US directories business, purchased in 05, along with the implications of the Competition Commission's enquiry into the UK's classified directories market.
OTHER SCHEDULED EVENTS:
AcandoFrontec (AFAB-B.SK): EGM
Ales Groupe (5465.FR): FY Revenue
Avenir Telecom (66.5.FR): 2Q Revenue
Basler Kantonal Bank (BSKP.EB): FY Earnings
BE Semiconductor Industries NV (33976.AE): 4Q/FY Earnings
Bilia (BILI-A.SK): 4Q Earnings
Boliden (BOL.SK): FY Earnings
Cybercom Group Europe (CYBE.SK): FY Earnings
Cyberdeck (415415.FR): FY Revenue
Danka Business Systems (DANKY): 3Q Earnings
DICOM Group (DCM.LN): H1 Earnings
Dobbies Garden Centres (DGC.LN): FY Earnings
EasyJet (ESY.LN): January Traffic Data
Enea (ENEA.SK): FY Earnings
Evialis (5440.FR): FY Revenue
Fagerhult (FAG.SK): FY Earnings
Fast Search & Transfer (FAST.OS): 4Q Earnings
GL Trade (7208.FR): FY Revenue
Hitt (35815.AE): FY Earnings
IWKA (IWK.XE): FY Earnings
JPMorgan Fleming Emerging (JMG.LN): 1H Earnings
Kemira (KRA1V.HE): FY Earnings
Know IT (KNOW.SK): FY Earnings
LEM Holding (LEHN.EB): 3Q Earnings
Nobia (NOBI.SK): FY Earnings
Nolato (NOLA-B.SK): FY Earnings
Norwegian Air Shuttle (NAS.OS): January Traffic Data
Perlos (POS1V.HE): FY Earnings
Prevas (PREV-B.SK): FY Earnings
PZ Cussons (PZC.LN): 1H Earnings
Quantica (QTA.LN): FY Earnings
Raysearch Laboratories (RAY-B.SK): FY Earnings
Regent Inns (REG.LN): 1H Earnings
SAS (SAS.SK): January Traffic Data
Saunalahti Group (SAG1V.HE): FY Earnings
SCI Entertainment (SEG.LN): AGM
Solvang (SOL.OS): FY Earnings
Stedim (5326.FR): 4Q Revenue
Subsea 7 Inc (SUB.OS): 4Q Earnings
Sweco (SWEC-B.SK): FY Earnings
Tulikivi (TULAV.HE): FY Earnings
Ultraframe (UTF.LN): AGM
Wartsila Corporation (WRTBV.HE): FY Earnings
Wilhelm Wilhelmsen (WWI.OS): FY Earnings
XP Power (XPP.LN): FY Earnings
Shaftesbury (SHB.LN): Full Year 2005 Dividend Payment Date
Smith (WH) (SMWH.LN): Full Year 2005 Dividend Payment Date
(END) Dow Jones Newswires