Stocks Fall Sharply On Worries About Fiscal Cliff, Europe
Stocks moved
sharply lower at the start of trading on Wednesday, giving back ground
after moving mostly higher over the course of the two previous sessions.
The major averages all showed notable moves to the downside at the
open.
The major averages have recently climbed off their lows for the young session but remain firmly in the red. The Dow is down 159.80 points or 1.2 percent at 13,085.88, the Nasdaq is down 36.79 points or 1.2 percent at 2,975.14 and the S&P 500 is down 18.18 points or 1.3 percent at 1,410.21.
The
initial weakness on Wall Street came on the heels of news that
President Barack Obama won re-election, defeating Republican challenger
Mitt Romney.
While Obama's definitive victory has helped to
eliminate some uncertainty, traders continue to worry about the upcoming
fiscal cliff.
Without action by Congress, the end of the year
will see the expiration of the Bush-era tax cuts as well as the
automatic spending cuts that were part of last summer's debt ceiling
deal.
"The re-election of President Obama removes one
uncertainty that has been weighing on the markets over the last few
months," Capital Economics said in a note. "But they are none the wiser
about if, how and when Congress will deal with the colossal tightening
in fiscal policy scheduled to occur early next year."
"And with
Congress still split, President Obama will struggle to garner bipartisan
support for a more comprehensive agreement that addresses the longer
term issue of how to put the nation's finances back on a sustainable
path," the firm added.
Lingering concerns about the financial
situation in Europe are also weighing on the markets, with European
Central Bank President Mario Draghi saying European economic activity is weak and is expected to remain weak in the near term.
In a speech in Frankfurt, Draghi also
said the latest data suggest that the problems in the eurozone are now
starting to affect the German economy, which had previously been
insulated from some of the difficulties.
Most of the major sectors have moved to the downside in early trading, reflecting broad based selling pressure on Wall Street.
Banking stocks are
seeing considerable weakness, dragging the KBW Bank Index down by 2.3
percent. The weakness in the sector comes as a Romney victory was
expected to be better for the industry.
Electronic storage, oil service, steel, and defense stocks are also posting notable losses, while some healthcare provider and networking stocks are bucking the downtrend.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Hong Kong's Hang Seng Index and Australia's All Ordinaries Index both advanced by 0.7 percent, while Japan's Nikkei 225 Index bucked the uptrend and closed modestly lower.
Meanwhile, the major European markets have turned lower over the course of the trading day. While the U.K.'s FTSE 100 Index has fallen by 0.8 percent, the French CAC 40 Index and the German DAX Index are down by 1.3 percent and 1.6 percent, respectively.
In
the bond market, treasuries have moved sharply higher amid the worries
about the fiscal cliff and Europe. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, has tumbled by 11.2 basis points to 1.63 percent.
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TSX Dives At Open Wednesday
Toronto stocks opened sharply lower Wednesday amid selling in energy and base-metals stocks, with the S&P/TSX Composite Index diving 75.31 points or 0.61 percent to 12,285.89.
The Diversified Materials Index
lost nearly 2 percent, with Teck Resources shedding about 3 percent.
First Quantum Minerals and Inmet Mining were down nearly 2 percent each.
In
the oil patch, Cenovus Energy and Imperial Oil were down nearly 2
percent each. Oil and gas transportation company Enbridge Inc. slipped
0.50 percent despite turning to profit in third-quarter.
Crude oil transportation company Pembina Pipeline Corp. eased 0.25 percent even after reporting improved third-quarter earnings.
Bombardier Inc. cost over 3 percent despite posting improved third-quarter net income.
Meanwhile gold stocks
were trading firm amid steady bullion prices. Gold-focused royalty
company Franco-Nevada Corp. gained 3 percent after reporting improved
third-quarter net income.
Goldcorp. Allied Nevada Gold and Barrick Gold were up over 1 percent each.
The
price of crude oil was moving lower as traders await cues from the
official inventories data from the EIA, due out later during the trading
session. Crude for December shed $1.10 to $87.61 a barrel.
The price of gold was steady at a two-week high Wednesday morning, with gold for December adding $6.00 to $1,721.00 an ounce.
In corporate news from Canada, fertilizer maker Agrium Inc.
reported third-quarter net earnings of $129 million or $0.80 per share
down from $293 million or $1.85 per share in the year ago quarter.
Excluding one time items, net earnings would have been $215-million or
$1.34 earnings per share for the third quarter. Analysts expected the
company to report earnings of $1.82 per share.
Petroleum and
natural gas company Pengrowth Energy Corp. said it has acquired
additional Lochend Cardium assets with production capability of about
650 bod, weighted 95 percent to light oil.
