Stocks Turning In A Lackluster Performance In Early Trading
Stocks
have shown a lack of direction over the course of early trading on
Wednesday, as traders seem reluctant to make any significant moves. The
major averages are lingering near the unchanged line after ending each
of the two previous sessions mixed.
The major averages are currently turning in another mixed performance, with the Nasdaq clinging to a modest gain. While the Nasdaq is up 1.68 points or 0.1 percent at 3,121.72, the Dow is down 23.72 points or 0.2 percent at 13,458.64 and the S&P 500 is down 1.57 points or 0.1 percent at 1,444.18.
The choppy trading on Wall Street comes as traders appear to be staying on the sidelines ahead of Friday's monthly jobs report from the Labor Department.
While payroll processor Automatic Data Processing, Inc. (ADP)
released a report showing stronger than expected private sector job
growth in the month of September, the impact has been limited as recent
ADP data has not matched up with the more closely watched government
data.
ADP said private sector employment increased by 162,000
jobs in September compared to economist estimates for an increase of
about 140,000.
At the same time, the job growth in previous
months was revised lower, with the July growth reduced by 17,000 to an
increase of 156,000 jobs and the August growth lowered by 12,000 to an
increase of 189,000 jobs.
Peter Boockvar, managing director at Miller Tabak,
said, "In terms of the market response, ADP has lost its month to month
relationship to the government payroll figure and thus makes today's
market move possibly completely different from this Friday."
Friday
morning, the Labor Department is scheduled to release its monthly
employment report, which includes both public and private sector jobs.
Most
of the major sectors are showing only modest moves in early trading,
although weakness has emerged among oil service stocks. The Philadelphia Oil Service Index is down by 1.4 percent, with the weakness in the sector coming amid a Sharp drop by the price of Crude oil.
Steel, natural gas, and gold stocks have also moved to the downside, while notable strength is visible among housing stocks.
In overseas trading, stock markets across the Asia-Pacific region turned yet another mixed performance on Wednesday. While Japan's Nikkei 225 Index fell by 0.5 percent, Hong Kong's Hang Seng Index edged up by 0.2 percent.
The major European markets have also turned mixed on the day. The French CAC 40 Index is down by 0.3 percent, while the U.K.'s FTSE 100 Index and the German DAX Index are both up by 0.1 percent.
In the bond market,
treasuries have moved modestly lower after ending the previous session
slightly higher. Subsequently, the yield on the benchmark ten-year note,
which moves opposite of its price, has edged up by 1 basis point to
1.625 percent.
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TSX Flat Amid Mixed Cues - Canadian Commentary
Canadian
stocks were struggling to move higher Wednesday morning amid anxiety
over Spain's bailout plan after Spanish Prime Minister Mariano Rajoy
played down expectations of an immediate bailout for his debt-ridden
nation. Furthermore, weak manufacturing data out of Europe kept a check
on gains, even as upbeat macroeconomic data out of U.S supported trader
sentiment.
Payroll processor ADP reported that private sector
employment in the U.S. rose by more than expected and the ISM revealed
that activity in the U.S. service sector expanded for the 33rd
consecutive month in September.
The S&P/TSX Composite Index eased 7.90 points or 0.06 percent to 12,383.33, after adding about 75 points or 0.60 percent in the past two sessions.
Among base-metals stocks, First Quantum Minerals gained about 2 percent and Teck Resources gathered close to 1 percent.
Today's
data from the EIA revealed that U.S. crud oil inventories unexpectedly
edged down 0.50 million barrels, while gasoline stocks moved up 0.10
million barrels in the weekended September 28. Analysts expected Crude oil inventories to move up 1.5 million barrels and gasoline stocks to remain flat last week. Crude for November lost $2.84 to $89.05 a barrel.
In the oil patch, Niko Resources
surged 6 percent. Canadian Natural Resources entered into a long term
gas processing agreement with a North American infrastructure company,
primarily to reduce CO2 emissions at Horizon. The stock shed nearly 2
percent.
MEG Energy (MEG,TO), Bonavista Energy and Cenovus Energy were down around 2 percent each.
Gold stocks were trading marginally higher as the price of gold was steady near its seven-month high Wednesday morning as the U.S. dollar was little changed versus a basket of currencies amid private sector employment report from the ADP. gold for December gained $5.00 to $1,780.60 an ounce.
