Morning Update

Kicking Off the Week in the Green

Stocks are solidly higher in morning action following Friday's resiliency in the face of a disappointing October labor report, and after the G20 group of world finance leaders met and pledged to keep stimulus efforts deployed until economic recovery is assured. Treasuries are nearly unchanged as the economic calendar is void of any major releases today, and will remain relatively light for the week. A couple of Dow members are dominating the equity headlines, with McDonald's reporting October comparable store sales gained ground, and Kraft Foods formalizing its hostile bid for UK confectionary firm Cadbury, which it left unchanged. Overseas, markets are mostly higher, as the rally in gold continues to lift mining and metals issues.

As of 8:51 a.m. ET, the December S&P 500 Index Globex future is 9 points above fair value, the DJIA is 73 points above fair value, and the Nasdaq 100 Index is 15 points above fair value. Crude oil is higher by $1.03 at $78.646 per barrel, and the Bloomberg gold spot price is up $13.08 at $1,108.18 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is down 1.0% at 75.06.

Dow member McDonald's (MCD $62) is higher after it reported that global comparable store sales-sales at all restaurants in operation at least thirteen months-for October rose 3.3%. The world's largest fast food chain said its US comparable sales were relatively flat, Europe's sales jumped 6.4%, and sales from its Asia/Pacific, Middle East and Africa segment gained 4.7%.

Meanwhile, fellow Dow component Kraft Foods (KFT $27) formalized its 9.8 British pound ($16 billion) hostile takeover offer for UK confectionary firm Cadbury (CBY $51). Today's proposal remained unchanged from its September bid, which offered shareholders 300 pence in cash and 0.2589 new KFT shares for each share of CBY. Due to stock value fluctuations since the original offer, today's deal is below the 10.2 billion pounds that KFT's bid had valued the company at. KFT said that no other potential suitor has publicly declared its interest in acquiring CBY. CBY has rejected KFT's formal offer as it said it is worse than the previous bid.

All may be quiet on the economic front

Treasuries are flat in morning action as equities open higher and as there are no major reports on today's economic calendar to possibly influence trading in the bond markets. In fact, this week will be relatively light in terms of economic reports, with this week's key releases being MBA Mortgage Applications, initial jobless claims, and the Treasury's monthly budget statement being released on Thursday, while Friday will yield the trade balance, the Import Price Index and the University of Michigan consumer sentiment survey. Also note that the bond market will be closed on Wednesday in observance of the Veteran's Day holiday.

In economic news over the weekend, the G20 group of finance ministers and central banks from the world's 20 leading economies met and decided that although their have been signs of recovery, they will keep stimulus measures in tact to ensure a global recovery takes hold. "Economic and financial conditions have improved following our coordinated response to the crisis," the G20 statement said. The group added that, "However, the recovery is uneven and remains dependant on policy support, and high unemployment is a major concern. To restore the global economic and financial system to health, we agree to maintain support for the recovery until it is assured."

Europe advances on earnings and economic data

Stocks in Europe are broadly higher on the heels of the weekend pledge by the G20 group. Financials are among the best performers in Europe, helping markets across the pond advance for a fourth-straight session, supported by a 5% increase in shares of Allianz (AZSEY $12) after Europe's largest insurer reported better-than-expected 3Q profits, on strength in its life-health insurance and financial services business. Meanwhile, the economic front is aiding the advance in the eurozone, with a report showing industrial production in Germany-Europe's largest economy-rose 2.7% in September, easily exceeding the 1.0% advance that economists surveyed by Bloomberg had anticipated. Adding to the upbeat economic backdrop, a separate report showed French business sentiment rose for an eighth-consecutive month. Also, steep gains in gold prices and strength in crude oil are helping boost oil and gas and basic materials issues to support the European advance. In other equity news, Nokia Corp. (NOK $13) announced that it will replace 14 million cellphone chargers manufactured by China's BYD Co. (BYDDY $92) as the devices could fall apart and expose consumers to risk of electrical shock. A spokesman at NOK said, "We are undertaking this exchange program as a proactive, precautionary measure," adding that the company is not aware of any incidents or injuries relating to these chargers.

Asia advances led by Australia

Stocks in Asia were mostly higher, led by a 1.8% advance in Australia's S&P/ASX 200 Index on some M&A news and better-than expected earnings from the financial sector. Shares of AXA Asia Pacific Holdings (AXAPF $4) jumped 33% after the Australian insurer rejected a $10 billion takeover offer from rival AMP Ltd. (AMLTY $21) and its parent company AXA SA (AXA $25), making it the largest takeover offer in Asia this year, per Bloomberg news. Additional support for trading in Australia, shares of Commonwealth Bank of Australia (CBAUF $47) rose about 5% after the lender reported strong 1Q profits after reporting a positive trading update. Additionally, the G20 members' economic recovery pledge supported sentiment in Asia, while metals and mining firms gained ground to help the advance as gold prices continued to rally. Elsewhere, Japan's Nikkei 225 Index increase 0.2% and China's Shanghai Composite Index increased 0.4%, while Hong Kong's Hang Seng Index advanced 1.7%, after Moody's Investor Services increased its credit ratings outlook on China and boosted Hong Kong's outlook to positive from stable. Meanwhile, South Korea's Kospi Index rose 0.3%.