US SUMMARY: Economic Worry Kills Stock Rally
DJIA 10883.35 gain 24.73 up 0.2%
NASDAQ 2255.87 loss 11.11 dn 0.5%
S&P 500 1263.78 loss 1.87 dn 0.2%
Dow Future 10902.46 gain 6.00 up 0.1%
NASDAQ Future 1661.50 gain 2.50 up 0.2%
S&P Future 1265.75 0.00 0.0%
10-Yr US Treasury: 4.54% unchanged
(Futures values as of 0550 GMT)
Wall Street's momentum sagged Thursday, leaving the major indexes mostly lower after investors' enthusiasm over a six-year low in unemployment claims and strong corporate earnings waned in the face of longer-term economic worries. Treasurys ended mixed.
STOCKS: With lingering questions remaining about the health of the economy, interest rates, oil prices and geopolitics, investors took profits in late trading, focusing on the energy and technology sectors that led the most recent rallies.
"Most companies have already reported their earnings, and I think we're getting to a quiet period where it can be tough to keep anything positive going," said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers. "There's still a lot out there to deal with."
While weekly first-time jobless claims rose slightly, Wall Street was initially encouraged after the Labor Department said the four-week moving average of claims, a strong indicator of the labor market's health, fell to its lowest level since April 2000. Positive earnings reports from Best Buy Co. Inc. and Aetna Inc. also cheered would-be buyers for much of the session.
Crude prices edged higher after the Energy Department reported a drop in U.S. energy stockpiles Wednesday. A barrel of light crude settled at $62.62, up 7 cents, on the New York Mercantile Exchange.
Business software maker Oracle Corp. will cut about 2,000 jobs, or more than 3 percent of its work force, as it digs for bigger profits from its recent $5.85 billion takeover of Siebel Systems Inc.
BONDS: A strong auction of 30-year bonds, the first by the Treasury Department since 2001, helped lift other long-dated government bond prices Thursday, but shorter-dated maturities ended close to their starting mark.
The split price action capped a volatile day where the bond auction was the main show, a Fed official signaled vigilance on inflation, and the economic data fell by the wayside as a matter of market interest.
Andy Brenner of Investec said the sale proved a "hugely bullish auction" and that the difference between the current long bond and the new issue is widening as a result.
Meanwhile, David Ader of RBS Greenwich said the auction showed a "clean story" of "very strong retail demand." He noted that the bid-to-cover ratio, a gauge of investor interest, was, at 2.05, "modest" and a surprise given the heft of the indirect bidding.
The gains in the long end of the market came just after the market got another warning from a Federal Reserve official that more rate hikes could well lie ahead from the central bank.
Federal Reserve Bank of Chicago President Michael Moskow said that while he expects inflation to remain contained, price pressures were near "the upper end" of his comfort zone. As for the central bank's rate policy, "my views about policy will depend importantly on how various cost factors play out and affect the outlook for inflation," he said.
"If inflation or inflation expectations were to rise persistently, then policy clearly would have to be tightened further," Moskow said. The Fed is widely expected to hike rates again when it next meets in late March, the first policy meeting that will convene under the command of new chairman Ben Bernanke. Most observers expect the Fed to lift its current 4.50% funds rate target to 4.75%. In that environment, traders and investors say long-dated securities are more attractive relative to issues like the two-year note.
ASIAN SUMMARY: Tokyo Shares Fall, Reversing Early Gains
USD-Yen 117.96 loss 0.70 dn 0.7%
AUD-USD 0.7402 0.0000 0.0%
Nikkei 225 16265.97 loss 173.70 dn 1.1%
Hang Seng 15403.33 loss 10.10 dn 0.1%
Taiwan Index 6594.92 loss 35.21 dn 0.5%
S.Korea Kospi 1333.03 gain 11.37 up 0.9%
JGB Yield 1.5750% up 0.0200%
(All values as of 0550 GMT)
STOCKS: Japanese stocks fell Friday, led by real estate and shipping issues. The downturn erased earlier gains.
BONDS: Prices of Japanese government bonds fell on worry that the Japanese central bank will tighten its exceedingly loose monetary policy soon.
But Japanese Prime Minister Junichiro Koizumi said Friday the Bank of Japan should confirm that deflation has abated before deciding on ending its current policy.
OIL: Crude futures rose 22 cents to $62.84 in Asian trading.
