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Stocks Moving Mostly Higher, Adding To Yesterday's Gains
Stocks have
moved mostly higher in early trading on Friday, extending the
substantial upward move that was seen in the previous session. The major
averages have climbed firmly into positive territory, reaching new
multi-year intraday highs.
The major averages have seen some further upside in recent trading, reaching new highs for the young session. The Dow is up 66.44 points or 0.5 percent at 13,606.30, the Nasdaq is up 25.60 points or 0.8 percent at 3,181.43 and the S&P 500 is up 8.03 points or 0.6 percent at 1,468.02.
The
early strength on Wall Street comes as traders continue to react
positively to the Federal Reserve's announcement of its decision to
provide further economic stimulus by purchasing additional agency
mortgage-backed securities at a pace of $40 billion per month.
Looking
ahead, the Fed said it would continue its purchases of mortgage-backed
securities until the outlook for the labor market improves
substantially.
The central bank also left interest rates
at near-zero levels and said exceptionally low rates are likely to be
warranted at least through mid-2015.
Traders are also digesting a
mixed batch of economic data, including a report from the Commerce
Department showing slightly stronger than expected retail sales growth
amid a jump in gas prices.
Benefiting from optimism about the
outlook for demand, steel stocks have shown a particularly strong upward
move in early trading. The NYSE Arca Steel Index has surged up by 4 percent, reaching its best intraday level in over four months.
Gold stocks are
also seeing considerable strength amid a modest increase by the price
of the precious metal. Housing, oil service, and computer hardware
stocks are also posting substantial gains, moving higher along with most
of the major sectors.
In overseas trading, stock markets across
the Asia-Pacific region saw considerable strength on Friday following
the overnight rally on Wall Street. Japan's Nikkei 225 Index surged up
by 1.8 percent, while Hong Kong's Hang Seng Index jumped by 2.9 percent.
The major European markets have also moved sharply higher on the day. While the French CAC 40 Index is up by 2 percent, the U.K.'s FTSE 100 Index and the German DAX Index are up by 1.5 percent and 1.3 percent, respectively.
In the bond market, treasuries have shown a notable move to the downside, extending a recent downward trend. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.1 basis points at 1.817 percent.
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TSX Jumps At Open Friday
Bay Street stocks were extending gains at open Friday amid smart buying across a variety of sectors, with the S&P/TSX Composite Index surging 123.45 points or 1 percent to 12,483.61.
The
Diversified Materials Index rose over 3 percent, with First Quantum
Minerals gaining nearly 6 percent. Inmet Mining and Teck Resources were
up nearly 4 percent each.
In the oil patch, Niko Resources gathered over 5 percent. Pacific Rubiales Energy and Cenovus Energy moved up around 2 percent each.
Among
gold plays, Allied Nevada Gold, Barrick Gold and Goldcorp. gained
around 2 percent each. Communications equipment manufacturing company
Evertz Technologies Ltd. rose over 3 percent after reporting improved
first quarter profit.
Contact lenses retailer Coastal Contacts Inc. added over 1 percent despite posting a wider third quarter net loss.
Meanwhile, Golden Minerals
Company dived 17 percent after announcing that it has entered into an
underwriting agreement with Wells Fargo Securities to sell 5,497,504
units at a price of $5.75 per unit.
The price of gold was
steady around its six-month high Friday morning as the U.S. dollar was
trading lower versus a basket of currencies after the Federal Reserve
announced the much anticipated QE3. Gold for December edged down $1.90
to $1,770.20 an ounce.
In corporate news from Canada, communications equipment manufacturing company Evertz Technologies
Ltd. reported improved first quarter profit at C$24.8 million or
C$0.34 per share compared to C$17.6 million or C$0.23 per share in the
same period last year. Analysts were expecting the company to earn
C$0.25 per share for the first quarter.
Contact lenses retailer Coastal Contacts Inc.
reported a wider third quarter net loss at C$1.9 million or C$0.07 per
share compared to C$1.5 million or C$0.06 per share in the year-earlier
quarter. Analysts were expecting the company to report breakeven
earnings for the quarter.
In economic news, Statistics Canada
said manufacturing sales fell 1.5 percent to $48.3 billion in July
mainly due to declines in transportation equipment. Manufacturers in 11
of 21 industries reported lower sales, representing over 60 percent of
total manufacturing. Moreover, inventories rose 1.0 percent in July to
$65.5 billion, led by increases in the aerospace product and parts, and
machinery industries
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European Markets Rally On Fed QE3 Announcement
The European markets
are sharply higher in afternoon trading Friday, boosted by the Federal
Reserve's announcement of open-ended monetary easing. Miners and banks
are seeing strong upward move. The Asian markets gained and the U.S.
index futures are higher.
The Fed, at the end of a two-day
policy meeting, announced a plan to increase policy accommodation by
purchasing additional agency mortgage-backed securities at a pace of $40
billion per month. The Fed also said it would continue its purchases of
mortgage-backed securities until the outlook for the labor market
improves substantially.
The 'Operation Twist' program also will
be continued. Thus, the actions taken together will increase the central
bank's holdings of longer-term securities by about $85 billion each
month through the end of the year.
