Bargain Hunting Leads To Initial Strength On Wall Street
Stocks moved
higher at the start of trading on Thursday, regaining some ground after
moving mostly lower over the past few sessions. The major averages all
moved to the upside but have not seen much follow-through on the initial
upward move.
The major averages have pulled back off their highs for the young session but currently remain in positive territory. The Dow is up 35.79 points or 0.3 percent at 13,380.76, the Nasdaq is up 19.08 points or 0.6 percent at 3,070.86 and the S&P 500 is up 7.49 points or 0.5 percent at 1,440.05.
The
initial strength on Wall Street came as some traders looked to pick up
stocks at reduced levels following the recent weakness, which pulled the
major averages down to their lowest closing levels in about a month.
Adding to the early buying interest, the Labor Department
released a report showing an unexpected drop in weekly jobless claims.
The decrease pulled jobless claims down to their lowest level in over
four years.
The report said initial jobless claims tumbled
to 339,000 from the previous week's revised figure of 369,000. The drop
surprised economists, who had expected jobless claims to edge up to
370,000 from the 367,000 originally reported for the previous month.
Jim
O'Sullivan, Chief U.S. Economist at High Frequency Economics, said,
"The big drop was apparently mostly from one state, likely due in part
at least to seasonal adjustment challenges relating to the start of the
quarter. Officials did not name the state, but it had to be a major one,
and we suspect California." "While the drop is almost certainly
exaggerated, the trend in claims looks flat at worst," he added. "If
anything, the data are raising the possibility that some new
strengthening in the labor market is under way. Claims remain important
to watch."
Lingering concerns about the outlook for the global
economy have helped to limit the upside for the markets, however, with
the Commerce Department releasing a separate report showing a notable
drop in U.S. exports.
Nonetheless, biotechnology stocks have shown a strong move to the upside in early trading, driving the NYSE Arca Biotechnology Index up by 1.1 percent. Vertex (VRTX) has helped to lead the sector higher.
Steel, banking, and chemical stocks are also posting notable gains, while most of the major sectors have shown more modest moves to the upside.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday following the negative lead from Wall Street. Japan's Nikkei 225 Index fell by 0.6 percent, while China's Shanghai Composite Index ended the day down by 0.8 percent.
Meanwhile, the major European markets are regaining some ground following recent weakness. While the U.K.'s FTSE 100 Index is up by 0.9 percent, the German DAX Index and the French CAC 40 Index are advancing by 1.1 percent and 1.3 percent, respectively.
In the bond market, treasuries have moved moderately lower on the heels of the upbeat jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.1 basis points at 1.722 percent.
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TSX Up At Open Thursday
Toronto stocks
opened higher Thursday amid buying across a variety of sectors, with
the S&P/TSX Composite Index adding 45.86 points or 0.38 percent to
12,258.28.
The Diversified Materials Index rose nearly 2 percent,
with Teck Resources and First Quantum Minerals adding about 2 percent
each.
In the oil patch, Niko Resources gained close to 4 percent. MEG Energy and Pacific Rubiales Energy gathered nearly 2 percent each
Among gold plays, Detour Gold rose 2 percent and Agnico-Eagle Mines added 1 percent. Sports goods
and apparels maker Bauer Performance Sports edged up 0.60 percent after
it said that it would buy Inaria International for C$7.0 million in
cash.
Meanwhile, construction and industrial services company The Churchill Corp. dived 4 percent after it said it bagged a 3 year maintenance contract worth $120 million.
In the commodities market, the price of crude oil
was moving higher Thursday morning as traders await cues from the
official inventories data from the EIA, due out later today. Also,
tensions between Syria and Turkey, and a steady euro supported prices.
Today during trading hours, the EIA will release its U.S. crude oil
inventories report for the weekended October 05. Analysts expect crude
oil inventories to jump 1.50 million barrels, while gasoline stocks are
seen little changed.
Crude for November gained $1.32 to $92.57 a barrel.
The price of gold was
ticking higher Thursday morning as the euro was steady even after the
downgrade of Spain's sovereign rating by the rating agency Standard
& Poor's. Gold for December added $5.20 to $1,770.30 an ounce.
In corporate news from Canada, Novagold Resources
posted a significantly narrower third-quarter net loss of C$21.5
million or C$0.08 per share versus a C$52.1 million or C$0.22 per share
loss last year.