Oil and gas
transportation company Enbridge Inc. swung to profit in third-quarter,
reporting net earnings of C$189 million or C$0.24 per share, as against a
loss of C$5 million or C$0.01 per share last year. Quarterly adjusted
earnings totaled C$269 million or C$0.34 per share up from C$239 million
or C$0.32 a year ago. Analysts expected the company to report earnings
of C$0.35 per share.
Crude oil transportation company Pembina Pipeline Corp. reported
improved third-quarter earnings of C$30.7 million or C$0.11 per share
compared to C$30.1 million or C$0.18 per share last year.
Gold-focused royalty company Franco-Nevada Corp. reported
improved third-quarter net income at $52.0 million or $0.36 per share
compared to $44.1 million or $0.35 per share in the same quarter last
year. Adjusted net income was $45.3 million or $0.31 per share, compared
to $39.8 million or $0.31 per share last year. Analysts expected the
company to report earnings of $0.30 per share for the quarter.
Separately the company said it would acquire an approximate 11.7 percent
net royalty interest in the Weyburn Oil Unit from Penn West Petroleum
Ltd. and Penn West Petroleum to for C$400 million in cash.
Bombardier
Inc. posted third-quarter net income of $212 million or $0.12 per share
versus $192 million or $0.11 per share last year.
Financial services company Intact Financial Corp.
reported a lower third quarter net income of C$96 million or C$0.70 per
share compared to C$101 million or C$0.87 per share last year. On an
adjusted basis, per share earnings totaled C$0.93. Analysts expected the
company to report earnings of C$0.56 per share for the quarter.
Food and beverages company Molson Coors Brewing Co.
reported that its third-quarter net income attributable to the company
was $198.4 million or $1.09 per share, up from $197.4 million or $1.06
per share in the same quarter last year.
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European Markets Rise As Obama Wins
The European markets
are higher on Wednesday, after U.S. President Barack Obama won a second
four-year term in the White House, overcoming a stiff challenge from
his Republican rival Mitt Romney in Tuesday's presidential elections.
Germany's industrial production
declined 1.8 percent in September from a month ago, the Federal
Ministry of Economics and Technology said. It follows a slower 0.4
percent drop in August and exceeded a 0.7 percent decline forecast by
economists.
Germany's independent council of economic advisers,
the so-called 'wise men,' predicts the gross domestic product to grow
0.8 percent in 2012 and 2013, while the government forecasts the economy
to grow 1 percent next year, following a 0.8 percent expansion this
year.
The council said the deceleration in the pace of economic
activity will bottom out in the fourth quarter of 2012. They observed
that there is a continuing need for action in the field of economic
policy. Reforms that have been implemented or initiated, particularly in
connection with the labor market and pension system, should not be
retracted, they said.
Retail sales in the euro area decreased at a
slightly faster rate than economists expected in September, after
recording a modest increase in the previous month, data released by
statistical office Eurostat showed.
The Euro Stoxx 50 index
of eurozone bluechip stocks is adding 0.47 percent, while the Stoxx
Europe 50 index, which includes some major U.K. companies, is losing
0.49 percent.
The German DAX is adding 0.4 percent and the French CAC 40 is rising 0.6 percent. The UK's FTSE 100 is advancing 0.4 percent and Switzerland's SMI is gaining 0.7 percent.
In Frankfurt, Munich Re reported a significant rise in third-quarter profit and lifted its full year view. The insurer is advancing 2.5 percent.
BMW is gaining 1.9 percent. Daimler is adding 0.5 percent. Volkswagen is losing 0.1 percent. Hochtief is surging 6.1 percent. The company reported quarterly results today.
Kuka, which also reported financial results, is advancing 3.3 percent.
Pfeiffer Vacuum is up 1.1 percent. HSBC raised the stock to "Neutral" from "Underweight."
Infineon Technologies and Beiersdorf are notably lower. Lenders Commerzbank and Deutsche Bank are in negative territory.
In Paris, Veolia Environnement,
which reported financial results, is surging 7.2 percent. Alstom is up
5.3 percent after the speed-train maker reported increased profit for
the first half of the year.
BNP Paribas, which reported a surge in third-quarter profit, is gaining around 5 percent. Societe Generale and Credit Agricole are advancing 2.2 percent and 1.6 percent, respectively.
In London, Pearson is
up 1.6 percent. The publisher is said to be mulling the sale of
Financial Times newspaper so that it can focus better on its education
business.
Randgold Resources is declining 4.2 percent. The
company reported lower third-quarter profit. Marks & Spencer, which
posted decreased profit for the first half of the year, is dropping 1.5
percent.
ArcelorMittal is up 1.5 percent in Amsterdam, following a positive broker recommendation. ING is up 1.5 percent in Amsterdam. The firm is cutting 2,350 positions.
Carlsberg
is gaining around 5 percent in Copenhagen. The Danish brewer reported
quarterly performance in line with its expectations and maintained its
outlook for 2012.
Vestas is declining close to 13 percent.
