Stock Market Update - Friday, October 22, 2010 - Modest Gain Expected
Latest US Economic News Headlines:
USA EQUITY INDEXES: (OCT. 22, 4:10 PM EDT)
Dow Jones 11,132.56 -14.01 (-0.13%)
S&P 500 1,183.08 +2.82 (+0.24%)
Nasdaq 2,479.39 +19.72 (+0.80%)
Dow Jones CLOSING Averages: DJIA 11,132.56 DN 14.01
30 INDUS 11,132.56 DN -14.01 OR 0.13%
20 TRANSP 4,754.97 UP +19.40 OR 0.41%
15 UTILS 406.83 DN -2.93 OR 0.72%
65 STOCKS 3,869.70 DN -2.78 OR 0.07%
US DOLLAR FUTURES INDEX DXY: OCT. 22, 4:00PM EDT: 77.47
0.06 (0.07%)US COMMODITY PRICES: (OCT. 22, 4:10 PM EDT)
Crude Oil 81.87 + 0.22%
Natural Gas 3.33 - unch
Gasoline 2.07 + 0.25%
Heating Oil 2.26 + 0.26%
Gold 1327.70 + 0.16%
Silver 23.27 + 0.43%
Copper 3.79 + 0.42%
SECTOR SUMMARY: (OCT. 22, 4:10 PM EDT)
Basic Materials -0.17%
Capital Goods +0.12%
Conglomerates -0.33%
Cons. Cyclical +0.21%
Cons. Non-Cyclical-0.11%
Energy +0.26%
Financial +0.04%
Healthcare -0.20%
Services +0.32%
Technology +0.67%
Transportation +0.45%
Utilities -0.43%
MODEST MARKET GAINS & LOSSES
U.S. stocks closed mixed Friday with mild gains in the Nasdaq and the S&P. The blue-chip measure closed down 14.01 points, or 0.13%, to 11132.56. U.S. stocks wavered Friday despite earnings that continued to top estimates but investors remained cautious as a meeting of the Group of 20 industrial and developing nations' finance ministers got under way. The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, edged up less than 0.1%.
The Dow Jones industrial average .DJI slipped 31.04 points, or 0.28 percent, to 11,115.53. The Standard & Poor's 500 Index .SPX rose 0.68 point, or 0.06 percent, to 1,180.94. The Nasdaq Composite Index .IXIC added 16.63 points, or 0.68 percent, to 2,476.30.
Technology shares advanced on Friday after positive earnings from Baidu Inc (BIDU.O) and SanDisk (SNDK.O) helped push the S&P 500 and Nasdaq toward a third straight week of gains. Technology led gains in the recent rally. The Nasdaq is up 17 percent since the end of August compared with the S&P 500, which is up 12.6 percent.
Profit at SanDisk, a maker of flash memory, and Baidu, the Chinese Web search engine, beat Wall Street estimates and both companies forecast strong demand ahead. Baidu's shares rose 6.2 percent while SanDisk jumped 1.2 percent.
Profit at SanDisk, a maker of flash memory, and Baidu, the Chinese Web search engine, beat Wall Street estimates and both companies forecast strong demand ahead. Baidu's shares rose 6.2 percent while SanDisk jumped 1.2 percent.
Also boosting the Nasdaq were shares of online retailer Amazon.com Inc (AMZN.O), which gained 2.6 percent to $169.30 after Wall Street analysts raised their price targets on the company, even as Amazon gave a disappointing forecast on Thursday.
But American Express (AXP.N) slipped as regulatory issues overshadowed rising profit while Verizon Communications Inc (VZ.N) fell after it said additions of new wireless customers may lag.
Encouraging earnings over the last three weeks have helped stocks sustain upward momentum, so far defying expectations that investors would take profits after strong results.
Mid-day the Dow Jones Industrial Average shed 12 points, or 0.1%, to 11132, in early trading.
American Express weighed with a drop of 1.1%. The credit-card company's third-quarter earnings and revenue topped analysts' estimates as customers increased their spending by 14%, but the company noted it is seeing weak demand for new loans, as lending volumes are still below pre-recessionary levels.
The Nasdaq Composite edged up 0.1% to 2461. The Standard & Poor's 500 index rose less than a point to 1180, with the energy sector leading to the upside while the telecommunications sector fell, hurt by Verizon.
The energy sector was boosted by Schlumberger, which climbed 5.2%. The oilfield-services company's third-quarter earnings more than doubled, topping analysts' expectations. The company posted on an investment gain related to its Smith International acquisition while North American drilling activity continued to rebound.
Despite Friday's choppy trading, the Dow and the S&P 500 are set to close the week in positive territory, on pace for their third-straight week in the black and seventh weekly gain out of the last eight. This week's advance has come as third-quarter earnings have topped expectations.
Of the S&P 500 companies that have reported third-quarter earnings so far, nearly 75% of them beat estimates for operating earnings while 85% of them topped prior-year earnings, according to Howard Silverblatt, senior index analyst at Standard & Poor's. In addition, nearly 68% have topped sales estimates with 80% beating last year's sales.
Friday's mixed activity came as finance ministers and central bankers from the G-20 were meeting Friday and Saturday in Gyeongju, South Korea.
The market is keenly watching whether the meeting, in preparation for a G-20 summit in Seoul next month, can agree on managing exchange rates to cool what's been called a "currency war," with China under U.S.-led pressure to let the yuan rise and other export-reliant economies intervening to curb rises in their own currencies. Also on the G-20 agenda are proposed Basel III rules on boosting banks' capital requirements and tighter rules on hedge funds.
The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, edged down 0.1% at the market open. The dollar was lower against the euro but higher against the yen.
Treasurys declined, lifting the yield on the 10-year note up to 2.58%. Crude-oil futures edged up above $81 a barrel while gold futures also advanced.
Among stocks in focus, Amazon.com slipped 0.2%. The Internet retailing giant posted a 16% profit increase as sales continued at breakneck pace, but investors grew concerned with heavy spending the company is doing to expand its business. Amazon's operating expenses rose 40% in the third quarter from a year earlier.
But American Express (AXP.N) slipped as regulatory issues overshadowed rising profit while Verizon Communications Inc (VZ.N) fell after it said additions of new wireless customers may lag.
Encouraging earnings over the last three weeks have helped stocks sustain upward momentum, so far defying expectations that investors would take profits after strong results.
Mid-day the Dow Jones Industrial Average shed 12 points, or 0.1%, to 11132, in early trading.
American Express weighed with a drop of 1.1%. The credit-card company's third-quarter earnings and revenue topped analysts' estimates as customers increased their spending by 14%, but the company noted it is seeing weak demand for new loans, as lending volumes are still below pre-recessionary levels.
The Nasdaq Composite edged up 0.1% to 2461. The Standard & Poor's 500 index rose less than a point to 1180, with the energy sector leading to the upside while the telecommunications sector fell, hurt by Verizon.
The energy sector was boosted by Schlumberger, which climbed 5.2%. The oilfield-services company's third-quarter earnings more than doubled, topping analysts' expectations. The company posted on an investment gain related to its Smith International acquisition while North American drilling activity continued to rebound.
Despite Friday's choppy trading, the Dow and the S&P 500 are set to close the week in positive territory, on pace for their third-straight week in the black and seventh weekly gain out of the last eight. This week's advance has come as third-quarter earnings have topped expectations.
Of the S&P 500 companies that have reported third-quarter earnings so far, nearly 75% of them beat estimates for operating earnings while 85% of them topped prior-year earnings, according to Howard Silverblatt, senior index analyst at Standard & Poor's. In addition, nearly 68% have topped sales estimates with 80% beating last year's sales.
Friday's mixed activity came as finance ministers and central bankers from the G-20 were meeting Friday and Saturday in Gyeongju, South Korea.
The market is keenly watching whether the meeting, in preparation for a G-20 summit in Seoul next month, can agree on managing exchange rates to cool what's been called a "currency war," with China under U.S.-led pressure to let the yuan rise and other export-reliant economies intervening to curb rises in their own currencies. Also on the G-20 agenda are proposed Basel III rules on boosting banks' capital requirements and tighter rules on hedge funds.
The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, edged down 0.1% at the market open. The dollar was lower against the euro but higher against the yen.
Treasurys declined, lifting the yield on the 10-year note up to 2.58%. Crude-oil futures edged up above $81 a barrel while gold futures also advanced.
Among stocks in focus, Amazon.com slipped 0.2%. The Internet retailing giant posted a 16% profit increase as sales continued at breakneck pace, but investors grew concerned with heavy spending the company is doing to expand its business. Amazon's operating expenses rose 40% in the third quarter from a year earlier.
FEDERAL REGULATORS CLOSED SEVEN US BANKS
The US Government FDIC regulators closed seven US Banks late Friday and seized all assets.