Goldcorp. , Agnico-Eagle Mines and Detour Gold edged up around 0.50 percent each.
International gold miner Barrick gold Corp. inched up 0.15 percent after it said it does not recommend or endorse an unsolicited mini-tender offer made by TRC Capital Corp.
to purchase up to 2.50 million Barrick common shares, or approximately
0.24 percent of its outstanding common shares, at C$39.05 per share
Shares of Barrick .
Meanwhile, media holding company Quebecor Inc.
(QBR_A.TO, QBR_B.TO) slipped over 1 percent after it said it would,
along with its majority owned unit Quebecor Media Inc., buy back a part
of Quebecor Media stake owned by Caisse de depot et placement du Quebec
for C$1.5 billion.
Information solutions provider MacDonald Dettwiler (MDA.TO)
eased 0.25 percent after announcing that it received a follow-on
contract for $9.8 million to map soil characterization and terrain
globally.
In economic news from the U.S., the Automatic Data Processing, Inc.
(ADP) said private sector employment increased by 162,000 jobs in
September compared to economist estimates for an increase of about
140,000. At the same time, ADP said the job growth in the previous
months was revised lower, with the July growth reduced by 17,000 to an
increase of 156,000 jobs and the August growth lowered by 12,000 to an
increase of 189,000 jobs.
A report released by the Institute for
Supply Management revealed that its non-manufacturing index climbed to
55.1 in September from 53.7 in August, with a reading above 50
indicating an increase in activity in the service sector. The increase
surprised economists, who had expected the index to edge down to 53.5.
Elsewhere,
euro zone's private sector contracted at a slower pace than estimated
earlier in September, a detailed result of a survey by Markit Economics
showed. The composite output index, that measures performance of both
manufacturing and service sectors, fell to a four-month low of 46.1 in
September from 46.3 in August. This was slightly above the flash
estimate of 45.9.
Germany's services sector contracted in
September, according to final data from Markit Economics. The Services
Business Activity Index came in at 49.7 in September, up from 48.3 in
August, survey data revealed.
Meanwhile, data from Eurostat showed that euro zone
retail sales rose unexpectedly in August. Retail sales were up 0.1
percent on a monthly basis, the same rate of growth as seen in June and
July. Economists had forecast a 0.1 percent drop for August. |
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European Markets Mixed Amid Spanish Concerns
The
European markets are trading mixed on Wednesday, as investors remained
weary about the delay in the bailout request from Spain. The Asian
markets ended mixed after data showed that China's service sector
performance declined in September, suggesting a more moderate expansion
of operating conditions in the sector.
Germany's services sector
contracted in September, final data from Markit Economics showed. The
Services Business Activity Index came in at 49.7 in September, up from
48.3 in August. However, the reading was below the flash estimate of
50.6.
Meanwhile, data from Eurostat showed that Eurozone retail
sales rose unexpectedly in August. Retail sales were up 0.1 percent on a
monthly basis, the same rate of growth as seen in June and July.
Economists had forecast a 0.1 percent drop for August.
Separately, Eurozone's private sector contracted at a slower pace than estimated earlier in September.
The euro Stoxx 50 index of eurozone bluechip stocks is losing 0.09 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is falling 0.03 percent.
The German DAX is up 0.05 percent and the UK's FTSE 100 is advancing 0.12 percent. The French CAC 40 is falling 0.26 percent and Switzerland's SMI is losing 0.15 percent.
In Frankfurt, Deutsche Bank is gaining 2.5 percent. Commerzbank is advancing 0.5 percent after Berenberg initiated the stock with a "Sell" rating.
RWE is climbing 1.6 percent and ThyssenKrupp is rising 1.5 percent.
Among carmakers, BMW is adding 1.4 percent. Daimler is moderately up while Volkswagen is losing 1.4 percent.
In Paris, Vallourec is declining 1.2 percent. Essilor International is losing 1 percent.
Sanofi is falling 0.7 percent. The drugmaker and U.S.-based peer Bristol-Myers Squibb Co.
have restructured their long-term alliance, following the loss of
exclusivity for blood thinner Plavix and hypertension drug
Avapro/Avalide in many major markets.
Alcatel Lucent is gaining 1.6 percent. Schneider Electric and Unibail-Rodamco are notably higher.
Lenders Credit Agricole, BNP Paribas and Societe Generale are moderately higher.
In London, International Consolidated Airlines and chipmaker ARM Holdings are adding 1.6 percent each.
