US SUMMARY: Tech Sector Worries Sinks Markets
DJIA 11013.18 loss 121.59 dn 1.1%
NASDAQ 2090.24 loss 38.62 dn 1.8%
S&P 500 1258.60 loss 13.92 dn 1.1%
Dow Future 11089.00 gain 6.00 up 0.1%
NASDAQ Future 1517.00 gain 0.25 0.0%
S&P Future 1268.50 gain 0.25 0.0%
Euro-USD 1.2711 gain 0.0014 up 0.1%
10-Yr US Treasury: 5.11% unchanged
(Futures values, Treasury, EUR/USD Data as of 0450 GMT)
Stocks plunged Wednesday as a broker's downgrade of Dell and higher oil prices aggravated Wall Street's worries about a shaky start to second-quarter earnings. Treasurys held steady, while oil and the dollar gained.
STOCKS: An analyst's reduced outlook for Dell drove concerns about the impact of a slowing economy on technology companies, whose shares led the broader market lower and gave the Nasdaq composite index its biggest one-day drop in a month. Meanwhile, rising oil prices intensified the market's inflation jitters.
"We're not out of the inflation woods yet," said Sam Stovall, chief investment strategist with Standard & Poor's U.S. equity research.
After months of intensive focus on the Federal Reserve's interest rate policy, traders have reached a consensus that the central bank will raise rates again when it meets in August.
"We've been totally driven by what the Fed's going to do, but it looks like we've lost that leader," said Scott Merritt, a U.S. equity strategist for JPMorgan Asset Management. "Now it's almost a foregone conclusion that the Fed is done after August and people are trying to find something else to focus on."
FOREX: The dollar is giving up some its gains made Wednesday when the greenback was buoyed by a combination of lukewarm comments on interest rates by Japan's Minister of Finance and U.S. trade data that came in better than expected.
BONDS: Treasury prices ended Wednesday with most notes just slightly lower in price after the market had almost completely retraced losses from earlier in the day.
The bounce in the latter part of the day was in part the result of buying of longer-dated Treasurys by pension funds, said Tom di Galoma, managing director and head of Treasurys for Jeffries & Co. in New York.
Also giving the market a boost, he said, were some flight-to-quality trades based on weakness in equities. "I think there's a lot of geopolitical uncertainty with Iran and what's going on in southern Lebanon, also on the back of the bombings in India," di Galoma said. "So that's why we're at the 5.10% level on 10-year notes."
OIL: The U.S. Energy Department reported that oil inventories dropped by a larger-than-expected amount last week. The news sent crude oil futures up 79 cents a barrel to settle at $74.95 on the New York Mercantile Exchange.
ASIAN SUMMARY: Shares Mostly Mixed
USD-Yen 115.37 loss 0.14 dn 0.1%
AUD-USD 0.7557 gain 0.0043 up 0.6%
Nikkei 225 15154.58 loss 94.74 dn 0.6%
Hang Seng 16448.62 loss 73.59 dn 0.5%
S&P/ASX 200 5075.30 loss 18.10 dn 0.4%
Taiwan Index 6580.40 loss 53.69 dn 0.8%
S.Korea Kospi 1290.14 loss 6.55 dn 0.5%
JGB Yield 1.9550% up 0.0250
(All values as of 0450 GMT)
STOCKS: Asian stocks were lower Thursday in the wake of broad losses on Wall Street. Japan's market lost out despite investors pricing in the notion that the Bank of Japan planned to raise interest rates for the first time since 2000.
FOREX: The yen gained against the dollar, on buying prompted by the belief that the Bank of Japan will raise rates. Massive growth in jobs in Australia boosted the country's currency against the greenback.
China's companies have adjusted well to yuan exchange-rate reform, a People's Bank of China official, Tang Xu, said. He also said the exchange rate can only have a limited effect on resolving global imbalances.
BONDS: Government debt prices fell as Friday's rate decision and BoJ statements remain the focus.