First Arizona Savings, A FSB, Scottsdale, AZ., Oct.22, 2010
Hillcrest Bank, Overland Park, KS., October 22, 2010
First Suburban National Bank, Maywood, IL., October 22, 2010
The First National Bank of Barnesville, Barnesville, GA., Oct. 22, 2010
The Gordon Bank, Gordon, GA., October 22, 2010
Progress Bank of Florida, Tampa, FL., October 22, 2010
First Bank of Jacksonville, Jacksonville, FL., October 22, 2010
To see the complete list of failed banks and credit unions visit:
US CRUDE OIL:
OIL FUTURES: Nymex Crude Settles Up $1.13 At $81.69/Bbl
US Crude Oil: $81.46 per barrel
Oil prices held near $81 a barrel on Friday as positive German data fueled demand growth expectations as the market awaits a G20 finance ministers' decision on currencies.
NATURAL GAS:
US NATURAL GAS: Futures Close Down 1% At $3.335/MMBtu.
Natural gas futures again hit 13-month lows Friday, as weak heating demand and ample supplies continued to pressure the market.
Natural gas for November delivery settled down 3.6 cents, or 1.1%, at $3.332 a million British thermal units on the New York Mercantile Exchange, the lowest settlement price since September 2009. The benchmark contract ended the week down 5.7%, the fifth consecutive weekly decline and the tenth in the last 12 weeks.
With gas-heating demand subdued during autumn's temperate weather, the last six weekly U.S. gas inventory builds have together been well above the five-year average. Inventories are closing in on last year's record highs, pressuring prices lower as the market settles in to the mindset that the supply overhang will persist through the winter, and maybe beyond.
"Traders are worried that if this weather stays benign, and if we get another couple of weeks of [large] injections, there's a good chance that we'll break last year's record," said Fain Shaffer, of InfinityTrading.com.
U.S. inventories hit a record high of 3.837 trillion cubic feet in November 2009 amid strong production and recession-hit demand, and the market hasn't rebalanced since. The number of active gas-directed drilling rigs has stayed steady despite recent weakness in prices. The U.S. gas rig count is up by about 33% from the same week last year, oil-field service company Baker Hughes Inc. said Friday. The number of rigs drilling for gas fell by one this week, to 965, the company said.
"Right now the market is in a freefall, people are realizing that the bottom isn't in yet," said Phil Flynn, an analyst with PFGBest in Chicago. He said some traders who had tried to time the market's seasonal low point with bets that prices would rise were selling those positions Friday.
PRECIOUS METALS:
US Gold: $ 1,323.15
US Silver: $ 23.16
Settlements: (ranges include market floor and electronic trading):
London PM Gold Fix: $1,322.50; previous PM $1,343.50
Dec gold $1,325.10, down 50 cents; Range $1,315.60-$1,328.80
Dec silver $23.118, down 2.1 cents; Range $22.840-$23.395
Jan platinum $1,675.10, up $1.70; Range $1,663.30-$1,682.70
Dec palladium $591.10, up $4.80; Range $578.35-$594.90
Gold Seen Flat
PRE-MARKET COMEX FUTURES:
Gold down $4.70 (-0.35%) to $1320.90, COMEX silver down $0.104 (-0.45%) to $23.04
PRE-MARKET COMEX FUTURES:
Gold down $4.70 (-0.35%) to $1320.90, COMEX silver down $0.104 (-0.45%) to $23.04
Engelhard Corp's base price for industrial gold bullion was $1325.40 per troy ounce, down $21.03 from previous. It's selling price for gold in fabricated form was $1424.80, down $22.62.
Handy & Harman's base price for gold was $1322.50 per troy ounce, down $21.00. The fabricated form price was $1428.30, down $22.68.
Gold prices were holding steady Friday as currency concerns re-emerged during the weekend's Group of 20 meeting.
The most actively traded contract, for December delivery, was recently up 0.1%, or $1.80, at $1,327.40 per troy ounce on the Comex division of the New York Mercantile Exchange.
Recent selling pressure on gold abated as traders eyed the upcoming G-20 meeting, where "currency wars" will likely be discussed. Gold's recent rally to a record of $1,376.70 last week has been helped by escalating fears about currency risk, as governments around the world moved to depreciate home currencies to boost exports and economic growth.
Gold prices benefited from this so-called "currency war," as investors sought to limit currency risk exposure by buying gold. Gold is often seen as an alternative currency and an inflation hedge, as well as a safe harbor asset in times of economic uncertainty.
STATE UNEMPLOYMENT NUMBERS:
The state-by-state unemployment picture improved in September, with 23 states and the District of Columbia reporting lower unemployment rates, and Illinois and Mississippi slipping below the 10% point.
Unemployment rates increased in 11 states last month, according to Labor Department data released Friday. That was a sharp decline from the 27 states that reported higher unemployment rates in August. The department said 16 states had no change.
Nevada had the highest rate for the fifth month in a row, holding steady at 14.4%. Michigan was second at 13%, followed by California at 12.4%, Florida at 11.9%, Rhode Island at 11.5% and South Carolina at 11%. Eleven states stood at 10% or over, down from 13 states in August.
Texas jobless rate slips to 8.1 percent in Sept. The Texas unemployment rate dropped slightly to 8.1 percent in September, fueled by modest job growth.
Massachusetts posted the biggest drop in its jobless rate, down 0.4 percentage point to 8.4%. West Virginia reported the largest increase, up 0.4 percentage to 9.2%.
North Dakota continued to register the lowest jobless rate, 3.7%, followed by South Dakota with 4.4% and Nebraska with 4.6%.
GOLF BALL SIZED HAIL POUNDS COTTON
Hailstorms Pound Texas Cotton Fields, Drive Futures Higher
Thunderstorms across parts of west Texas dumped golf-ball-size hail on the region's cotton fields Thursday night and sparked a run-up in futures on fears the weather will seriously damage the much-needed crop.
The South Plains region--which houses much of the state's cotton production--absorbed the brunt of the storms according to meteorological reports, including more than two inches of rain and hail measuring up to one inch in diameter.
With the global market leaning heavily on U.S. exports to close its production gap, investors worried the storms would destroy significant amounts of Texas' crop.
Futures for December delivery surged 4 cents, or 3.5%, to $1.1971 a pound in midday trading Friday. They fell just short of the post-Reconstruction Era high set last week due to the limit on price swings.
Cotton needs to be completely dry before it is harvested. The heavy rains will not only delay harvesting but could damage the actual crop or stir up mud that discolors the cotton and cuts into its value.
Demand for U.S. cotton has soared since major producers Pakistan and China lost parts of their crop to flooding and heavy rains.
The U.S. Department of Agriculture on Thursday said export deals for about half a million bales, each weighing 480 pounds, were struck last week. Analysts say nearly two-thirds of this marketing year's expected U.S. exports are already spoken for.
With no indication Chinese mill buying will slow in the near future, the market is vulnerable to price spikes whenever supplies are threatened.
BEFORE THE BELL:
US STOCKS EXPECTED TO OPEN HIGHER
The market may start off in positive territory Friday as the US dollar has slightly declined prior the bell. US stock futures turned slightly higher Friday near 8:00 a.m. as investors digested a stronger-than-expected run of earnings, but remained wary of the economic outlook and reluctant to press positions as finance officials from the Group of 20 nations met in South Korea.
Earlier, U.S. stock index futures were pointed to a slightly lower opening for Wall Street with futures for the S&P 500, for the Dow Jones industrial average and for the Nasdaq all down by around 0.1 percent by 5:14 a.m. ET.
Wall Street shares gained Thursday, and solid U.S. earnings will buoy sentiment. Gains however, may be fairly limited amid layoff news a lack of compelling positive earning announcements and caution at the index's current level. September regional and state employment, unemployment and mass layoff news will be announced at 10 a.m.
The G20 meeting may influence market actions today. Overnight, the dollar fell slightly on speculation a U.S. plan that included letting undervalued currencies strengthen would gain support at a contentious weekend Group of 20 meeting, lifting gold and oil prices.
Gold touched its lowest range in more than two weeks in Europe on Friday as the dollar strengthened amid caution ahead of this weekend's G20 meeting, at which officials will seek ways to tackle currency imbalances.
US CMBS 3Q DEFAULT RATE NEAR 11%
Third quarter U.S. commercial mortgage-backed securities default rate increases to 10.6% from 9.48% in the second quarter, as debt continues to sour, says Fitch Ratings.
SCHLUMBERGER PROFIT MORE THAN DOUBLES
Schlumberger's 3Q earnings more than double to $1.73 billion, or $1.38 a share, as the oilfield-services company posts an investment gain related to its Smith International acquisition and as North American drilling activity continued to rebound.
Verizon's Profit Drops 25% in Quarter
Verizon Communications reported a 25 percent drop in third-quarter profit on Friday, citing pension settlements resulting from layoffs.
GE to Buy Clarient in $587 Million Deal
General Electric Co. has agreed to acquire Clarient Inc. for about $587 million as the conglomerate looks to build its disease-diagnosis capability.