EUROPEAN OUTLOOK: Stocks Likely To Open Lower
Euro-USD 1.1992 gain 0.0011 up 0.1%
Stlg-USD 1.7466 gain 0.0056 up 0.3%
USD-Franc 1.2980 loss 0.0017 dn 0.1%
(All values as of 0550 GMT)
European Stocks are headed lower to start, while government debt prices rise slightly. The euro opens steady against the dollar.
STOCKS: European markets face moderate losses at the open as investors lock-in profits.
U.K. spreadbettor CMC Markets is calling the FTSE down 24 points at 5785, the DAX down 38 at 5706 and the CAC down 31 at 4925.
European stocks pushed higher on Thursday, helped by a positive start to trading on Wall Street, gains in the energy and metals sectors, and some well-received earnings reports from Unilever and BG Group.
"Corporate earnings growth remains supported by the outlook for global economic activity, which is improving," said Mike Lenhoff, chief market strategist at Brewin Dolphin Securities.
Lenhoff added that earnings, coupled with generally favorable valuations for equity markets, are helping to nourish corporate activity. "The combination is helping to underpin equity markets and should drive them higher," he said.
BONDS: Prices of government debt may open slightly higher, as the market continues to price in an ECB rate hike next month.
Analysts said recent comments by the ECB had prepared the market for another rate hike in March. "Increased vigilance on inflation, stronger recovery prospects and warnings about being poised to strike at any time, all add up to an imminent rate hike next month," said David Brown, chief European economist at Bear Stearns.
ECB governing council member Nicholas Garganas and the central bank's chief economist Otmar Issing both struck an upbeat tone about the euro-zone's economic recovery, while at the same time pointing to growing inflationary pressures.
And, in its monthly bulletin for February, the ECB also reiterated that vigilance is required given upside risks to price stability.
European government bonds sent mixed signals Thursday as gilts outperformed their euro-zone counterparts on differing interest rate outlooks.
FOREX: The euro opens little changed against the dollar as players ponder the widening U.S. trade deficit.
T.J. Marta, senior currency strategist at RBC Capital Markets in New York, said in a note that "one reason for (the) lack of FX price action might be that the U.S. trade balance provides critical event risk."
The dollar rose versus the yen but was modestly lower against the euro Thursday in a calm session that saw investors steer clear of adopting new positions ahead of U.S. trade data Friday.
CALENDAR: Friday, Feb. 10: France Industry; US Trade
GMT Expected Previous
0700 GER Jan CPI, final -0.5%MM -0.5%MM
0745 FRA Dec Mfg Production +0.3%MM +2.6%MM
0745 FRA Dec Indus Production Index +0.3%MM +3.1%MM
0745 FRA Dec Foreign trade -2.6B -3.1B
0750 FRA 4Q GDP, flash estimate +0.4%QQ +0.7%QQ
1100 FRA Dec OECD Composite Leading Indicators
1330 US Dec Trade Deficit $64.7B $64.21B
1900 US Jan Tsy Budget Statement +$10B +$10.06B
N/A FRA Monthly oil market report
N/A GER German Finance Agency calls for bids on
EUR6B auction of 6-month-Bubills
-By Dennis Baker; Dow Jones Newswires; email@example.com
(MORE TO FOLLOW) Dow Jones Newswires
February 10, 2006 01:00 ET (06:00 GMT)
Copyright (c) 2006 Dow Jones & Company, Inc.
10 Feb 2006 06:00 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events
Assa Abloy (ASSA-B.SK): 4Q Earnings
Average pretax profit (SME Direkt, 13 analysts): SEK978M (SEK802M)
Average sales: SEK7.23B (SEK6.26B)
Note: Earnings are expected to have been boosted by 6% organic growth as well as by cost savings. Main focus is on whether new CEO Johan Molin will improve profitability by further restructuring initiatives. Eyes also on costs result. Report is due at 0730 GMT.
Coloplast (COLO-B.KO): 1Q Earnings
Average operating profit (Co, 10 analysts): DKK256M (DKK180M)
Average sales: DKK1.7B (DKK1.57B)
Note: Sydbank analyst Brian Kirk notes the results for 1Q '05 fiscal year were exceptionally low due to stock reductions. Kirk, who rates the shares neutral, says he's keen to hear more on the impact of UK healthcare reform and how the establishment of a factory in China is proceeding.
