Market Updates

Moderate CPI Helps Futures

Elena
15 Sep, 2006
New York City

    U.S. stock futures advanced on data showing that consumer price inflation moderated in August as gasoline and home ownership costs rose at a slower pace. The CPI rose 0.2% after a 0.4% gain in July, while prices excluding food and energy rose 0.2% for the second straight month. The upbeat economic news helped offset disappointment over restructuring plans at Ford Motor.

[R]09:00AM Stock futures advanced on CPI data.[/R]
U.S. stock futures advanced as data showing that consumer price inflation moderated in August as gasoline and home ownership costs rose at a slower pace. The CPI rose 0.2% after a 0.4% gain in July, while prices excluding food and energy rose 0.2% for the second straight month. The upbeat economic news helped offset disappointment over restructuring plans at Ford Motor. Trading is expected to be volatile as Friday marks the expiration of four options and futures contracts.

Shares of Ford Motor Co. ((F)) fell 6% before the bell after the company said it would cut annual costs by about $5 billion by the end of 2008 and slash its salaried staff by about a third. Merrill Lynch cut its rating on Ford to sell from neutral. In contrast, shares of Adobe Systems Inc. ((ADBE)) jumped 10% after the company posted a stronger-than-expected quarterly profit. Among other companies, Public Service Enterprise Group Inc. ((PEG)) slid 8% in Europe as Exelon Corp. ((EXC)) said it is terminating a $17.7 billion takeover agreement of the utility after failing to reach an agreement with New Jersey regulators. Standard & Poor's 500 futures were up 4.9 points, above fair value. Dow Jones industrial average futures were up 46 points and Nasdaq 100 futures were up 11.25 points.

[R]Consumer price inflation moderated in August.[/R]
Friday morning, the Department of Labor released its closely watched report on consumer prices in the month of August. The report showed that price growth came in line with economist estimates. The Labor Department said that its consumer price index rose 0.2 percent in August following an unrevised 0.4 percent increase in July. Economists had been expecting the index to increase by about 0.2 percent. The slowdown in the pace of growth compared to the previous month came as energy prices increased by only 0.3 percent in August after surging up 2.9 percent in July. At the same time, the pace of food price growth rose to 0.4 percent from 0.2 percent in the previous month. The report showed that the core consumer price index, which excludes food and energy prices, rose 0.2 percent in August, matching the increase seen in the previous month. The increase in core prices also came in line with economist estimates. The modest increase in core consumer prices was partly due to a notable increase in apparel prices, which rose 0.9 percent in August after falling 1.2 percent in July. Medical care costs also contributed to the increase, rising 0.4 percent. With the growth in both overall and core prices coming in line with economist estimates, the report may help to offset recent concerns about the pace of inflation. A fuller view of inflation will be provided with the release of the Labor Department''s report on wholesale prices next week.


[R]7:30AM Asian markets close mixed, Japan falls on profit-taking.[/R]
Asian markets closed mixed on Friday. The Nikkei 225 Average ended the day 0.47% lower at 15866.93. Toshiba slipped 1.1%, TDK lost 1.5% and Sony declined 0.8%. Toyota closed 0.3% lower and Honda fell 0.3%. Hitachi shed 3.1% as the company revised down its earnings outlook for this fiscal year to March shortly before the market close.

Hong Kong Hang Seng Index advanced 0.32% to close at 17237.65. Shares in Hong Kong finished higher supported by property companies on hopes that interest rates would not be hiked and earnings in the sector will be solid. Kerry Properties gained 3.3% and Sun Hung Kai Properties advanced 0.5% after both companies posted increases in net profit. Blue chip Hang Lung Properties climbed 1.3% and Henderson Land gained 1%.

South Korea''s Kospi Index gained 0.17% to 1361.10. Stocks ended higher as institutional buying toward the end of the session counters earlier losses, with gains led by automobile and brokerage shares. Hyundai Motor was up 1.8%, Kia Motors advanced 1.3% and Hyundai Mobis climbed 2%. Shanghai Composite Index jumped 1.9% to finish at 1721.05. Air China soared by the daily limit of 10%, China Southern Airlines jumped 6.3% and Shanghai Airlines rose 6.2%.

Taiwan ended 1.25% higher at 6681.09, while Australia S&P/ASX 200 dropped 0.67% to 5036.40. Shares in Taiwan advanced on possible support from government funds, led by financial and technology companies, while Australian shares dipped as commodity prices remained weak. BHP Billiton shed 2.3%, Rio Tinto fell 1.5% and Woodside Petroleum sagged 2.8%.


[R]6:30AM European markets edge into positive territory on Friday.[/R]
European markets were higher by mid-morning on Friday. The U.K. FTSE 100 index gained 0.04% at 5,880, the German DAX 30 index added 0.1% at 5,912 and the French CAC 40 index advanced 0.2% at 5,134. Veolia Environnement advanced 1.2% after it said first-half net profit rose 40.3% as sales climbed 13.7%.

The auto sector was in demand after data showed that new car registrations in European shed 1.4% in August and after reports that truck maker Man AG could unveil the terms of its takeover offer for Swedish peer Scania as early as next week. Shares in Man and Scania both rose around 0.5%.

SEB erased early gains to slip 1.2%. The Swedish bank advanced 5% on Thursday on speculation of a merger between it and Nordic bank Nordea, which added 3.2% yesterday, but was down 1.3% this morning. German tyremaker Continental rose 2.6% after JP Morgan started coverage of the stock with a overweight.

Crude oil prices were unchanged Friday after natural gas prices plummeted to a two-year low overnight, and supply concerns were relieved after Nigerian oil workers prematurely ended a strike. Light, sweet crude for October on the NYME was down 2 cents to $63.20 a barrel on Friday.

Gold opened Friday at a bid price of $577.30 a troy ounce, down from $587.60 late Thursday. The euro was down slightly on the U.S. dollar Friday before the release of U.S. inflation data, which could signal what the Fed next interest rate move will be. In morning trading, the euro bought $1.2722, down from $1.2729 late Thursday in New York. The British pound advanced to $1.8873 from $1.8864 in New York, while the dollar rose to purchase 117.56 Japanese yen from 117.49 the day before.

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