Honeywell sees 2011 sales up about 5 percent
Honeywell International Inc (HON.N) expects sales to rise 5 percent or more next year, with profit at its four divisions rising 10 percent.
BASEL COMMITTEE AGREE ON LIQUIDITY GUIDELINES
The Basel Committee on Banking Supervision has agreed in principle to allow banks to use non-government bonds and securities to help them satisfy stricter liquidity requirements aimed at preventing another financial crisis.
The agreement was announced Friday by Deutsche Bundesbank Vice President Franz-Christoph Zeitler after the committee consulted with finance ministers of the Group of 20 industrialized and developing nations, who were meeting in Seoul Friday."In principle we have reached an agreement that private securities, such as highly-rated corporate bonds and covered bonds, can qualify as up to 40% of the liquidity reserve that banks will be required to hold under new rules," he said.
The non-government securities will still require a 15% discount to their current market value when counted as part of liquidity reserves, Zeitler said. Further criteria governing liquidity rules for non-government bonds and securities remains undecided, he said.
They could include minimum ratings and limits on price volatility and low market prices, and will be decided during an observation period between 2011 and 2014.The rules governing liquidity are part of stricter guidelines being drawn up by the Basel group to bolster the ability of banks to withstand big economic shocks and to prevent another financial crisis.
Earlier this week, the chairman of the committee, Nout Wellink, said central bankers and regulators plan to finalize concrete rules on systemically relevant--or "too-big-to-fail"--financial institutions by 2011.
G20 - MEETING NEWS
G20 finance officials started two days of meetings by discussing a U.S. proposal to set a target of 4 percent of gross domestic product for current account balances. The US dollar steadied on Friday on wariness over whether any clear agreement would be reached at a Group of 20 meeting, as the United States called for countries to avoid using their currencies to gain an economic advantage.
Group of 20 finance chiefs are struggling to agree whether to set targets for their current account imbalances as a way of defusing tension over currencies before it sparks a trade war.
G-20 finance ministers and central bankers began talks in Gyeongju, South Korea, today after weeks of wrangling over whether nations from the U.S. to China are relying on weaker exchange rates to spur growth.
Seeking a solution, U.S. Treasury Secretary Timothy F. Geithner proposed G-20 members pursue policies to reduce trade imbalances "below a specified share" of their economies, according to an Oct. 20th letter. That suggestion today split the group of emerging and industrial countries.
Finance ministers and central bankers who gather this weekend in Gyeongju, South Korea, are likely to fall short of any binding action, as they meet again in November.
By Daniel Flynn and Louise Egan
GYEONGJU, South Korea
Fri Oct 22, 2010 7:40am EDT
GYEONGJU, South Korea (Reuters) - The United States struggled on Friday to win backing for its proposal of setting numerical targets for external imbalances as a way of pressing surplus countries such as China to let their exchange rates rise.
In a letter to fellow finance ministers of the Group of 20 leading economies, U.S. Treasury Secretary Timothy Geithner said countries should implement policies to reduce their current account imbalances below a specified share of national output.
Diplomats said the Treasury chief was proposing to limit surpluses and deficits on the current account -- the broadest measure of trade in goods and services -- to 4 percent of gross domestic product.
But Geithner's proposal met a cool reception on the first day of a two-day meeting meant to smooth the path for a G20 summit in Seoul on November 11-12.
German Economy Minister Rainer Bruederle warned of falling back into "planned economy thinking," while Russian Deputy Finance Minister Dmitry Pankin said the draft communiqué to be issued on Saturday would stay clear of numerical targets.
Read the entire G-20 report at Reuters:
http://www.reuters.com/article/idUSTRE69K0Q720101022
American Express Beat Forecasts With $1.1 Billion Profit
American Express Co's reported third quarter results after Thursday's close. They announced a profit that rose 71 percent, beating expectations, as credit quality improved and its wealthy customers ramped up their spending.
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Canadian Market:
Toronto Stocks Mixed - Finish Up
Toronto's key index was slightly lower at midday, but closed up Friday, as losses in the financial sector were partially offset by gains in energy and materials.
The S&P/TSX Composite Index ticked up 1.95 points, or 0.02%, to 12601.18. Advances beat declines 928 to 632. Trading volume was 374.7 million shares, down from Thursday's total of 508.2 million shares.
The S&P/TSX 60 Index closed down 1.87 points, or 0.26%, to 725.90.
Canada August Retail Sales Up 0.5%
Canada Govt August Budget Deficit C$5.8B Vs C$5.3B Year Ago
Canadian retail sales rose unexpectedly in August after staying flat over the previous two months, led by higher gas station sales.
Retail sales rose 0.5% to C$36.08 billion (US$35.12 billion), following a 0.1% gain in July, revised up from a previously estimated decline of 0.1%, Statistics Canada said Friday. In volume terms sales rose 0.3%.
Canadian retail sales rose unexpectedly in August after staying flat over the previous two months, led by higher gas station sales.
Retail sales rose 0.5% to C$36.08 billion (US$35.12 billion), following a 0.1% gain in July, revised up from a previously estimated decline of 0.1%, Statistics Canada said Friday. In volume terms sales rose 0.3%.
Sales at gasoline stations were up 2.1% to C$3.84 billion, the second consecutive increase.
Sales at motor vehicle and parts dealers rose 0.7% to C$7.95 billion, with gains of 2.6% at automotive, parts, accessories and tire stores, and 1.0% at new car dealerships. Used car and other motor vehicle dealers posted declines following two monthly increases.
Excluding new and used vehicles and parts, sales rose 0.4% to C$28.13 billion after falling 0.2% in July, revised up from an initially estimated decline of 0.4%, StatsCan said. The market had expected ex-auto sales to rise 0.5%. Sales at motor vehicle and parts dealers rose 0.7% to C$7.95 billion, with gains of 2.6% at automotive, parts, accessories and tire stores, and 1.0% at new car dealerships. Used car and other motor vehicle dealers posted declines following two monthly increases.
Food and beverage store sales rose 0.8% to C$8.75 billion, with gains reported at supermarkets and convenience stores. Beer, wine and liquor store sales fell 0.8%.
Sales at furniture and home furnishing stores rose 2.1% to C$1.20 billion, driven by a 7.0% increase at home furnishing stores following large fluctuations in recent months.
Overall, gains were reported in six of 11 retail sub-sectors.
Sales were down at clothing and clothing accessories stores, falling 0.8% to C$2.02 billion, with increases at shoe stores offset by lower sales at jewelery, luggage and leather goods stores. Sporting goods, hobby, book and music stores posted the sharpest declines, as sales fell 1.8% following two consecutive increases.
Sales were up in seven provinces in August. Retailers in Nova Scotia posted the largest percentage increase, with sales rising 3.4% to C$1.06 billion. Sales also rose in Alberta and Ontario, but were down in Prince Edward Island.
CANADA ANNUAL CORE CPI UP 1.5%
Canada's annual core inflation rate accelerates at a slower pace than expected in September, while the headline rate holds steady, with higher prices for energy, passenger vehicles and homeowners' replacement costs.
BHP POTASH DEAL REJECTED
Saskatchewan Premier: Canada Must Reject BHP-Potash Deal
CALGARY, BC. Saskatchewan Premier Brad Wall confirmed Thursday that his government is opposed to BHP Billiton's (BHP) $38.6 billion hostile takeover of Potash Corp. of Saskatchewan (POT), saying it jeopardizes jobs, tax revenue and Canada's strategic importance to the world.
CALGARY, BC. Saskatchewan Premier Brad Wall confirmed Thursday that his government is opposed to BHP Billiton's (BHP) $38.6 billion hostile takeover of Potash Corp. of Saskatchewan (POT), saying it jeopardizes jobs, tax revenue and Canada's strategic importance to the world.
Toronto Indexes, Volume; 4:05 PM EDT Composite Up 1.95
S&P/TSX Composite 12601.18 up 1.95 or 0.0%
S&P/TSX 60 Index 725.90 off 1.87 or 0.3%
Financials 180.17 off 1.66 or 0.9%
Materials 394.91 up 3.22 or 0.8%
Energy 289.13 up 0.75 or 0.3%
Industrials 108.64 up 0.55 or 0.5%
IT 28.55 up 0.12 or 0.4%
Volume Friday Thursday
3-4:15 66.2M 93.0M
9:30-4:15 374.7M 508.2M
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South American Markets:
BRAZIL:
Brazil Real Ends Weaker Than BRL1.7 For 1st Time Since Sep 29
BRAZIL FACES DAILY CURRENCY INTERVENTION
Brazil's Central Bank Will Buy Dollars In 2nd Spot Market Auction
Brazil's government has many measures available to combat the appreciation of the local currency, the real, including the use of its sovereign investment fund, Treasury Secretary Arno Augustin said Friday, according to the Estado news agency.
A permanent program of real-denominated bond sales abroad is one of the mechanisms at hand, Augustin said.
