Dollar Declines, Gold Up $10

123jump.com Staff
24 Nov, 2006
New York City

Investors watched consumers battle for discounts at malls and stores. Early indications show a steady flow of customers at malls across the country. Fall in dollar in the international markets against euro and pound kept major stock averages under check in Europe and the U.S. The decline in dollar in the last three days has supported a steady rise in gold, silver and platinum prices. Dollar falls to eighteen-month low against euro and two-year low against pound. Euro closed above $1.30.

[R]2:00PM NY – 8:00 PM Germany[/R]
Speculation on U.S. economic growth and on Chinese Central Bank’s diversification plan away from the U.S. dollar drove the dollar to the lowest level against euro since April 2005.

Yield on 10-year bond closed at 4.537% and the 30-year bond closed at 4.618%.

Gold increased $10.10 to close at $645.50 a troy ounce, silver advanced 39.7 cents to end at $13.625 a troy ounce and copper gained 9.15 cents to close at 322.75 cents a pound.

Oil gained 52 cents to close at $59.76 a barrel and heating oil increased 2.65 cents to finish at 169.30 cents a gallon. Gasoline was up 0.82 cents to end at 159.70 cents a gallon. Natural gas advanced 17.3 cents to close at $7.891 per mBtu.

Asian markets closed mostly lower led by Japan with a decline of 1.13%, Singapore with a decrease of 0.83% and Thailand with a loss of 0.69%. The advancers were led by Malaysia with a gain of 1.33%, South Korea with an advance of 0.18% and India with an increase of 0.16%. Japan''s Stocks declined on weakness in exporters.

European markets closed lower after the dollar reached its lowest level against the euro since April a year earlier. The decliners were led by Spain with a decrease of 1.37%, Germany with a loss of 0.98% and France with a decline of 0.65%. The only advancer was Norway with a gain of 0.04%.

Other America markets ended higher led by Mexico with an advance of 0.20%, Canada with an increase of 0.08% and Argentina with a gain of 0.07%. The only decliner was Brazil with a loss of 0.47%.

[R]1:00PM European markets slipped as weak dollar hurt exporter issues.[/R]
European stock markets ended lower for the third consecutive session after the U.S. dollar tumbled to its lowest level against the euro since April 2005. Euro broke through $1.30 and the British pound also rallied against the greenback. Consequently, exporter-related issues declined, with Siemens, Nestle, and BASF each falling 1%. However, deal talk provided a boost for certain shares. The French oil-services group Technip jumped 7.6% on news that Eni may bid for it. Remy Cointreau extended recent gains on speculation it may be bought following a decision to leave a distribution joint venture. Shares of the company rose 3.6%. Shares of champagne maker Laurent-Perrier rose 1.3% after it said first-half net income rose 47%. The German DAX 30 slipped 1%, followed by the French CAC 40, down 0.7%, and London FTSE 100, down 0.3%.

Crude oil prices advanced amid weak dollar and a disruption to supply in Nigeria. Crude oil December contract rose 70 cents to $59.94 a barrel. London Brent climbed 76 cents to $60.11. The U.S. dollar sharply dropped against its rival currencies. The euro was quoted at $1.3092, up from $1.2952. The dollar bought 115.81 yen, down from 116.17.The British pound was quoted at $1.9314, up from $1.9155. European gold prices advanced on the back of weak dollar. In London, gold traded at $638.20 per troy ounce, up from $630.30. In Zurich, the precious metal traded at $638.05 per ounce, up from $630.45. Silver closed at $13.38, up from $13.09.


[R]11:30AM Retail stock traded lower on Black Friday.[/R]
A steep drop of the U.S. dollar kept stocks under pressure Friday, as it heightened inflation worries and diminished the appeal of U.S. shares. The dollar fell on concerns about central banks'' diversifying their reserves and the greenback''s narrowing yield advantage over other currencies.

