N AMERICAN MORNING BRIEFING: Renewed Optimism To Lift Stocks

13th Jul 2010 11:40

DJIA Futures 10230.0 +51.0 +0.5% S&P 500 Futures 1083.2 +6.6 +0.6% Nasdaq Futures 1833.9 +13.6 +0.8% Above are as of 0615 ET FTSE 100 5241.5 +74.4 +1.4% Xetra DAX 6156.8 +79.7 +1.3% CAC40 3617.6 +50.0 +1.4% Above are as of 0615 ET Nikkei 225 9537.2 -10.9 -0.1% Hang Seng 20431.1 -36.4 -0.2% Above are closing prices SNAPSHOT: -Stocks seen higher; Treasurys higher; dollar lower; Nymex crude lower at $74.92; gold up slightly at $1205.95. -Watch for: International Trade in Goods & Services at 0830 ET OPENING CALL: Stock futures are indicating a higher open amid a new burst of investor confidence after Alcoa kicked off the earnings season Monday with stronger than expected results. Alastair McCaig from Worldspreads in London said the key trade data out before the open will set the tone for Tuesday, although investors will take heart from gains in Europe. "Alcoa's figures should help things a little at the open, although the economic data out before then will maybe take precedence," McCaig he said. "But if nothing else, the wholescale negativity and doom-mongering that was around a short while ago seems to have calmed down." EQUITIES: BP (BP) said Monday it had installed a new sealing cap that could halt the oil spewing from its broken well in the Gulf of Mexico, raising the possibility that a nearly three-month long environmental crisis could soon be contained. It could be another 48 hours before the company knows if the cap has entirely sealed the well. BP shares were up 2.8% at 0606 ET. A former Food and Drug Administration official said GlaxoSmithKline (GSK), the maker of diabetes drug Avandia, withheld from regulators information suggesting the drug posed an increased risk for serious heart problems, the Wall Street Journal reported, citing people familiar with her statements. The allegation comes as one of the biggest recent drug-safety fights nears a climax. Starting Tuesday, a panel of FDA experts will debate whether Avandia should be pulled from the market after years of controversy over its alleged side effects. Glaxo shares were up 0.3% at 0543 ET. AIG's (AIG) biggest private shareholder, Bruce Berkowitz, has made his stake even bigger, as his fund-management company increased its common-stock holdings in the insurer. According to a filing with the SEC, Berkowitz's Fairholme Capital Management now holds a 24% stake, up from 19%. AIG's massive government bailout during the financial crisis gave the federal government ownership of nearly 80% of the company. Fairholme common-stock stake represents 24% of the remainder. Chevron (CVX) said late Monday it expects its second-quarter earnings to be higher than the previous quarter, driven by significantly better results from its refining and marketing business and the stronger dollar. The outlook from the second-largest U.S. oil company by market value after Exxon Mobil (XOM) is a rare sign of relief for the downstream segment, which manufactures, transports and sells gasoline, diesel fuel and other refined products. The sector suffered a sharp downturn after the economic recession, leading refiners, including Chevron, to cut back on costs and lay off workers. Chevron was 3.5% higher in Frankfurt at 0629 ET. Avis Budget (CAR) is proceeding with plans to make an offer for Dollar Thrifty Automotive (DTG) that would top rival Hertz's (HTZ) $1.2 billion bid, and is looking to take on more debt to finance the deal, people familiar with the matter said late Monday. These people declined to give a specific timeline but said Avis would present an offer--perhaps in late July or early August--that would give shareholders enough time to assess the bid prior to a scheduled vote on Hertz's Dollar deal. Avis was down 2.2% in Frankfurt at 0626 ET. European Union competition authorities are likely to approve as soon as Tuesday a long-debated commercial alliance among AMR's (AMR) American Airlines, British Airways (BAY.LN) and Spain's Iberia (IBLA.MC), the Wall Street Journal reported, citing people familiar with the matter. A green light from the E.U. for the alliance would let BA, American and Iberia join their commercial operations, such as marketing and network planning, in ways normally forbidden as collusion. AMR shares were down 0.3% in Frankfurt at 0626 ET. BONDS: Treasurys rose in London after Moody's downgrades Portugal by two notches to A1. The news knocked the euro lower and prompted safe-haven bunds and gilts to come off lows. The Treasury is set to auction $21 billion of 10-year notes Tuesday. This comes after the average yield at a $35 billion sale of 3-year notes overnight fell to a record low of 1.055%. The 2-year note was a tad higher at 99-31+/32 yielding 0.633%; the 10-year note was up at 104-00/32, yielding 3.026%; and the 30-year was up at 106-02/32, yielding 