News From Overseas Leads To Early Strength On Wall Street
After
turning mixed over the course of the previous sessions, stocks moved
moderately higher at the start of trading on Tuesday. The major averages
have all moved to the upside, although buying interest has remained
relatively subdued.
The major averages have pulled back off their highs for the young session but currently remain positive. The Dow is up 19.24 points or 0.1 percent at 13,534.35, the Nasdaq is up 13.21 points or 0.4 percent at 3,126.74 and the S&P 500 is up 4.56 points or 0.3 percent at 1,449.05.
The early strength on Wall Street is partly due to a positive reaction to the latest news from overseas, including a report from Reuters indicating that Spain is ready to request a bailout as early as next weekend.
Citing senior European sources, Reuters said
that Spanish officials are now ready to ask for a bailout for the
country's public finances after previously expressing hesitation.
However, Germany has reportedly signaled that Spain should hold off.
Peter
Boockvar, managing director at Miller Tabak, said, "Spain knows what
conditions are expected from the EU and now seem to be studying how
involved the ECB will be."
"Spanish stocks and bonds are rallying
in the belief that we're very close to finally getting on with this
inevitable bailout," he added. "At the same time, we must get clarity on
how the ESM will be utilized in capitalizing Spanish banks."
Traders are also digesting news that the Reserve Bank of Australia
lowered its cash rate by 25 basis points to 3.25 percent, the lowest
level since October of 2009. The monetary policy board cited the weaker
economic outlook as the reason for the move.
Nonetheless, traders
seem reluctant to make any significant moves amid a lack of major U.S.
economic data. Caution ahead of Friday's monthly employment report is
helping to keep traders on the sidelines.
Most of the major
sectors are showing only modest moves in early trading, although notable
strength has emerged among biotechnology stocks. The NYSE Arca
Biotechnology Index is up by 1.3 percent, with Illumina leading the way
higher.
Steel, pharmaceutical, and housing stocks are also seeing early strength, while weakness is visible among trucking and chemical stocks.
In
overseas trading, stock markets across the Asia-Pacific region turned
in another mixed performance on Tuesday, as several major markets
remained closed for public holidays. While Japan's Nikkei 225 Index edged down by 0.1 percent, Australia's All Ordinaries Index advanced by 1 percent.
Meanwhile, the major European markets have all moved to the upside over the course of the trading day. The German DAX Index has risen by 0.4 percent, while the U.K.'s FTSE 100 Index and the French CAC 40 Index are both inching up by 0.2 percent.
In the bond market,
treasuries have moved modestly lower after ending the previous session
just above the unchanged line. Subsequently, the yield on the benchmark
ten-year note, which moves opposite of its price, is up by 1.4 basis
points at 1.639 percent.
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TSX May Extend Gains At Open - Canadian Commentary
Canadian
stocks are poised for a positive open Tuesday amid firm commodities and
on encouraging cues from the global equity markets. While most Asian
markets settled higher overnight after a surprise rate cut announcement
from the Australian central bank, European shares were hovering in the
green amid firm euro following reports that Spain would seek a bailout.
U.S. stock futures were pointing to a higher open.
On Monday, the S&P/TSX Composite Index gained 52.73 points or 0.43 percent to 12,370.19,
The price of Crude oil was
extending gains for a fourth session Tuesday morning amid lingering
concerns of potential disruption to oil supply driven by geopolitics
worries. Today after the market hours, the API will release its U.S. Crude oil inventories data for the weekended September 28. Crude for November added $0.19 to $92.67 a barrel.
The price of gold was little changed Tuesday morning even as the U.S. dollar continued to trade lower versus a basket of currencies. gold for December edged down $3.50 to $1,779.80 an ounce.
In corporate news from Canada, Baytex Energy Corp.
announced that it would acquire a 100 percent working interest in
undeveloped oil sands leases in Alberta for about $120 million.
Baytex Energy Corp.
announced it has entered into an agreement to acquire a 100 percent
working interest in approximately 46 sections of undeveloped oil sands
leases in the Cold Lake area of northeast Alberta. Total consideration
for the acquisition of $120 million,
Iron ore producer Labrador Iron Mines Holdings (LIM.TO) announced that Canaccord Genuity Corp.
has agreed to purchase, on a bought deal basis, 30 million common
shares at C$1.00 per Share for gross proceeds of C$30 million.
Transcontinental rail service provider Canadian Pacific Railway (CP.TO)
announced that Mike Franczak, executive vice president and chief
operations officer, has resigned from the company, effective Monday.
GreenAngel Energy Corp. (GAE.V) announced the appointment of Bruce Schmidt as the company's new CEO, replacing Bob de Wit.