METALS: Basic metals were mixed, while gold dipped to around $645.90 from around $650 in New York.
OIL: Prices continued their rise Thursday, up 29 cents to $75.24, in response to Middle East tension, including Iran's referral to the U.N. Security Council for possible sanctions over its nuclear program and unrest in Israel and Lebanon.
EUROPEAN OUTLOOK: Stocks Face Opening Losses
Euro-USD 1.2714 gain 0.0016 up 0.1%
Stlg-USD 1.8356 gain 0.0010 up 0.05%
USD-Franc 1.2334 loss 0.0005 dn 0.06%
(All values as of 0450 GMT)
European shares, under the weight of Wall Street losses, are likely to start lower, with government debt prices and the euro higher.
STOCKS: Technology issues are likely to lead European markets lower to start following steep declines in New York overnight.
U.K. spreadbettor CMC Markets is calling the FTSE down 20 points at 5841, the DAX down 29 at 5609 and the CAC down 33 at 4909.
"I don't think that you should read too much into the technology companies that have disappointed a bit in the last two days," said Lars Kreckel, part of the European equity strategy team at ABN Amro.
He said all indicators pointed to a good earnings season and that it's too early to extrapolate trends for the whole season from just a few technology companies. He also noted that, in the pre-announcement season, the technology sector was one of the weakest performers.
"As more and more companies report from other areas of the market, chances are the overall season will turn out to be quite good," he said.
He also said that a strong earnings season will keep the debate alive on whether growth will slow down in the future, but will at least probably reassure investors that fundamentals are still very strong.
In corporate news, U.K.'s Aviva is expected to announce today the acquisition of life insurer AmerUs Group for roughly $2.9 billion, say people familiar with the matter, in a deal that would significantly expand the British firm's presence in the U.S.
European shares closed higher on Wednesday, led by mining and auto shares, with the broad-based rise inspired by renewed hopes that a few early earnings misses would still allow for a good second-quarter earnings season.
FOREX: The euro gained against the dollar overnight, resulting from buying in EUR/JPY, dealers said. The euro's near-term range is called between $1.2700-1.2750.
BONDS: Government bond are set to start higher on technicals. But with the impulse from fundamentals lacking, Bund futures are likely to hold in a trading range between 115.05 and 115.60, said Wilson Chin, fixed-income strategist at ING Bank.
In the absence of first-tier economic data in the euro zone, attention has turned to Asia, where the Bank of Japan is widely expected to end its zero interest rate policy Friday.
"Financial markets now are eagerly awaiting the rate verdict by the BoJ, and it might be that the market prefers to be short while going into the event," said Christoph Rieger, fixed-income analyst at Dresdner Kleinwort. Against this backdrop, he expects the slew of U.S. economic data, such as initial jobless claims due Thursday and the University of Michigan's confidence index due Friday, to be of minor importance to the market.
"Maybe U.S. retail sales will attract some attention, but the other data might play an underpart," Rieger said. Retail sales are due Friday at 1230 GMT, with the consensus of analysts forecasting a 0.4% rise, both in the headline and the core rate.
In the U.K., analysts and dealers said the recent figures would back the view that the Bank of England will keep interest rates at 4.5% for the time being.
European government bond prices were under pressure Wednesday in thin trade, with stronger equities weighing on fixed-income markets, while safe-haven bids recede.
CALENDAR: Thursday, July 13: German, French CPI; Fed
GMT Expected Previous
0600 GER Jun CPI, final +0.2%MM +0.2%MM
+2.0%YY +1.9%YY
0645 FRA Jun CPI 0.1%MM 0.4%MM
2.0%YY 2.1%YY
0835 GER Pres Bush meets with German
Chancellor Merkel in Stralsund; press
conference at 1020 GMT
0900 EU June Long-term govt bond yield
1230 US July 8 Jobless Claims -2K
1400 US Jun 24 DJ-BTMU Business Barometer -0.2%
1430 US July 7 US Energy Dept Natural Gas Stocks (in +73
billion cubic feet)
1515 US Minneapolis Fed Pres Stern speaks on
"Economic Outlook: Fundamentals vs.