On the economic front,
Eurostat said Eurozone inflation increased as initially estimated to 2.6
percent in August. Also, the number of persons employed remained stable
in the euro area during the second quarter.
The Euro Stoxx 50 index of eurozone bluechip stocks is climbing 2.02 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is falling 0.97 percent. The German DAX is climbing 1.56 percent and the French CAC 40 is gaining 2.04 percent. The UK's FTSE 100 is rising 1.65 percent while Switzerland's SMI is advancing moderately by 0.79 percent.
In Frankfurt, Volkswagen is surging 4.1 percent. BMW and Daimler are gaining 3 percent and 2.7 percent, respectively. ThyssenKrupp is climbing 3.5 percent. Outside the main index, Salzgitter is surging 4.9 percent. Commerzbank
is gathering 2.3 percent and Deutsche Bank is advancing 1.5 percent.
UBS cut Deutsche Bank to "Neutral" from "Buy." Commerzbank cut Fraport
to "Hold" from "Buy." The stock is up modestly.
Those making notable losses include Fresenius, Fresenius Medical Care, Beiersdorf, Merck and Henkel. Berenberg lowered its rating on EON. The stock is down 0.5 percent. Peer RWE is falling 0.7 percent after a price target reduction.
Fashion
and lifestyle firm Gerry Weber International reported a 22 percent
increase in third-quarter profit, but margin declined from last year.
The stock is moderately lower.
In Paris, Steel giant ArcelorMittal is surging 6.7 percent. Carmakers Peugeot and Renault are gaining 5.2 percent and 5 percent, respectively.
Among lenders, BNP Paribas is advancing 4 percent. Societe Generale is gaining 3.6 percent and Credit Agricole is rising 3.3 percent. Saint-Gobain is adding 5.1 percent, Bouygues is rising 3.5 percent and Vinci is climbing 3.1 percent.
In London, Anglo American is adding 6.3 percent and Antofagasta is jumping 8.3 percent. BHP Billiton is gaining 4.3 percent and Rio Tinto is jumping 6.1 percent.
Eurasian Natural Resources is climbing 9.2 percent, Vedanta is gaining 11.8 percent and Kazakhmys is advancing around 11 percent. Russian steel maker Evraz is surging 11.8 percent. Gold miner Petropavlovsk is surging over 12 percent.
Royal Bank of Scotland Group
said it plans to launch an initial public offering of its fully-owned
subsidiary Direct Line Insurance Group Plc in an all-secondary offering
by the lender. The stock is gaining 3.4 percent.
Barclays
is advancing 3.8 percent and Lloyds Banking is gathering 3.5 percent. JD
Wetherspoon is climbing 4.3 percent after announcing full year results.
Chemring Group
is gaining 7.2 percent. The company announced extension of deadline by
the Takeover Panel for Carlyle Group to make an offer for the firm.
ABB is gaining 3.4 percent in Stockholm. Exane BNP raised its rating on the stock. Unicredit is up 3.3 percent in Milan. HSBC cut its rating on the stock.
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Asian Markets Follow US Shares Higher On Fed Move
Asian stock
markets rose sharply on Friday, joining a rally in U.S. stocks
overnight, after the U.S. Federal Reserve announced a $40 billion a
month "open-ended" program of mortgage backed security purchases while
also committing itself to keep interest rates exceptionally low until at
least 2015 to aid U.S. recovery.
The Fed said it would
continue easing until the labor market outlook improves "substantially."
Investors cheered Fed's commitment to action as weaker growth and low
interest rates abroad may result in big inflow of funds to emerging
markets.
The Fed, which was under pressure to act amid the
sagging economies of Europe and the United States, has succeeded in
conveying a consisting message that investors can count on low interest
rates and accommodative monetary policy for a considerable time.
The Fed's latest action came a week after the European Central Bank
announced bond-buying measures to check volatility in sovereign bonds
of troubled European countries. It is now widely expected that the Bank
of Japan would eventually follow the Federal Reserve on easing monetary
policy, when the policy board meets next week.
Tokyo stocks
rose sharply as the Fed's stronger-than-expected move on
mortgage-backed securities heightened expectations that the Bank of
Japan would ease its policy further to support the export-reliant
economy at its policy meeting next week. Hinting at possible yen
intervention, Japan's finance minister today urged the Bank of Japan to
act at the right time.
The Nikkei average jumped 1.8 percent to end at its highest level since March 23, while the broader Topix index added 1.7 percent. Shares sensitive to growth and inflation benefited the most.
Steelmakers JFE
Holdings and Nippon Steel jumped about 5 percent each, while Sumitomo
Metal Mining soared 9.4 percent, benefiting from a positive Credit
Suisse appraisal. Oil firm Inpex climbed 5.9 percent, shipping line
Mitsui OSK jumped 5.7 percent, realty firm Mitsui Fudosan rallied 5.5
percent and trading house Mitsubishi Corp. advanced 4 percent.
Financials also ended sharply higher, with Nomura, Dai-ichi Life
Insurance and Sumitomo Mitsui Financial Group adding 4-5 percent.