4.023%. Corporate bonds: Markit iTraxx corporate credit indexes were a touch wider at the open Tuesday, ahead of a busy week for corporate earnings, as the looming European bank stress tests continued to keep market participants on their toes. FOREX: The euro and the dollar tumbled against the yen after Portugal's downgrade. The news hit a market that was already looking for safe havens after China made it clear that it will continue to halt speculation in its property market. Analysts are also concerned that gross domestic product data from the country later this week will confirm that the Chinese economy is already slowing. By 0515 ET, the dollar was down in Europe at Y88.49, while the euro was down at $1.2543 and the pound had risen to $1.5045. COMMODITIES: Oil prices gained a little ground following a report from the International Energy Agency saying it expects world oil demand in 2011 to grow by 1.6%, compared with expected growth of 2.1% this year. However the energy watchdog said it expects oil demand to slow next year in China and most other parts of the world, indicating crude prices are likely to trade at subdued levels well into next year. Gold prices are likely to consolidate in current ranges in the near-term as market participants digest this week's heavy slate of economic data and the second quarter earnings results, according to TheBullionDesk. It said risk appetite was slightly weaker, with the euro down against the dollar and yen, while Asian equities were lower on concerns of China's tightening grip on real estate speculation. It tipped physical and investment demand to provide a floor for gold around $1,185-$1,190/oz. =======TODAY'S CALENDAR======= ET PERIOD 0730 Jun NFIB Index of Small Business Optimism 0745 Jul 10 ICSC-Goldman Sachs Chain Store Sales Index 0830 May International Trade in Goods & Services 0855 Jul 10 Johnson Redbook Retail Sales Index 1000 Jul IBD/TIPP Economic Optimism Index 1400 Jun Monthly Treasury Statement of Receipts & Outlays of the Govt 1630 Jul 9 API Weekly Statistical Bulletin 1700 Jul 11 ABC News Consumer Comfort Index ============================== OTHER TOP STORIES OF THE DAY: NEW BAN HITS OIL DRILLERS The Obama administration on Monday issued a new order banning most new deepwater-drilling activities until Nov. 30, setting up a fresh round of conflict with the oil industry over when it will be safe to drill again offshore. IEA SAYS WORLD OIL DEMAND WILL SLOW The International Energy Agency says it expects oil demand to slow next year in China and most other parts of the world, indicating that crude prices are likely to trade at subdued levels well into next year. FORD EUROPE JUNE VEHICLE SALES SLUMP 17% ON YEAR Ford Motor Co.'s (F) European division said Tuesday that sales in its 19 core markets declined by 17% in June to 118,800 vehicles as demand contracted following the end of several scrapping incentive schemes in the region. MOODY'S CUTS PORTUGAL, CITES WEAKENING FINANCES Moody's Investors Service cut Portugal's sovereign debt rating by two notches to A1 with a stable outlook early Tuesday, citing the government's weakening financial strength and meagre economic growth prospects. US GOVERNMENT FINDS NO EASY FIX FOR OIL-DATA FLAWS Antiquated technology has put plans to improve the accuracy of the U.S. government's influential weekly oil-inventory survey on hold, despite growing concerns about the accuracy of the data. WSJ: US DETAINS 12TH PERSON IN RUSSIAN SPY RING PROBE Authorities are detaining a 12th, previously undisclosed person implicated in the federal probe that busted a Cold War-style Russian spy ring, according to a U.S. official familiar with the matter. FINANCE BILL CLOSE TO PASSAGE IN SENATE Democrats on Monday won over a pair of Senate Republicans to the financial overhaul bill, securing enough votes to push the legislation into law. PIMCO CUTS EUROPE EXPOSURE, BUYS US TREASURYS Pacific Investment Management Co doesn't expect a default in Europe but has reduced its exposure to European debt, and is buying US Treasurys, Head of Global Product Management David Fisher said Tuesday. WSJ: IRAN SAYS MISSING SCIENTIST AT PAKISTAN EMBASSY IN WASHINGTON Iran state media reported Tuesday that a missing Iranian academic, who Tehran has said was kidnapped last year by the U.S., is seeking refuge at the Pakistan embassy in Washington and has asked to return home. PROSPECTIVE BUYERS SUE TEXAS RANGERS FOR VIOLATING SALE PACT The prospective buyers of the Texas Rangers filed a lawsuit Monday against the baseball team, alleging that the franchise breached its $575 million deal to sell itself to an investment group that includes Hall of Fame pitcher Nolan Ryan and sports attorney Chuck Greenberg. -By David Crawshaw, Dow Jones Newswires; +44 207 842 9252; [email protected] (MORE TO FOLLOW) Dow Jones Newswires July 13, 2010 06:40 ET (10:40 GMT)