=DJ UPDATE:US Stock Futures Dn On China Rate Move,Bernanke Eyed(DJ)
By Steve Goldstein
LONDON (Dow Jones)--U.S. stock futures fell Thursday as China's
central bank lifted interest rates and on caution ahead of
testimony from the chairman of the Federal Reserve.
Treasury bond prices are also lower and yields are higher, as the
Chinese move plays into general concerns about tightening
liquidity across the world. The two-year yield is currently at
4.99% and the 10-year note is currently yielding 5.12%.
However, of greater importance for U.S. markets will be the
testimony to Congress later Thursday at 10 a.m. EDT by Fed
Chairman Ben Bernanke. His testimony comes after strong data this
week - particularly on the housing market - which has prompted
investors to raise their expectations for a rate hike in June, as
well as in May.
Dow Jones futures were recently down 44 points, S&P 500 futures
dropped 5.8 points, and Nasdaq 100 futures fell 7.5 points. A
downgrade of Dow industrials component Honeywell also may affect
sentiment.
On Wednesday, the Dow industrials hit a new six-year high, helped
by strong data, indications from the Federal Reserve of a healthy
economy and solid earnings from Boeing Co. (BA) and PepsiCo (PEP).
Weekly jobless claims rose by 11,000 to 315,000 in the week to
April 22, compared with an expected 2,000 gain.
The Chinese central bank lifted its key base rate to 5.85%, the
first rise since October 2004.
While the move could boost the yuan, HSBC strategist Richard
Yetsenga says it won't have any broader implications for foreign
exchange markets.
"China is tightening (and only very modestly at that) to try and
control domestic liquidity," he said.
Early in New York, the dollar is at $114.94, up a touch from
Wednesday's Y114.74. The euro is at $1.2412, down from $1.2452.
Crude-oil futures continued to edge lower, losing 65 cents to
$71.28 a barrel.
Thursday also will see the release of a batch of earnings,
including ExxonMobil (XOM) and Microsoft Corp. (MSFT), with
Microsoft's results coming after the close of trading.
A number of leading companies outside the U.S., including Sony
(SNE), AstraZeneca (AZN), Siemens (SI) and Alcatel (ALA), reported
results on Thursday.
Highlights included Sony guiding to an improving fiscal-year net
profit, and AstraZeneca lifting its earnings guidance.
Siemens also announced a deal to buy Diagnostics Products Group
(DP) for $1.86 billion, or a 21% premium to Wednesday's close.
Another deal had Carlson Wagonlit Travel agreeing to buy Navigant
International (FLYRE) for $510 million, or $16.50 a share, a 25%
premium to Wednesday's close. That deal is contingent on the
closing of Accor's 50% stake sale in Carlson Wagonlit Travel to
Carlson Companies and a J.P. Morgan Chase (JPM) unit for $465
million.
MeadWestvaco (MWV) said it's agreed to buy Saint-Gobain Calmar, a
maker of plastic dispensing systems, from Saint-Gobain for $710
million in cash, in a deal that's expected to lift its earnings in
2007.
On the analyst front, Dow component Honeywell (HON) was downgraded
to underweight from neutral by J.P. Morgan on concerns over
environmental liabilities.
Overseas, most European markets fell sharply lower, with commodity
stocks such as miner BHP Billiton (BHP) and oil major Royal Dutch
Shell (RDSA) among the early losers.
Asian markets had more success, with gains in Japan and South
Korea.
-Steve Goldstein; 415-439-6456; AskNewswires@dowjones.com
(Laurence Norman and Ilona Billington contributed to this report.)
Sincerely, Ilan Levy-Mayer, M.B.A Vice President Cannon Trading Co Inc. http://www.cannontrading.com http://www.E-Futures.com ilan@cannoncapital.com Yahoo IM ilanlevy1970 310-859-9572 800-454-9572 Fax 310-859-0547 9301 Wilshire Blvd. Suite #614 Beverly Hills, Ca 90210 The finest compliment I can receive is a referral from a trusted client. * Important Please Note: Trading commodity futures and options involves substantial risk of loss. The recommendations contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