Chinese
shares underperformed regional markets, with the benchmark Shanghai
Composite index rising 0.6 percent, as the Fed's promise to buy
mortgage-backed securities at a pace of $40 billion a month raised
concerns that inflationary pressure may increase domestically. Hong
Kong's Hang Seng index soared 2.9 percent, with resource-related stocks
leading the rally.
Australian shares followed U.S. shares higher, with the Fed's much-awaited QE3 announcement underpinning sentiment. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index rose about 1.2 percent each, with miners rallying taking cues from strength in the metals pack.
BHP Billiton gained
1.6 percent and Rio Tinto rallied 2.8 percent, while gold miner
Newcrest soared 7.30 percent amid the surge in gold prices Thursday.
Fortescue Metals shares were placed in a trading halt until Tuesday
pending an announcement from the company on its debt restructuring.
Banks also rose across the board, with ANZ, Commonwealth and NAB adding
about half a percent each, while Westpac rose 1.3 percent. Construction
company Leighton Holdings climbed 4.7 percent after its wholly-owned
subsidiary Thiess Pty won a $154 million contract to build transport
facilities in Sydney's CBD.
Seoul shares jumped about 3
percent to a five-month high, as investors cheered the Federal Reserve's
move to launch a new round of bond buying and Standard & Poor's
upgrade of South Korea's credit rating. The benchmark Kospi average rose 2.9 percent to breach the 2,000-point mark, with steel firms and brokerage stocks outperforming.
Apple's component suppliers LG Display and SK Hynix
jumped about 5 percent each, rebounding from the previous session's
retreat after many analysts predicted that Apple will sell more than 10
million units of the newly-unveiled iPhone 5 by the end of this month.
Standard
& Poor's today joined its fellow ratings agencies in upgrading the
sovereign ratings on South Korea, citing waning geopolitical threats on
the Korean peninsula amid stable political conditions in North Korea.
The ratings agency lifted Korea's credit rating to "A plus" from "A",
the fifth-highest level on its rating grade, and affirmed its
foreign-currency short-term ratings at "A-1", reflecting the firm's
expectations that the Democratic People's Republic of Korea will remain
politically stable in the next three to five years.
New Zealand
shares pared early gains to end modestly higher. The benchmark NZX-50
rose 0.2 percent to a fresh four-year high, with gold miner OceanaGold
climbing 8 percent after gold prices surged up 2 percent overnight in
the aftermath of the FOMC announcement. NZX, the stock exchange
regulator, rallied 2.8 percent, Fletcher Building, the nation's largest
construction company, gained 1.6 percent and carpet maker Cavalier rose
about a percent.
Trade Me shares added 1.8 percent after the NZX said
the online auction site will replace Nuplex Industries in the NZX20
index comprised of most liquid companies. Exporter Fisher & Paykel
Healthcare led the decliners on the exchange, tumbling 6.6 percent as
the kiwi dollar climbed to a six-month high.
Elsewhere, India's
benchmark Sensex was last rallying 2.5 percent on hopes the government
would speed up reforms after the Cabinet Committee on Political Affairs
approved a Rs. 5 hike in the price of diesel and limited supply of
subsidized LPG cylinders to six per household in a year.
Indonesia's Jakarta Composite index was up 2.1 percent, Malaysia's KLSE Composite index rose 0.9 percent, Singapore's Straits Times index was rising 1.3 percent and the Taiwan Weighted average added 2.1 percent
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Crude Jumps Above $100 On QE3
The price of crude oil surged Friday morning as demand worries eased after the Federal Reserve announced the much awaited monetary stimulus measures.
Light Sweet Crude Oil
(WTI) futures for October delivery, rose $1.71 to $100.20 a barrel
Yesterday, oil ended at a four-month high after the U.S. Federal Reserve
announced the much anticipated additional quantitative easing measures
to stimulate growth in the world's largest economy. Prices were also
supported by increasing tensions in the Middle East, with the U.S.
Ambassador to Libya killed and protests spreading to more locations in
the Arab world targeting the U.S.
This morning, the U.S. dollar
was extending its four-month low versus the euro and sterling. The buck
was leveling off from its seven-month low against the yen, while
ticking lower against the Swiss franc.
In economic news, euro zone
inflation increased as initially estimated to 2.6 percent in August,
final data issued by Eurostat showed Friday. The rate rose from 2.4
percent in July. The central bank aims to retain inflation rates
below, but close to, 2 percent over the medium term. Month-on-month,
consumer prices were up 0.4 percent, in line with economists'
expectations.
A separate report from the Eurostat revealed that
the number of persons employed remained stable in the euro area during
the second quarter, after falling 0.3 percent sequentially in the prior
quarter.
Traders will look to the inflation data from the
U.S. Labor Department due out at 8.30 a.m ET. Economists expect the
headline index to have risen by 0.6 percent and the core reading by 0.2
percent. In July, consumer prices remained unchanged.
Simultaneously, the Commerce Department will
release its report on retail sales for the month of August. Economists
estimate a 0.8 percent increase each in retail sales and excluding autos
sales.
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