Upbeat Economic Data Leads To Early Strength On Wall Street
Stocks
moved higher at the start of trading on Thursday, benefiting from a
positive reaction to a batch of largely upbeat economic data. 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 firmly positive. The Dow is up 66.79 points or 0.5 percent at 13,144.13, the Nasdaq is up 15.82 points or 0.5 percent at 2,997.52 and the S&P 500 is up 8.80 points or 0.6 percent at 1,417.55.
The
early strength on Wall Street comes as the latest batch of economic
data has offset some of the recent concerns about the global economic
outlook.
A report released by the U.K. Office for National
Statistics showed that the U.K. economy grew by a better than expected
rate of 1 percent in the third quarter, boosted by the London Olympics.
The
economic growth in the third quarter came on the heels of contractions
in economic activity in each of the three previous quarters.
The U.S. Labor Department also released a report showing a bigger than expected drop by initial jobless claims in the week ended October 20th.
The
report showed that initial jobless claims dropped to 369,000 from the
previous week's revised figure of 392,000. Economists had been expecting
jobless claims to fall to 372,000 from the 388,000 originally reported
for the previous week.
Additionally, a report from the Commerce Department showed that durable goods orders rebounded by more than expected in September after falling sharply in August.
The
report said durable goods orders jumped by 9.9 percent in September
after tumbling by 13.1 percent in August. Economists had been expecting
durable goods orders to increase by about 7 percent.
However,
many economists have pointed to the report's reading on orders for
non-defense capital goods excluding aircraft, which is seen as an
indicator of business spending. The report showed that the orders were
unchanged in September following a 0.2 percent increase in August.
Gold stocks have shown a strong move to the upside in early trading, driving the NYSE Arca Gold Bugs Index up by 2.7 percent. Agnico-Eagle Mines (AEM) and Goldcorp (GG) are posting notable gains after reporting better than expected quarterly earnings.
Brokerage, railroad, and biotechnology stocks are also seeing early strength, although buying interest has remained somewhat subdued.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index advanced by 1.1 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.
The
major European markets have also moved to the upside over the course of
the trading day. While the German DAX Index is up by 0.7 percent, the U.K.'s FTSE 100 Index is up by 0.4 percent and the French CAC 40 Index is up by 0.3 percent.
In the bond market, treasuries have
come under considerable pressure on the heels of the upbeat economic
data. Subsequently, the yield on the benchmark ten-year note, which
moves opposite of its price, is up by 6.9 basis points at 1.844 percent.
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TSX Rebounds At Open Thursday
Bay Street stocks
rebounded sharply at open Thursday amid buying across a variety of
sectors, with the S&P/TSX Composite Index surging 107.73 points or
0.88 percent to 12,302.75.
The Energy Index rose over 1 percent, with Cenovus Energy, Tourmaline Oil and Suncor Energy adding about 2 percent each.
Oil and gas firm Nexen Inc. gained over 1 percent despite reporting a sharp decline in third quarter profit.
In the gold space, Agnico-Eagle Mines
soared close to 5 percent after it swung to profit in third-quarter.
Goldcorp. gathered nearly 4 percent, while Royal Gold and Barrick Gold
were adding over 1 percent each.
Among base metals stocks, Teck Resources, Inmet Mining and First Quantum Minerals were up around 1 percent each.
Meanwhile, energy transportation and services company Mullen Group Ltd. shed 2 percent even after reporting a much improved third-quarter net income.
Potash Corp. slipped 0.25 percent after reporting a lower third quarter net income.
In corporate news from Canada, Potash Corp.
reported that its third quarter net income declined to $645 million
from $826 million. Earnings per share dropped to $0.74 from $0.94.
Analysts were expecting the company to report earnings of C$0.78 per
share for the quarter.
Precision Drilling Corp reported
net earnings of C$39 million or C$0.14 per share for the three months
ended September 30, 2012 compared to net earnings of C$83 million or
C$0.29 per share for the third quarter of 2011
Gold miner Agnico-Eagle Mines
swung to profit in third-quarter, reporting net income of $106.3
million or $0.62 per share compared to a net loss of $81.6 million or
$0.48 per share in the year ago quarter. Excluding special items, net
income came in at $131.5 million or $0.77 per share, well above
analysts' estimates for $0.42 per share.
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European Stocks Edge Higher For Second Day
European stocks rose
for a second consecutive session after the Federal Reserve said the
world's largest economy is improving moderately and companies such as
BASF and Hindustan Unilever reported earnings results that exceeded
analysts' estimates.
The Euro Stoxx 50 index of Eurozone bluechip stocks and the Stoxx Europe 50
index, which includes some major U.K. companies, are edging up about
0.4 percent each, while around Europe, Switzerland's SMI, the U.K.'s FTSE 100, the German DAX and France's CAC 40 are up between 0.2 percent and 0.5 percent.