Glencore, Vedanta and Xstrata are notably higher.
J Sainsbury
is moderately up. The company posted increases in sales and
like-for-like sales for the second quarter, with strong growth in
Non-Food category.
Tesco reported a drop in profit for the
first half of the year, amid lukewarm sales growth in tough conditions.
The stock is losing 1.3 percent.
Schroders is losing 1.5 percent. UBS cut its rating on the stock.
Lamprell expects full-year loss to be 'significantly greater' than its prior expectations. The stock is plummeting 32 percent.
Firstgroup is
plunging 18 percent, following an announcement from the Department for
Transport that it has discovered significant technical flaws in the way
franchise process for the InterCity West Coast was conducted and have
canceled the competition for this franchise.
Across Asia/Pacific, major markets ended mixed. Australia's All Ordinaries and Hong Kong's Hang Seng advanced around 0.2 percent each, while Japan's Nikkei 225 lost 0.5 percent.
In
the U.S., futures point to a mixed open on Wall Street. The major
averages ended the previous session mixed for the second straight day.
While the Nasdaq and the S&P 500 managed to finish the day in positive territory, the Dow posted a slim loss.
In the commodity space, Crude for November delivery is falling $0.73 to $91.16 per barrel while December gold is adding $3.7 to $1779.3 a troy ounce. |
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Asian Stocks Mixed On Spain Worries
Asian
stocks fell broadly in thin holiday trading on Wednesday, as lingering
uncertainty over Spain's bailout and concerns regarding the slowdown in
China kept investor mood cautious ahead of Friday's U.S. jobs report.
The
Asian Development Bank today slashed its growth forecast for developing
Asia, citing gloomier global prospects and weak domestic demand in the
region's largest economies. In its Asian Development Outlook 2012
update, the bank cut the region's growth forecast for this year sharply
to 6.1 percent from the 6.9 percent estimated in April, but noted that
most of the developing Asia economies have room to counteract shocks
emanating from the unresolved euro area sovereign debt crisis or a Sharp fiscal contraction in the U.S.
Japanese
shares fell for a fourth consecutive session, dragged down by tech
shares as traders awaited U.S. employment data and Moody's rating
decision on Spain after Prime Minister Mariano Rajoy dismissed
speculation that the country is getting close to requesting a euro-zone
bailout. The Nikkei average slid half a percent in thin trading.
Tokyo
Electron and Advantest fell 3-5 percent on rising concerns over global
growth prospects. Pharmaceutical maker Daiichi Sankyo slumped 5.4
percent on news that the company and U.S. drug firm ArQule Inc. will
discontinue a late-stage study of their experimental drug to treat lung
cancer. Nissan Motor ended down 2.1 percent after shares of its
Chinese partner Dongfeng Motor Group fell in Hong Kong amid concerns
that movements to boycott Japanese vehicles may gain momentum in China.
Toyota
Motor added 0.4 percent after the company led major automakers with the
biggest gain in September U.S. sales. Heavyweight Fast Retailing
rallied 3.7 percent on a Nikkei report that the retailer is on
track to generate record earnings in annual group sales. Japan Petroleum
Exploration climbed 5.3 percent on a report the firm has succeeded in
trial extraction of shale oil in northern Japan.
Hong Kong's Hang Seng Index edged
up 0.2 percent, with weakness in oil majors following gloomy Chinese
data capping further upside. The Purchasing Managers Index of China's
non-manufacturing sector, a key economic indicator, fell to 53.7 in
September from 56.3 in August, with a reading below 50 indicating
contraction of the sector, a survey by the China Federation of Logistics
and Purchasing showed today. The mainland Chinese market was shut for
the Golden Week holidays running from September 30 to October 7. The
South Korean share market was also closed for a holiday.
Australian
shares pared some early gains after hitting a 14-month high early in
the session following the Reserve Bank of Australia's rate decision on
Tuesday afternoon. The benchmark S&P/ASX 200 rose 0.13 percent, while the broader All Ordinaries index gained
0.15 percent. Miners gave up early gains going into the close after
official figures showed Australia's trade deficit widened in August,
with merchandise trade deficit widening to A$2.027 billion in the month
compared to an upwardly revised deficit of A$1.530 billion in July.
BHP Billiton eased 0.3 percent and Rio Tinto lost half a percent. Smaller rival Fortescue Metals
Group shed 0.6 percent after Standard and Poor's Ratings Services said
the company was the most vulnerable iron ore miner in the world to
falling commodities prices.