In economic news, euro zone producer
price inflation accelerated more than expected in August, data released
by Eurostat showed. The producer price index advanced 2.7 percent
year-on-year in August, faster than the 1.6 percent increase in July.
Economists expected the rate of inflation to rise to 2.6 percent. On a
monthly basis, the PPI rose 0.9 percent compared to 0.3 percent increase
recorded in July. This was forecast to rise 0.6 percent.
Meanwhile,
the results of a survey by Markit Economics showed that that
construction sector activity continued to contract in September. The
construction sector purchasing managers' index came in at 49.5 compared
to 49.9 expected by economists. |
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European Markets Finished Mostly Higher After Volatile Trading Session
The
majority of the European markets closed in positive territory Tuesday.
The markets struggled to find direction ahead of the meeting of German
Chancellor Angela Merkel and ECB President Mario Draghi in Berlin. The
stronger than expected U.S. consumer confidence number and the positive
home price index result provided a boost to the European markets in the
afternoon.
Rating agency Standard & Poor's cut Eurozone's
economic forecasts for this year and next on Tuesday, saying the
17-nation economy is entering a new period of recession.
The firm expects the euro area economy
to shrink 0.8 percent this year, which is worse than the 0.7 percent
contraction forecast in July. For 2013, S&P sees flat growth in the
single currency bloc, compared to 0.3 percent forecast in July.
Germany cannot
decouple from Europe and the global economy, Chancellor Angela Merkel
said Tuesday. Germany is not an island, but a strong exporting nation,
she said at a conference organized by the German Industry Association in
Berlin.
She observed that there is a lack of confidence in
financial markets about the ability of the governments to repay its
debt. It would have been better if the European Court of Justice had
been granted powers to monitor the fiscal pact, Merkel noted.
Spanish
short-term borrowing costs increased at a debt auction on Tuesday as it
remains uncertain if the embattled country would seek a bailout for its
economy. The Spanish Treasury raised nearly EUR 4 billion from the sale of its 3 and 6 month bills. The target set for the sale was between EUR 3 billion and EUR 4 billion.
The
yield on the three-month paper rose to 1.203 percent from 0.946 percent
on August 28. The bid-to-cover ratio, which shows demand, dipped to
3.29 from 3.35. The 6-month treasury bill fetched a yield of 2.213
percent, up from 2.026 percent on August 28.
Italy saw its two-year borrowing costs decline at an auction on Tuesday. The Italian Treasury raised EUR 3.937 billion from the sale of its zero coupon bonds known as CTZ, which was close to the top target of EUR 4
billion set for the sale. The yield on the zero-interest bearing
security fell to 2.53 percent from 3.064 percent in the previous sale on
August 28.
The euro Stoxx 50 index of eurozone bluechip stocks increased by 0.39 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.29 percent.
The DAX of Germany climbed by 0.16 percent and the CAC 40 of France advanced by 0.47 percent. The FTSE 100 of the U.K. rose by 0.36 percent and the SMI of Switzerland gained 0.25 percent.
In Frankfurt, Volkswagen declined by 1.71 percent. Daimler fell by 1.82 percent and BMW lost 1.68 percent. Goldman Sachs cut its price targets on the automakers.
Deutsche Telekom decreased by 1.68 percent, after Jefferies reduced its rating on the stock to "Hold" from "Buy."
UBS removed E.ON from its 'Most Preferred List' European utilities. The stock closed up by 0.34 percent. RWE finished higher by 1.33 percent after UBS removed it from 'Least Preferred List' European utilities.
In Paris, Credit Agricole gained 0.07 percent. Goldman Sachs downgraded the stock to "Neutral" from "Buy." BNP Paribas climbed by 1.14 percent and Societe Generale rose by 2.35 percent.
Deutsche Bank cut Schneider Electric to "Hold" from "Buy." The stock finished higher by 0.39 percent.
HSBC initiated STMicroelectronics with a "Neutral" rating. The stock closed lower by 1.61 percent.
In London, BAE Systems declined by 1.94 percent, amid worries about its merger with EADS.
Royal Bank of Scotland fell by 0.55 percent. A Bloomberg report
said RBS managers condoned and took part in the manipulation of global
interest rates, which suggests that more than four people fired by the
bank were involved in wrong doing. Standard Chartered is also lost 1.55
percent.
Cairn Energy has reached an agreement to sell an 8 percent stake in its Indian unit for $910 million. The stock decreased by 0.81 percent.
Diageo climbed by 1.74 percent, after confirming that it is in talks to acquire an interest in United Spirits.
Germany's consumer confidence is set to remain unchanged in October, survey results from market research group GfK showed
Tuesday, which slightly eased fears of the economy slipping into a
recession. The forward-looking consumer sentiment index came in at 5.9
in October, unchanged from September and matched economists'
expectations.
