David Morrison - 28.07.09

CFD360 Markets Round-Up - Equities take a breather - 28/07/2009 28/07/2009 16:49 PM GMT

Tuesday 28th July 2009

Headlines 

Deutsche Bank hit by bad loans provision



US equities lead wider falls



CFTC looks at limiting speculators

Chart To Watch - BP - weekly chart

BP gave up earlier gains as traders dissected today's earnings and guidance. The fall of 53% in second quarter profits compared to the same period last year was better than expected. But there was disappointment in the company's gloomy outlook. The dividend was held steady at 14 cents, yet there would be a further $1 billion of cost cuts, following the $2 billion last year. The stock has failed to close above resistance at the 50% retracement.

  GFT Inflation Indices Market

Ticker

Price

Change

Percent

CPI - UK

CPIUKU9

0.61

unch

unch

HCIP Euro Inflation

HICPEUU9

0.08

unch

unch

Again GFT's inflation indices were unchanged today which reflects the balancing forces acting on inflation expectations. On one side we see crude oil and commodity prices slipping back, suggesting lower inputs. On the other side, bond yields are creeping higher across the UK, Germany and US. This could be over supply concerns, but also because inflation worries are starting to emerge. However, any rise in rates will go some way to dampening spending in the current environment, as saving rates push higher.

rise in rates will go some way to dampening spending in the current environment, as saving rates push higher. Most Actively Traded Instruments Index

Commodity

Equity

US Wall Street (.US30) Spot Silver (.SILVER)

Next (NXT.L)

Hong Kong 40 (.HK40)

WTI Crude Oil (.WTI)

BP (BP.L)

USTEC 100 (.USTEC)

High Grade Copper (HGU9) GlaxoSmithKline (GSK.L)

Uk and Europe Market

Ticker

Price

Change

Percent

UK 100

.UK100

4526

- 48.0

- 1.05

Germany 30

.DE30

5180

- 70.0

- 1.33

France 40

.F40

3330

- 42.0

- 1.25

UK Market News 

CBI - UK shop sales fall



BP (BP.L) beats forecasts



Lloyds (LLOY.L) appoints new chairman

We saw another positive open for European stocks, but by mid-morning the indices were all hovering around their closing levels yesterday. The FTSE was heading for a record 12th day of gains, but was finally knocked lower after a weaker Consumer Confidence number from the US. A CBI survey showed that 47% of retailers reported lower sales for the year to July. Also of concern was that retailers expect conditions to remain difficult through August. BP (BP.L) profit halves but beats forecasts, tracking the fall in the price of crude from $147 this time last year to $70 now. Cost cutting is a major feature, with cuts of $2 billion this year and a further $1 billion coming out next. Tony Hayward, BP's chief executive, said that energy demand had now stabilised, while he saw "little evidence of any growth in demand and expect the recovery to be long and drawn out." BP gave up earlier gains to end the day down 2.9%. Lloyds Bank (LLOY.L) appointed Sir Win Bischoff as its new chairman. Many observers were disappointed, feeling that the appointment of the former Citigroup chairman showed a lack of inspiration, with the troubled taxpayer-backed group preferring a cosy shoe-in for the role rather than a more radical appointment, such as Northern Rock's Ron Sandler. The UK taxpayer owns 43% of the group, and shareholders are anxious to see a radical restructuring of the group.The stock ended down 3%. National Express (NEX.L) was down 5% in early trading after it was revealed that Transport Secretary Lord Adonis may strip the rail and coach company of its profitable contracts as punishment for abandoning  the east coast franchise.However, the stock regained some ground to end down 3.9%. Deutsche Bank (DTBKY) fell 11% despite posting better-than-expected second quarter earnings. The German bank was hit by a dramatic leap in provisions for credit losses. These rose to 1 billion euros for the second quarter, up from 135 million euros for the previous year. Big Winners Stock

Ticker

Price

Change

Percent

GlaxoSmithKline

GSK.L

1171

+ 8.50

+ 0.73

Shire

SHP.L

893.0

+ 9.50

+ 1.08

Sage

SGE.L

192.2

+ 6.80

+ 3.67

It has been difficult to find many gainers after the broad-based sell-off this afternoon. However, financial software firm Sage, was up as it announced results in line with expectations. Defensive drug stocks also benefited from losses in the cyclicals, led by GlaxoSmithKline. Shire was also stronger as it said it was still confident of launching its hyperactivity drug, despite US regulatory delays. Big Losers Stock

