Daily World Financial and Forex News

US Market
Markets Look Forward to “Stress Test" Results Even as Earnings Encourage

While the major averages are currently off their highs for the young session, they are holding onto strong gains. The Dow is currently up 65.39 at 8,022.45, the Nasdaq is up 11.86 at 1,664.07 and the S&P 500 is up 6.60 at 858.52.

The major U.S. index futures are pointing to a higher opening on Friday. Most companies have managed to beat tempered expectations and traders may latch on to the positivism, as they fervently hope for a turnaround in economic conditions. Ford (F), Amazon (AMZN) and American Express (AXP) were among the companies, which reported better-than-expected results. Additionally, a rally in price of commodities is likely to generate buying interest in the space.

Orders for goods that are designed to last for more than three years fell by a little less than expected. All eyes are likely to be riveted to any information forthcoming about the stress results of financial firms and the Commerce Department’s new home sales report to be released later in the day.

After showing significant volatility throughout Thursday’s session, the major U.S. averages rose decisively above the unchanged line in late trading. The late session advance came despite the markets trading with a negative bias for much of the session, weighed down by an uncertain economic outlook and apprehensions about the release of details regarding the stress test results.

Despite these apprehensions, the markets found their way up, encouraged by positive earnings announcements from companies such as Apple (AAPL) and eBay (EBAY). The Dow Industrials ended the day up 70.49 points or 0.89% at 7,957 and the S&P 500 Index advanced 8.37 points or 0.99% to 852, while the Nasdaq Composite closed with a gain of 6.09 points or 0.37% at 1,652.

On the economic front, the National Association of Realtors said existing home sales fell 3% month-over-month in March to a seasonally adjusted annual rate of 4.57 million. Economists had expected a less severe decline to 4.70 million units. Annually, existing home sales were down 7.1%. The median sales price of an existing home declined 12.4% from a year-ago to $175,200, although it increased from the previous month. While total inventories of existing homes for sale fell during the month, the supply of existing homes at the current sales pace rose to 9.8 months in March from 9.7 in February due to a slower pace of sales.

Europe, Global Markets
The major European markets are advancing on Friday, with the French CAC 40 Index and the German DAX Index rising 2.04% and 2.31%, respectively, while the U.K.’s FTSE 100 Index is gaining about 2.39%.

On the economic front, the French National Institute for Statistics and Economic Studies reported that French consumer spending rose by 1.1% in March following a 1.8% decline in February. Spending on automobiles and textiles-leather climbed sharply, contributing to the overall spending.

The business climate in Germany improved in April, according to the results of Ifo business climate survey. The business climate index rose 1.5 points to 83.7 in April, with both the present situation and expectations indexes improving in the month. Economists had expected a more modest increase to 82.1.

In the U.K., the Office of National Statistics reported that the U.K.’s retail sales unexpectedly rose 0.3% month-over-month in March. Economists expected a decline of 0.3%. On an annual basis, retail sales increased 1.5% in March, larger than the 1.1% forecast by economists.

Meanwhile, the U.K.'s GDP contracted 1.9% on a quarter-over-quarter basis in the first quarter of 2009 compared with a decrease of 1.6% in the fourth quarter of 2008, the statistical office said in a separate report. It was the biggest quarterly decline since the third quarter of 1979. Economists had forecast the economy to contract 1.5% in the first quarter. The increased rate of decline in output was due to weaker services and production output.

U.S. Economic Reports

The Commerce Department’s durable goods orders report showed that orders fell 0.8% month-over-month to $161.2 billion in March, marking the seventh decline in the last eight months. Economists were looking for a 1.5% decline in the durable goods orders for March.

The decline was mainly due to a 1.4% drop in transportation equipment orders, which fell 1.4%. Shipments of durable goods slid 1.7% and unfilled orders tumbled 1.4%. Inventories were down 1.1%. Non-defense capital goods orders, excluding aircraft orders, rose 1.9% in March, adding to the 4.9% gain in the previous month.

The Commerce Department is due to release its new home sales report for March at 10 AM ET. Economists expect new home sales to come in unchanged at an annual rate of 337,000.