Retail stocks declined on Black Friday as the sector''s main measure dropped into the red in early trading. Family Dollar ((FDO)) fell 1.6% after the discount retailer said it won''t file its annual report by the Friday extended deadline, citing its continuing investigation into stock options. Shares in Target Corp. ((TGT)) lost about 1%, while Sears Holding ((SHLD)) inched up 0.4%. Wal-Mart ((WMT)) also moved slightly down. In late morning trading, the Dow Jones industrial average was down 15.30, or 0.12%, at 12,311.65. The Standard & Poor''s 500 index was down 1.30, or 0.09%, at 1,404.79, and the Nasdaq composite index was up 1.69, or 0.07%, at 2,467.67. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.53% from 4.56% late Wednesday.


[R]10:30AM The Sensex finishes the day slightly higher on buying in large-caps.[/R]
The Sensex on BSE finished on Friday with 22.50-point gain, or 0.16%, at 13,703.33. The market-breadth was positive throughout as small-cap and mid-cap stocks also benefitted from the rally. As 1,336 shares advanced on BSE, 1,195 declined and 88 remained unchanged. Among the 30-Sensex stocks, 18 advanced while the rest declined. The turnover on BSE was Rs 5,213 crore, lifted by four block deals of 15.30 lakh shares each, executed in HDFC in opening trade at an average Rs 1,662 per share. Yesterday the turnover was Rs 5,531.48 crore. The turnover on NSE was Rs 8194.92, lower than Rs 8,884.68 crore.

Economic news

The wholesale price index in India rose 5.29% in the 12 months to Nov. 11, marginally lower than the previous week annual increase of 5.30% due to lower energy and milk prices, data showed on Friday. The figure was lower than a forecast of 5.32%.

Most active stocks

HDFC was the top traded stock on BSE, with a total turnover of Rs 1,021.86 crore, followed by Siemens, Bombay Dyei and Tata Steel.

Advancers

NTPC led the gainers, up 5.64% to Rs 149.95, on a high volume of 26.05 lakh shares. It struck a new 52-week high of Rs 150.70 following strong demand. As per grapevine, the company will benefit the most if the Indo-US nuclear deal finally sees the light of day. Pharma large-cap Dr Reddy’s advanced 2.53% to Rs 756, while Hindustan Lever was up 1.02% at Rs 243.10.

Tata Steel rose 2.57% to Rs 483.55, on a volume of 15.34 lakh shares. The company rejected media reports about a sweetened bid for Corus Group, to stall the counter-bid by a Brazilian company. Soon after Brazil CSN on 17 November launched a counter bid for Corus, the Tata Steel stock started declining with investors worrying that the steel maker will over-pay in a bidding war.

ONGC rose 1.16% to Rs 855, on reports that it is likely to win 21 blocks in the sixth round of the New Exploration Licensing Policy (NELP VI). Of the 21 likely to be awarded to ONGC, 12 are deep-water blocks. Cipla and Hindalco gained 1.7% each at Rs 264 and Rs 178, respectively while Wipro ended to Rs 590.

Decliners

Hero Honda led the decliners, down 1.47% to Rs 735.95. It had hit a high of Rs 747. Zinc and cement producer Binani Industries lost 1.52% to Rs 354 ahead of the initial public offer of its subsidiary, Binani Cement.

Index heavy Reliance Industries lost 0.90% to Rs 1,260, on 4.39 lakh shares. It had hit an intra-day high of Rs 1,274.50. Thomas Cook India dropped 1.2% to Rs 533.95, after it reported 64.8% fall in net profit for the October quarter. Thomas Cook India lost 3.60% to Rs 521.25 after it reported a sharp decline in net profit to Rs 3.08 crore for the quarter ended October 2006.

Siemens sank 8.34% to Rs 1,172.50, slipping for the second straight day, after the company reported below market expectations results on 22 November. Larsen & Toubro and Bharti Airtel shed 1% each to Rs 1,387 and Rs 616, respectively.


[R]9:45AM Stocks opened in the negative.[/R]
U.S. stock markets opened in the negative, as a sharp drop in the dollar added to inflation worries and diminished the appealing of U.S. shares to foreigners. The euro broke through the $1.30 level for the first time since April 2005. The sharp sell-off of the dollar continued and it fell to as low as 115.61 yen from 116.27 yen late Thursday. The British pound rose to $1.9351 from $1.9156. The steep decline of the dollar sent gold futures on a strong rally. Gold for December delivery jumped $9.30 to $638.30 an ounce in electronic trading. The Nymex is closed for trading Friday, leaving the electronic Chicago Board of Trade contract as only way to trade the precious metal. At the same time, mining stocks advanced along with the gold price. Shares of Meridian Gold Inc. ((MDG) jumped 6.2%.