BASF
is gaining 2.1 percent in Frankfurt after the German chemical giant
reported a decline in profit for the third quarter, hurt by increased
taxes, while sales advanced 8 percent, beating estimates. The company
also confirmed its forecast for record sales and operating profit this
year.
Adidas is adding 1.2 percent after winning a legal battle with bitter athletic-shoe rival Nike over patent infringement.
Shares of Unilever are
rallying 3 percent in London after the consumer goods maker posted a
5.9 per cent increase in underlying sales in the third quarter, beating
analyst forecasts. Credit Suisse is climbing 2.7 percent in Zurich as
the Swiss banking giant unveiled plans to cut costs further after
posting a 63 percent fall in third-quarter profit.
Dassault
Systèmes is gaining 2.5 percent after the company posted higher IFRS net
earnings attributable to equity holders of the parent of 82.6 million
euros versus 76.4 million euros a year ago.
Shares of Novartis are
edging down modestly after posting worse-than-expected third quarter
sales. France Telecom is declining 2.8 percent in Paris after the
company reported third-quarter revenues of 10.76 billion euros, lower
than 11.15 billion euros in the corresponding period last year on a
comparable basis.
Royal Dutch Shell Plc is losing 1.1
percent after it announced an agreement with Hess Corp to acquire its
interests in the Beryl area fields and the Scottish Area Gas Evacuation
System for $525 million.
In economic news, the U.K. economy
expanded in the third quarter, ending three straight quarters of
contraction, preliminary estimate from the Office for National
Statistics showed. Gross domestic product grew by a more-than expected 1
percent sequentially in the third quarter following a 0.4 percent fall
in the second quarter and 0.3 percent drop in the first quarter.
Elsewhere,
Asian stock markets turned in a mixed performance, with Japanese stocks
gaining sharply on BOJ easing speculation, while Chinese shares
succumbed to selling pressure on concerns over weaker earnings growth.
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Asian Stocks Mixed Amid Earnings Worries
Asian stocks
swung between gains and losses on Thursday, with Japanese stocks
gaining on BOJ easing speculation, while Chinese shares succumbed to
selling pressure on concerns over weaker earnings growth. Amid a lack of
fresh incentives and with earnings still in focus, signs of improvement
in China's factory output and the U.S. housing market helped limit
losses across the Asia-Pacific region.
In news out of Europe, the
Eurozone finance ministers will approve a new loan of between EUR 16
billion to EUR 20 billion for Greece at a crucial Euro Group meeting on
November 12, the German newspaper Handelsblatt reported, citing sources.
Japanese shares
rose sharply to a one-month high on continued expectations that the
Bank of Japan would further ease its monetary policy next week.
Speculation is rife that the Bank of Japan would expand its
asset-purchase program by some Y10 trillion at its October 30 policy
board meeting.
The benchmark Nikkei average rose 1.1
percent to 9,055, its highest closing level since September 25.
Export-linked stocks such as Honda Motor and Canon rose 1-2 percent
supported by another bout of yen weakness, while heavyweight Fast
Retailing advanced 2.6 percent. After the market close, Canon posted
lower third-quarter net income attributable to the company of 50.14
billion yen or $642.81 million versus last year's 77.86 billion yen.
KDDI
soared 5.5 percent after the mobile-phone company and Sumitomo
Corporation launched a takeover bid for domestic cable operator, Jupiter
Telecommunications. Nintendo rose 3.2 percent, reversing early losses
after the maker of video-game machines cut its fiscal year profit
forecast, citing lower demand for its handheld players and a strong yen.
Shin-Etsu Chemical
added 1.3 percent on a brokerage upgrade, while shares of Sharp tumbled
4.2 percent on a Nikkei report that it suffered a group net loss of
around 400 billion yen in the first six months of its fiscal year.
China's Shanghai
Composite index fell 0.7 percent on growth concerns after data released
earlier this week showed China's economic growth slowed to a seventh
straight quarter. However, Hong Kong's Hang Seng index rose 0.2 percent,
extending its winning streak into a 10th straight session.
Australian shares rebounded from early losses to end marginally higher, led by defensive sectors like telecoms and healthcare. Both the benchmark S&P/ASX 200
and the broader All Ordinaries index edged up about 0.1 percent each.
Shares of ANZ fell 0.9 percent after the bank posted full-year profit
that missed estimates. Westpac eased marginally, while Commonwealth and
NAB rose about 0.4 percent each.
In the mining sector, BHP Billiton and Rio Tinto rose less than half a percent each, boosted by gains in iron ore prices. Gold miner Newcrest lost
1.8 percent after the price of gold fell below $1,700 an ounce for the
first time since September in the wake of the Federal Reserve's policy
statement. St Barbara tumbled 10.9 percent after reporting disappointing
production results. Wesfarmers eased marginally after reporting a
modest rise in sales across all its retail outlets in the first three
months of the new financial year.
