US SUMMARY: Stocks Stumble On US Economy Fears
DJIA 11297.90 loss 41.94 dn 0.4%
NASDAQ 2134.66 loss 15.36 dn 0.7%
S&P 500 1292.99 loss 5.83 dn 0.5%
Dow Future 11328.00 loss 6.00 dn 0.1%
NASDAQ Future 1558.00 loss 0.25 0.0%
S&P Future 1296.75 loss 1.00 0.0%
Euro-USD 1.2767 loss 0.0016 dn 0.08%
10-Yr US Treasury: 4.81% unchanged
(Futures values, Treasury, EUR/USD Data as of 0450 GMT)
Wall Street fell for a third straight session Wednesday as fresh signs of a housing slump triggered concerns that the economy is slowing too fast and could erode corporate profits. The dollar and Treasurys were mixed, and oil dipped.
STOCKS: Investors believed that housing sales might be dropping more rapidly than anticipated, and theorized that a soft landing for the U.S. economy might be more difficult to achieve. The report from the National Association of Realtors that sales of previously owned homes dropped in July to a pace of 6.33 million units, the lowest since January 2004.
The data comes after a Federal Reserve official hinted Tuesday that higher interest rates may still be needed to tame inflation, a move that could curtail consumer spending. Retailers and homebuilders, which have the most exposure to consumers, led major indexes lower.
"Housing is a relatively important number and clearly an area that has been a driver for the economy, and now we're trying to figure out if the Fed is done or if it needs to do more," said John Caldwell, chief investment strategist for McDonald Investments, the securities unit of Cleveland-based KeyCorp.
"The focus now is on housing as the market shifts away from inflation and toward growth," he said. "The question is has the Fed done too much, and is housing going to lead us down."
U.S. homebuilder stocks, already trading near yearly lows as housing sales remain depressed this summer, pulled back after the data was released.
FOREX: The dollar is mixed after it exited the New York session Wednesday little changed on a day of choppy trading, despite the lower housing figures.
Andrew Busch, global market strategist at BMO Capital Markets said rising geopolitical tension between the U.S. and Iran may have led to some safe-haven flows into the dollar. News reports that Iran may have made a breakthrough in its nuclear research caused some market jitters, Busch said. The reports were compounded as the Bush administration said an offer by Iran to hold negotiations on its nuclear weapons fell short of U.N. demands.
BONDS: An unconventional reaction to weak home sales data Wednesday saw an initial selloff in government bonds, though they recovered later in the session to remain unchanged on the day
But Michael Cheah, portfolio manager at AIG SunAmerica Asset Management, said inventories data are a more reliable reflection of an ailing market.
At 7.3 months of supply, inventories are now at their highest level since 1993, suggesting that owners are having to keep their houses on the market longer to sell at their preferred price.
"When inventories shoot up, there's a lot of supply of existing homes for sale, which adds to impression that things are getting worse, particularly as we're now at the peak of the homebuying season," Cheah said.
Thursday brings new home sales figures, and economist await another lackluster reading. But Lundy Wright, head of Treasurys trading at Nomura Securities, played down the likely market impact.
"A strong print would defy belief," Wright said. "Housing data has run its course at this point - the story has been played for two years, and that story is fully priced into the market," he added.
OIL: Prices declined after U.S. government data showed rising supplies of gasoline as refiners increased output. Light sweet crude for October delivery fell $1.34 to $71.76 a barrel on the New York Mercantile Exchange.
ASIAN SUMMARY: Worry About U.S. Slowdown Hits Shares
USD-Yen 116.40 loss 0.06 dn 0.04%
AUD-USD 0.7609 loss 0.0017 dn 0.3%
Nikkei 225 15981.19 loss 181.80 dn 1.1%
Hang Seng 17033.67 loss 54.72 dn 0.3%
S&P/ASX 200 4991.80 loss 56.20 dn 1.1%
Taiwan Index 6534.03 loss 22.30 dn 0.3%
S.Korea Kospi 1311.71 loss 13.24 dn 1.0%
JGB Yield 1.8100% up 0.0150
(All values as of 0450 GMT)
STOCKS: Asian stocks headed lower Thursday after overnight declines in U.S. markets, with blue-chips including Sony and Toyota Motor dropping sharply on worries about slowing demand in the U.S.
FOREX: The yen is little changed against the dollar but the greenback could fall swiftly this week and next, as far as Y114.00, if Thursday's U.S. economic figures come in very weak, dealers said.
BONDS: Prices of Japan's government debt are little changed, with the Nikkei lower sparking extra demand for public debt issues. Japan's CPI report due Friday will keep investors sidelined.
OIL: Prices rose 6 cents to $71.82, as the market largely shrugged off more bad news from BP. Production at the Prudhoe Bay oil field was reduced by another 90,000 barrels when a problem was discovered in a compressor, according to a spokesman for BP.