Sports goods and apparels maker Bauer Performance
Sports said that it would buy Inaria International for C$7.0 million in
cash to to enter the large and growing uniform market.
Oil and gas firm NiMin Energy Corp.
announced that its common shares will be voluntarily delisted from the
TSX after the close of trading on October 22, 2012 and its listing will
be transferred to the NEX, a separate board of the TSX Venture Exchange,
effective as of market open on October 23, 2012.
Construction and industrial services company The Churchill Corp. said
it bagged a 3 year maintenance contract worth $120 million, which
included a 2 year option, worth an additional $80 million from an oil
sands producer in the Fort McMurray region. Further, the company said it
reduced its corporate workforce by 20 percent to save $4 million-$6
million annually and guided full-year 2012 EBITDA in the range of $37
million- $42 million
Precious metal miner Mountain Province
Diamonds announced that it has filed a rights offering circular with the
TSX and the securities regulators in each of the provinces of Canada to
raise gross proceeds of about $47.1 million
Aerospace and defense electronics product maker Firan Technology Group Corp.
reported a lower third quarter net earnings of C$155,000 or C$0.01 per
share compared to C$332,000 or C$0.02 per share last year.
Engineering company Semcan Inc. announced that Remy Stachowiak, President of the operating division STT Stanco, has left the Company as of October 10, 2012.
In economic news, Statistics Canada
said the merchandise imports fell 3.1 percent and exports edged down
0.1 percent in August. As a result, the nation's trade deficit with the
world narrowed from $2.5 billion in July to $1.3 billion in August.
Separately, the agency said the New Housing Price Index (NHPI) rose 0.2
percent in August, following a 0.1 percent increase in July.
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European Markets Trading Higher Amid Buoyant Corporate News
The European markets
are trading higher in afternoon trading Thursday, as investors shrugged
off Spain's downgrade by Standard & Poor's and welcomed some
positive corporate news from the region. That said, debt concerns
continued to linger in the background, limiting the upside.
Standard & Poor's lowered
Spain's long-term credit rating by two notches to "BBB-" from "BBB+"
with a negative outlook, citing a deepening recession and growing
concerns about the country's ability to deal with the region's debt
crisis. The S&P's rating action brings it in line with Moody's Baa3
rating.
Meanwhile, International Monetary Fund Managing Director Christine Lagarde
said the struggling euro area member Greece requires two more years to
meet its budget targets and should be brought back to its feet.
"This
is what we advocated for Portugal, this is what we advocated for Spain,
and this is what we are advocating for Greece, where I said repeatedly
that an additional two years was necessary for the country to actually
face the fiscal consolidation program that is considered," Lag arde said
at a news conference ahead of the IMF-World Bank annual meetings in
Tokyo.
The European Central Bank said in its monthly
bulletin that the governments should continue to implement necessary
measures to reduce fiscal and structural imbalances. The bank said
Eurozone countries should proceed further with financial sector
restructuring measures.
Italy's borrowing costs for three-year
funds increased at a bond auction as Spain's rating downgrade coupled
with the uncertainty about that country's bailout request weighed on
investor sentiment.
The Treasury sold 3.75 billion euros of its
three-year benchmark BTPs. The yield climbed to 2.86 percent from 2.75
percent at the prior auction on September 13.
The Euro Stoxx 50
index of eurozone bluechip stocks is adding 0.55 percent, while the
Stoxx Europe 50 index, which includes some major U.K. companies, is
rising 0.44 percent.
The German DAX is gaining 0.76 percent and the French CAC 40 is rising 0.62 percent. The UK's FTSE 100 is advancing 0.59 percent and Switzerland's SMI is advancing 0.28 percent.
In Frankfurt, Deutsche Bank is gaining 2.3 percent and Commerzbank is rising 1.8 percent. Lanxess and Lufthansa are advancing 2 percent and 1.8 percent, respectively. Suedzucker is up 1.1 percent after reporting higher first-half profit.
HSBC cut Fresenius to "Neutral" from "Overweight." The stock is up 0.5 percent. Siemens is losing 0.6 percent. Deutsche Bank cut the stock to "Hold" from "Buy." Pfeiffer Vacuum is declining close to 6 percent. Deutsche Bank cut the stock to "Sell" from "Hold."
Carl Zeiss is falling 2.4 percent after HSBC reduced its rating on the stock. Qiagen is losing 1.2 percent on a broker downgrade.
