N AMERICAN MORNING BRIEFING: Recovery Fears To Hit Stocks

24th Jun 2010 11:43

DJIA Futures 10191.50 -33.50 -0.30% S&P 500 Futures 1081.60 -5.80 -0.50% Nasdaq Futures 1860.13 -13.63 -0.70% Above are as of 0615 ET FTSE 100 5144.85 -33.67 -0.70% Xetra DAX 6160.65 -43.87 -0.70% CAC40 3602.90 -38.89 -1.10% Above are as of 0615 ET Nikkei 225 9928.34 +4.64 +0.1% Hang Seng 20733.49 -123.1 +0.6% Above are closing prices SNAPSHOT: -Stocks seen lower; Treasurys higher; dollar lower ; Nymex crudelower at $76.05; gold lower at $1236.00. -Watch for: Advance report on durable goods at 0830 ET; June initial jobless claims at 0830 ET; earnings from Oracle, Palm and Research In Motion. OPENING CALL: Thursday's disappointing home sales data and the Fed's downgrade of the economic outlook is likely to dent further, already-fragile sentiment, with stocks called lower as a result. "The home sales figures caught the market by surprise," said Michael Hewson at CMC Markets in London. "The bad data and the FOMC's comment are weighing on sentiment as investors remain cautious, trying to figure out if this really is a recovery or if there is going to be a double dip." EQUITIES: In M&A news, private-equity firm Providence Equity Partners is in preliminary discussions with Hasbro (HAS), one of the world's largest toymakers, to take the company private in a leveraged buyout, the Wall Street Journal reported. The talks are still in their early stages and may not lead to a deal, people familiar with the matter said. Hasbro has a market capitalization of about $6 billion. A leveraged buyout of Hasbro would mark the year's largest private-equity deal. At 0630 in Frankfurt, Hasbro was up 2.75%. Reliance Industries (500325.BY) Thursday agreed to buy a 45% stake in Pioneer Natural Resources (PXD)-Eagle Ford shale natural-gas asset in Texas for about $1.36 billion, the second such investment in the U.S. by the Indian company in less than three months. Under an agreement with a wholly owned unit of Reliance, India's biggest company by market value will pay $266 million in cash to Pioneer at the closing of the deal and another $879 million as its share of Pioneer's future drilling costs, the U.S. company said. Reliance will separately pay about $210 million to Newpek, Pioneer's existing partner in the Eagle Ford Shale asset. The deal is expected to close in five business days, after which Pioneer, Reliance and Newpek will own 46%, 45% and 9% of the joint venture respectively, Mumbai-based Reliance said. A federal judge in Manhattan ruled Wednesday for Google's (GOOG) YouTube, rendering the first major decision in a closely watched copyright-infringement lawsuit brought by Viacom (VIA, VIAB). The judge granted Google's motion for summary judgment in the three-year-old suit, in which Viacom claimed that the video-sharing Web site had sought to exploit its copyrighted works for profit. Viacom, which has been seeking more than $1 billion in damages, said it plans to appeal Wednesday's ruling. At 0630 in Frankfurt, Google was trading down 0.7% and Viacom was 0.57% lower. Ford (F) is making multi-million-dollar investments in two major export hubs in Asia and Africa, as part of an effort to beef up its presence in fast-growing emerging markets. On Thursday, Ford will announce a $450 million outlay to build a new passenger car plant in Thailand and next week, Ford will also unveil plans to increase production capacity at a plant in South Africa, enabling the company to export more Ford Ranger trucks to Europe and other markets. At 0630 in Frankfurt, Ford was 1.87% lower. BONDS: Treasurys were higher in London, supported by weakness in equities and dovish comments from the FOMC Wednesday. The Fed gave a downbeat assessment of the economy and said it will keep interest rates low for an "extended period." Corporate bonds: European corporate credit markets were wider Thursday after a tighter opening, moving in tandem with falling stocks in Europe amid a very quiet market, traders said. FOREX: Despite an initial hit when the Fed proved more dovish than anticipated, the dollar was back in favor as investors turned away from risky assets. The FOMC statement comes just ahead of a G20 summit meeting in Canada this weekend at which the U.S. is likely to continue pushing for further fiscal expansion, a policy that is completely at odds with the deficit reduction plans being pursued by the euro zone and the U.K. More disappointing news on the U.S. economy could also come later Thursday with the durable goods orders for May, which are expected to show a 1.5% decline