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Stocks Showing A Lack Of Direction In Early Trading
With
traders expressing caution ahead of tomorrow's European Central Bank
meeting, stocks are turning in a lackluster performance in early trading
on Wednesday. The major averages are lingering near the unchanged line
after ending the previous session mixed.
The major averages are currently turning in a mixed performance, with the Dow posting a modest gain. While the Dow is up 6.69 points or 0.1 percent at 13,042.63, the Nasdaq is down 1.98 points or 0.1 percent at 3,073.08 and the S&P 500 is down 0.69 points or 0.1 percent at 1,404.25.
The
choppy trading comes as traders await the outcome of the ECB's latest
monetary policy meeting, with the bank expected to announce details of a
plan to purchase bonds from troubled eurozone countries such as Italy
and Spain in order to reduce borrowing costs.
Bloomberg News reported that ECB President Mario Draghi's bond-buying proposal involves unlimited purchases of government debt but will refrain from setting a public cap on yields.
Traders
are also staying on the sidelines ahead of Friday's monthly U.S. jobs
report, which is expected to show an increase of about 125,000 jobs in
August.
While most of the major sectors are showing only modest
moves in early trading, trucking and railroad stocks are seeing notable
weakness.
The weakness among trucking and railroad stocks may be partly due to news that delivery giant FedEx (FDX) lowered its first quarter earnings guidance due to weakness in the global economy.
FedEx
said it now expects first quarter earnings in the range of $1.37 to
$1.43 per share compared to its original forecast for earnings of $1.45
to $1.60 per share. The company said weakness in the global economy
constrained revenue growth at FedEx Express more than expected in the
earlier guidance.
On the other hand, airline stocks have shown a strong move to the upside, regaining some ground after trending lower in recent sessions.
In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Wednesday. Japan's Nikkei 225 Index fell by 1.1 percent, while Hong Kong's Hang Seng Index tumbled by 1.5 percent.
Meanwhile, the major European markets have turned mixed over the course of the trading session. While the U.K.'s FTSE 100 Index is down by 0.3 percent, the French CAC 40 Index and the German DAX Index and up by 0.4 percent and 0.5 percent, respectively.
In the bond market, treasuries are showing a lack of direction ahead of the ECB meeting. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.587 percent.
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TSX Edges Up At Open Wednesday
Bay Street stocks edged up at open Wednesday as traders were cautious ahead of a key meeting scheduled Thursday.
The S&P/TSX Composite Index added 19.02 points or 0.16 percent to 11,960.72.
Gold stocks
were trading higher as the price of bullion was hovering around its
six-month high. Agnico-Eagle Mines and Detour Gold were up around 1
percent each.
Among base-metals stocks, First Quantum Minerals rose above 1 percent.
TeraGo Inc.
surged over 8 percent after announcing that its Board of Directors has
initiated a review process to identify, examine and consider a range of
strategic options available to the company with a view to enhancing
shareholder value.
Meanwhile, AuRico Gold plummeted 20 percent after providing guidance update and announcing the appointment of Vice President.
Power generation company TransAlta Corp. dived over 3 percent after it said that its wholly owned subsidiary would acquire Solomon power station for $318 million.
The price of gold was
easing from its six-month high Wednesday morning as traders await a key
meeting of the European Central Bank this week. Gold for December eased
$4.30 to $1,691.70 an ounce.
In corporate news from Canada, power generation company TransAlta Corp. said that its wholly owned subsidiary has entered into an agreement with Fortescue Metals Group Ltd. to acquire its 125 megawatt dual-fuel Solomon power station for $318 million.
Beachwear products retailer Groupe Bikini Village inc.
reported a lower second quarter profit at C$748,000 or C$0.39 per share
compared to C$890,000 or C$0.47 per share in the prior year.
Ethiopia focused potash miner Allana Potash Corp. announced that it would acquire Nova-Ethio Potash Corporation in exchange of 12,716,667 common shares.
In economic news from south of the border, the U.S. Labor Department
said productivity increased by an upwardly revised 2.2 percent in the
second quarter compared to the preliminary estimate for 1.6 percent
growth. Economists had expected the rate of productivity growth to be
revised to 1.9 percent.
Elsewhere, euro zone's private sector
contracted more than initially estimated in August, data from a survey
by Matkit Economics showed. The seasonally adjusted composite output
index, designed to measure activity in both the manufacturing sector and
the service sector, dropped to 46.3 in August from 46.5 in July. The
index was initially estimated to rise to 46.6.
Meanwhile, data released by Eurostat showed retail sales in
euro zone declined 0.2 percent month-on-month in July, in line with
economists' forecast. This followed a 0.1 percent increase in June. On
an annual basis, sales fell 1.7 percent in July. This was also in line with forecast.