METALS: Spot gold fell $2 to $620.90, with gold mining shares also lower. Dealers said support at $620.00 needs to hold to prevent more substantial losses. Copper prices are slightly higher, with good technical support at $7,600, But "we would be wary about chasing the upside at this stage," says Man Financial, as the Escondida strike in Chile is showing signs of moving toward a settlement.
EUROPEAN OUTLOOK: Positive Start For Shares Despite US Fears
Euro-USD 1.2767 loss 0.0016 dn 0.08%
Stlg-USD 1.8912 loss 0.0020 dn 0.1%
USD-Franc 1.2370 gain 0.0012 up 0.1%
(All values as of 0450 GMT)
European shares are set to gain at the open, with government debt little changed and the euro slightly lower. STOCKS: European markets are likely to buck the global trend and start the session higher, as investors ponder the endurance of the U.S. and European economies.
U.K. spreadbettor CMC Markets is calling the FTSE up 10 points at 5870, the DAX up 19 at 5795 and the CAC up 14 at 5097.
European stock markets ended lower Wednesday, as declines in the technology sector and concerns about U.S. economic strength counterbalanced the impact from better-than-expected results at Nestle, the Swiss food and beverages giant.
FOREX: The euro is lower against the dollar and yen, on growing doubt about more European Central Bank rate hikes by year end. The euro could fall further if the German Ifo comes in weak at 0800 GMT.
Investors then will await more closely tracked U.S. data due out Thursday, including durable goods orders and a new home sales report. "The new home sales report due out (Thursday) is arguably more important in terms of what it says about the outlook for the construction industry and economic growth," said Greg Anderson, currency strategist at ABN Amro.
BONDS: Thursday will be a busy day for fixed-income markets, with a slew of economic data from both sides of the Atlantic on the agenda.
In Germany, the state of North-Rhine Westphalia is scheduled to release its consumer price index for August some time in the morning, with the market eager to see if inflationary pressure in Europe's biggest economy has further receded. The consensus forecast of analysts in a Dow Jones Newswires poll is that the monthly rate will be flat and the annual rate will have risen by 1.8% in August.
Thursday will also see the release of the Ifo business survey, which the market will closely scrutinize for hints on the country's future business cycle. Tuesday's slump in the ZEW index fueled speculation that the ECB might keep rates steady to ensure Europe's upswing. Economists expect the Ifo to decline to 104.8 from July's 15-year high of 105.6.
"In my opinion, the market will only react to the data if there's a real surprise," said DZ Bank's Bernd Weidensteiner, fixed-income strategist. Otherwise, profit-taking might continue to dominate Thursday's session, said Weidensteiner, with the market being braced for a weaker reading and bonds trading at relatively expensive levels.
Later in the session, U.S. durable goods' orders and new homes sales will attract the markets' attention as they search for further clues on the state of the U.S. slowdown.
Prices of European government bonds were lower Wednesday on profit-taking, shrugging off a set of weak U.S. economic data.
CALENDAR: Thursday, Aug 24: German Ifo; US Durables
GMT Expected Previous
0600 GER 2Q GDP +0.9%QQ +0.7%QQ
0800 GER Aug Ifo Business Climate 104.8 105.6
0830 UK Jul Motor Vehicle Production
1230 US Jul Durable Goods -0.8% +2.9%
1230 US Aug 19 Jobless Claims +3K -10K
1400 US Aug 12 DJ-BTMU Business Barometer unch
1400 US Jul New Home Sales -2.7% -3.0%
1430 US Aug 18 US Energy Dept Natural Gas Stocks +38
2030 US Aug 18 Money Supply
2330 JPN Aug Tokyo CPI +0.2%YY +0.4%YY
2330 JPN Jul Nationwide CPI +0.5%YY +0.6%YY
-By Dennis Baker; Dow Jones Newswires; email@example.com
(MORE TO FOLLOW) Dow Jones Newswires
August 24, 2006 01:46 ET (05:46 GMT)
Copyright (c) 2006 Dow Jones & Company, Inc.
24 Aug 2006 05:46 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events
Agfa-Gevaert (AGFB.BT): 2Q Earnings
Average net profit (DJ, 6 analysts): EUR21.3M (EUR22M)
Average sales: EUR888.7M (EUR849M)
Note: Analysts keen to see if the effects of the company's price hikes - aimed at offsetting the soaring prices of its raw materials silver and aluminum - are beginning to show in improved sales and margins. Focus is also on expected details of Agfa's EUR250M cost savings plan.
Basilea (BSLN.EB): 1H Earnings
Average net loss (DJ, 3 analysts): CHF34.2M (CHF20.5M net loss)
Average sales: CHF3.3M (CHF19.6M)
Note: net loss is seen widening from a year ago due to higher research and development costs - particularly for its lead compound Ceftobiprole. Revenues seen dropping from last year's figure on the absence of an CHF17.9M R&D and expense reimbursement paid by Johnson & Johnson (JNJ) in the first six month of 05. Analysts eye comments on the further timing of Basilea's R&D pipeline, any update on its plans to partner its anti-fungal BAL8557. Basilea will release results at 0515 GMT.