Brazil this week sold BRL1.1 billion in bonds overseas in a re-opening of 2028 real-denominated global bond. The deal priced at 112.226 and carried a yield of 8.85%.
"We're studying the best way to make real-denominated Brazilian treasury bonds more liquid," Augustin said in an interview with Estado.
Augustin said the government won't hesitate to use resources from its sovereign investment fund to combat the appreciation of the real if necessary.
Brazil in 2007 formed a sovereign investment fund to manage wealth from offshore oil reserves. The fund has about 18 billion Brazilian reals ($10.5 billion), however, a large portion of that amount is invested in shares of state-controlled oil company Petrobras (PBR, PETR4.BR) and state-controlled bank Banco do Brasil (BBAS13.BR).
Augustin also said he believes the yields seen in recent days on domestic treasury securities are higher than the "equilibrium" rate and would eventually fall. He said the treasury was especially attentive to higher yields on longer-end maturities and wouldn't tolerate exaggeration.
"I think it's normal that the market always tries to impose higher yields for its own gain," he said. "On the other hand, we will react."
Foreign investors have plowed funds into Brazil over recent months seeking rich returns from the country's high interest rates. Brazil's reference Selic interest rate currently stands at 10.75%.
To offset the strong investor interest, Brazil's government this week raised the country's financial operations tax, known as the IOF, on foreign investment in local fixed-income securities to 6% from 4%, in an effort to curb strong inflows.
The increase was the second undertaken in less than a month as the government struggles to contain the robust real. The government this week also raised the IOF tax for foreigners on guarantees for derivatives market transactions to 6% from 0.38% to limit leveraging.
Brazil's currency has appreciated by about 30% against the dollar over the past 18 months in reaction to heavy inflows, prompting concern from government and industry leaders over the outlook for the country's exports and balance of payments.
MEXICO:
Mexico's September Trade Shows Signs Of Slowdown
Mexico's September trade figures released Friday show that while the engine of economic growth this year--booming exports of manufactured goods like cars--has begun to slow, an increase of imported consumer goods after last year's deep economic crisis may point to a gradual rebound in overall domestic demand.
Mexico ran up a trade deficit of $560 million in September, with exports still higher from the year-ago month, but lower as compared with August, the National Statistics Institute, or Inegi, said in its monthly trade report. The deficit was smaller than the $879 million registered a year ago, and about half of the $1.02 billion median estimate in a Dow Jones Newswires survey of 12 economists.
Inegi said exports rose 21% to $25.30 billion compared with September 2009, and imports rose 19% to $25.86 billion. August exports were $26.92 billion and imports were $27.62 billion.
"There two things to look at here," said Arturo Vieyra, coordinator for economic studies at Citigroup unit Banamex. "One is the slowdown in exports, but the other is growing imports of consumer-related goods."
The 22% increase in manufacturing exports in September was smaller than Banamex's estimate of 28%, and much lower than the accumulated increase in the January-September period of 33%. "That confirms the fears of a slowdown in the second half of the year, caused by lower economic activity in the U.S.," Vieyra said.
But he also pointed out that imports of consumer goods, excluding gasoline and other fuels, were showing some signs of life, rising 21% in September, and that capital good imports were 2% higher for the same period. Both those figures were better than in the accumulated January-September period.
The increase in consumption of imported goods "supports the outlook of a gradual reactivation of internal demand in the second half of the year," a recuperation in investment, and should allow Mexico to meet its target of 4.8% economic growth this year, Vieyra said.
Inegi said that from January to September, the accumulated trade deficit was $1.98 billion, a 57% decline from the same period last year. Exports were up by 34% during that time to $216.81 billion, led by $179.25 billion in manufactured goods, of which $47.18 billion were automobiles.
Mexico's petroleum imports rose 52% to $22.12 billion in the first nine months of the year, compared with the same period in 2009.
Mexico September Unemployment Rises To 5.7%
Inflation Up In Early October On Food, Power and Consumer Prices
Mexico's consumer prices rose more than estimates in the first half of October, as electricity prices soared due to an end to summertime subsidies, while heavy rains last month drove up the cost of some key agricultural goods.
Mexico's unemployment rate rose in September from the previous month but remained well below year-ago levels, the National Statistics Institute, or Inegi, said Friday.
September's unemployment rate, based on a national survey, rose to 5.7% from 5.4% in August, Inegi said in a press release. The jobless rate in September 2009 was 6.4%, the highest level of the year, as Mexico's economy was struggling to recover from its deepest recession in more than a decade.
Underemployment, which takes into account people who needed more work than they found, fell last month to 8.1% of the employed population from 8.7% in August and 9% in September 2009.
The Bank of Mexico said Friday that the consumer price index rose 0.48% in the first two weeks of the month, pushing the annual rate up to 3.89% from 3.70% at the end of September.
The core inflation index, which excludes volatile prices for energy, and fresh fruits and vegetables, rose 0.18% in the first half of October, bringing the annual rate down to 3.56% from 3.62% at the end of last month.
The CPI and the core index were above the median estimate of a 0.44% rise and a 0.16% uptick forecast by a Dow Jones Newswires survey of 12 economists.
Higher electricity rates and tomato prices contributed most to inflation in the first two weeks of the month, the Bank of Mexico said. Prices also rose for gasoline, heating gas, eggs and milk. On the other hand, prices fell for local telephone service, air transport, and a number of fruits.
Inflation typically picks up its pace in the final months of the year as the summertime electricity subsidies end and demand picks up, particularly in November and December for the year-end holidays.
This year, a number of tropical cyclones caused heavy rainfall in certain areas of the country, leading to higher prices for some fresh fruits and vegetables, economists said.
Annual inflation remains below the Bank of Mexico's fourth-quarter forecast of 4.75%-5.25%, and the central bank isn't expected to raise its benchmark overnight lending rate from its current 4.5% until the third quarter of 2011. The Bank of Mexico's inflation target is 3%.
Mexican retail and beverage conglomerate Femsa (FMX, FEMSA.MX) said Friday its net profit rose 35% in the third quarter from a year ago to 5.06 billion pesos ($408.8 million), as sales rose modestly and the company incorporated results from its 20% stake in Dutch brewer Heineken NV (HINKY) into net earnings.
Femsa, which sold its beer business for the stake in Heineken at the end of April, said revenue at its soft-drinks and convenience store businesses rose 4.3% from the third quarter of 2009 to MXN42.78 billion, with most of the growth supplied by the Oxxo convenience store chain.
Oxxo sales rose 15% to MXN16.22 billion as the company opened 180 stores in the quarter, bringing its total stores to 8,011, up by 1,017 from a year earlier. Soft drinks unit Coca-Cola Femsa (KOF, KOF.MX) on Thursday reported a 1.3% drop in sales to MXN25.68 billion.
Femsa's cash flow, measured by earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 3.3% to MXN7.04 billion.
Adjusting for the sale of the beer business, comparable net income was up 67% from a year earlier, Femsa said. Majority interest net profit rose 56% to MXN3.94 billion, or 87 cents per American depositary share.
ARGENTINA:
TRADE SURPLUS $1.07 BILLION
Argentina's September Trade Surplus $1.07Billion Vs $869 Million
Argentina posted a wider trade surplus in September as both imports and exports grew at a fast pace amid a broad recovery in economic activity.
Argentina posted a trade surplus of $1.07 billion in September, up from $869 million a year earlier. September exports totaled $6.4 billion, up 41% on the year, while imports climbed 46% on the year to $5.3 billion.
Argentina's August Preliminary GDP +8.5% Argentina's economy roared ahead in August as the country continued to rebound from what many economists call a deep recession a year earlier.
Economic activity soared 8.5% from the same month a year ago, the national statistics agency Indec reported Friday.
he economy expanded 0.3% from the previous month, said Indec, which reported preliminary data for economic growth.
Indec releases its definitive estimate for gross domestic product on a quarterly basis.
Indec's year-on-year figure was similar to the median estimate of 12 economists polled by Dow Jones Newswires. Economists' estimates for August growth had ranged from 4.8% to 10.2%.
But local economists who participated in the survey said Indec would overstate economic activity at least one percentage point.
"The growth data are not as exaggerated as the consumer price data are, but growth is overstated," said Eric Ritondale, an economist at EconViews.
The veracity of Indec's economic data, especially inflation, has been questioned since former President Nestor Kirchner made personnel changes at the agency in early 2007. The government of President Cristina Fernandez, Kirchner's wife, denies charges that it manipulates Indec data.
Despite the controversy, economists agree that Argentina's GDP is expanding at a fast clip, thanks partly to easy comparisons with last year, when the economy probably contracted amid the global financial crisis. Locally, a major drought slashed crop production during that time and a flu epidemic led to lower sales at restaurants, movie theaters and shopping centers across the country.
GDP is widely believed to have contracted by as much as 4.5% last year, which stands in sharp contrast to official data showing an expansion of 0.9%.