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European Markets Mostly Higher Ahead Of ECB Meet
The European markets
are mostly higher in afternoon trading Wednesday, ahead of Thursday's
monthly European Central Bank meeting. The Asian markets sank and the
U.S. index futures are lower, after sluggish manufacturing data from the
world's largest economy in the previous session.
Eurozone's
private sector contracted more than initially estimated in August,
adding to concerns that the economy is on course to fall back into
technical recession in the third quarter, a survey by Markit Economics
showed.
The seasonally adjusted composite output index, designed
to measure activity in both the manufacturing sector and the service
sector, dropped to 46.3 in August from 46.5 in July. The index was
initially estimated to rise to 46.6.
Meanwhile, retail sales in Eurozone declined 0.2 percent month-on-month in July, in line with economists' forecast, data released by Eurostat showed.
Germany's
services sector contracted in August, marking the weakest level of
activity since July 2009, Markit Economics said. The services Purchasing
Managers' Index fell to 48.3 from 50.3 in July, matching flash estimate
published on August 23.
In China, service sector activity slowed
to its weakest level in a year in August, mainly due to weak growth in
new order volumes.
The Euro Stoxx 50 index of eurozone
bluechip stocks is advancing 0.28 percent, while the Stoxx Europe 50
index, which includes some major U.K. companies, is rising 0.04 percent.
The German DAX is rising 0.59 percent and Switzerland's SMI is gaining 0.67 percent. The French CAC 40 is rising 0.13 percent. However, the UK's FTSE 100 index is falling 0.18 percent.
In Frankfurt, Fresenius is climbing 1.8 percent. Commerzbank raised the stock to "Add" from "Hold." SAP and Henkel are notably higher. Kloeckner is advancing 2 percent after HSBC upgraded the stock.
Deutsche Bank is gaining 0.1 percent while Commerzbank is falling 0.3 percent. BMW is losing 1.8 percent after HSBC cut the stock to "Neutral" from "Overweight." Volkswagen and Daimler are notably lower.
In Paris, PPR is advancing 1.6 percent and Essilor is gaining 1.3 percent. BNP Paribas is rising 1.1 percent. Credit Agricole and Societe Generale are moderately higher.
UBS reduced its rating on STMicroelectronics. The stock is losing 3.8 percent. Alcatel Lucent is dropping 2.1 percent and ArcelorMittal is losing 1.8 percent. Renault and Peugeot are declining around 1 percent each.
In London, BP is
declining 3.8 percent on reports that the U.S. Department of Justice
will try to prove gross negligence against the oil giant for the Gulf of
Mexico oil spill in April 2010.
BG Group is declining 3.3 percent. BT Group is gaining 1.3 percent. JPMorgan raised the stock to "Overweight" from "Neutral." Lloyds Banking Group is rising 1.9 percent and Royal Bank of Scotland Group is adding 1 percent.
Sports Direct is
climbing 5.5 percent after the sporting goods retailer reported about
25 percent growth in sales for the 13-week period ended July 29,
benefited by its pricing measures and Olympics.
Theo Fennell shares
are climbing over 30 percent. The jewelry and silverware provider
confirmed that it is in very preliminary talks with private equity firm
EME Capital LLP.
Britvic is surging over 13 percent on news that the company and A.G. Barr are in preliminary merger talks. KPN is losing 1.9 percent in Amsterdam. JPMorgan cut the stock to "Underweight" from "Neutral."
Richemont is up 1.5 percent in Zurich. The luxury goods
group reported a 23 percent increase in sales for the five months ended
August, helped by continued positive momentum across its regions.
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Asian Stocks Fall On Growth Concerns
Asian stocks
fell across the board on Wednesday, as weak U.S. manufacturing data
coming on the heels of disappointing manufacturing data for China and
the eurozone released earlier this week raised doubts about the strength
of the global economic recovery. Apprehensions preceding the ECB's
Thursday meeting and Friday's U.S. payroll data, which will provide some
insight on downside risks to the U.S. economy, also kept investors on
the edge.
The euro held steady before extending its losses
against the dollar after revised data showed service sector activity in
the euro zone contracted at a slightly faster pace than initially
estimated in August.
Japanese shares fell for a fifth
consecutive session, as weaker-than-expected U.S. manufacturing data
added to concerns the global economic slowdown is deepening. The Nikkei
average fell 1.1 percent to a one-month closing low, while the broader Topix
index shed 1.2 percent. Heavyweight Fast Retailing lost a percent as it
reported a 2 percent rise in August domestic same-store sales at its
Uniqlo casual closing store chain.
Economy-sensitive stocks like Hitachi Construction Machinery, Komatsu and Mitsui OSX Lines
plunged 3-5 percent after overnight data showed U.S. factory activity
shrank for the third straight month in August, with new orders,
production and employment indexes all falling as consumers cut back
their spending and businesses invested less in machinery and equipment.
