ECB News, Jobs Data Drives Stocks Higher At The Open
Stocks moved
sharply higher at the start of trading on Thursday, as traders reacted
positively to the latest news out of the European Central Bank along
with a batch of upbeat U.S. employment data. The major averages jumped
into positive territory after ending the previous session mixed.
The major averages have not seen much follow-through on their initial upward move but remain firmly positive. The Dow is up 149.48 points or 1.2 percent at 13,196.96, the Nasdaq is up 32.34 points or 1.1 percent at 3,101.61 and the S&P 500 is up 15.40 points or 1.1 percent at 1,418.84.
The
initial strength on Wall Street came on the heels of ECB President
Mario Draghi's remarks at a press conference following the central
bank's monetary policy meeting.
The Labor Department
released a separate report showing a bigger than expected drop in
first-time claims for unemployment benefits in the week ended September
1st.
The release of the upbeat jobs data has generated some
optimism about the outlook for the Labor Department's monthly jobs
report, which includes government jobs. The report is expected to show
an increase of about 125,000 jobs in August.
Most of the major sectors have moved to the upside in early trading, reflecting broad based buying interest on Wall Street.
Semiconductor stocks
are turning in some of the market's best performances, driving the
Philadelphia Semiconductor Index up by 1.8 percent. Banking, steel,
networking, and software stocks are also posting notable gains.
In overseas trading, stock markets
across the Asia-Pacific region moved mostly higher on Thursday. While
Japan's Nikkei 225 Index closed only just above the unchanged line, Hong
Kong's Hang Seng Index rose by 0.3 percent and China's Shanghai Composite Index advanced by 0.7 percent.
The major European markets have also shown notable moves to the upside on the day. The U.K.'s FTSE 100 Index is up by 1.2 percent, the German DAX Index is up by 1.8 percent and the French CAC 40 is up by 2.4 percent.
In
the bond market, treasuries have moved notably lower amid the rally on
Wall Street. Subsequently, the yield on the benchmark ten-year note,
which moves opposite of its price, is up by 5.7 basis points at 1.651
percent.
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TSX Jumps At Open Thursday
Bay Street opened higher Thursday as commodities moved up after the ECB agreed new bond buying program. The S&P/TSX Composite Index gained 84.32 points or 0.70 percent to 12,074.46.
The
Diversified Materials Index gathered nearly 2 percent, with First
Quantum Minerals adding about 3 percent. Teck Resources and Inmet
Mining rose close to 2 percent each.
In the oil patch, Canadian Natural Resources, Cenovus Energy , Suncor Energy and Baytex Energy Corp. were up around 2 percent each.
Among gold plays, Detour Gold rose close to 3 percent, while Goldcorp. was adding nearly 2 percent.
Meanwhile, Gold miner AuRico Gold Inc. was extending losses for a second session, dipping close to 2 percent after it yesterday cut its 2012 production outlook.
Enbridge Inc.
slipped nearly 1 percent after announcing plans to invest up to $600
million to expand Enbridge Gas Distribution's natural gas distribution
system.
Crude oil futures are adding $0.73 to $96.09 a barrel after rising $0.06 to $95.36 a barrel on Wednesday.
The
weekly inventory report released by the American Petroleum Institute
late Wednesday showed that crude oil inventories rose by 5.5 million
barrels in the week ended September 1st.
An ounce of gold is
currently fetching $1,706.70 an ounce, up $2.70 from the previous
session’s close of $1,694 an ounce. On Wednesday, the precious metal
slid $2.
Among currencies, the U.S. dollar is trading at
78.86 yen compared to the 78.39 yen it fetched at the close of New York
trading on Wednesday. Against the euro, the dollar is valued at $1.2591 compared to yesterday’s $1.2601.
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European Markets Rise Ahead Of ECB Decision
The European markets
are moderate to notably higher in afternoon trading Thursday, ahead of
the all-important decision from the European Central Bank. Resource
stocks and banks are seeing momentum. The Asian markets rose, the U.S.
index futures are higher and Spanish borrowing costs fell, with all eyes
on ECB president Mario Draghi.
Draghi is expected to
announce measures to battle the sovereign debt crisis that has plagued
the euro area, which could include buying bonds of peripheral
governments. He told European lawmakers in a closed-door meeting on
Monday that the central bank is not averse to buying government bonds of up to three-year maturities on the secondary market.
The ECB is
likely to cut its record low benchmark interest rate, known as the
refi, to 0.50 percent from 0.75 percent. The bank will announce its rate
decision at 7.45 am ET.
The Bank of England policymakers
maintained the size of quantitative easing at 375 billion pounds and the
record low interest rate unchanged at 0.50 percent, as expected by
economists.
The U.K. government said it would relax the
planning rules for building extensions on houses and business premises
as part of a new package to be unveiled today, reports said. Under the
planned package, an attempt to rebuild the economy, homeowners will be
temporarily allowed to build extensions and carry out major renovations
without seeking a planning approval.