Argentina Bank Industry Jan-Aug Profit Rises 42.5%
Argentina's banking system said its net profit rose 42.5% on the year during the January-August period, thanks to growth in lending and gains on securities, according to the Central Bank of Argentina.
Net profit was 6.68 billion pesos ($1.69 billion), up from ARS4.68 billion in the same eight month period of 2009, the central bank said in a report published Thursday night.
The banking industry's return on equity--a measure of profitability--was 21.4% in August, up from 17.7% in the same month last year.
Banks are benefiting from an economy that is booming on the back of elevated levels of government spending, favorable terms of trade for key exports such as grains and automobiles, and strong consumer demand.
The administration of President Cristina Fernandez has forecast growth in gross domestic product of about 9% this year, while the central bank has said the economy might expand as much as 9.5%.
The central bank said the sector's financial margin increased 19.7% to ARS21.79 billion, thanks to higher revenue from lending and gains on fixed-income securities holdings. Administrative expenses jumped 23.2% to ARS22.71 billion, while loan-loss provisions declined 15% to ARS2.13 billion.
Loans on banks' balance sheets at the end of August stood at ARS199.8 billion, up 25.8% from a year earlier, led by growth in commercial lending and consumer credit such as credit-card loans. Asset quality continued to improve, with nonperforming loans as a percentage of total loans easing to 2.4% in August, from 3.3% in August 2009.
Holdings of government securities jumped 40.6% to ARS107.6 billion, the central bank said.
Deposits grew 30.9% on the year to ARS335.9 billion, led by growth in deposits at public-sector banks, which increased 50.7% to ARS103.8 billion. Deposits at private-sector banks expanded a more modest 24.6% to ARS229.3 billion.
With a view to reducing the use of cash in the economy, new regulations that took effect on Monday require all banks to offer a free, basic savings account with a debit card to the public
CHILE:
CHILEAN STOCKS CLIMB
Chile's blue-chip Ipsa index ended higher Friday, with select heavy-weighted shares rising as investors shuffled their portfolios looking for value.
The Ipsa closed 0.2% higher at 4794, while market volume grew to 95.3 billion Chilean pesos ($195.7 million), compared with CLP86.6 billion the previous session.
Volume jumped after an auction of 4.82 billion shares of local bank Corpbanca (BCA, CORPBANCA.SN), which raised $71.5 million. Corpbanca ended 1.6% higher at CLP7.62.
Also gaining, pulp and paper producer CMPC (CMPC.SN), which has a 6.3% weighting on the Ipsa, rose 0.9% to CLP25,500.00 following recommendations by investment banks.
Investment bank Banchile Inversiones recently set a target price of CLP27,250.00 per share for CMPC and highlighted the positive forecasts for the forestry sector.
The nation's largest bank in terms of lending, Banco Santander Chile (SAN, BSANTANDE.SN) jumped 2.4% to CLP43.80, as foreign investors bought up its American Depositary Receipts, according to a trader at investment bank Celfin Capital.
"Market participants shuffled around their portfolios, as they sought better valued shares," said the trader.
Additionally, integrated steel and iron ore producer Cap (CAP.SN) expanded 1.0% to CLP23,300.00 after environmental authorities approved an expansion of iron ore production at its Los Colorados operation in northern Chile.
Chile Peso Ends Weaker Reducing Likelihood Of Forex Intervention
The peso ended weaker against the dollar as investors snapped up greenbacks prior to the weekend, helping to reduce the specter of imminent currency market intervention.
Chile's peso ended weaker against the dollar Friday as investors snapped up greenbacks prior to the weekend, helping to reduce the specter of imminent currency market intervention.
In thin trading, the peso weakened to CLP486.90 to the dollar, versus Thursday's close of CLP485.30, while trading in a range of CLP485.30 to CLP488.10.
With the peso trading recently at 29-month highs versus the dollar, exporters have demanded intervention in the local currency market, as the peso's strength hurts the competitiveness of their products.
The peso, however, has posted a sharp turn around over the last two weeks from its more than two-year high, losing 2.4% versus the dollar over that time.
"The government and central bank are going to avoid direct intervention at all costs. With the peso already losing steam over the last couple of weeks, the possibility of intervention is greatly reduced," said Sebastian Momberg, currency trader with investment bank BCI.
Traders say, though, that if the peso appreciates to CLP450-CLP460, the central bank will likely be prompted to act.
Chile's government announced Thursday that it will cut red tape for exporters in an effort to improve the competitiveness of their products
In the bond market, yields on inflation-indexed Chilean central bank bonds, or BCUs, ended higher in light over-the-counter trading.
The yield on five-year BCU bonds ended at 2.70%, from 2.65% on Thursday, while the yield on 10-year BCUs closed at 3.10%, from 3.06% the prior session.
PERU:
Peru's Main Stock Indexes End Higher; Sol Unchanged
Lima Peru's main stock market indexes ended higher Friday, in part because mining company Volcan rose sharply in heavy trade.
The Lima Stock Exchange's broad General index closed stronger by 1.50%, at 18764.90.
The Selective blue-chip index ended higher by 2.05% at 27424.70.
Peruvian miner Volcan Compania Minera SAA (VOLCABC1.VL) traded sharply higher on news that shareholder commodity trading firm Trafigura had sold a large holding in that mining company.
Volcan's "C" share ended 6.34% higher at 5.70 soles ($2.04).
Precious metals miner Compania de Minas Buenaventura SAA (BVN, BUENAVC1.Vl) rose 2.24% to end at $50.10, while copper miner Sociedad Minera Cerro Verde SAA(CVERDEC1.VL) increased 2.17% at end at $33.00.
Financial holding company Credicorp Ltd. (BAP) rose 0.09% to end at $123.51. It owns Peru's largest bank, Banco de Credito.
The sol ended unchanged at PEN2.794 per dollar.
Argentina posted a trade surplus of $1.07 billion in September, up from $869 million a year earlier. September exports totaled $6.4 billion, up 41% on the year, while imports climbed 46% on the year to $5.3 billion.
Argentina's August Preliminary GDP +8.5% Argentina's economy roared ahead in August as the country continued to rebound from what many economists call a deep recession a year earlier.
Economic activity soared 8.5% from the same month a year ago, the national statistics agency Indec reported Friday.
he economy expanded 0.3% from the previous month, said Indec, which reported preliminary data for economic growth.
Indec releases its definitive estimate for gross domestic product on a quarterly basis.
Indec's year-on-year figure was similar to the median estimate of 12 economists polled by Dow Jones Newswires. Economists' estimates for August growth had ranged from 4.8% to 10.2%.
But local economists who participated in the survey said Indec would overstate economic activity at least one percentage point.
"The growth data are not as exaggerated as the consumer price data are, but growth is overstated," said Eric Ritondale, an economist at EconViews.
The veracity of Indec's economic data, especially inflation, has been questioned since former President Nestor Kirchner made personnel changes at the agency in early 2007. The government of President Cristina Fernandez, Kirchner's wife, denies charges that it manipulates Indec data.
Despite the controversy, economists agree that Argentina's GDP is expanding at a fast clip, thanks partly to easy comparisons with last year, when the economy probably contracted amid the global financial crisis. Locally, a major drought slashed crop production during that time and a flu epidemic led to lower sales at restaurants, movie theaters and shopping centers across the country.
GDP is widely believed to have contracted by as much as 4.5% last year, which stands in sharp contrast to official data showing an expansion of 0.9%.
Argentina Bank Industry Jan-Aug Profit Rises 42.5%
Argentina's banking system said its net profit rose 42.5% on the year during the January-August period, thanks to growth in lending and gains on securities, according to the Central Bank of Argentina.
Net profit was 6.68 billion pesos ($1.69 billion), up from ARS4.68 billion in the same eight month period of 2009, the central bank said in a report published Thursday night.
The banking industry's return on equity--a measure of profitability--was 21.4% in August, up from 17.7% in the same month last year.
Banks are benefiting from an economy that is booming on the back of elevated levels of government spending, favorable terms of trade for key exports such as grains and automobiles, and strong consumer demand.
The administration of President Cristina Fernandez has forecast growth in gross domestic product of about 9% this year, while the central bank has said the economy might expand as much as 9.5%.
The central bank said the sector's financial margin increased 19.7% to ARS21.79 billion, thanks to higher revenue from lending and gains on fixed-income securities holdings. Administrative expenses jumped 23.2% to ARS22.71 billion, while loan-loss provisions declined 15% to ARS2.13 billion.
Loans on banks' balance sheets at the end of August stood at ARS199.8 billion, up 25.8% from a year earlier, led by growth in commercial lending and consumer credit such as credit-card loans. Asset quality continued to improve, with nonperforming loans as a percentage of total loans easing to 2.4% in August, from 3.3% in August 2009.
Holdings of government securities jumped 40.6% to ARS107.6 billion, the central bank said.
Deposits grew 30.9% on the year to ARS335.9 billion, led by growth in deposits at public-sector banks, which increased 50.7% to ARS103.8 billion. Deposits at private-sector banks expanded a more modest 24.6% to ARS229.3 billion.
