World Summary: US MARKET PLAYS CAUTIOUSLY AHEAD Q1 EARNINGS 07:56, Wednesday, April 11, 2007
Sydney - Wednesday - April 11: (RWE Aust Business News) - US investors played it cautiously in the latest session ahead of the first quarter earnings season.
On Wall Street, the Dow crept 5 points higher while the S&P 500 gained 4.
Technologies were a touch firmer with the Nasdaq composite gaining 8.
US investors are still unsettled about interest rates after the better-than-expected job figures on Friday, underlining a stronger economy which does not augur well for a Fed rate cut.
Oil stocks are still being propelled by offshore political developments, although the latest confrontation between Britain and Iran has faded after the return of the 15 Britons who were kidnapped by the Iranians in the Gulf.
Overnight, the May crude contract rose 38c to $61.89 barrel on the New York Mercantile Exchange.
Meanwhile, US Treasuries regained some of recent losses which pushed yields near two-month highs.
In the latest session the 10-year cash paper yield fell 2 points to 4.73 per cent.
Dallas Federal Reserve Bank president Richard Fisher said inflation was low, but could be lower still.
"We have been growing handsomely ... and we have kept inflation reasonably low, but not as low as some of us would like," he told a community luncheon in Texas.
Fed governor Frederic Mishkin said that while the Fed has effectively kept prices low and stable, stimulative policy that boosts the jobless rate above long-run sustainable level might feed inflation and hurt incomes.
Meanwhile, the International Monetary Fund says stability of the global financial system is being bolstered by favourable economic conditions but some financial market risks have crept up in recent months.
The fund also points to the potential risk from the recent wave of corporate buyouts, which show a weakening of credit discipline.
"So far, target firms are mostly those with high cash flows and low leverage," the fund said.
"However, there are signs that credit risks have risen as valuations of target companies are rising along with leverage, while credit discipline is eroding, reflecting the continued weakening of loan covenants."
In other news, currency trading volume on electronic platforms doubled to $35 trillion in 2006, helped by improvements in technology and investors new to the foreign exchange market, a survey showed.
Electronic trading systems encourage volume growth by making currency transactions easier and cheaper, by aggregating and increasing liquidity, and by extending market access to investors that otherwise would not be able to participate, especially retail investors.
The strong performance of commodities this year, after a battering in late 2006, should augur well for currencies and equities associated with the sector.
Recoveries in oil and gold and new bull markets in other commodities like corn have contributed to a gain of more than 5pc this year in the S&P GSCI Index, formerly the Goldman Sachs Commodity Index.
In the US market, home builder D.R. Horton said its fiscal second-quarter orders fell 37pc, in an ill omen for the crucial spring home-selling season.
TXU has scrapped plans to build a fleet of coal-fired power plants in Texas and will focus on building nuclear power plants.
Luxury-goods group PPR said it bought a large stake in Puma and will bid for the rest of the company, valuing the German sporting-goods maker at $7.1 billion.
WALL STREET... The Dow Jones industrial average index settled 4.71 points higher at 12,573.85 and the S&P 500 ended 3.78 points better at 1448.39. The Nasdaq Composite finished 8.43 points higher at 2448.61, while the 100 futures index was up 8.74 to 1816.93 at the close. The 10-year note rose 6/32 points to 99 8/32, trimming the yield 2 points to 4.73pc. The 30-year bond yield slipped 1 point to 4.91pc while the 2-year note yield dropped 4 points to 4.71pc.
US DOLLAR... is changing hands at 119.04 yen, compared with the 119.30 seen previously in New York. The euro is at 1.3432 from 1.3356 while sterling is at 1.9720 against 1.9608 previously. On the Swiss franc the US dollar is trading at 1.2172 against 1.2267.
AUSTRALIAN DOLLAR... continues to trade at 17-year highs, at US82.54c against US82.64c on yesterday's local close. It posted a high in New York at US82.65c overnight and a low of US8.65c. The Aussie is also strong on crosses with 98.25 yen (prev 97.35) 0.6144 euros (pre 0.6110) and 41.86 pence on sterling (pre 41.62).
AUSTRALIAN SHAREMARKET ... is likely to firm with the June futures contract up 28 points to 6205 at this stage. Resuming after the Easter long weekend, the ASX 200 index rose 75.9 to 6153 and the All Ordinaries put on 75.1 to 6139.1 yesterday. Today MacarthurCook Asia stapled securities will begin trading. Ex dividend are Oxiana, SP Telemedia and Tollhurst Noall. The ABS will publish February housing finance figures today and the Department of Employment and Workplace Relations will publish its leading index of employment.
EUROPEAN SHAREMARKETS... At the close the UK FTSE-100 Index rose 20.5 points to 6417.80, the French CAC-40 gained 24.89 to 5766.27 while the German DAX Xetra advanced 66.76 to 7166.67 and Zurich improved 51.57 to 9150.65. Amsterdam rose 5, Brussels 42, Madrid General 4, Milan 316 and Oslo 3.
METALS... The COMEX spot (Apr) gold gained $4.60 to $676.50 oz. The active June contract also rose $4.60 to $681.50 oz. April silver improved 12.2c to $13.888 oz while April platinum put on $4.30 to $1265.60 oz. April copper edged up 2c to 351.70c lb in New York.
Three months closing LME bid prices were copper $7750 (prev $7370) tonne, tin $14,100 ($13,950), lead $2015 ($1990), zinc $3550 ($3425) aluminium $2850 ($2845) and nickel $48,600 ($48,700) tonne.
Earlier, on the three months official bid prices, copper rose $349 to $7759 tonne, tin gained $150 to $14,275 while lead added $44.50 to $2029.50. Zinc rose $194 to $3594, aluminium improved $73.50 to $2913,50 while nickel rose $50 to $49,550 tonne.
OIL... The May crude contract settled 38c higher at $61.89 barrel with a high of $62.25 and low $61.50. The June contract rose 57c to $64.88 barrel with a high of $65.15 and low $64.38. Brent ICE for May gained 78c to $67.37 with a high of $67.67 and low of $66.40 barrel.
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