Spain's Treasury sold
3.5 billion euros from the auction of securities, matching the upper
end of the target range of 2.5 billion euros to 3.5 billion euros. It
sold 682 million euros of securities maturing on April 2014, at an
average yield of 2.798 percent. The cost declined from 4.706 percent at
the previous auction in June.
The Euro Stoxx 50 index of
eurozone bluechip stocks is adding 1.17 percent, while the Stoxx Europe
50 index, which includes some major U.K. Companies, is rising 0.75
percent.
The German DAX is adding 1.25 percent and the French CAC 40 is gaining 0.89 percent. The UK's FTSE 100 is advancing 0.55 percent and Switzerland's SMI is rising 0.54 percent.
In Frankfurt, ThyssenKrupp is gaining 2.5 percent. Outside the DAX, Salzgitter is jumping 4.3 percent. Deutsche Bank is advancing 2.4 percent and Commerzbank is gaining 1.4 percent. BMW, Volkswagen and Daimler are rising between 2.4 percent and 1.2 percent.
Lanxess is gaining 1.7 percent even after JPMorgan reduced its rating on the stock. Deutsche Boerse is falling 1.2 percent and Fresenius Medical Care is losing 0.9 percent. Infineon is down 0.2 percent. Exane BNP cut the stock to "Neutral" from "Outperform."
In Paris, Lafarge is gaining 3.3 percent. Michelin is advancing 3.2 percent. Credit Agricole is climbing 2.5 percent while BNP Paribas and Societe Generale are gaining 1.5 percent and 1.3 percent, respectively. Peugeot is gaining 2.5 percent while Renault is advancing 2.1 percent.
GDF Suez is declining 1.8 percent. Alstom and Loreal are down 0.8 percent each. UBS cut Alstom to "Neutral" from "Buy" while Loreal was downgraded at Morgan Stanley.
In London, miners are notably higher. Antofagasta is climbing 4 percent. Eurasian Natural Resources and Vedanta are rising 2.8 percent each. Randgold Resources is advancing 4.3 percent. Lonmin is rising 5.3 percent on reports of a peace deal with unions.
Lloyds Banking is up 1.3 percent and Royal Bank of Scotland is rising 1 percent. Barclays is gaining 1.1 percent even after Credit Suisse downgraded the stock.
Whitbread shares are climbing 5.4 percent. The company issued a trading update. WM Morrison Supermarkets is advancing 2.9 percent after reporting first-half results.
International Consolidated Airlines is
up 1.9 percent. The firm said its wholly-owned subsidiary, British
Airways, and Australia's Qantas Airways Ltd. have agreed to terminate
their joint business from March 31, 2013.
May Gurney Integrated Services
is plunging 43.6 percent. The firm said it faced some serious
operational issues within two long-term MaGos contracts and the planned
run-down of its Facility Services division. The company expects to
significantly under-perform its original expectations for the current
year.
ABB is gaining 3.5 percent in Zurich. UBS raised the stock to "Buy" from "Neutral." Deutsche Bank and Societe Generale reduced their ratings on Nokia. The stock is falling 4.2 percent in Helsinki. ASML is losing 0.7 percent in Amsterdam. Societe Generale cut the stock to "Hold" from "Buy."
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Asian Stocks Rise On ECB Optimism
Asian stocks
rose broadly on Thursday, with shares paring losses in late trading, as
investors waited for the European Central Bank's bond-buying
announcement to support financially struggling European countries. There
were some leaked reports that said ECB President Mario Draghi will
announce unlimited purchases of bonds of maturity up to three years from
European sovereigns to stem the heightening risk of contagion.
The
bond-buying program may not offer a longer-term solution to the bloc's
debt crisis, but would result in lower borrowing costs for Spain and
Italy, the third and fourth largest euro zone economies, that are on the
verge of collapse if denied help by the ECB.
Spanish and Italian
government bond yields have fallen significantly since Draghi said on
August 2 that the ECB was working on bond- buying program aimed at
lowering the region's borrowing costs. The euro held the previous
session's gains on expectations the ECB will unveil measures to help
ease Europe's debt crisis.
Tokyo stocks ended a lackluster
session little changed, as investor adopted a cautious approach ahead
of the ECB meeting. After swinging between gains and losses, the Nikkei
average ended up 0.75 points or 0.01 percent, while the broader Topix index rose 0.13 percent. Toyota Motor rose 1.6 percent, helped by a slightly stronger euro, while Sony fell 0.4 percent to hit a fresh 32-year low.
Shares of Sharp Corp
tumbled 4.3 percent on heavy volume amid reports the company has
offered almost all of its domestic offices and factories as debt
collateral in order to stay in business. All Nippon Airways jumped 3.6 percent as short sellers covered positions before rival JAL announces the closing of its IPO order books Friday.
China's Shanghai Composite
index rose 0.7 percent, with railway builder and train manufacturers
pacing the gainers, after the government rolled out a series of plans to
speed up infrastructure spending. Hong Kong's Hang Seng index rose 0.3
percent.
Australian stocks rose notably despite a flat
lead from Wall Street. Both the benchmark S&P/ASX 200 and the
broader All Ordinaries index rose about 0.8 percent each, as renewed
hopes that the ECB will unveil measures to help contain the debt crisis
outweighed mixed unemployment data.
