Current Account Deficit Falls 6.5%

Elena
16 Jun, 2006
New York City

Stocks opened lower on worries that China''s move to curb credit could slow corporate earnings growth. A decline in Microsoft''s shares also weighed. In economic news, the Commerce Department reported that the U.S. current account trade deficit fell to $208.7 billion in Q1 quarter, down 6.5% from the all-time high deficit of $223.1 billion set in Q4 last year.

[R]9:45AM Stocks opened in the negative.[/R]
Stocks opened in the negative as market steadied after the sharp rebound in the previous session. Stocks markets declined on worries that China's move to curb credit could slow corporate earnings growth. A decline in Microsoft Corp.’s ((MSFT)) shares also weighed on the market sentiment. Microsoft shares fell 1.1% $21.82 on the Nasdaq. Commodity stocks, which rallied Thursday, came under pressure in the early going. The energy group was dragged by a 1.3% slide in the oil service sector. The gold sector dropped less than 1%. The semiconductor sector reversed from yesterday’s gains to slide nearly 1%. The airline sector stood out as one of the best performers, extending gains from the previous session. The advance was contributable to positive comments as Bear Stearns raised its rating on UAL Corp. ((UAUA)) to Outperform from Peer Perform. The sector climbed 2%, testing its 50-day moving average and was on track for its highest close since mid-May.In the first hour of trading, the Dow Jones industrial average gained 4.24 points, or 0.04%. The Standard & Poor's 500 index was down 1.04, or 0.08%, and the Nasdaq composite index fell 3.36, or 0.16%. Bonds rose, with the yield on the 10-year Treasury note falling to 5.08% from 5.10% late Wednesday.

[R]The U.S. current-account deficit in Q1 narrowed more than anticipated.[/R]
Friday morning, the Department of Commerce released its report on the U.S. current-account deficit in the first quarter. The report showed that the deficit narrowed more than economists had expected. The report said that the deficit narrowed to $208.7 billion in the first quarter from a revised $223.1 billion in the fourth quarter. Economists had expected the deficit to narrow to $222.0 billion from the $224.9 billion reported in the fourth quarter. The narrower deficit was partly due to a decrease in net unilateral current transfers, with net outflows falling to $19.9 billion in the first quarter from $26.2 billion in the fourth quarter. The decrease reflected drops in U.S. government grants, private remittances, and other transfers. The decrease by the current account deficit also came as the deficit on goods narrowed to $208.0 billion in the first quarter from $212.5 billion in the fourth quarter. The report showed that goods exports rose to $244.5 billion while goods imports rose to $452.5 billion. The Commerce Department also said that the narrower deficit reflected a shift to a surplus from a deficit on income, although it noted that the changes were partly offset by a decrease in the surplus on services. The report showed that the surplus on services narrowed to $17.2 billion in the first quarter from $17.7 billion in the fourth quarter.


[R]9:00AM Stock futures indicated a flat start on mixed news from Oracle and Microsoft.[/R]
U.S. stock futures retreated from yesterday’s high levels, pointing to a flat market opening, as two major software companies announced news of mixed nature, taking the market to different directions. Software maker Oracle Corp. ((ORCL)) jumped more than 6% after the closing bell Thursday, saying that the company’s Q4 earnings would come above earlier forecasts. Shares of Microsoft Corp. ((MSFT)) came under pressure on news that Chairman Bill Gates will give up his day-to-day role in the company in 2008 to devote more of his time to his philanthropic foundation. Shares of Microsoft slipped 0.5% to $21.95 on the Inet electronic network on Thursday. Shares of Adobe ((ADBE)) showed some pre-market weakness after the software company reported weaker-than-expected Q2 earnings and lowered its guidance for full year earnings and revenue. In other news, Indian drug maker Jubilant Organosys Ltd. is expected to bid more than $500 million for New Jersey-based drug firm Cambrex Corp. ((CBM)) according to a newspaper report. S&P 500 futures were down 1 point but slightly above fair value. Dow Jones industrial average futures fell 16 points, and Nasdaq 100 futures declined 2.25 points.


[R]7:30AM Asian shares continue their rally for a third straight day.[/R]
Asian markets finished higher. Japan''s benchmark Nikkei stock index climbed 2.82%, boosted by broad buying, following a jump on U.S. markets overnight. The Nikkei gained 408.58 points to close at 14879.34. Technology, banks and nonferrous metals shares led the gainers. Elpida Memory jumped 8.3% and Sharp reported a 3.6% gain. Matsushita Electric Industrial climbed 3.5% and Mizuho Financial Group advanced 4.9%. Nonferrous metals also rallied, with Sumitomo Metal Mining adding up 4.6% and Mitsubishi Materials gaining 6.3%. Hong Kong shares finished up, led by large-cap China Mobile, HSBC Holdings and Cnooc, following advances on U.S. markets overnight. The blue-chip Hang Seng Index advanced 407.57 points, or 2.64%, to 15842.65. HSBC advanced 1.7%, China Mobile surged 4.2%. Cnooc, offshore oil producer, jumped 6.3% on news it has the rights to a 51% stake in a deep-water natural gas discovery in the South China Sea. South Korea''s Composite Index, or Kopsi, closed up 3.5%. Taiwan''s leading index, the Taipex, finished up 2.3%.Chip makers were in focus after strong gains in the U.S semiconductor sub index. South Korea''s Samsung Electronics advanced 3.6%, while Hynix Semiconductor jumping 4.2%. In Taiwan, chip maker Taiwan Semiconductor advanced 4.4%.


[R]6:30AM European stocks continue to rebound.[/R]
European stocks traded higher in early session. The FTSE 100 in London advanced 0.6% at 5,654.1, the Xetra Dax in Frankfurt was up 0.8% to 5,464.45, the CAC 40 in Paris gained 0.9% at 4,765.45. On the corporate front, Philips Electronics, the Dutch consumer electronics company, agreed to buy Intermagnetics, a US maker of magnets and imaging tools for hospital imaging equipment, for $1.3 billion in cash. The stock advanced 1.8%. OMV, the Austrian oil and gas group, led the gainers, advancing 6.4%. The oil sector was strong as crude jumped above $70 a barrel, with Neste up 2.3% and Repsol 1.3%. EADS shed 2.2% as the aerospace company’s troubles following the announcement of delays to its A380 superjumbo deepened.

Light, sweet crude oil for July delivery advanced 54 cents to $70.04 a barrel and August Brent crude on London''s ICE Futures exchange gained 45 cents to $68.90 per barrel. Gold bullion opened Friday at a bid price of $582.20 a troy ounce, higher than $574.10 late Thursday. The dollar weakened slightly against the euro. The European currency inched up 0.1% at $1.2655, the British pound added 0.1% against the dollar to $1.8531, while the greenback was trading at 114.72 yen in, down 0.28 yen from late Thursday in New York