With a view to reducing the use of cash in the economy, new regulations that took effect on Monday require all banks to offer a free, basic savings account with a debit card to the public
CHILE:
CHILEAN STOCKS CLIMB
Chile's blue-chip Ipsa index ended higher Friday, with select heavy-weighted shares rising as investors shuffled their portfolios looking for value.
The Ipsa closed 0.2% higher at 4794, while market volume grew to 95.3 billion Chilean pesos ($195.7 million), compared with CLP86.6 billion the previous session.
Volume jumped after an auction of 4.82 billion shares of local bank Corpbanca (BCA, CORPBANCA.SN), which raised $71.5 million. Corpbanca ended 1.6% higher at CLP7.62.
Also gaining, pulp and paper producer CMPC (CMPC.SN), which has a 6.3% weighting on the Ipsa, rose 0.9% to CLP25,500.00 following recommendations by investment banks.
Investment bank Banchile Inversiones recently set a target price of CLP27,250.00 per share for CMPC and highlighted the positive forecasts for the forestry sector.
The nation's largest bank in terms of lending, Banco Santander Chile (SAN, BSANTANDE.SN) jumped 2.4% to CLP43.80, as foreign investors bought up its American Depositary Receipts, according to a trader at investment bank Celfin Capital.
"Market participants shuffled around their portfolios, as they sought better valued shares," said the trader.
Additionally, integrated steel and iron ore producer Cap (CAP.SN) expanded 1.0% to CLP23,300.00 after environmental authorities approved an expansion of iron ore production at its Los Colorados operation in northern Chile.
Chile Peso Ends Weaker Reducing Likelihood Of Forex Intervention
The peso ended weaker against the dollar as investors snapped up greenbacks prior to the weekend, helping to reduce the specter of imminent currency market intervention.
Chile's peso ended weaker against the dollar Friday as investors snapped up greenbacks prior to the weekend, helping to reduce the specter of imminent currency market intervention.
In thin trading, the peso weakened to CLP486.90 to the dollar, versus Thursday's close of CLP485.30, while trading in a range of CLP485.30 to CLP488.10.
With the peso trading recently at 29-month highs versus the dollar, exporters have demanded intervention in the local currency market, as the peso's strength hurts the competitiveness of their products.
The peso, however, has posted a sharp turn around over the last two weeks from its more than two-year high, losing 2.4% versus the dollar over that time.
"The government and central bank are going to avoid direct intervention at all costs. With the peso already losing steam over the last couple of weeks, the possibility of intervention is greatly reduced," said Sebastian Momberg, currency trader with investment bank BCI.
Traders say, though, that if the peso appreciates to CLP450-CLP460, the central bank will likely be prompted to act.
Chile's government announced Thursday that it will cut red tape for exporters in an effort to improve the competitiveness of their products
In the bond market, yields on inflation-indexed Chilean central bank bonds, or BCUs, ended higher in light over-the-counter trading.
The yield on five-year BCU bonds ended at 2.70%, from 2.65% on Thursday, while the yield on 10-year BCUs closed at 3.10%, from 3.06% the prior session.
PERU:
Peru's Main Stock Indexes End Higher; Sol Unchanged
Lima Peru's main stock market indexes ended higher Friday, in part because mining company Volcan rose sharply in heavy trade.
The Lima Stock Exchange's broad General index closed stronger by 1.50%, at 18764.90.
The Selective blue-chip index ended higher by 2.05% at 27424.70.
Peruvian miner Volcan Compania Minera SAA (VOLCABC1.VL) traded sharply higher on news that shareholder commodity trading firm Trafigura had sold a large holding in that mining company.
Volcan's "C" share ended 6.34% higher at 5.70 soles ($2.04).
Precious metals miner Compania de Minas Buenaventura SAA (BVN, BUENAVC1.Vl) rose 2.24% to end at $50.10, while copper miner Sociedad Minera Cerro Verde SAA(CVERDEC1.VL) increased 2.17% at end at $33.00.
Financial holding company Credicorp Ltd. (BAP) rose 0.09% to end at $123.51. It owns Peru's largest bank, Banco de Credito.
The sol ended unchanged at PEN2.794 per dollar.
_______________________________________________________________________
European Markets:
European shares retreated on Friday from six-month high touched on Thursday as investors awaited the outcome of a meeting of G20 financial leaders in South Korea, although strong earnings gave some support.
European stocks ended lower Friday, ending a two-day winning streak as investors took profits on recent gains and digested results from high-profile companies including Ericsson, Volvo and Volkswagen.
The Europe Stoxx 600 index fell 0.3% to close at 266.75 after gaining 0.6% on Thursday.
Despite a better than expected German business confidence report, the EURUSD extended yesterday’s southern journey during the overnight trade and looked poised to test key support soon. FTSEurofirst 300 index falls 0.3 percent.
The pan-European FTSEurofirst 300 .FTEU3 index of top shares was down 0.3 percent at 1,090.32 points after reaching its highest closing level since late April.
GERMANY:
Germany's DAX 30 stock index slipped 0.1% to end at 6,605.84
German IFO Sentiment Index Hits 3 1/2 Year High
Germany's bluechip Dax .GDAXI index climbed above 6,600 points this week for the first time since August 2008, but still has some way to go regain pre-crisis levels around 8,000 points.
Surging exports have helped Germany emerge quickly from its deepest post-war slump last year, boosting growth to 2.2 percent in the second quarter, the highest in reunified Germany.
German business sentiment hit its strongest in 3-1/2 years in October and firms' expectations also improved, with a key survey on Friday suggesting that a recovery in Europe's largest economy may hold up better than expected.
The Munich-based Ifo think tank's business climate index, which points to growth levels six months ahead, climbed to 107.6 from 106.8 in September. That was its fifth increase in a row and the highest since May 2007.
German Ifo business confidence survey unexpectedly rose in October, helping to drive up the Euro while also giving the European Central Bank reason to exit stimulus measures.
The business climate indicator rose to 107.6 off of 106.8 from last month versus expectations of 106.5 while Ifo current assessment and expectations indicators also beat expectations.
A healthy labour market and improving consumer confidence mean German domestic demand is picking up and Economy Minister Rainer Bruederle said on Thursday that domestic demand would make up three quarters of growth in 2011.
Germany's private sector also grew faster than expected in October, with both services and manufacturing gaining.
Prior to Friday's report, the German 2-YR government notes had pushed higher for 8 straight days, the longest run since 2006, but the all-important Ifo data helped push yields lower.
Signs from the corporate sector have also been bullish, with global chemicals maker BASF (BASFn.DE) predicting better than expected gains in 2010 operating profit by at least two thirds after a strong quarter, though it stopped short of forecasting the same pace of growth next year.
VOLKSWAGEN SALES JUMPED 20%
German car maker Volkswagen AG surprised markets with an early release of nine-month earnings. The company said sales rose 20% and operating profit surged to EUR4.8 billion from EUR1.5 billion in the year-ago period. Shares rose 3.2%.
Volkswagen is scheduled to report full results on Oct. 27.
Shares of retailer Metro AG rose 1.1%. "At the current share price, Metro trades 'only' in line with its peers for 2011 earnings, implying no premium either for recovery or potential consensus upgrades," Credit Suisse wrote in a note to clients. "We still think that Metro should trade at a premium."
FRANCE:
French Senate Passes Pensions Reform
French senators defied mass strikes, riots and fuel blockades Friday to pass President Nicolas Sarkozy's fiercely contested bill to raise the retirement age from 60 to 62.
"The day will come when former opponents will thank the president and the government... for acting responsibly," Labour Minister Eric Woerth predicted just before the upper house approved the bill by 177 votes to 153.
CAC-40 stock index lost 0.3% to close at 3,868.54
Shares of French glass and building-materials maker Compagnie de Saint-Gobain SA fell 3%, a pullback that came a day after it reported third-quarter sales rose 7.8% and confirmed its full-year sales outlook.
Gains were seen by PSA Peugeot Citroen SA, which rose 2.8%, and Renault SA, up 1.4%.
Renault's third-quarter sales are due next week.
French Police Break Blockade Near Paris
French police stormed through picket lines at oil refineries and fuel depots Friday as the battle against President Nicolas Sarkozy's pensions reform escalated hours before a decisive vote. Clashes have broken out outside a major oil refinery in France after riot police moved in to clear strikers who blockaded the terminal for 10 days.
Two people were hurt outside the Grandpuits refinery east of Paris, one of 12 facilities affected by strikes. The Police also acted to remove protesters from two fuel depots, in an attempt to restore supplies at the start of the school half-term.
Teargas was used to stop 200 demonstrators blocking access to a site near the southern city of Toulouse.
President Nicolas Sarkozy ordered the authorities to lift the blockade earlier this week after thousands of petrol stations across France ran dry. The Senate will vote later on the pension reform that sparked the action.