Shares of U.S. retailers moved slightly lower. Shares of Federated Department Stores Inc. ((FD)) slipped 0.7%. Shares of Wal-Mart Stores Inc. ((WMT)), which is due to release its initial ''Black Friday'' sales on Saturday, dipped 0.5%. Outside the sector, Intel Corp. ((INTC)) fell 1.1% to $21.48 after a South Korean newspaper reported the company had decided to close a research and development center in the country.

A quiet trading session is expected as a lot of investors haven’t come back from the Thanksgiving holiday, but the thin trading is also likely to lead to erratic movements. The stock markets will close at 1 p.m. EST. In the first hour of trading, the Dow Jones industrial average was down 66.73, or 0.54%, at 12,260.22. The Standard & Poor''s 500 index was down 6.59, or 0.47%, at 1,399.50, and the Nasdaq composite index was down 15.84, or 0.64%, at 2,450.14.


[R]9:30AM The FTSE 100 sinks on Friday as profit-taking seized the market.[/R]
In afternoon trading on Friday, the FTSE 100 declined 0.86% at 6,088.

Decliners

Exposed to the US markets companies were suffered including fund manager Amvescap, down 3.11%, credit checking firm Experian, declining 2.45% and plumbing supplies group Wolseley, shedding 1.21%. Life insurers Prudential and Old Mutual were also stuck well in the red. Prudential was off 2.45% and Old Mutual lost 2.73%.

Banks extended recent losses as the interest rate outlook remained unclear. Barclays shed 1.4%, Lloyds TSB fell 1.3% and Alliance & Leicester was down 1%.

Airlines shrugged off a report that Gordon Brown will raise taxes on air travel to combat environmental damage. Easyjet sank 0.35% though despite investors focusing on the weak crude price.

Deutsche Bank downgraded Kingfisher to sell from hold ahead of third quarter figures due next week. The broker remains cautious, saying the figures could lead to lower estimates on the DIY retailer. Kingfisher declined 2.14%.

Finnish biotech Inion slumped after it warned sales would be well below forecasts. That warning comes just seven weeks after it said there was no reason for its recent share price decline. Shares of Inion plunged 6.80%.

Advancers

Contrary to Easyjet, BA held steady and gained 0.92%. Cairn Energy shares continued to make gains on the back of Thursday successful Cairn India share placement. Shares in the oil explorer rose 1.3%.

Other news

A surge in business investment helped the UK economy grow above its long term trend in the third quarter, figures released on Friday confirmed. The news means that Gordon Brown is likely to revise higher his original forecast of growth for the year of 2 - 2.5% when he presents his pre-Budget report on December 6.


[R]8:00AM Stock futures declined on sharply weaker dollar.[/R]
U.S. stock market futures indicated a sharply lower market opening on Friday for a shortened trading day. The U.S. stock market was closed on Thursday and will close at 1 p.m. on Friday. The declines tracked weakness in Asian and European stock markets. What hurt pre-market sentiment wad a plunge of the U.S. dollar against other major currencies, with the euro climbing above $1.30 after economic data showed strong business confidence in Germany.

Shares of U.S. retailers were also in focus with the approaching holiday shopping season, and consumers seeking bargains on the day after Thanksgiving. Shares of Wal-Mart Stores Inc. ((WMT)) fell nearly 1% in European trading, while shares of Federated Department Stores Inc. ((FD)) dipped 0.2% as investors sought to gauge the impact of early holiday store traffic and price discounts on retailers'' profits. Pharmaceutical wholesaler McKesson Corp. said it renewed its supply agreement with Wal-Mart Stores and will remain the primary supplier of branded pharmaceutical products for Wal-Mart stores across the US.

Advanced Semi ((ASX)) said it received an indication of interest from investors led by The Carlyle Group that would value the company at $5.5 billion. Standard & Poor''s 500 futures were down 6.6 points, below fair value. Dow Jones industrial average futures were down 44 points, and Nasdaq 100 futures were down 13 points.