In Paris, Carrefour is gaining 3.8 percent. Luxury group LVMH is gaining 3.2 percent. Credit Agricole and Societe Generale are advancing 2.9 percent and 2.3 percent, respectively. BNP Paribas is moderately higher.
Alcatel Lucent is falling 2.3 percent. EADS is
losing 1.4 percent even though several analysts upgraded the stock
after the company dropped its merger plan with BAE Systems.
BAE Systems, which also received positive broker recommendations after the decision, is up 2 percent in London.
In the U.K., Burberry is leading the gainers by jumping 10.2 percent. The luxury group said in a trading update that first-half revenues improved despite weakness in China and the U.K.
Croda is gaining 3.6 percent and Petrofac is rising 2.8 percent. WM Morrison Supermarkets is falling 1.5 percent. Credit Suisse reduced its rating on the stock.
WH Smith
is dropping 3.5 percent. The retailer reported lower revenues for the
year and announced the departure of its Chief Executive Kate Swann after
nine years in the role.
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Asian Stocks Fall On Growth, EU Debt Worries
Asian stocks fell
across the board on Thursday, as Spain's credit rating downgrade by
Standard & Poor's intensified concerns over the future of Europe.
With Spain resisting a bailout, EU leaders still remaining divided over a
banking union and Greece struggling to fulfill a debt-reduction
program, investors fear that the regional debt crisis could worsen.
Global growth
worries, apprehensions about earnings growth outlook and the ongoing
territorial dispute between Japan and China also kept investor mood
cautious. Japan's core machinery orders fell more than expected in
August, while Australian unemployment rose to its highest level in more
than two years, separate reports released today showed, reinforcing
worries about the global economy.
Downgrading Spain's credit
rating to 'BBB-' from 'BBB+', just above junk territory, S&P warned
that "rising tensions" between the central government and Spain's
semi-autonomous regions as well as "increasing social discontent" and
the government's "hesitation" to request a bailout from the European
Union would continue to put strain on the nation's creditworthiness.
Japanese shares
extended losses for a third straight session on concerns over the
negative effects of a strong yen and the strained relations between
China and Japan over the Diaoyu Islands dispute on the economy and corporate earnings. The Nikkei average lost 0.6 percent, while the broader Topix index slid 0.4 percent.
Among the prominent decliners, automakers like Honda Motor, Nissan Motor and Toyota fell between 0.6 percent and 1.4 percent, metal shares such as Sumitomo Metal Mining lost 1.8 percent and heavyweight Fanuc lost 2.7 percent on a brokerage downgrade. On the positive side, utilities Kansai Electric Power and Kyushu Electric Power jumped about 5 percent each on bargain hunting after recent sell-off.
In
economic news, core machine orders in Japan dipped a seasonally
adjusted 3.3 percent from the previous month to 717.3 billion yen in
August, the Cabinet Office said today - contracting for the first time
in three months. The headline figure missed forecasts for a contraction
of 2.3 percent following the 4.6 percent increase in July and the 5.6
percent jump in June.
China's Shanghai Composite index fell 0.8 percent on economic worries, while Hong Kong's Hang Seng index rose 0.4 percent, led by mainland banking and infrastructure stocks on hopes of more stimulus measures from Beijing.
Australian
shares weakened after the monthly employment report painted a mixture
picture of the economy. The country hired more jobs than expected in
September, while the unemployment rate increased 0.3 percent to a near
two-and-a-half-year high of 5.4 percent in the month, the Australian
Bureau of Statistics reported.
A separate survey by the
Melbourne Institute survey of consumer inflationary expectations showed
that inflation expectations among Australian consumers increased
slightly to 2.6 percent in October, remaining within the central bank's
target band of 2-3 percent.
Both the benchmark S&P/ASX 200
and the broader All Ordinaries index slipped about 0.2 percent each.
Global miners BHP Billiton and Rio Tinto recouped some early losses to
close the session down around 0.7 percent each, while smaller rival
Fortescue lost 2.3 percent. Gold miner Newcrest ended little changed as
gold prices rebounded from four days of losses.
Banks gained ground as investors weighed the prospects of a rate cut in November. ANZ, NAB and Commonwealth
rose about 0.2 percent each, while Westpac gained 0.3 percent. Lynas
plunged 15 percent after a Malaysian Court delayed the start of
production at its controversial rare earth plant near Kuantan. IIuka Resources slumped 6.6 percent after the mineral sands miner reported a 58 percent fall in third-quarter sales revenue.