Banks ended mostly higher after yesterday's interest rate cut by the central bank. Westpac ended flat, ANZ rose 0.2 percent and NAB added half a percent, but Commonwealth slipped
marginally. APN News & Media tumbled 3.5 percent after the company
said it has "nothing to announce at this stage" on the sale of its New
Zealand assets.
In economic news, an index measuring the
performance of the service sector in Australia came in with a score of
41.9 in September, the Australian Industry Group said - down from 42.4
in August, with a lower reading indicating a faster pace of contraction.
New
Zealand shares rose to a fresh four-and-a-half-year high as the
prospects of continued low returns on popular savings vehicles
encouraged investors to search for better returns. The benchmark NZX-50 index rose half a percent to 3889.60, its highest level since January 10, 2008.
Resins
and chemicals maker Nuplex Industries, which offers an attractive
dividend yield of 7.4 percent, climbed 5.5 percent, Fletcher Building,
the nation's largest construction company, rose 2.5 percent and
Warehouse Group, New Zealand's largest listed retailer, added 2.4
percent, while Vector fell 1.4 percent and Auckland International
Airport lost 3 percent on going ex-dividend.
Stock exchange
operator rose 0.9 percent after data showed the value of trading in NZX
debt and equity markets rose 15 percent to $NZ2.6 billion in September
from a year earlier.
Elsewhere, key benchmark indexes in Indonesia, Malaysia and Singapore eased marginally and the Taiwan Weighted average shed 0.4 percent, while India's benchmark Sensex was up 0.1 percent, extending a recent rally on continued hopes for further policy reforms in the coming months.
Commodities like copper and oil were subdued and the euro weakened
against most of its major counterparts as investors awaited today's ADP
employment report from the U.S. which will give investors a heads up on
what to expect from Friday's non-farm payrolls report.
U.S.
stocks turned in a lackluster performance overnight on renewed
uncertainty about the timing of a Spanish bailout after Spanish Prime
Minister Mariano Rajoy denied a Reuters report that the nation could request a euro-zone bailout as early as next weekend. The Dow edged down 0.2 percent, while the tech-heavy Nasdaq inched up 0.2 percent and the S&P 500 crept up 0.1 percent. |
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Bank Of England Unlikely To Boost QE
The
U.K. central bank is set to stick to the current level of quantitative
easing and leave its interest rate unchanged at historic low as
policymakers are likely to take note of the improvement in the economy.
The
Monetary Policy Committee of the Bank of England headed by Governor
Mervyn King is widely expected to retain its quantitative easing
programme unchanged at GBP 375 billion. The announcement is due on
Thursday at 7.00 am ET.
The extension of asset purchases, which
was last initiated in July, will continue until early November.
Moreover, lending to households has started to show positive signs due
to the Funding for Lending Scheme introduced in August.
The bank is likely to expand stimulus next month once they complete the ongoing GBP 50 billion increase.
According
to the latest Credit Conditions Survey of the bank, lenders predicted a
significant growth in secured credit availability over the fourth
quarter citing strength from the Funding for Lending Scheme.
The
nine-member committee is also expected to maintain the current 0.50
percent interest rate. The rate stands at the lowest level since the
bank was established in 1694. The previous change in the rate was in
early 2009. A rate cut would help borrowers, but it will impact income
of savers.
IHS Global Insight's Chief U.K. economist Howard
Archer said he is sceptical that the BoE will take interest rates down
to 0.25 percent given ongoing serious doubts within the MPC that such a
move would have a net overall beneficial impact.
Inflation eased
to 2.5 percent in August, but continues to remain sticky above the 2
percent target. But, policymakers are more concerned about the risks
from slowdown in economic activity.
Official data showed that the
British economy contracted 0.4 percent in the second quarter, following
a 0.3 percent fall in the first quarter and 0.4 percent drop in the
fourth quarter of 2011.
Many economists said the economy is set
to have exited a recession in the third quarter. The official ONS
assessment that the U.K. was in technical recession for three
consecutive quarters is too gloomy, the British Chambers of Commerce
said. The lobby expects a return to positive GDP growth in the third
quarter.
"It is clear that the economy has been stagnant for too
long, and urgent measures are needed to enable businesses to drive a
sustainable recovery," the BCC said. |
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