Among trading companies, Mitsubishi Corp. retreated 2.4 percent and Mitsui & Co. dropped 2 percent. Consumer electronics makers Panasonic and Sony fell 2.4 percent and 3 percent, respectively, while camera maker Canon tumbled 4 percent. Troubled computer services provider NEC declined 2.6 percent following reports the company has sold its 2.7 percent stake in Lenovo of China for 18 billion yen.
China's Shanghai
Composite index eased 0.3 percent, with financials coming under selling
pressure as investors awaited a slew of economic reports on inflation,
industrial production, retail sales and trade numbers due out next week.
Hong Kong's Hang Seng index fell 1.5 percent, its worst single-day loss since July 23 on concerns China may be facing a hard landing.
Australian
shares lost ground after official data showed Australia's GDP grew a
seasonally adjusted 0.6 percent quarter-over-quarter in the second
quarter of 2012, less than the 1.4 percent expansion in the first
quarter. On a yearly basis, GDP was up 3.7 percent - matching forecasts,
but slowing from 4.3 percent in the previous three months.
Another survey report released by the Australian Industry Group and Commonwealth Bank showed that the nation's services sector contracted for the seventh straight month in August. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index ended down about 0.6 percent each.
Resource stocks weighed on the market, with Fortescue Metals retreating a whopping 8.5 percent and Sundance Resources
tumbling over 13 percent after iron ore prices plunged overnight on
mounting concerns over a slowdown in commodity demand from China.
BHP Billiton declined
1.6 percent after a guerilla unit has blown up heavy mining equipment
at a Columbian mine part owned by the company. Rio Tinto lost about 2
percent on reports its Australian iron-ore expansion plans remain on
track. Among banks, Commonwealth, NAB, ANZ and Westpac fell between 0.2 percent and 1.5 percent.
Seoul shares tumbled on persistent global growth worries. The benchmark Kospi average fell 1.7 percent to a one-month low, with heavyweight Samsung falling
2.4 percent after Apple Inc invited reporters to a news conference next
week in San Francisco, where it is widely expected to launch the
iPhone5. Automakers extended the previous session's declines, with Kia Motors and Hyundai Motor tumbling 3-4 percent on posting weak U.S. sales.
New Zealand shares eased, mirroring weakness across Asia on concerns about weakening global manufacturing. The benchmark NZX-50 index slid 0.2 percent. Medical property manager Vital Healthcare Property Trust and Wealth manager AMP
fell 2-4 percent on going ex-dividend, children's clothing chain
Pumpkin Patch lost 2.5 percent after recent steep gains and Fletcher
Building, the nation's largest construction company, slipped 0.6
percent. NZX retreated 2.8 percent after the stock exchange operator reported a fall in market trading volume last month.
Australian food
ingredients manufacturer Goodman Fielder led the gainers on the
exchange, climbing 4.7 percent after the company unveiled plans to close
at least another 10 factories in Australia and New Zealand as part of a three-year plan to shore up profit growth and returns.
Elsewhere, India's benchmark Sensex was last trading down 0.8 percent, Indonesia's Jakarta Composite index was losing 0.7 percent, Malaysia's KLSE Composite fell 0.8 percent, Singapore's Straits Times index lost half a percent and the Taiwan Weighted average retreated 1.1 percent.
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Crude Eases Near $95
The
price of crude oil was moving lower Wednesday morning as traders were
cautious ahead of the European Central Bank's policy meeting Thursday
Light Sweet Crude Oil (WTI)
futures for October delivery, slipped $0.16 to $95.14 a barrel.
Yesterday, oil ended lower after some weak manufacturing data from the
U.S. that showed a third straight month of contraction.
This morning, the U.S. dollar
was lingering around its two-month low versus the euro and near a
two-week low against sterling. The buck was leveling off from a
three-week low versus the yen, while trading flat against the Swiss
franc.
In economic news, euro zone's private sector contracted
more than initially estimated in August, data from a survey by Matkit
Economics showed. The seasonally adjusted composite output index,
designed to measure activity in both the manufacturing sector and the
service sector, dropped to 46.3 in August from 46.5 in July. The index
was initially estimated to rise to 46.6.
Meanwhile, data released by Eurostat showed retail sales
in euro zone declined 0.2 percent month-on-month in July, in line with
economists' forecast. This followed a 0.1 percent increase in June. On
an annual basis, sales fell 1.7 percent in July. This was also in line
with forecast.
In economic news, the U.S. Labor Department
will release its final report on second quarter non-farm productivity
and unit labor costs at 8:30 a.m. Economists expect productivity growth
to be upwardly revised to 1.9 percent, while unit labor costs are
expected to have increased at a downwardly revised rate of 1.4 percent.
Today after the market hours, the API will release its crude oil inventories report for the weekended August 31.
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