16/07/09

FTSE 100	4346.46, +108.78	Dow	8616.21, +256.72
FTSE 250	7572.33, +161.24	Nasdaq	1862.90, +63.17
FTSE All Share	2220.23, +54.12	S&P 500	932.68, +26.84
Nikkei	9344.16, +74.91	Hang Seng	18495.58, +236.92
Oil (Crude)	$61.54	Gold	$939.10
Base Rate	0.5%	10 Yr Gilt	3.81%
£/$	1.638	Euro/Gbp	0.86

Markets

stocks rallied yesterday following positive economic data and a bright outlook from Intel. The government reported industrial production fell 0.4% against expectations of a 0.6% contraction, suggesting the recession is abating. Furthermore, the Federal Reserve's minutes from the most recent policy meeting said while the economy remained weak, the pace of the decline appeared to be slowing.

The Dow Jones jumped 256.72 points to close at 8,616.21 while the S&P 500 gained 26.84 points to end at 932.68. The Nasdaq rallied 63.17 points to finish at 1,862.90.

Intel led tech stocks higher after reporting profit and revenue that topped forecasts following better than expected consumer demand for personal computers. The world's largest chip maker also gave a strong outlook for the remainder of the year, sending shares 7.3% higher. Rival, Advanced Micro Devices also went 8.7% higher. Thursday's trade may well be dominated by tech stocks, with results expected from IBM and Google. IBM was the top performer on the Dow yesterday, up 3.85%.

American Express surged 11.3% higher after forecasting a better second half to the year. This came after US credit card companies said defaults and delinquencies were lower than expected in June.

US light crude oil for August delivery jumped $2.02 to $61.54 a barrel. COMEX gold for August delivery gained $16.60 to $939.10 an ounce. Treasury prices dropped, raising the yield on the 10 year note to 3.56% from 3.47%.

The Nikkei climbed 74.91 points to 9,344.16 this morning. Mitsubishi Corp, which gets more than half its sales from commodities, added 4.6% after prices rose. Bridgestone Corp, the world's largest tyre maker, rose 5.8% after Mizuho Securities more than doubled its earnings estimate.

The Hang Seng is currently 236.92 points higher at 18,495.58 after a government report showed China's economy rebounded from its weakest growth in almost a decade. China's GDP expanded 7.9% in the second quarter from a year earlier after a 6.1% gain in the three previous months.

The FTSE 100 is currently 12.38 points higher at 4,358.84. Schroder rises 5.1% after Citigroup upgraded the stock. Petrofac gains 4.5% after confirming its 50% owned Joint Venture, Petrofac Emirates, has received a letter of award from GASCO for a contract worth approximately US$2.1 billion. Fresnillo adds 3.3% after reporting a 6.7% rise in output of precious metals during its second quarter and said it expects production costs to continue to decline through the year. On the downside, Autonomy tops the fallers even after reporting a 67% rise in second quarter profit and a cautiously optimistic outlook.

Economics

Initial jobless claims (week 11 Jul) 13:30 BST / 08:30 EDT

Last week’s initial jobless claims were lower than expected at 565,000, down from 617,000 the previous week. The reading was depressed by the Labor Department’s seasonal adjustment, as auto factory layoffs that typically occur in early July may have been pre-empted by the closures and shutdowns that have already been happening all year long. An even bigger seasonal factor could depress claims again this week, and analysts expect a drop down to 510,000. Meanwhile, continuing claims (with an extra week’s lag) showed an unexpected rise to 6.88m last week, a new all-time high. Analysts look for a pullback to 6.80m this week.

US Treasury international capital flows (May) 14:00 BST / 09:00 EDT

TIC capital inflows continue to be dominated by purchases of Treasury notes and bonds. April’s USD11.2bn net long-term inflow was positive due to the USD42bn of Treasury purchases, which were relatively balanced between official institutions and private foreigners. Meanwhile, foreigners were small net sellers of agencies and corporate bonds and modest buyers of US stocks, while US residents purchased USD23bn in foreign securities. Analysts look for a USD25bn longterm inflow for May, with a bigger contribution coming from US stock purchases.

US Philadelphia Fed (Jul) 15:00 BST / 10:00 EDT

June’s Philadelphia Fed jumped 20pts up to -2.2, moving it from a laggard (relative to the Empire, Richmond Fed, and ISM surveys) to one of the leaders. The detail also improved sharply, with new orders rising to -4.8 from -25.9 and shipments climbing to +2.1 from -19. Analysts look for a similar reading of -2 in July, with new orders and shipments also staying close to the breakeven level of 0.

US NAHB housing market index (Jul) 18:00 BST / 13:00 EDT

Homebuilder optimism has been trending higher since January, although the latest reading in June dropped 1pt to 15. Both anecdotal reports from builders as well as the latest readings on new home sales and housing starts suggest we are starting to see some stabilization. Homebuilder equity prices have dropped off a bit recently, but analysts still expect the NAHB index to creep slowly higher, rising to 16 in July.

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