Seoul shares
extended declines for a fourth consecutive session, weighed down by
concerns about China's slowing growth and lingering issues in the
Eurozone. The Kospi average fell 0.8 percent to a one-month low,
as options expired and the Bank of Korea cut interest rates and slashed
economic growth forecasts for this year and next in a bid to bolster
growth, hit by falling exports and weak domestic demand. Index heavyweights Samsung Electronics and Hyundai Motors fell around 2 percent each, while shares of state-owned utility Korea Electric Power rose a percent.
New Zealand shares fell slightly in quiet trading taking cues from weak global markets. The benchmark NZX-50 index slipped 0.1 percent. Steel & Tube
fell 1.8 percent, extending the previous session's loss, after
Australian company Arrium sold its 50.3 percent shareholding in the
company at a 15 percent discount to Tuesday's closing price.
Logistics
firm Mainfreight, insurer Tower, clothing retailer Hallenstein
Glassons, rural services firm PGG Wrightson and courier & data
management company Freightways fell 2-4 percent, while shares of New Zealand Oil & Gas gained 1.8 percent after the company bought a small stake in a deepwater exploration permit. Gold miner
OceanaGold climbed 4.4 percent, Fletcher Building, the nation's largest
construction company, rose 1.1 percent and carpet maker Cavalier added 1.6 percent.
Elsewhere, Malaysia's KLSE Composite edged down 0.2 percent and the Taiwan Weighted average lost 1.9 percent, while India's benchmark Sensex was up 0.9 percent, Indonesia's Jakarta Composite index rose 0.1 percent and Singapore's Straits Times index was up marginally.
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Crude Up Ahead Of Inventories Data
The price of crude oil
was moving higher Thursday morning as traders await cues from the
official inventories data from the EIA, due out later today. Also,
tensions between Syria and Turkey, and a steady euro supported prices.
Light Sweet Crude Oil
(WTI) futures for November delivery, gained $0.79 to $92.04 a barrel.
Yesterday, oil settled lower as investors weighed demand growth concerns
and supply concerns from the tension build-up between Turkey and Syria
in the Middle East.
Wednesday after the market hours, the API said U.S. crude oil inventories rose 1.65 million barrels and gasoline stocks added 2.5 million barrels in the weekended October 05.
The price of gold was
ticking higher Thursday morning as the euro was steady even after the
downgrade of Spain's sovereign rating by the rating agency Standard
& Poor's
Earlier today, Standard & Poor's Ratings
Services downgraded its sovereign ratings on Spain by two notches to the
lowest investment grade, citing the mounting risks to public finances
from rising economic and political pressures.
Gold for
December delivery, the most actively traded contract, added $7.60 to
$1,772.70 an ounce. Yesterday, gold ended flat amid euro zone worries
and global economic growth concerns with the International Monetary Fund
warning on the world economy. The uncertainty over Spain continued with
the beleaguered nation still refusing to seek financial aid.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at a record high of 1,340.52 tons.
This morning, the U.S. dollar was hovering near its two-week high versus the euro and easing from a monthly high against sterling. The buck was trading flat versus the Swiss franc and the yen.
In
economic news from the euro zone, Germany's EU harmonized inflation
weakened in September as estimated earlier, final data released by the
Federal Statistical Office showed. The harmonized index of consumer
prices (HICP) decelerated to 2.1 percent in September from 2.2 percent
in August, in line with the preliminary estimates.
Earlier today,
Standard & Poor's Ratings Services downgraded its sovereign ratings
on Spain by two notches to the lowest investment grade, highlighting
the mounting risks to public finances from rising economic and political
pressures.
Traders will look to the weekly jobless claims
data from the U.S. Labor Department due out at 8.30 a.m. ET. Economists
expect claims to increase to 370,000 from 367,000 in the previous
week..
Simultaneously, the the Commerce Department will
release its trade gap data for August at 8:30 a.m. ET. Economists
estimate that the trade gap widened to $44 billion in the month from $42
billion in July
Today during trading hours, the EIA will
release its U.S. crude oil inventories report for the weekended October
05. Analysts expect crude oil inventories to jump 1.50 million barrels,
while gasoline stocks are seen little changed.
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