Risks" in Bozeman, Mont.
1800 US June Federal Budget +$20B -$42.83B
2030 US July 7 Money Supply
N/A JPN BOJ Policy Board meeting starts
Agrana Beteiligungs (AGR.VI): 1Q Earnings
Average net profit (DJ, 3 analysts): EUR21.6M (EUR13.7M)
Average EBIT: EUR31.2M (EUR18.4M)
Average sales: EUR461.6M (EUR282.1M)
Note: Agrana's earnings are seen boosted by the consolidation of 2005-acquisition Atys Group and increased sugar sales, as Agrana exports its excess non-quota sugar stocks ahead of a WTO-ban, effective from mid-summer, notes Morgan Stanley.
Fastweb (FWB.MI): 2Q Earnings
Average EBITDA (DJ, 3 analysts): EUR93.8M (N/A)
Average revenues: EUR298M (N/A)
Note: Company didn't provide figures for same period last year and will only announce a few figures, analysts note. Eyes on new clients, free cash flow break-even and outlook for the rest of the year.
Saab (SAAB-B.SK): 2Q Earnings
Average pretax profit (SME Direkt, 7 analysts): SEK462M (SEK217M)
Average revenue: SEK5.14B (SEK4.61B)
Note: Profit seen boosted by a SEK8.3B surveillance systems order from Pakistan and lower restructuring costs. 2Q restructuring costs are expected at SEK61M, compared with SEK118M a year ago. Analysts are listening out for more information about the integration of Saab Microwave Systems and ongoing restructuring.
Sony Ericsson (SNE): 2Q Earnings
Average pretax profit (SME Direkt, 24 analysts): EUR159M (EUR87M)
Average revenues: EUR2.1B (EUR1.6B)
Note: Revenue rise helped by more sales of expensive, higher margin phones. The average selling price for phones is also forecast to rise to EUR144 from around EUR137.
Sulzer (SUN.EB): 2Q Orders
Average orders (DJ, 3 analysts): CHF769M (CHF674M)
Average 1H orders: CHF1.61B (CHF1.31B)
Note: A somewhat slower pace of growth in 2Q expected although demand from oil, gas and chemical industries still seen at elevated level. Data due 0530 GMT.
OTHER SCHEDULED EVENTS:
Abbey (ABBY.LN): FY Earnings
Aberforth Smaller Companies Trust (ASL.LN): 1H Earnings
Allianz (AZ): Capital Markets Day
BETandWIN (BWIN.VI): AGM
Bristol Water Group (): FY Earnings
Christian Salvesen (SVC.LN): AGM
ComBOTS (CMBT.XE): AGM
EMAP (EMA.LN): AGM
EMI (EMI.LN): AGM
First Group (FGP.LN): AGM
Flughafen Wien (VIEV.VI): June Traffic Figures
Fraport (FRA.XE): June Traffic Figures
Iberia (IBLA.MC): June Traffic Figures
Nordic Semiconductor (NOD.OS): 2Q Earnings
Norwegian Air Shuttle (NAS.OS): 2Q Presentation
Scorpion Offshore (SCORE.OS): 4Q Earnings
Sistema JSFC (SSA.LN): 1Q Earnings
Suedzucker (SZU.XE): 1Q Earnings
Holland Colours (44031.AE): FY 2005 Dividend Payment Date
INDUS Holding (INH.XE): FY 2005 Dividend Payment Date
INDUS Holding (INH.XE): FY 2005 Ex-Dividend Date
Liontrust Asset Management (LIO.LN): FY 2005 Dividend Payment Date
Prodesse Investment (PRD.LN): 2Q 2006 Ex-Dividend Date
TREVI-Finanziaria Industriale (TFI.MI): FY 2005 Dividend Payment Date
Value & Income Trust (VIN.LN): FY 2005 Dividend Payment Date
(END) Dow Jones Newswires