De Beers (AAL.LN): FY Earnings
Note: De Beers, the 45% owned diamond unit of Anglo American (AAUK) is expected to contribute $426M of headline earnings, or earnings before items and after tax and minority interests, up 49% from the $286M contribution last year, according to 13 analysts surveyed by the company. Gain seen predominantly on increased prices, with some contribution from higher volumes. Analysts watching for update on the US jewelry market. Anglo American releases De Beers' earnings at 0730 GMT.
Puma (PUM.XE): FY Earnings
Average net profit (DJ, 8 analysts): EUR279M (EUR257.3M)
Average sales: EUR1.73B (EUR1.53B)
Note: Company has said it's seeing strong sales due to sporting events including the soccer World Cup, being hosted by Germany later this year.
TeliaSonera (TLSN.SK): 4Q Earnings
Average net profit (SME Direkt, 15 analysts): SEK3.14B (SEK2.09B)
Average EBITDA excluding non-recurring items: SEK7.56B (SEK7.46B)
Average revenues: SEK22.2B (SEK21.3B)
Note: Profit rise due to fewer extraordinary writedowns of assets. Outlook for 06, including investments, is eyed by market.
Unaxis (UNAX.VX): 4Q Sales
Average sales (DJ, 4 analysts): CHF442.8M (CHF347M)
Note: Profit rise on cyclical recovery of semiconductor industry and easy comparisons. Order intake seen +36% at CHF426.8M versus CHF313M. Focus on profitability, updates on strategy after Kovats' departure as chairman.
OTHER SCHEDULED EVENTS:
Alma Media Corportation (ALN1V.HE): FY Earnings
Amer Sports (AMEAS.HE): FY Earnings
Anglo Ashanti (AU): 4Q Earnings
Aquarius Platinum (AQP.AU): 1H Earnings
Astaldi (AST.MI): 4Q Earnings
Bank CA St Gallen (BCAN.EB): FY Earnings
Barbara Bui (6278.FR): FY Revenue
Boss Media (BOSS.SK): FY Earnings
BRE (BRE): 4Q Earnings
Bricorama (5442.FR): FY Revenue
Buzzi Unicem (BZU.MI): FY Earnings
Cermaq (CEQ.OS): FY Presentation
Cloetta Fazer (CFA-B.SK): FY Earnings
Compass Group (CPG.LN): AGM
Ems-Chemie Holding (EMSN.VX): FY Analyst Meeting
Euro Disney (12587.FR): AGM
Eurocommercial Properties (28887.AE): 1H Earnings
Flughafen Wien (VIEV.VI): January Traffic Data
Groupe Bourbon (454887.FR): 4Q Revenue
Herald Investment Trust (HRI.LN): FY Earnings
I.NET (INE.MI): 3Q Earnings
Iliad (403591.FR): FY Revenue
Isagro (ISG.MI): 4Q Earnings
Kemira GrowHow (KRA1V.HE): FY Earnings
Laurent-Perrier & Co (686448.FR): 3Q Revenue
Lectra (6548.FR): FY Analyst Meeting
Merrill Lynch New Energy (MNE.LN): AGM
Merrill Lynch World Mining (MLW.LN): FY Earnings
Norsk Vekst (NOV.OS): FY Earnings
Opg Groep (37641.AE): FY Earnings
Optimail (OPTI.YY): FY Earnings
Otor (6443.FR): 4Q Revenue
Phoenix Mecano (PM.EB): FY Earnings
Q-Med (QMED.SK): FY Earnings
Qinetq : IPO Pricing/Dealings Start
Resco (RESC-B.SK): FY Earnings
SAS (SAS.SK): FY Analyst Meeting
SEB (SEB-A.SK): FY Analyst Meeting
Soditech (7832.FR): 4Q Revenue
Software (SOW.XE): 4Q Earnings
Sysopen Digia (SYS1V.HE): FY Earnings
Talentum (TTM1V.HE): FY Earnings
Tessi (4468.FR): 4Q Revenue
Viking Telecom (VIKT.SK): 4Q Earnings
Wihlborgs Fastigheter (WIHL.SK): FY Earnings Conference
Witan Investment Trust (WTAN.LN): FY Earnings
Yit-Yhtyma (YTY1V.HE): FY Analyst Meeting