[R]7:30AM Asian markets end mostly lower Friday, Japan weighs the markets down.[/R]
Asian markets finished mostly lower on Friday. Japanese Nikkei 225-stock index ended down 1.1% at 15,734.60. In the autos sector, shares of Toyota fell 1.7%. Shares in electronics giant Sony fell 1.9%. Japanese bank Sumitomo Mitsui Financial Group tumbled 4.2% and fellow lender Resona Holdings fell 3.1%.

The Hang Seng Index in Hong Kong ended fractionally lower, declining 5.02 points to 19,260.30. The China Enterprises Index, a yardstick of China-incorporated shares listed in Hong Kong, declined 0.4% to 8,591.09. Among mainland property stocks, China Overseas Land rose 2.2% while China Resources Land rose 2.5%. Chinese financials traded lower with state-owned lender China Construction Bank down 1.2% while Bank of Communications fell 1%.

Kospi in South Korea rose 0.2% and Malaysia KLSE Composite traded gained 1.3%. Taiwan Weighted Price Index rose 0.6%, advancing for the ninth consecutive session. On other markets across Asia, S&P ASX/200 in Australia lost 0.2% to end at 5,453.60. Singapore Straits Times Index fell 0.5% and New Zealand NZX-50 Index shed 0.2%.


[R]6:30AM European markets decline in early trading on Friday due to a strong euro.[/R]
European markets were lower on Friday. In early exchanges, London FTSE 100 fell 0.5% to 6,112.3, Frankfurt Xetra Dax shed 0.9% to 6,418.82, in Paris the CAC 40 lost 0.7% to 5,386.1.

Advancers

Shares of Technip jumped 9.9% in Paris trading after two French newspapers reported that Eni or partly held unit Saipem, may bid for the oil-services group. Eni shares declined 0.9% in Milan. Shares of champagne maker Laurent-Perrier rose 1% in thin trading after it said first-half net income rose 47% to 13.1 million euros ($17 million), or 2.2 euros a share, with revenue up 10.5% to 100.3 million euros. A strong price and mix effect buoyed results. Remy Cointreau built on gains on Thursday on speculation it may be bought following a decision to leave a distribution joint venture. Shares of the cognac maker rose 2.8%.

Decliners

Financial were weak in early trasing. Crédit Agricole, which was cut from hold to sell by Citigroup in the previous session, fell 1.2%, while Belgian-Dutch financial services group Fortis lost 1.2% in Brussels. Other financial stocks with exposure to equity losses fell, with Zurich Financial, the Swiss insurance group, down 1.5%.

Oil stocks were also lower as crude prices slipped back towards $58 a barrel. French Total shed 0.8%, Austria OMV lost 1.7%, and Neste Oil, the Finnish refiner, fell 1%.

Exporters fell as the euro hit its highest level this year against the US dollar. Carmakers, which realise a large percentage of their earnings in the US, were among the most severe decliners. Peugeot, the French manufacturer, fell 2.2%, while German BMW shed 2.4%.

Oil and gold

Oil rose after a report that Eni SpA halted delivery of 60,000 barrels a day of Nigerian crude because of an attack by armed militants earlier this week. Brent crude oil for January delivery rose as much as 47 cents, or 0.8%, to $59.82 a barrel on London ICE Futures Exchange. The contract traded at $59.77 a barrel in early session in London. West Texas Intermediate crude advanced 37 cents to $59.61 a barrel on the NYME.

Gold drifted higher on Friday on a weaker dollar and dealers said the market was expected to be choppy in thin trading conditions during a U.S. holiday. Gold was quoted at $636.00/637.00 an ounce in early trading, up from $630.30/631.30 late in London on Thursday. Platinum also gained, but traded much below the record high in this week of $1,395 on talk of an exchange traded fund. Other precious metals followed gold upward move.

Currencies

The euro broke through the $1.30 barrier on Friday for the first time since April 2005, rising more than a U.S. cent on speculation about a European interest rate increase in light trading. In morning European trading, the euro spiked as high as $1.3085 from $1.2959 late the day before. The dollar weakened against other major currencies as well, falling to 115.81 Japanese yen from 116.16 the day before, while the British pound rose to $1.9316 from $1.9155.