following a 2.8% rise in April. Analysts will also be looking at the results of seven-year Treasury auction for any signs that international appetite for U.S. paper has been damaged by the FOMC statement. By 0530 ET, the dollar was down in Europe at Y89.56, while the euro was down at $1.2276 and the pound had fallen to $1.4971. COMMODITIES: Oil futures were down slightly, slipping with weaker European equities to extend the losses following the release of Department of Energy weekly inventory statistics Wednesday. August Brent and WTI were almost in parity, but WTI regained a premium over its European equivalents from September onwards. Spot gold was trading marginally lower, with analysts predicting further consolidation as the market awaits a catalyst to driver the market back into its record-breaking range. =======TODAY'S CALENDAR======= ET PERIOD 0830 May Advance Report on Durable Goods 0830 Unemployment Insurance Weekly Claims Report - Initial Claims 1000 DJ-BTMU U.S. Business Barometer 1030 EIA Weekly Natural Gas Storage Report 1100 Jun Federal Reserve Bank of Kansas City Survey of Tenth District Manufacturing 1630 Foreign Central Bank Holdings 1630 Federal Discount Window Borrowings 1630 Money Stock Measures ============================== OTHER TOP STORIES OF THE DAY: WSJ: BP BASED OIL SPILL RESPONSE PLAN ON FAULTY US DATA BP PLC (BP) and other big oil companies based their plans for responding to a big oil spill in the Gulf of Mexico on U.S. government projections that gave very low odds of oil hitting shore, even in the case of a spill much larger than the current one. WSJ: FED GROWS MORE WARY ON ECONOMY The Federal Reserve offered a subdued assessment of the U.S. economy Wednesday and affirmed that short-term interest rates would remain near zero for "an extended period," which most economists now believe could mean well into 2011 and possibly into 2012. BP REINSTALLS CAP ON LEAKING WELL BP Plc (BP) said late Wednesday it has reinstalled a cap the company removed earlier in the day after a collision with an underwater robot, allowing the company to restart collection of oil at the larger of two ships siphoning crude from a massive Gulf of Mexico spill. WSJ: CONFIDENCE WANING IN OBAMA Americans are more pessimistic about the state of the country and less confident in President Barack Obama's leadership than at any point since Mr. Obama entered the White House, according to a new Wall Street Journal/NBC News poll. WSJ: MERKEL REJECTS OBAMA'S CALL TO SPEND Chancellor Angela Merkel roundly rebuffed U.S. President Barack Obama's call for Germans to aid the global recovery by spending more and relying less on exports, even as she warned that Europe's own financial crisis is far from over. US HOUSE SEEKS LONGER PHASE-IN FOR TRUST-PREFERRED CHANGES U.S. House negotiators on Wednesday sought to extend the phase-in period for large bank holding companies to implement new capital requirements established in the massive financial-overhaul bill. WSJ: NEW FRONTS OPEN UP IN SMARTPHONE TURF WAR Consumers around the globe will wait on long lines Thursday to get their hands on the newest iPhone, but far from the sidewalk frenzy, Apple Inc.'s (AAPL) smartphone is making inroads with business customers. CHINA UNICOM, APPLE IN TALKS ON IPHONE 4, IPAD - SOURCE Telecommunications operator China Unicom (Hong Kong) Ltd. (CHU) and Apple Inc. (AAPL) are in talks about offering the iPhone 4 and the iPad in China, a person familiar with the situation said Thursday. WSJ: APPLE BEGINS SALES OF IPHONE 4 IN TOKYO Apple Inc. (AAPL) started selling the iPhone 4, the latest version of its wildly popular smartphone, on Thursday morning to teeming crowds of eager Japanese consumers--including some who waited three days to be among the first in the world to purchase the new handset. GOOGLE EYES INDONESIA FOR EXPANSION Google Inc. (GOOG) said Thursday that Internet use in Indonesia was expanding at a fast pace and was the leading emerging economy in terms of growth. GAP TO OPEN 4 STORES THIS YEAR AS EXPANSION INTO CHINA BEGINS Gap Inc. (GPS) said it plans to open two stores each in Beijing and Shanghai later this year and will offer online shopping in China. PFIZER ENDS PEDIATRIC BIPOLAR-DRUG TRIAL BEFORE IT STARTS Pfizer Inc. (PFE) has decided not to proceed with a late-stage clinical trial of its antipsychotic drug Geodon in children with bipolar disorder, a controversial area for the drug. -By Sarah Kent, Dow Jones Newswires; 4420-7842-9376; [email protected] (MORE TO FOLLOW) Dow Jones Newswires June 24, 2010 06:43 ET (10:43 GMT)