New home sales rose 4.7% in February to an annualized rate of 337,000. The months' supply of new homes fell to 12.2 months from 12.9 months in the previous month, while the median sales price of a new home declined to $200,900 in February from $206,800 in January. Annually, median new home sales prices were down 18.1%.

Asia Markets
The major stock markets across the Asia-Pacific region closed mostly lower on Friday as investors took some profits and braced for more news on the methodology of "stress tests" for U.S. banks. Although several bellwether companies reported better-than-expected results, investors preferred to wait and watch ahead of the weekend.

The Japanese market closed sharply lower, as traders cut their long positions ahead of the release of earnings reports from major Japanese firms next week. The benchmark Nikkei 225 index closed at 8,708, down 139 points or 1.57% and the Topix index of all First Section issues on the Tokyo Stock Exchange fell 9 points or 1.1% to 830. Volume was higher than usual at about 2.7 billion shares.

Automakers closed weaker after the Japanese yen strengthened to as much as 96.89 yen against the U.S. dollar on Thursday, a level not seen since March 30. Steel maker JFE Holdings and its smaller rival Kobe Steel fell more than 3% each. After the close of trading hours, JFE Holdings reported a net profit of 194.2 billion yen for the fiscal year 2009, down from the 261.9 billion yen reported a year earlier.

Banking stocks bucked the declining trend to end mostly higher. Mitsubishi UFJ Financial Group advanced 3.35%, Sumitomo Mitsui Financial Group rallied 4.57% and Mizuho Financial Group gained 3.12%, but Resona Holdings moved down 1.12%

Brokerages closed mixed, while among other notable stocks, electronics maker Pioneer Corp plunged 6.55% on profit taking after rallying nearly 45% in the past two sessions. Mobile carrier KDDI Corp tumbled 5.17% as its profit forecast fell short of market expectations.

The Australian market closed lower, as traders cut their positions ahead of the weekend amid lower U.S. index futures and weakness in the other Asian markets. The benchmark S&P/ASX200 index closed at 3,712, down 30 points or 0.82% and the broader All Ordinaries index moved down 27 points or 0.74% to 3,668.

Gold miner Newcrest Mining surged up 5.57% and Lihir Gold rallied 3.46% after gold prices rallied to a three-week high of $900 an ounce. Among the big miners, Iluka Resources moved down 0.93% and BHP Billiton declined 1.32%, but Rio Tinto rose 2.18%. Energy stocks closed mixed, while banking stocks closed mostly lower on profit taking.

The South Korean market closed notably lower as investors took profits after a 3-day rally. The benchmark KOSPI closed at 1,354, down 15 points or 1.07%. Volume was higher at 664.46 million shares worth 8.01 trillion won (US$5.9 billion) and decliners outnumbered advancers by 550 to 285.


Hong Kong’s Hang Seng Index showed an uncertain trend throughout the trading session before moving decisively into positive territory in late trading to close up 44.39 points or 0.29% at 15,259.

Meanwhile, after trading choppily in early trading, the Indian market bounced back sharply on fund buying. Stocks across the sectors traded sharply higher. The benchmark Sensex ended at 11,329, up 194 points or 1.74% over the previous close.

Among the other markets in the region, China's Shanghai Composite index moved down 0.62% and Singapore's STI Straits Times index slipped 0.38%, but Taiwan's TWII Weighed index closed up 0.09%.

Currencies, Commodities Markets
Gold Prices Inch Higher Again

Gold inched higher again in early trading on Friday, adding to its recent rally. The metal is looking for its fourth positive close of the week.

June-dated gold rose to $908.00, up $1.40 for the session. The metal hit as high as $911.40 earlier in the week.

The dollar tumbled to a new multi-week low against the yen and an 11-day low against the euro and the franc as ongoing concerns about the U.S. stress tests on banks prompted investors to sell the U.S. currency. Gold usually moves opposite the dollar because of its hedge value.

On the economic front, Commerce Department report showed that durable goods orders fell 0.8 percent in March following a downwardly revised 2.1 percent increase in February. Economists had expected orders to fall 1.5 percent compared to the 3.5 percent increase that had been reported for the previous month.

Gold futures finished Thursday up $14.10 for the session. The metal finished higher for the third time in four sessions this week and posted its highest close in almost three weeks.