Ministers said the bill would clear its last major hurdle in a matter of hours, after the Senate was asked to halt debate on hundreds of opposition amendments and hold a single vote on all of them. Changes to the retirement and pension age could become law next week, once they pass the committee stage and a final vote is held in both houses of parliament.
Bank Of France: French 3Q GDP Estimated To Be Up 0.3%
France's gross domestic product likely grew 0.3% in the third quarter, the Bank of France said Friday, citing its final advance estimate based on its synthetic indicator model. Such growth is unchanged from the French central bank's previous advance estimate.
France Has Enough Oil Reserves For 90 Days
France still has 90 days of oil left even after the government authorised the use of strategic reserves to cope with strike induced shortages, the body controlling the stocks said Friday.
"At midday, the reserves held by the company for managing safety reserves were what they are supposed to be," Jean-Marc Tennesson of the French Committee of Strategic Oil Reserves (CFSSP) told AFP.
Thousands of French petrol stations have run dry as protest action against President Nicolas Sarkozy's unpopular pension reform bid hit refineries and oil depots in recent weeks.
At the start of October, France had 17 million tonnes of crude oil and oil products in its strategic stocks, enough for an estimated 98.5 days of consumption, more than the internationally stipulated 90 days.
The reserves are controlled by the CFSSP and oil companies which keep part of the stocks in their oil depots.
The government on October 15 authorized the use of companies' own reserves but declined to use the term "strategic reserves" in order to avoid panicking motorists and markets. But an official from the International Energy Agency confirmed on Monday that France had indeed started to use its strategic reserves and that the agency had been informed.
LONDON:
London's FTSE 100 stock index settled 0.3% lower at 5,741.37
London Stocks Close Lower
FTSE 100 5741.37 -16.49 -0.29%FTSE 250 10894.73 -9.96 -0.09%
DJ UK Smaller Companies 917.64 +1.90 +0.21%
FTSE 100 closes down with jitters setting in and a reluctance to take up any positions as the G-20 meeting gets under way.
Mining stocks lead the decline, with Vedanta Resources -2% and Eurasian Natural Resources -2.3%.
Lonmin is -1.7% as Goldman Sachs downgrades the stock. Reckitt Benckiser is the biggest faller however, -4.6%, after the company announced the departure of its chief financial officer, Colin Day. On the upside TUI Travel is +3.2% and at the top of the leaders board, recouping some of the previous session's losses.
Preliminary 3Q GDP Seen Slowing From 2Q
U.K economic growth is the third quarter is expected to have slowed from the second, preliminary gross domestic product data due next week is predicted to show.
British Airways Offers To Return Travel Perks In Bid To End Dispute
British Airways PLC (BAY.LN) said Friday it has offered a further compromise on restoring travel perks to cabin crew that went on strike earlier this year, as part of its latest attempt at ending the ongoing labor dispute.
Betfair Up 18% In Conditional Trading After IPO
Shares in online sports-betting company Betfair (BET.LN) were trading up 18% from its initial public offering price of GBP13 mid-morning Friday, in a sign of confidence from investors dealing with a still-wary IPO market.
TNK-BP's AAR: Optimistic On BP Vietnam Buy Amid Russia Talks
TNK-BP Ltd.'s shareholders are optimistic its acquisition of BP PLC's (BP) assets in Vietnam will still be completed early 2011 as it is in talks with the Asian nation about a partnership in Russia, the chief executive of TNK-BP's Russian partner said Friday.
BSkyB Customers Swell Close To 10 Million Mark
British Sky Broadcasting Group PLC (BSY.LN), which is subject of a takeover approach from majority shareholder News Corp. (NWS), said Friday that its customers had swelled close to a landmark 10 million, attracted by its mix of content, broadband and phone services, as it posted third quarter earnings that beat expectations.
Investor Joseph Sitt To Buy Burlington Arcade
Joseph Sitt, the New York-based property investor who created the Ashley Stewart retail brand and is involved in the redevelopment of Coney Island, is poised to make his first European acquisition with the purchase of London's iconic Burlington Arcade, according to people familiar with the situation.
British Sky Broadcasting Group PLC (BSY.LN), which is subject of a takeover approach from majority shareholder News Corp. (NWS), said Friday that its customers had swelled close to a landmark 10 million, attracted by its mix of content, broadband and phone services, as it posted third quarter earnings that beat expectations.
Investor Joseph Sitt To Buy Burlington Arcade
Joseph Sitt, the New York-based property investor who created the Ashley Stewart retail brand and is involved in the redevelopment of Coney Island, is poised to make his first European acquisition with the purchase of London's iconic Burlington Arcade, according to people familiar with the situation.
Caterpillar To Buy MWM Holding From 3i Group For EUR580M
Caterpillar Inc. (CAT) said Friday that it has agreed to buy MWM Holding GmbH from 3i Group PLC (III.LN) and funds managed by it for EUR580 million in cash.
Staffline Sees 2010 Above Views On Uncertain Economy
Temporary staffing and outsourcing company Staffline Group PLC (STAF.LN) said Friday full-year earnings will likely be significantly ahead of market expectations as economic uncertainty leaves businesses unwilling to take on permanent staff, adding that it is on the lookout for acquisitions.
SWEDEN:
Swedish stocks were active today as shares of L.M. Ericsson AB jumped more than 4% after the telecom-equipment company topped expectations on net income for the third quarter.
Shares of Volvo AB fell 1.9%. The firm's third-quarter sales fell short of expectations, though Volvo swung to a net profit from a loss a year ago.
Caterpillar Inc. (CAT) said Friday that it has agreed to buy MWM Holding GmbH from 3i Group PLC (III.LN) and funds managed by it for EUR580 million in cash.
Staffline Sees 2010 Above Views On Uncertain Economy
Temporary staffing and outsourcing company Staffline Group PLC (STAF.LN) said Friday full-year earnings will likely be significantly ahead of market expectations as economic uncertainty leaves businesses unwilling to take on permanent staff, adding that it is on the lookout for acquisitions.
SWEDEN:
Swedish stocks were active today as shares of L.M. Ericsson AB jumped more than 4% after the telecom-equipment company topped expectations on net income for the third quarter.
Telefon AB L.M. Ericsson (ERIC, $11.30, +$0.53, +4.92%), the world's largest maker of mobile network equipment, on Friday posted a stronger-than-expected third-quarter profit as rising margins helped to compensate for a continuing shortage of component supplies and North American sales surged, helped by the rising popularity of smartphones.
Shares of Volvo AB fell 1.9%. The firm's third-quarter sales fell short of expectations, though Volvo swung to a net profit from a loss a year ago.
IRELAND:
Dublin Stocks: ISEQ Ends -1% At 2,720; Financials Weak
SWITZERLAND:
Switzerland, market heavyweight Nestle SA slipped 0.8% after the company edged past expectations on nine-month sales and confirmed its financial outlook.
_______________________________________________________________________Asian Pacific Markets:
CHINA:
China Shares End Mixed on Light Trade Volume
Hang Seng down 0.6 pct
Shanghai Composite down 0.3 percent
Hong Kong and Shanghai shares slipped on Friday in light volume as investors locked in gains in financials ahead of bank earnings reports due next week.
The Hang Seng index .HSI fell 0.6 percent to 23,517.5 on the day, producing most of the week's 1 percent decline that marked its first weekly drop since the end of August. Trade was HK$84 billion, an eighth lower than last week.
TRANSPORTATION GAINED:
Transport stocks, including automobiles and railway equipment makers gained helped by expectations that domestic demand in China is rising as the government tries to rebalance the economy.
China Railway Construction rose 4.9 percent to a 52-week high, breaking out of a 2-½ month trading range. Geely Auto rose 6 percent.
BANKS DECLINE:
Mainland banks had been a popular buy since mid-September as investors picked up market laggards, encouraged by robust lending and low valuations.
"The surprise rate hike sort of threw a wrench in the works," said Christian Keilland, managing director at BTIG in Hong Kong, referring to China central bank's surprise decision to raise interest rates on Wednesday for the first time since late 2007.
China Construction Bank shares fell 1.6 percent and were the biggest drag on the index, having provided the biggest boost on Thursday as investors rotated in and out of sectors.
CCB shares have gained 10 percent in October, outperforming the broader market by nearly two times.
Bank of China fell 2 percent, Agricultural Bank of China fell 1.2 percent and ICBC was down 0.6 percent.
JAPAN:
Nikkei Ends Week Up- Light Volume
Japan's Nikkei average concluded the week higher on Friday, carrying over an uptrend seen in U.S. and European markets, but persistent bullishness in the yen has keep stocks under pressure.
Trading were nervous as investors were unwilling to take large positions before confirming the outcome of the Group of 20 meeting starting on Friday.
The "yen's strength will continue to limit gains in stocks," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities. "The underlying mood is not too good as there are very few incentives to buy Japanese stocks despite European and U.S. stocks having advanced in the last two sessions."