Holcim (HOLN.VX): 1H Earnings
Average net profit (DJ, 4 analysts): CHF779M (CHF615M)
Average operating profit: CHF1.95B (CHF1.45B)
Average sales: CHF10.89B (CHF7.87B)
Note: Sales are seen +38%, operating profit +35%. Improvement is seen in price increases, strong demand and beneficial earnings effects from newly-acquired companies. The bottom line estimate is seen tricky because minority interest is hard to assess. The company is expected to reiterate it aims to grow FY EBITDA by more than 5%.
Kudelski (KUD.VX): 1H Earnings
Average net profit (DJ, 6 analysts): CHF58M (CHF43.2M)
Average sales: CHF331.6M (CHF330.2M)
Note: Sales are driven by an estimated CHF50 million gain on the sale of Ticketcorner that the company has said it would book as revenue. The year-ago figure was boosted by a one-time effect of a swap-out of over 6 million digital television smartcards for a newer model, for an estimated impact of around CHF60 million. Analysts will look out for a clear-cut guidance on 2006, as well as an update on the company's intended switch of business model to renting out its cards
Ladbrokes (LAD.LN): 1H Earnings
Average EBIT (Co, 11 analysts): GBP150M (GBP134.7M)
Forecast range: GBP138M - GBP158M
Note: Analysts focus on EBIT following the separation of the gaming operations from hotels during the period. Earnings are expected to have been underpinned by the World Cup but will also look strong against weak comparable results last year. Analysts expect an update on Ladbrokes' review of policy: whether to start accepting US customers on its online gambling sites amid the ongoing regulatory uncertainty and recent demise of BETonSPORTS (BSS.LN). Review follows the GBP3.3 billion sale of the Hilton International Hotel division to its namesake, Hilton Hotel Corp. (HLT)
Rentokil Initial (RTO.LN): 1H Earnings
Average pretax profit (DJ, 3 analysts): GBP102.9M (GBP134.4M)
Note: Poor results are expected due to ongoing company restructuring but the company's forecast for 2H is expected to show the benefits of the recovery strategy.
Rexam (REX.LN): 1H Earnings
Average pretax profit (Co, 9 analysts): GBP138M (GBP141M)
Average EPS: 17.9p (17.8p)
Note: Rexam's Bevcan is suffering from higher aluminum costs in Europe and lower prices in the US, says one analyst. One analyst says he will be looking for an update on Rexam's recent acquisitions in India as well as the outlook for the volumes of cans.
Swatch (UHR.VX): 1H Earnings
Average net profit (DJ, 5 analysts): CHF283.8M (CHF264M)
Average operating profit (DJ, 5 analysts): CHF351.7M (CHF293M)
Average sales: CHF2.23B (CHF1.98B)
Note: The rise in net profit is mainly due to strong demand for its luxury watches. However, net profit will be affected by negative currency effects and the absence of a strong financial result that boosted last year's figures. Operating profit is expected to rise 20% and sales will expand 13%. Analysts will mainly watch for outlook comments and an update on the company's efforts to turn around its low-price watch segment.
Umicore (UMI.BT): 1H Earnings
Average net profit (DJ, 4 analysts): EUR98M (EUR72.9M)
Average sales: EUR3.6B (N/A)
Note: Net profit would be around EUR90M, up 24%, if not for the EUR9M sale of Sibeca, a Congolese diamond producer. "The fundamentals are positive," says Sven Smit at Cheuvreux, who has a EUR138 target price and an outperform rating on the stock. "They've locked in rising zinc prices and their recycled precious metals business is growing strong."
OTHER SCHEDULED EVENTS:
Cosmote Mobile Telecommunications (COSMO.AT): 1H Earnings
Farstad Shipping (FAR.OS): 1H Earnings
Fielmann (FIE.XE): 1H Earnings
IQE (IQE.LN): 1H Earnings
JM (JM.SK): 1H Presentation
John Laing (LNGO.LN): 1H Earnings
Nordex (NDX1.XE): 2Q Earnings
Norgani Hotels (NORGAN.OS): 2Q Presentation
Odfjell (ODF.OS): 2Q Earnings
Pax-Anlage (PAXN.EB): 1H Earnings
Playtech (PTEC.LN): 1H Earnings
Porceleyne Fles (37866.AE): 1H Earnings
Sensys Traffic (SENS.SK): 1H Earnings
Solon AG fur Solartechnik (SOO1.XE): AGM
Valora (VALN.EB): 1H Earnings
Vestas Wind Systems (VWS.KO): 1H Earnings
Brunner Investment Trust (BUT.LN): 1H 2006 Dividend Payment Date
Charter Pan-European Trust (CPE.LN): 1H 2006 Dividend Payment Date
Lagercrantz Group (LAGR-B.SK): FY 2005 Ex-Dividend Date
(END) Dow Jones Newswires