French business confidence remained unchanged in
September, but was markedly below its long-term average, a report from
the statistical office Insee showed Tuesday. The headline synthetic
index was at 90 in September, unchanged from August. Economists expected
the reading to edge down to 89.
Home prices in major U.S.
metropolitan areas showed a notable annual rate of growth in the month
of July, according to a report released by Standard & Poor's on
Tuesday.
The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index
rose by 1.2 percent in July compared to the same month a year ago.
Economists had been expecting the index to increase by about 1.1 percent
year-over-year.
With consumers considerably more optimistic
about the short-term outlook, the Conference Board released a report on
Tuesday showing a much bigger than expected improvement in U.S. consumer
confidence in the month of September.
The Conference Board said
its consumer confidence index jumped to 70.3 in September from a revised
61.3 in August. Economists had expected the index to climb to 64.8 from
the 60.6 originally reported for the previous month. |
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Asian Markets Trade Higher
Asian
stock markets are trading firm on Tuesday with the overnight gains in
the U.S. and European markets amid some fairly encouraging economic data
prompting investors to indulge in some buying.
Though gains are
not significantly pronounced in most of the markets, the mood is
somewhat upbeat amid slightly easing worries about the global economy.
The
Australian market is trading higher with investors picking up stocks,
tracking positive cues from the U.S. and European markets.
Energy, mining, bank and industrial stocks are trading notably higher, while consumer discretionary and healthcare stocks are trading mixed.
The benchmark S&P/ASX 200 index
is up 29.4 points or 0.7 percent at 4,418. The broader All Ordinaries
index is trading at 4,436.3, up 28.1 points or 0.6 percent from its
previous close.
Among top miners, BHP Billiton (BHP,BBL:Quote), Rio Tinto (RIO:Quote, RIO.L) and Newcrest Mining are up 0.6 to 1 percent. Fortescue Metals
shares are under a trading halt, ahead of a high court decision that
could put Andrew Forrest's position as chairman of the company in doubt.
In the energy sector, Woodside Petroleum, Oil Search and Origin Energy are up 0.8 to 1.2 percent and Santos is gaining nearly 3 percent, while Caltex Australia is trading marginally up.
Bank stocks are trading firm ahead of the central bank's interest rate decision. ANZ Bank (ANZ:Quote), National Australia Bank and Westpac (WBK:Quote) are up 0.7 to 1 percent, while Commonwealth Bank of Australia is trading marginally up. Bendigo & Adelaide Bank and Bank of Queensland are up 1.2 percent and 1 percent, respectively.
During the day, the Reserve Bank of Australia
will conclude its monetary policy meeting and then announce its
decision on the benchmark interest rate. The RBA is widely expected to
keep rates on hold at the current level of 3.50 percent. The RBA also
will release commodity price index data for September.
Arrium is up 6 percent. Seven West Media, Aurora Oil & Gas, ALS, Beach Energy, Incitec Pivot and PanAust are trading higher by 2 to 3.3 percent.
Qantas Airways
shares are up nearly 3 percent after the airline said it sold its 50
percent stake in road freight operator StarTrack to Australia Post, and
has taken full ownership of air freight business Australian air Express.
Goodman Group, Metcash, Bluescope Steel, Oz Minerals, Atlas Iron, Boart Longyear, Stockland, Tatts Group and Alumina (AWC:Quote) are also up with strong gains.
Atlas Iron, Lynas Corporation, Boart Longyear, Tabcorp Holdings, Goodman Group, Stockland, Sims Metal Management, Beach Energy and Challenger are also trading notably higher.
After
a fairly strong upmove on the back of positive global cues, the
Japanese market pared some gains towards the end of the morning session,
with a section of investors indulging in some profit taking.
Insurance, mining, steel, non-ferrous metals and marine transport stocks started
off on a high note and were mostly trading firm when the morning
session ended. Electric power, manufacturing and foods stocks were a bit
subdued.
The benchmark Nikkei 225 index, which rose to 8,843.3, was up 21.9 points or 0.3 percent at 8,818.4 at the end of the morning session.
Shares of Softbank Corp. moved up sharply. The company had announced on Monday that it will buy eAccess Ltd for around 180 billion yen. Softbank will
pay 16.74 of its share for each share of eAccess. The company said the
acquisition will enable it to offer the best broadband services.
Nippon Yusen KK gained over 6.5 percent. Mitsui OSK Lines also gained more than 6 percent. Ricoh, Kawasaki Kisen Kaisha, JFE Holdings, JX Holdings, Kobe Steel, Sony Corp. (SNE:Quote) and Sumitomo Heavy Industries were up 2 to 4.4 percent.
Among the prominent losers, Alps Electric Co. plunged as much as 10 percent. Hokuetsu Kishu Paper lost over 6 percent. Pioneer Corp. and Nippon Suisan Kaisha drifted down by over 3 percent.