Nikkei futures traded in Chicago 2NKc1 finished at 9,410, up 0.4 percent from the Osaka close JNIc1. The benchmark Nikkei is likely to move between 9,300 and 9,500, traders said.
The Nikkei slipped to its lowest close in three weeks on Thursday, finishing down 0.1 percent to 9,376.48, its lowest close since Sept. 30.
STOCKS TO WATCH
Hitachi Ltd
Hitachi's operating profit for April-September is set to come to more than 200 billion yen ($2.46 billion), beating its forecast of 170 billion yen, the financial daily Nikkei reported.
The earnings of Japan's biggest electronics conglomerate were supported by strong economic growth in emerging markets, resulting in higher demand for such items as digital consumer
electronics.
Sumitomo Corp and Mazda Motor Corp
Sumitomo is in the final stages of talks to buy an additional stake in Mazda from Ford Motor Co (F.N), the Nikkei business daily reported. The trading house, which holds a stake of about 0.4 percent in Mazda, is expected to buy about another 1 percent in the Japanese automaker, the paper said.
Toshiba Corp
The Japanese electronics firm said on Thursday its first-half operating profit would likely beat its previous forecast by 49 percent thanks to strong sales of semiconductors and liquid crystal displays.
Toyota Motor Corp
Toyota said on Thursday it would begin producing its best-selling Prius hybrid vehicle in Thailand from November. Toyota already produces and sells its Camry Hybrid sedan in Thailand, the company said in a news release.
SOUTH KOREA:
G20 MEETING
G-20 finance ministers and central bankers began talks in Gyeongju, South Korea, today after weeks of negotiations over whether nations from the U.S. to China are relying on weaker exchange rates to spur growth.
G-20 Proposal On Curbing Trade Imbalances Faces Opposition
GYEONGJU, South Korea
A proposal among the Group of 20 nations to target curbs on current-account imbalances, meant to avert a "currency war," itself ran into opposition from industrial and developing nations Friday.
In Friday's meeting, China didn't appear to offer "any clear, straight answers" to the proposal, Japan's Noda said. Chinese officials declined comment on Friday's meetings. But the current-account idea received a boost after People's Bank of China Deputy Gov. Yi Gang said Oct. 10 that China is planning policies that could result in its surplus falling below 4% of gross domestic product in three to five years, from about 5.8% in 2009.
STOCKS CLOSED UP ON LIGHT TRADE
The Korea Composite Stock Price Index .KS11 (KOSPI) finished up 0.23 percent Thursday at 1,874.69 points, still fairly close to the earlier 34 month high of 1,909.01 points.
Seoul Shares Higher
Seoul shares may open higher on Friday after gains on Wall Street and a strong set of U.S.
corporate earnings, while LG Display is likely to be in focus after after posting weak third quarter results late on Thursday.
South Korea's Hyundai Motor said on Friday that it had signed a 500 billion won ($443.1 million) joint venture with China's commercial vehicle maker Sichuan Nanjun Automotive Group to expand its presence in the growing segment.
The 50-50 joint venture, which will be established in Ziyun city in the southwestern province of Sichuan, aims to sell 90,000 commercial vehicles in 2011 and 300,000 units in 2015, Hyundai Motor said in a statement.
China's commercial vehicle market is expected to grow to 5.5 million units in 2015, from 4.5 million units this year, Hyundai said.
Hyundai, the world's No.5 car maker along with its affiliate Kia Motors, is enjoying a surge in sales in China, fueled by Beijing's subsidies for fuel-efficient cars. Monthly car sales exceeded 70,000 units for the first time in China in September, and 2010 sales are expected to exceed the target of 670,000 units.
Sales will further increase when Hyundai's third Chinese plant will be completed in 2012, which will push up Hyundai's total production capacity to 1 million units.
Hyundai Motor in September signed a deal with Chinese government officials to build a third plant in China with production capacity of 400,000 units per year Beijing Hyundai Motor, a joint venture between Hyundai Motor and Beijing Automotive Industry Holding Corp (BAIC), currently runs two plants in China.
AUSTRALIA:
Australia's Current Account Deficit is 4.25 percent.
Swan said on Friday that U.S. proposals to target current account balances as a mean to re-balance the global economy were "constructive."
Referring to proposals floated by U.S. Treasury Secretary Timothy Geithner, Swan said "it's one way of dealing with such a challenge, and a constructive one. From our perspective when it comes to current accounts, not one size fits all." "We see a floating exchange rate as an important shock absorber in our economy," he said.
Referring to proposals floated by U.S. Treasury Secretary Timothy Geithner, Swan said "it's one way of dealing with such a challenge, and a constructive one. From our perspective when it comes to current accounts, not one size fits all." "We see a floating exchange rate as an important shock absorber in our economy," he said.
WORLD FOREX CURRENCIES SNAPSHOT:
(FRIDAY, OCT 22, 2010 3:30 PM EDT)
EUR/USD 1.3928 +0.0016 (0.12%)
USD/JPY 81.3800 +0.0500 (0.06%)
GBP/USD 1.5668 -0.0040 (-0.25%)
CAD/USD 0.9735 -0.0009 (-0.10%)
USD/HKD 7.7621 -0.0018 (-0.02%)
USD/CNY 6.6583 +0.0081 (0.12%)
AUD/USD 0.9800 +0.0017 (0.17%)
_______________________________________________________________________
WORLD MARKETS SNAPSHOT:
(FRIDAY, OCT 22, 2010 3:30 PM EDT)
Shanghai 2,975.04 -8.49 (-0.28%)
Nikkei 225 9,426.71 +50.23 (0.54%)
Hang Seng Index 23,517.54 -131.94 (-0.56%)
TSEC 8,168.06 +36.83 (0.45%)
FTSE 100 5,741.37 -16.49 (-0.29%)
DJ EURO STOXX 50 2,873.74 -8.55 (-0.30%)
CAC 40 3,868.54 -9.73 (-0.25%)
S&P TSX 12,588.88 -10.35 (-0.08%)
S&P/ASX 200 4,648.20 +25.30 (0.55%)
BSE Sensex 20,165.86 -94.72 (-0.47%)
_______________________________________________________________________Nikkei 225 9,426.71 +50.23 (0.54%)
Hang Seng Index 23,517.54 -131.94 (-0.56%)
TSEC 8,168.06 +36.83 (0.45%)
FTSE 100 5,741.37 -16.49 (-0.29%)
DJ EURO STOXX 50 2,873.74 -8.55 (-0.30%)
CAC 40 3,868.54 -9.73 (-0.25%)
S&P TSX 12,588.88 -10.35 (-0.08%)
S&P/ASX 200 4,648.20 +25.30 (0.55%)
BSE Sensex 20,165.86 -94.72 (-0.47%)
FRIDAY'S U.S. ECONOMIC CALENDAR:
10:00 a.m.
Sept. Regional & State Employment & Unemployment
10:00 a.m.
Sept. Mass Layoffs
N/A
Philadelphia Fed Pres Plosser speaks in Philadelphia
Sept. Regional & State Employment & Unemployment
10:00 a.m.
Sept. Mass Layoffs
N/A
Philadelphia Fed Pres Plosser speaks in Philadelphia
_______________________________________________________________________
US STOCK MARKET SUMMARY, THURSDAY, OCT. 21, 2010:
Stocks:On Thursday, Wall Street edged higher in a volatile session as the market swung in a wide range throughout the day with investors reacting to gyrations in currency markets and relatively strong earnings took a back seat to the dollars movements. .
Stocks erased the day's climb, as a stronger U.S. dollar and worries over elevated earnings expectations doused the market's earlier exuberance. The Dow Jones industrial average .DJI gained 38.60 points or 0.35 percent to 11,146.57, while the Nasdaq Composite Index .IXIC gained 2.28 points, or 0.09 percent, to 2,459.67.
The DJIA had been up more than 100 points earlier in the day. Stocks weakened as the dollar strengthened and traders said jitters over the threat of a currency war were spooking the market. The Dow's worst performer was Bank of America, which slid 3.2% as investors continued to worry over banks' liabilities connected to investigations into foreclosure practices. Caterpillar was also weak, sliding despite a surge in its third-quarter profit.
Treasurys:
Treasurys fell on a larger-than-forecast new debt-supply package, while comments from a key Federal Reserve official tempered bets on the central bank to buy government bonds on a large scale. The 30-year bond broke a three-day winning streak. Federal Reserve Bank of St. Louis President James Bullard, who votes on monetary policy this year, said he sees "small increments" of Treasury bond purchases when the Fed meets in early November.
Forex:
The dollar gained slightly against its major rivals as investors grow jittery ahead of this weekend's Group of 20 meeting, increasing the appeal of the safe-haven currency. Encouraging economic data from China and Germany increased demand for riskier assets overnight, but that faded in New York trading. Investors grappled with market chatter about some sort of currency agreement possibly emerging from this weekend's G-20 meeting in South Korea. However, most analysts dismiss the likelihood of any real accord.
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