24/06/09

The Dow Jones slipped 16.10 points to close at 8,322.91 while the S&P 500 added 2.06 points to end at 895.10. The Nasdaq fell 1.27 points to finish at 1,764.92.

Boeing was the runaway loser on the Dow, tumbling 6.5% and knocking 22.9 points off the blue chip index. The world's second largest commercial plane maker said the first flight of the 787 Dreamliner, already delayed for two years, will be postponed to reinforce a section of the aircraft. Boeing shares have slumped 56% since the first delay was announced in October 2007.

Financials rebounded from heavy losses on Monday after FBR Capital Markets raised its share forecast on Goldman Sachs. Analysts cited "a favourable trading and capital market environment", lifting the shares 3.1%. Also, Bank of America gained 2.4% to $12.23 after setting a price of $12.7048 for a swap of preferred shares for common stock in an effort to boost capital by more than $2.5 billion.

After the close, Oracle climbed 2.5% after its quarterly earnings beat expectations, with profit margins hitting a record high and software sales falling less than expected.

US light crude oil for August delivery rose $1.74 to $69.24 a barrel. COMEX gold for August delivery rose $3.30 to $924.30 an ounce. Treasury prices jumped, lowering the yield on the 10 year note to 3.63% from 3.68%.

The Nikkei gained 40.71 points to close at 9,590.32 this morning. Canon Inc rose as a weaker yen boosted its earnings outlook. Showa Shell Sekiyu jumped more than 6% after saying it will build solar power plants in Saudi Arabia.

The Hang Seng is currently 312.07 points higher at 17,850.44 after power output rose in China, stoking recovery expectations. Huaneng Power, China's biggest generator, added 2.3% after Shanghai Securities News said the nation's power output climbed.

The FTSE 100 is currently 3.46 points lower at 4,226.56. Friends Provident and Experian lead the fallers, off 4.4% and 2.8% respectively, after going ex-dividend. GlaxoSmithKline falls 1.6% after saying that the U.S. Food & Drug Administration declined to approve its nausea drug Rezonic. Anglo American tops the risers board, up 3.5%, after the miner revived the prospect of a sale of heavy building materials group Tarmac, its most out-of-place division according to the Financial Times. Hammerson and British Land both add more than 2% after Credit Suisse raised its weighting on UK commercial property sector to overweight from benchmark weight. Smiths Group advances 2.6% after Morgan Stanley resumed coverage of the firm at a rating of Overweight.

Economics
UK CBI distributive trades report (Jun) 11:00 GMT

Lower interest rates and a slightly firmer outlook for the housing market should support consumer spending, but this will be partly offset by rising unemployment and energy prices. Overall, analysts expect some retail spending growth, but at a relatively lacklustre rate.

US Durable goods orders (May) 13:30 BST/ 08:30 EDT

Durable goods orders have stabilised over the past three months, up 1.1% since January. Shipments still have further to fall, although the pace of decline has also slowed. Boeing aircraft orders totalled 20 in May, versus 17 in April. Meanwhile, the ISM new orders index rose to 51.1 in May, above breakeven for the first time since November 2007. Analysts expect May durable goods orders to fall 0.3%, with the ex-transportation element rising 0.2%.

US New home sales (May) 15:00 BST/ 10:00 EDT

In the latest Beige Book, eight out of twelve districts reported an uptick in home sales, boosted by low interest rates, declining house prices and the provision of tax credits for first-time buyers. Since January, the NAHB home builder survey has become less pessimistic about both home sales and prospective buyer traffic. Analysts look for new home sales to rise to 380,000, which would be the quickest pace seen since last November.

US FOMC announcement (Jun) 19:15 BST/ 14:15 EDT

The 29 April statement said that economic activity was “likely to remain weak for a time”. In his 3 June testimony to the House Budget Committee, Bernanke indicated that he expected economic activity “to bottom out, and then turn up later this year”. The FOMC statement this time around is likely to reflect this upgrade to the economic outlook. On inflation, the statement is likely to acknowledge the recent increases in the prices of oil and other commodities, but reiterate that inflation will remain subdued, given the sizeable reduction in resource utilisation. Comments from Fed officials over the past month suggest that they are unlikely to boost their announced purchases of Treasuries and mortgage backed securities at this meeting, but this is likely to remain a key question hanging over the scheduled August and September meetings as the FOMC’s current commitment to buy USD300bn of Treasuries only lasts through to the autumn. Meanwhile, there is a growing chance that the Fed could use a conditional calendar commitment (similar to what the Bank of Canada has done) to counteract any market expectations of early rate hikes, which would be a step beyond the current language that exceptionally low levels of Fed funds are likely “for an extended period”.


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