Ticker

Price

Change

Percent

Randgold Resources RRS.L

3692

- 342

- 8.48

Xstrata

XTA.L

736.0

- 50.2

- 6.38

Provident Financial

PFG.L

798.5

- 56.5

- 6.61

Randgold fell after it announced a share offering to fund gold mining projects in Senegal and Mali. Mining conglomerate Xstrata posted an 11% rise in coal production and a 1% rise in copper output for the first half. The results were seen as secondary to its aim of merging with Anglo American (AAL.L), who report on Friday. Sub-prime lender Provident Financial announced a 3.5% rise in half-year profits, but fell as some brokers tempered their outlooks for the company. US Indices 

US house prices up month-on-month



Consumer Confidence falls again



Earnings mixed Index

Ticker

Price Change Percent

DJIA

.US30

9034

S&P

.US500 972.0 - 10.0

NASDAQ .USTEC 1588

- 80

- 11.0

- 0.88 - 1.02 - 0.69

 Equities were heading lower by mid-session in what many saw as a healthy pull-back after a run of gains lasting more than two weeks. The S&P/Case-Shiller HPI showed that house prices rose month-on-month for the first time since July 2006, with the index rising 0.5% from April. Year-on-year prices were down 17.1%, which was better than expected, and an improvement from last month's drop of 18.1%. Analysts took this as evidence that the housing market is starting to stabilise, although warned that it was still a long way from recovery. Nevertheless, it is a mild positive combined with yesterday's better-than-expected Existing Home Sales data. In contrast, Consumer Confidence dropped for the second month in a row, falling to 46.6 from 49.3 in June, while the expected number was 49. The fall-off is despite strong gains in the stock market, and emphasises the concerns felt by many Americans as unemployment continues to rise. Data like this also force us to look beneath the headline numbers, as yesterday's main housing data hid the fact that while the number of home sales increased, the prices achieved were 12% below those of a year ago. As the earnings season hits its busiest week. We had results from Viacom and Coach before the open. Media conglomerate Viacom (VIA) announced a 30% fall in net profit in the 2nd quarter as revenues fell 14% from this time last year. By mid session the stock was unchanged. Meanwhile luxury goods maker Coach (COH) announced earnings in line with analysts' expectations, but the sock was down 5% mid session. Technical Outlook - S&P Update

Today's pullback looks like testing 969 as near-term support. If the market manages to hold on to recent gains, this level could become more significant. The bears will want to see this level breached and a lower close. So far, today's sell-off is very mild given the size of July's rally.

  Commodities: Precious Metals: Market Ticker

Price

Change

Percent

Gold

.GOLD

941.5

- 12.0

- 1.26

Silver

.SILVER 1370

- 28.0

- 2.00

Precious metals finally succumbed to selling pressure as buyers went on strike as they watched the dollar push higher. Gold, silver, oil and equities all headed lower as the dollar pushed higher, breaking a string of losses as it started to hit technical levels against a range of currencies. If this dollar move is temporary, then we can expect risky assets to resume their upward trajectory. Otherwise, a more prolonged dollar rally could see recent gains in metals, crude oil and equities wiped out.

 

Crude Oil: Market Ticker

Price

Change

Percent

Brent

.BRENT

6960

- 118

- 1.67

WTI

.WTI

66.90

- 1.42

- 2.01

Crude oil remains in the uptrend, but as with precious metals and equities, it is taking a breather today as the dollar rallies. The disappointing Consumer Confidence number meant that any attempts to rally were snuffed out There is some uncertainty about the outcome of an investigation into finite commodities markets by the regulatory body, the CFTC. There are worries that position limits may be imposed on market participants which would lead some speculators to unwind positions. The overall effect this would have on prices is far from clear.

  Looking forward - Wednesday 29th July 

09:30 GBP Net Lending to Individuals



13:30 USD Core Durable Goods



13:30 USD FOMC member Dudley speaks



15:30 USD Crude Oil Inventories

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