Stocks Showing A Lack Of Direction In Early Trading
With
traders keeping a close eye on developments in Washington, stocks are
turning in a lackluster performance in early trading on Friday. The
major averages are lingering near the unchanged line after closing
higher in each of the two previous sessions.
The major averages are currently turning in a mixed performance, with the Dow posting a slim gain. While the Dow is up 4.45 points or less than a tenth of a percent at 13,026.27, the Nasdaq is down 4.76 points or 0.2 percent at 3,007.27 and the S&P 500 is down 1.48 points or 0.1 percent at 1,414.47.
The
choppy trading on Wall Street comes as many traders have moved to the
sidelines, waiting for the next headline out of Washington regarding the
negotiations over the looming fiscal cliff.
Comments about the
status of the talks have contributed to big swings by the markets in the
past few sessions, leading to some apprehension.
While leaders
of both parties have said they remain hopeful that a deal can be
reached, familiar disagreements over taxes on the wealthy and
entitlement reform remain major sticking points.
Amid the focus on Washington, traders have
largely shrugged off a report showing an unexpected drop in U.S.
personal spending as well as a separate report showing growth in
Chicago-area business activity.
The Commerce Department said
personal spending fell by 0.2 percent in October after climbing by 0.8
percent in September. The drop came as a surprise to economists, who had
expected spending to inch up by 0.1 percent.
The report also
showed that personal income came in nearly unchanged in October
following a 0.4 percent increase in September. Economists had expected
income to increase by about 0.3 percent.
Meanwhile, the Institute for Supply Management -
Chicago said its business barometer climbed to 50.4 in November from
49.9 in October. A reading above 50 indicates an increase in activity.
Most
of the major sectors are showing only modest moves in early trading,
contributing to the lack of direction being shown by the broader
markets.
While some strength is visible among telecom and commercial real estate stocks, railroad stocks are seeing early weakness.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both advanced by 0.5 percent, while Australia's All Ordinaries Index ended the day up by 0.6 percent.
The major European markets have also moved to the upside on the day. While the French CAC 40 Index has edged up by 0.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both up by 0.3 percent.
In the bond market, treasuries are
seeing modest strength after ending the previous session nearly flat.
Subsequently, the yield on the benchmark ten-year note, which moves
opposite of its price, is down by 1.4 basis points at 1.606 percent.
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TSX Flat At Open Friday
Bay Street stocks
opened flat Friday amid marginal selling in commodities, with the
S&P/TSX Composite Index edging up 6.10 points or 0.05 percent to
$12,208.95.
Among base-metals stocks, Inmet Mining and First Quantum Minerals were down around 1 percent each.
In the oil patch, Coastal Energy and Talisman Energy were down about 2 percent each.
Among gold plays, Agnico-Eagle Mines and Goldcorp. slipped around 0.50 percent each, while Barrick Gold was adding 0.25 percent.
Meanwhile, Bombardier Transportation moved up 0.60 percent after announcing that it bagged $198 million orders from Public Transport Victoria.
The price of crude oil
was little changed Friday morning as traders focus their attention to
the developments in the U.S. budget talks. Crude for January edged down
$0.10 to $87.97 a barrel.
The price of gold was flat
Friday morning amid a mixed dollar as traders await cues from the U.S.
budget talks. Gold for February eased $0.50 to $1,729.00 an ounce.
Software services provider Espial Group Inc.
announced that it would acquire Cambridge UK-based ANT plc for an
all-cash offering of 0.205 pence per share, valuing the company at
approximately 5 million pounds.
Distribution management software solutions provider Tecsys Inc.
reported a marginally lower second-quarter net profit at C$122,000 or
C$0.01 per share compared to C$133,000 or C$0.01 per share for the
second quarter of last fiscal year.
In economic news, Statistics Canada
said real gross domestic product rose 0.1 percent in the third quarter,
slowing from the 0.4 percent growth in the second quarter. Exports fell
2.0 percent in the third quarter, the largest decline since the second
quarter of 2009. Imports rose 0.4 percent, the fourth quarterly increase
in a row.
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European Markets Make Modest Gains
The European markets are
making modest gains on Friday, ahead of the key consumer spending data
from the U.S. Sentiment was influenced by a rally in Asia, where stocks
rose after markets in the U.S. saw moderate gains overnight amid
conflicting reports on the progress made on the fiscal cliff.
House Speaker John Boehner,
R-Ohio, told reporters on Thursday at his weekly press conference that
"no substantive progress" has been made in fiscal cliff talks with the
White House. Boehner said he was disappointed with the lack of progress
and argued that Democrats in Washington need to get "serious about
spending cuts."
Meanwhile, Senate Majority Leader Harry Reid, D-Nev., spoke shortly afterward and claimed that it was Republicans that had not put a serious offer on the table.