Seoul shares snapped
four days of losses, helped by gains in large-cap shares on the back of
favorable corporate earnings. The benchmark Kospi average rose 0.6
percent. Hyundai Motor jumped 3.9 percent after the nation's
largest carmaker reported a 13 percent increase in its third-quarter net
profit, in line with expectations. Shares of its affiliates Kia Motors and Hyundai Mobis
rallied 5.8 percent and 2.7 percent, respectively, while Samsung
Electronics gained 1.7 percent ahead of its third-quarter results
tomorrow.
New Zealand shares eased slightly, tracking mixed global cues. The benchmark NZX-50
index slipped 0.3 percent, with Australia & New Zealand Banking
Group pacing the decliners with a 2.4 percent loss. Gold miner OceanaGold plummeted 7.8 percent after announcing the second round of drilling results from the Birthday Reef at Blackwater.
Shares of Fletcher Building, the nation's largest construction company, slid 1.9 percent following the Reserve Bank's decision
to keep interest rates unchanged. "For now it remains appropriate for
the official cash rate to be held at 2.5 percent," the newly installed
Governor Graeme Wheeler said after his first policy meeting since taking
up the post last month. Guinness Peat Group advanced 1.8 percent after
providing an update on its asset sales, while Freightways closed up 1.4
percent on posting solid results for the first three months of the new
financial year.
Elsewhere, India's benchmark Sensex was moving up marginally, Indonesia's Jakarta Composite index edged up 0.1 percent, Malaysia's KLSE Composite gained 0.2 percent and Singapore's Straits Times index was up 0.4 percent, while the Taiwan Weighted average lost 0.7 percent.
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Crude Steady On Recovery Hopes
The price of crude oil
was moving higher Thursday morning amid recovery hopes after reports
revealed that the U.K economy rebounded from recession in the third
quarter, recording its strongest quarterly GDP growth in five years.
Light Sweet Crude Oil (WTI)
futures for December delivery, gained $0.55 to $86.28 a barrel.
Yesterday, oil extended losses for a fifth straight session to dip to a
fresh 3-month low on demand growth concerns after an Energy Information
Administration weekly oil report showed U.S. crude oil stockpiles to
have increased more than expected last week. Investors also weighed some
soft global economic data with Europe in focus
Wednesday during trading hours, the EIA said
that U.S. crude oil inventories unexpectedly jumped 5.90 million
barrels and gasoline stocks added 1.40 million barrels in the weekended
October 19. Analysts expected crude oil inventories to gain 1.7 million
barrels, while gasoline stocks were seen shedding 1 million barrels last
week.
The price of gold was rebounding from its seven-week low Thursday morning on bargain hunting and on weak U.S. dollar following the FOMC outcome.
As expected, the Federal Reserve
made no change to its highly accommodative monetary policy at the
conclusion of its two-day meet on Wednesday. The central bank will
continue to purchase $40 billion of mortgage-backed securities per
month, and gave no indication of any extension to their quantitative
easing program before year's end.
Gold for December delivery, the
most actively traded contract, gained $13.90 to $1,715.50 an ounce.
Yesterday, gold extended losses for a second session to settle at a
fresh 7-week low on global cues as investors weighed some soft data out
of Europe and China, while awaiting the outcome of the Federal Reserve's
two-day FOMC policy meet which concludes later in the day. Gold prices
also reacted to comments from the European Central Bank chief on its
bond buying program.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,336.90 tons.
This
morning, the U.S. dollar slipped from a two-week high versus the euro
and moved back to a weekly low against sterling. The buck was ticking
lower versus the Swiss franc, while advancing to a four-month high
against the yen.
In economic news from the euro zone, the U.K. economy
expanded in the third quarter, ending three straight quarters of
contraction, preliminary estimate from the Office for National
Statistics showed. Gross domestic product grew by a more-than expected 1
percent sequentially in the third quarter. It follows a 0.4 percent
fall in the second quarter and 0.3 percent drop in the first quarter.
Traders
will look to the weekly jobless claims data from the U.S. Labor
Department due out at 8.30 a.m ET. The consensus estimates call for a
decline in claims to 372,000 from 388,000 in the previous week.
Simultaneously, the Commerce Department
will to release its durable goods orders report for September.
Economists expect durable goods orders growth of 7 percent compared to a
13.2 percent plunge in August. Orders, excluding transportation, are
expected to have risen 1 percent, reversing some of the 1.6 percent drop
last month.
Additionally, the National Association of Realtors
is scheduled to release its pending home sales index for September. The
index is expected to have risen by 2.5 percent in September following a
decline by about the same magnitude last month.
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