Morning Update

Markets Cheer Greek Aid

Stocks are set to rise in early trading after closing at session lows yesterday, as European Central Bank President Trichet appeared to back a Greek aid plan, after his comments in late trading yesterday called IMF involvement “very, very bad.” The Greek news is giving support to the euro to the detriment of the US dollar, and in combination with speculation that the Chinese government may wait to raise rates, is buoying commodity-based shares. In earnings news, Oracle Corp announced inline results, while consulting and outsourcing firm Accenture missed and lowered full-year guidance. Treasuries are mixed after the final reading on 4Q Gross Domestic Product for the US was revised lower. Asian shares were higher, while European markets are bucking the trend, as continued government debt problems in the nation are weighing on sentiment.

As of 8:40 a.m. ET, the June S&P 500 Index Globex future is 4 points above fair value, the Nasdaq 100 Index is 11 points above fair value, and the DJIA is 35 points above fair value. Crude oil is up $0.43 at $80.96 per barrel, and the Bloomberg gold spot price is up $7.35 at $1,097.85 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is down 0.3% to 81.86.

Oracle Corp (ORCL $26) reported 3Q revenue of $6.4 billion and non-GAAP earnings per share of $0.38, inline with Thomson Reuters estimates. Results included one month of results from Sun Microsystems, after the acquisition of the hardware maker closed in late January, and the company said the integration was going “even better than we expected.” New license revenue gained 13%, and rose 8% excluding currency changes.

Accenture PLC (ACN $41) announced 2Q earnings of $0.60, below the Street EPS estimate of $0.61, on net revenue, or revenue before reimbursements, of $5.54 billion. The company said that new bookings for the quarter were $6.52 billion, with consulting bookings of $3.39 billion and outsourcing bookings of $3.13 billion. The consulting and outsourcing company reduced its full-year earnings by $0.06 to $2.61-2.69 per share, and said revenue will be at the low end of prior guidance. In commenting on the results, the CEO said that the results reflected strong business management in a challenging economic environment.

Final report lowers reported 4Q economic growth, while consumer sentiment due later

The final look at 4Q Gross Domestic Product (chart), the broadest measure of economic output, was released this morning and showed a 5.6% annualized rate of growth, compared to the 5.9% advance in the prior report, while the Bloomberg forecast called for output in the final quarter of the year to remain unchanged. Personal consumption advanced 1.6%, below the 1.7% that was forecasted to be unrevised. Real final sales, which exclude changes in inventory, were 1.7% higher, versus the 1.9% that was last reported. Revisions from the second estimate of 4Q GDP primarily reflected downward revisions to non-residential construction, inventory investment and consumer spending.

The GDP Price Index rose 0.5%, versus the 0.4% consensus rise of economists surveyed by Bloomberg. The core PCE Index, which excludes food and energy, gained 1.8%, versus expectations of 1.6%. Treasuries are mixed.

After the open brings the other release on the US economic calendar, the final March reading of the University of Michigan consumer sentiment survey, forecasted to increase to 73.0 from the initial reading of 72.5, down from February’s reading of 73.6.

Greek aid rallies the euro but fails to buoy European markets outside of Greece

With the exception of a strong advance in Greece, European markets are lower despite a plan from the European Union (EU) to aid Greece, as concerns over government debt problems remain, highlighted by a credit rating downgrade of the debt of Portugal earlier this week. European Central Bank President Jean-Claude Trichet toned down his opposition to International Monetary Fund (IMF) involvement, telling reporters late yesterday that he was “extraordinarily happy that the governments of the euro area found out a workable solution,” while earlier remarks said an IMF role would be “very, very bad.” Trichet’s change in view came as European governments would be in control of the process, providing more than half of the loans in a mix of IMF assistance and bilateral loans, wherein help would be extended from the entire 16-nation euro region. EU leaders said that the objective was to provide financing at “average euro-area interest rates” but said that Greece probably won’t need help as markets were still funding its credit needs. In commenting on the plan, German Chancellor Angela Merkel said that, “Europe has shown it is capable of dealing with an important issue and at the same time take action for the stability of the euro and for a country struggling with difficulties.” The plan for aid to Greece today is expected to be a template for any euro-nation country that needs assistance.

In equity news, while declining to comment, shares of Renault (RNSDF $46) are higher after the Nikkei English News reported that the German carmaker was in final talks with Nissan Motor Co of Japan (NSANY $17) about buying 5% stakes in each other.

Britain’s FTSE 100 Index is lower by 0.3%, France’s CAC-40 Index and Germany’s DAX Index are declining by 0.2%, while Greece’s Athex Composite Index is advancing by 3.2%.

Asia surges on Greek relief and easing concerns on Chinese monetary policy

Stocks in Asia were higher after European leaders agreed to a plan to aid Greece, paring losses seen earlier in the week and as the yen fell, boosting prospects for Japanese exporters, and on speculation the Chinese government may wait to tighten monetary policy. The Shanghai Composite Index and Hong Kong’s Hang Seng Index both surged 1.3% after Chinese central bank Deputy Governor Zhu Min said that interest rates are a “heavy-duty weapon” and that alternative tools to address credit liquidity are working well. Chinese currency policy was in news headlines again today, after Fan Gang, an adviser to the country’s central bank, wrote an opinion piece in the government-backed China Daily. Fan said that, “China may resume a managed float of its exchange rate, particularly if the uncertainty of the overall post-crisis economic situation diminishes,” but added that, “If the adjustment came abruptly, Chinese companies would suffer a sudden loss of competitiveness.”

In Asian economic news, Japanese core consumer prices declined for the twelveth month in February, and the prospect of continued deflation contributed to a decision last week by the Bank of Japan to extend a credit program for commercial lenders of 20 trillion yen ($220 billion). In earnings news, PetroChina (PTR $112) fell after net income of 103.4 billion yuan missed the 108.6 billion yuan estimate. In other market action in the Asian/Pacific region, Australia’s S&P/ASX 200 gained 0.2%, South Korea’s Kospi Index rose 0.6% and India’s BSE Sensex 30 Index advanced 0.5%.