Retail sales
in Germany declined more than expected in October, data from the
Federal Statistical Office showed. Retail sales fell 2.8 percent
month-on-month on a calendar and seasonally adjusted basis in October.
This was expected to fall 0.4 percent.
French consumer spending decreased in October, after remaining flat in the previous month, data released by INSEE revealed.
Eurozone's
annual inflation, as measured by the harmonized index of consumer
prices (HICP) eased more than expected in November, flash report from
Eurostat revealed. The HICP rose 2.2 percent year-on-year in November, slower than October's 2.5 percent increase.
Eurostat
also said that the euro area unemployment rate reached a fresh high in
October. The jobless rate rose marginally to 11.7 percent, in line with
expectations, from 11.6 percent in September.
The Euro Stoxx 50 index of eurozone bluechip stocks is adding 0.15 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is rising 0.02 percent.
The German DAX is advancing 0.27 percent and the French CAC 40 is gaining 0.10 percent. The UK's FTSE 100 is adding 0.12 percent and Switzerland's SMI is up 0.08 percent.
In Frankfurt, Lanxess is advancing 1.8 percent. Linde, Adidas and RWE are making moderate gains. ThyssenKrupp is falling 0.7 percent. Infineon Technologies is losing 0.4 percent.
Goldman Sachs cut Hugo Boss to ''Neutral'' from ''Buy.'' The stock is modestly down. Carl Zeiss Meditec is losing 0.9 percent. Commerzbank reduced its rating on the stock.
In Paris, LVMH is climbing 2.7 percent. Goldman Sachs raised the stock to ''Buy'' from ''Neutral.'' Schneider Electric is gaining 2.1 percent after the stock was upgraded at HSBC.
Electrical products firm Legrand, telecom equipment maker Alcatel Lucent and car manufacturer Renault are making notable gains.
Those on the losing side include Vivendi, France Telecom and Pernod-Ricard.
In London, Specialty chemicals firm Johnson Matthey is gaining 1.6 percent. WM Morrison Supermarkets is climbing 1.5 percent and restaurant group Whitbread is gaining 1.2 percent.
Royal Bank of Scotland
is losing 0.6 percent. The lender failed to sell its banking operations
in India to HSBC and would begin to wind-down its Retail &
Commercial banking business in the country. HSBC is up around 1 percent.
Acal is plunging nearly 10 percent. The technology firm reported a decline in first-half profit amid a drop in revenues.
United Parcel Service,
Inc. (UPS) said remedies have been submitted to obtain competition
clearance from the European Commission for the acquisition of Dutch
package delivery company TNT Express N.V. TNT is down marginally in
Amsterdam.
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Asian Stocks Broadly Higher On Japan Stimulus, Data
Asian stocks
rose broadly on Friday on optimism over a pair of U.S. economic reports
and as the Japanese Cabinet approved another stimulus package worth 880
billion yen ($10.72 billion) to revive economic growth. The gains,
however, were capped to some extent by conflicting comments from
Washington about the progress in budget talks.
Tokyo stocks posted
modest gains, boosted by the yen's weakness against both the dollar and
the euro after the cabinet approved a stimulus package worth 880
billion yen ($10.72 billion) to revive growth. The benchmark Nikkei
average rose half a percent to 9,446, its highest closing level in more
than seven months, while the broader Topix index added 0.3 percent.
Meanwhile, a slew of domestic data on industrial production,
unemployment, household spending and core consumer prices released today
evinced little investor interest.
Japan's industrial output
unexpectedly rose a seasonally adjusted 1.8 percent in October from the
previous month, the Trade Ministry said in a preliminary reading,
beating expectations for a 2 percent decline. Core consumer prices were
unchanged on an annual basis in October, while average household
spending in the country was down 0.1 percent year-over-year in the
month.
Exporters led the gainers amid the weakness in the
yen. Canon rose 1.2 percent, Kyocera gained 2.3 percent and Nikon
rallied 4.5 percent. Automakers Nissan and Toyota Motor added less than a
percent each, Tokyo Electron advanced 2.8 percent and heavyweight Fast
Retailing rose 1.2 percent. Mitsubishi Heavy Industries jumped 3 percent
and Hitachi soared 4.2 percent after they agreed to form a joint
venture to integrate their power system operations. Among those that
fell, mobile phone operator Softbank lost 2.8 percent and consumer
finance firm Aiful slumped 5.9 percent on profit taking following recent
sharp gains.
China's Shanghai Composite index rose 0.9
percent, snapping a four-day losing streak, as construction stocks
rallied on expectations of further infrastructure spending in the coming
years. Vice Premier Li Keqiang recently said the nation must deepen its
rural-urban population shift to support growth. Hong Kong's Hang Seng
index added half a percent after data showed the U.S. economy grew
faster than initially estimated in the third quarter.