KDDI Corp., Chubu Electric Power, Oki Electric Industry, Mitsubishi Paper Mills, TDK Corp. and Mitsubishi Motors also posted notable losses.
According to data released by Bank of Japan,
the monetary base in Japan jumped 9.0 percent on year in September,
standing at 124.326 trillion yen. That follows the 6.5 percent increase
in August.
Banknotes in circulation added an annual 2.3 percent,
while coins in circulation collected 0.4 percent. Current account
balances spiked 27.6 percent on year, including a 30.0 percent surge in
reserve balances. The adjusted monetary base soared 45.4 percent on year
to 123.991 trillion yen. For the third quarter of 2012, the monetary
base jumped 8.0 percent on year.
In the currency market, the U.S.
dollar traded around 78 yen in early deals in Tokyo. The yen is
currently trading at 78.07 to the dollar.
Among other markets in
the Asia-Pacific region, Indonesia, Malaysia, New Zealand, Singapore,
South Korea and Taiwan are all trading notably higher. Markets in China
and Hong Kong remain closed for the National Day holiday.
On
Wall Street, stocks turned mixed after some early gains on Monday. The
pullback came as traders seemed reluctant to make significant moves
ahead of the release of the closely watched monthly employment report.
The
major averages ended the day on opposite sides of the unchanged line,
with the Nasdaq posting a modest loss. While the Nasdaq edged down 2.7
points or 0.1 percent to 3,113.5, the Dow rose 78 points or 0.6 percent
to 13,515.1 and the S&P 500 climbed 3.8 points or 0.3 percent to
1,444.5.
Major European markets moved higher on Monday. The French CAC index gained 2.4 percent, while the German DAX index and the U.K.'s FTSE 100 index jumped by 1.5 percent and 1.4 percent, respectively.
U.S. crude oil settled higher on Monday, after some positive manufacturingdata out
of the U.S. but were limited by some soft manufacturing data from China
and Europe. Oil prices were also supported by a dollar that weakened
against a basket of major currencies.
Crude for November delivery gained $0.29 or 0.3 percent to close at $92.48 a barrel on the New York Mercantile Exchange. |
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Eurozone Producer Prices Rise Sharply On Energy Costs
Eurozone's
producer prices increased at a faster pace in August driven by higher
energy prices and left little room for further interest rate reductions
from the European Central Bank to prop up the ailing economy.
The
producer price index increased 0.9 percent month-on-month in August,
following the previous month's 0.3 percent gain, which was revised from
0.4 percent, statistical office Eurostat said Tuesday. Economists had
forecast a slower growth of 0.6 percent.
The latest rise in
producer prices was the biggest since January. A faster rate was last
seen in January 2011, when prices rose 1.3 percent.
On an annual
basis, output prices rose 2.7 percent in August, after increasing 1.6
percent in July. Economists had expected a 2.6 percent rise. The latest
inflation figure is the highest since March, when it was 3.5 percent.
Driving the acceleration in price growth, energy costs climbed 2.4 percent, reflecting mainly a Sharp increase in global oil prices. Energy prices rose 7.9 percent from a year ago.
Core producer prices,
excluding energy and construction, increased 0.3 percent, reversing the
previous month's 0.1 percent decline. Annually, the core figure was 1
percent compared to 0.8 percent in the previous month.
Among
member states, the largest annual increases in the overall index were
observed in Bulgaria, Greece and Cyprus, and the smallest in Malta,
Slovenia and Austria, the agency said.
In EU27, producer prices
moved up 1 percent sequentially in August, faster than July's 0.3
percent gain. Year-on-year, the index advanced 2.7 percent, after rising
1.4 percent in July.
Despite the spike in costs, the weak
economic situation is likely to prevent companies from passing on the
higher costs to consumers in a bid to retain business, IHS Global
Insight Economist Howard Archer said.
Results of the latest
purchasing managers survey showed that manufactures' input prices in the
single-currency bloc rose for the first time in four months in
September, owing to the recent strengthening of global oil prices.
Meanwhile, output prices fell for the fourth month running.
Rising energy prices have pushed consumer price inflation in the euro area to a six-month high of 2.7 percent from 2.6 percent in August.
The
ECB kept the refi rate at 0.75 percent since July when it took the rate
below 1 percent for the first time in the bank's history. Although the
central bank is seen holding key rate at this week's meeting, the bank
will probably reduce rates before the end of this year.
"With the
underlying inflation situation in the Eurozone still looking far from
alarming and with the Eurozone almost certainly having suffered further
GDP contraction in the third quarter and still facing a troubling
outlook, we maintain the view that the ECB will take interest rates down
from 0.75% to 0.50% in the fourth quarter," Archer noted. |
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