23/07/09

Apple reported higher quarterly sales and earnings that topped forecasts in a report released late Tuesday. Strong sales of Macs and iPhones fuelled the gains. The stock rose 3.5 percent.  Yahoo also released results late Tuesday. The company reported better than expected earnings and in line revenue, but said revenue from advertising slumped and third quarter results and cash flow won't meet forecasts. After sliding in the morning, the stock ended up 3.5 percent.

In other company news, Wells Fargo reported surprisingly strong results this quarter. The company said it earned $3.17bn, or 57 cents per share in the quarter, up 81 percent from a year ago and easily surpassing analysts forecasts.

Morgan Stanley however, reported a bigger than expected quarterly loss, due partly to a one time charge related to paying back the billions in government loans it received as part of the bailout program last year.

Advanced Micro Devices reported a wider than expected quarterly loss late Tuesday and a big drop in gross margins. The stock fell 13 percent Wednesday.

Boeing reported higher quarterly earnings that beat forecasts on higher revenue that met forecasts. The stock fell 2.4 percent.

Pfizer reported higher than expected quarterly earnings and also lifted its outlook for the rest of the year. GlaxoSmithkline and Eli Lilly also reported higher than expected quarterly results and boosted their full year forecasts.

Coca-Cola fell a day after the company reported higher than expected quarterly earnings and lower than expected revenue. Rival PepsiCo reported a bigger than expected quarterly profit.

Treasury prices slipped, raising the yield on the 10 year note to 3.55 percent from 3.49 percent.

US light crude for September delivery fell 21 cents to close at $65.40 a barrel on NYMEX.

COMEX gold for August delivery fell $1.90 to close at $953.30 an ounce.

The Nikkei average rose to a three week closing high today, as Sony Corp and other exporters gained in the wake of a weaker yen, with buying of futures providing an additional boost. Kyocera Corp and other high tech exporters gained, riding the wave of confidence about US consumer spending after Apple posted solid quarterly earnings. The Nikkei rose 69.78 points to close at 9792.94, its highest close since July 3.

UK stocks closed higher on Wednesday, extending their winning streak to eight sessions thanks to modest gains on Wall Street and solid second quarter results from GlaxoSmithkline. The FTSE100 closed 12.56 points higher at 4493.73. Shire was the best performer, up 4 percent, with its second quarter results due in a few weeks, while AstraZeneca gained 1.2 percent. GlaxoSmithkline gave up earlier gains, falling 0.6 percent on profit taking after its second quarter earnings beat expectations and the firm said momentum in the second half would pick up on the back of flu vaccine sales.

Defensive stocks were in demand, with tobacco, mobile telecoms and utilities standing out. Imperial Tobacco was a strong gainer, up 2.7 percent ahead of a trading update due today, while British American Tobacco added 1.2 percent. Vodafone rose 1 percent. BT Group said it would transfer its consumer and small business broadband and voice consumer base in the Republic of Ireland to Vodafone. Severn Trent added 1.2 percent, extending Tuesday gains, which followed a trading update, while Pennon added 2.2 percent and SSE rose 1.8 percent, ahead of an update on Thursday. Nomura pointed out that shares in the water companies have been overly pessimistic ahead of today's draft price determination by OFWAT.

Banks were weak after the latest results from their US peers dampened optimism about a recovery in the financial sector. Morgan Stanley posted its third consecutive loss, while Wells Fargo reported rising credit losses. Barclays, Lloyds Banking Group, RBS and Standard Chartered fell between 0.3 and 3.1 percent. HSBC added 1 percent.

Insurers were weaker too, with Aviva, Legal and General and Standard Life off 0.3 to 2.2 percent.

In economic news, The Confederation of British Industry industrial data showed that its manufacturing order book fell to its lowest level since January 1992. Other data also reminded investors that the UK economy faces a long, slow road to recovery. Britain's economy will return to growth in the last quarter of the year, as companies start to rebuild inventories, but strong growth will not return until 2013, the National Institute of Economic and Social Research said.

Economics
UK Retail sales (Jun) 09:30 BST

Retail spending is expected to grow in June, albeit at a relatively moderate rate. Interest rates are low, supporting household income, and people feel a little more optimistic about their personal finances according to the latest consumer confidence releases.

UK BBA loans for house purchase (Jun) 09:30 BST

The British Bankers Association data account for roughly 60% of total UK mortgage issuance, and so provide a useful indicator of the more complete Bank of England data released a week later. A sizeable jump in mortgage approvals is expected to be reported in June.

US Initial jobless claims (Jul) 13:30 BST

Last week’s initial and continuing claims numbers were distorted downwards by aggressive seasonal factors, which are intended to account for the seasonal auto factory shutdowns that normally occur in the first two weeks of July. With GM and Chrysler shutdowns occurring as early as May this year, the rise in unadjusted claims was much smaller than usual. Initial claims could start to normalise this week with a rise up to 565,000, but the underlying trend may very well end up below 600,000.  Continuing claims are released with an extra week’s lag, and the seasonal distortion may last a bit longer. After plunging 642,000 to 6.27m last week, a small rise to 6.30m is expected this week, with a bigger increase likely for the following week.

US Existing home sales (Jun) 15:00 BST

Pending home sales only rose slightly in May (+0.1%) but are up 6.7% on a year-on-year basis (still down 29% from peak). Given that existing home sales were down 3.6% year on year as of May, there could be some room for catch-up in this month’s existing home sales report. June sales are expected to rise to 5.00m, up from 4.77m in May. The Midwest in particular has shown some clear signs of a pick-up in pending home sales.

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