Australian
shares rose to a fresh three-week high, with month-end window dressing
by fund managers and an unexpected rise in Japanese factory output
underpinning sentiment. Both the benchmark S&P/ASX 200 and the
broader All Ordinaries index gained about 0.6 percent each, led by
miners after most metals finisher higher at fresh seven-week highs on
the London Metal Exchange overnight.
BHP rose half a
percent after saying succession planning is a natural part of running a
business. Rio Tinto rallied 2.8 percent and Fortescue Metals Group
gained 1.3 percent, while gold miner Newcrest edged up 0.2 percent.
Lynas Corp. plunged 5.2 percent after the miner said it has begun
processing rare earths at a controversial plant in northern Malaysia.
Banks ended firm following a higher finish on Wall Street overnight. ANZ, Westpac and NAB ended up more than a percent each.
Seoul shares
eased slightly from the previous session's three-week high, reflecting
the uncertainty surrounding U.S. budget talks after Republican leader
John Boehner said there has been no "substantive progress" over the last
two weeks. The benchmark Kospi average slipped 0.1 percent despite renewed buying from institutional and overseas investors. Samsung Electronics, Hyundai Motor and SK Hynix
fell 1-4 percent, while shipbuilders extended the previous session's
gains. CJ Corp ended up 3.4 percent after reporting robust earnings.
New
Zealand shares rose sharply after units in the Fonterra Shareholders'
Fund jumped 21 percent on their listing price in their debut on the
stock exchange. The benchmark NZX-50 index added 0.8 percent.
Shares of Xero, the cloud-based accounting software provider, soared 6.8
percent as it raised NZ$60 million from U.S. investors to fund
expansion plans.
Fletcher Building, the nation's largest
construction company, added 1.4 percent after data released by
Statistics New Zealand showed the number of building consents for new
houses in October was the highest monthly value in over four years.
Among the prominent decliners, national carrier Air New Zealand, Telecom, the country's biggest phone company, and the Warehouse Group, New Zealand's biggest listed retailer, fell 1-3 percent.
Elsewhere, India's benchmark Sensex
was moving up 0.8 percent, extending gains for a fourth straight
session, on expectations that the government would be able to push
through economic reforms in Parliament. In economic news, government
data released today showed that the nation's GDP growth was stuck at a
three-year low of 5.3 percent in the second quarter of the current
financial year, matching estimates.
Malaysia's KLSE Composite index was up 0.2 percent, Singapore's Straits Times index was moving up 0.9 percent and the Taiwan Weighted average added a percent, while Indonesia's Jakarta Composite index was down a percent.
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Crude Steady Above $88
The price of crude oil was little changed Friday morning as traders focus to the developments in the U.S. budget talks.
Light Sweet Crude Oil
(WTI) futures for January delivery, edged up $0.05 to $88.12 a barrel.
Yesterday, oil snapped its three-session losing streak to settle higher
on some upbeat macroeconomic economic data and optimism of a deal in the
U.S. budget talks. Oil jumped a nearly two percent after
President Barack Obama expressed confidence over a deal, indicating that
he was hopeful the White House and Congress could reach an agreement
before Christmas.
The price of gold was ticking higher Friday morning amid a mixed dollar as traders await cues from the U.S. budget talks.
Gold for
February delivery, the most actively traded contract, edged up $2.80 to
$1,732.30 an ounce. Yesterday, gold snapped its three-session losing
streak to settle higher helped by a weak dollar and optimism of a deal
to avert the fiscal cliff set to begin January next. Gold normally
thrives on inflation while deflation tends to push it down.
Holdings
of SPDR Gold Trust, the world's largest gold-backed exchange-traded
fund, were unchanged at a record high of 1,347.02 tons.This morning, the
U.S. dollar was was lingering near its one month low versus the
euro and sterling. The buck was trading firm around its 7-month high
versus the yen, while ticking lower against the Swiss franc.
In economic news, the euro area unemployment rate
reached a fresh high in October, with the jobless rate rising
marginally to 11.7 percent, in line with expectations, from 11.6 percent
in September, data published by Eurostat showed.
Separately, the Eurostat said
euro zone's annual inflation, as measured by the harmonized index of
consumer prices (HICP) eased more than expected in November. The HICP
rose 2.2 percent year-on-year in November, slower than 2.5 percent
increase in October. Economists expected the rate of inflation to fall
to 2.4 percent.
Elsewhere in the region, German retail sales
declined at a sharper-than-expected pace in October as waning economic
momentum and rising unemployment eroded consumer willingness to spend. Retail sales fell 2.8 percent month-on-month on a calendar and seasonally adjusted basis in October, the Federal Statistical Office said. Economists expected sales to fall 0.4 percent after a 0.5 percent gain in September.
Traders will look to the report on personal income and spending from the U.S. Commerce Department
due out at at 8:30 am ET. The consensus estimates call for a 0.3
percent month-over-month increase in personal income, while personal
spending may have edged up by 0.1 percent. In September, personal income
rose 0.4 percent and personal spending climbed 0.8 percent.
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