Australia's unemployment rate
unexpectedly declined to a seasonally adjusted 5.1 percent in August
from 5.2 percent in July. Meanwhile the economy lost 8,800 jobs - well
below forecasts for an increase of 5,000 jobs following the addition of
14,000 jobs in the previous month, according to data released by the
Australian Bureau of Statistics.
Miners ended mixed, with BHP Billiton up 0.9 percent and Rio Tinto gaining 1.7 percent, while Fortescue Metals
tumbled 4.8 percent, extending recent losses after announcing plans to
cut jobs and delay expansion plans in response to falling iron ore
prices. In the financial sector, ANZ, Commonwealth and NAB rose between 0.2 percent and 0.6 percent, but Westpac eased 0.2 percent.
Billabong
shares climbed 7.5 percent on reports the surfwear company has received
its second takeover offer in six weeks, matching an earlier offer from
private equity group TPG. Lynas Corporation soared over 41 percent after
the company received a temporary operating license for its
controversial rare earths plant in Malaysia.
South Korea's Kospi average
ended 0.4 percent higher, rebounding from a one-month low hit in the
previous session as investors pinned hopes on the possible ECB policy
action. Heavyweight Samsung Electronics rose 0.6 percent after
the technology giant said sales of its latest smartphone, the Galaxy S3,
topped the 20 million mark in just 100 days since its debut in May
2012. Shares of mobile carrier KT Corp jumped 3.2 percent on reports of steadily rising customers for next-generation long-term evolution phones.
In economic news, South Korea's gross domestic product grew 0.3 percent in the second quarter of 2012 compared to the previous three months, the Bank of Korea
said in a final report. That was down from July's preliminary reading
that called for a 0.4 percent increase following the 0.9 percent gain in
the first quarter.
New Zealand shares rose on optimism about ECB action. The benchmark NZX-50
index rose 0.7 percent, with Air New Zealand pacing the gainers with a
3.2 percent rally after the national carrier last week posted
forecast-beating annual profit. Infrastructure investment firm rose 2.4
percent and airport operator Auckland International Airport added 1.2 percent.
Outdoor clothing retailer Kathmandu
Holdings led the decliners on the exchange, falling 4.3 percent as
investors took some profits off the table following recent gains. Gold
miner OceanaGold, carpet maker Cavalier and rural services firm PGG Wrightson fell 3-4 percent.
Elsewhere, India's benchmark Sensex was last trading up 0.4 percent and Indonesia's Jakarta Composite index rose 0.7 percent, while Malaysia's KLSE Composite slid 1.4 percent, Singapore's Straits Times index edged down 0.2 percent and the Taiwan Weighted average ended down 0.6 percent.
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Crude Up On ECB Expectations
The
price of crude oil was moving higher Thursday morning amid speculation
that the ECB will announce buying of bonds of maturity up to 3 years to
provide relief to troubled euro nations.
Light Sweet Crude Oil
(WTI) futures for October delivery, gained $1.09 to $96.45 a barrel.
Yesterday oil ended higher after some encouraging revised productivity
data from the U.S., even as traders continued to weigh the outcome of
the European Central Bank policy meeting Thursday, anticipating further
quantitative easing measures.
Wednesday after the market hours, the API said U.S. crude oil inventories were down by 7.20 million barrels and gasoline stocks dipped 2.3 million barrels in the weekended August 31.
This morning, the U.S. dollar
was lingering around its two-month low versus the euro and near a
four-month low against sterling. The buck was moving up to a weekly high
versus the yen, while trading flat against the Swiss franc.
In economic news, the euro zone economy
contracted as estimated earlier in the second quarter, data released by
statistical office Eurostat showed. Gross domestic products decreased a
seasonally adjusted 0.2 percent sequentially in the second quarter, in
line with the preliminary estimates. The economy contracted in the
second quarter after stagnating in the first quarter.
Elsewhere,
Germany's factory orders grew by a more than expected 0.5 percent in
July from June, data from the Federal Ministry of Economy and Technology
showed. Economists had forecast a 0.3 percent growth after declining
1.6 percent in June. Domestic demand rose 1 percent and foreign orders
edged up 0.1 percent.
The Bank of England held its interest rates at record low of 0.50 percent and maintained quantitative easing at GBP 375 billion.
The European Central Bank
is likely to cut its record low benchmark interest rate, known as the
refi, to 0.50 percent from 0.75 percent. The bank will announce its rate
decision at 7.45 a.m ET.
Traders will look to the private
sector employment report from the ADP, due out at 8.15 a.m. ET. The
consensus expectations are for an addition of 149,000 jobs by the sector
in August following an addition of 163,000 jobs in July.
The U.S. Labor Department
will release its weekly jobless claims data at 8.30 a.m ET. Economists
expect the claims to decline to 370,000 from 374,000 in the previous
week.
Today during trading hours, the EIA will come out
with its U.S. crude oil inventories report for the weekended August 31.
Analysts expect crude oil inventories to dip by 5 million barrels and gasoline stocks to shed 3.50 million barrels last week.
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