The Danish wind turbine maker reported a wider loss for the third
quarter. Telefonica turned to a profit in the third quarter. The stock
is gaining 1.3 percent in Madrid.
Delhaize is gaining over
10 percent in Brussels. The company reported higher profit for the
third quarter. Fiat is declining 2.5 percent in Milan. Deutsche Bank
reduced its rating on the stock.
In the commodity space, crude
for December delivery is falling $0.85 to $87.86 per barrel while
December gold is rising $8.6 to $1723.6 a troy ounce.
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Asian Markets Cheer Obama's Victory
Asian stock markets
rose broadly on Wednesday after incumbent U.S. President Barack Obama
defeated Republican challenger Mitt Romney to win a second term defying
the undertow of a slow-growth recovery and high unemployment. The
re-election meant a continuation of easy monetary policy that would
trigger more capital inflows into emerging markets.
Investors
will now have to confront the prospect of the "fiscal-cliff", a mix of
tax increases and spending cuts scheduled to take effect at the end of
2012, if lawmakers cannot agree on critical issues. Investors also kept
an eye on Greece ahead of a parliamentary vote on austerity measures to
unlock international aid.
Japanese shares ended little changed in directionless trading. The Nikkei average dropped 2 points or 0.03 percent to 8,973, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange ended up 0.1 percent. Utilities and metal firms ended firm, while airline companies and food makers closed on a subdued note.
Toyota Motor, which raised its outlook for the rest of the year ending March, closed unchanged, while Honda Motor edged up 0.4 percent and Nissan Motor
climbed 4.2 percent. Nissan reported a better-than-expected 7.7 percent
rise in the July-September net profit, but cut its full-year net profit
forecast by 20 percent, citing faltering sales in China and the
strength of the yen.
Shares of Softbank rallied 2.9
percent after subscriber data for October showed the mobile carrier won
the most subscribers on a net basis in October, helping it retain the
top spot for the 10th straight month. Shiseido climbed 3.8 percent on a brokerage upgrade. Sumitomo Metal Mining soared 6.2 percent after its full-year operating earnings forecast came in slightly above estimates. Yokogawa Electric plunged 10.7 percent after its net profit guidance for the fiscal year missed expectations.
China's Shanghai Composite index edged down 0.01 percent ahead of the once-in-a-decade top leadership change, while Hong Kong's Hang Seng
index rose 0.7 percent, snapping two days of losses. Chinese property
developer Evergrande soared 9.3 percent after posting its highest
single-month contract sales in October.
Australian shares rose
notably after Obama swept to re-election, ending a long period of
uncertainty over fiscal policies and monetary easing. Both the benchmark S&P/ASX and the broader All Ordinaries index ended up about 0.7 percent each. Global miner BHP Billiton
rose half a percent after the company said it has started the process
to find a successor to chief executive Marius Kloppers as part of an
ongoing process. Rio Tinto gained 0.8 percent, smaller rival Fortescue added 1.3 percent and gold miner Newcrest ended up 2.3 percent.
Commonwealth Bank of Australia rose 0.6 percent as the lender reported a 5.7 percent rise in cash earnings in the quarter through September. ANZ added a percent and Westpac advanced 1.3 percent, while NAB edged down 0.2 percent. News Corp shares rallied 3.2 percent as the media firm posted a profit rise and maintained its earnings guidance. Harvey Norman
fell 2.2 percent after the retailer reported a 20 percent fall in
first-quarter earnings on the back of double digit fall in sales revenue
and store closures.
Seoul shares gained ground as a
second Obama administration meant that the Federal Reserve will stay the
course on expansionary monetary policy. The benchmark Kospi average rose half a percent, led by exporters. Heavyweights Samsung Electronics and Hyundai Motor gained 1-2 percent, while utility Korea Electric Power Corp tumbled 3 percent after its president and CEO Kim Joong-kyum tendered his resignation, citing personal reasons.
New Zealand shares rose modestly, tracking firm regional cues. The benchmark NZX-50
index rose 0.4 percent, led by Fletcher Building on expectations that
growing momentum in the Christchurch rebuild would translate into higher
earnings for the company. Shares of the nation's largest construction
company rose 1.7 percent, while steel building products supplier Steel & Tube rallied 2.8 percent ahead of its inclusion in the NZX-50 index on November 13.
Retailers also ended broadly higher, with Pumpkin Patch, Kathmandu Holdings and Michael Hill adding 2-3 percent. Among the prominent decliners, utility Contact Energy, telecommunications network operator Chorus, Auckland International Airport, the country's main international gateway, and rural services firm PGG Wrightson fell 1-3 percent.
Elsewhere, India's benchmark Sensex was up 0.3 percent, Indonesia's Jakarta Composite index rose 0.8 percent, Singapore's Straits Times index was gaining 0.8 percent and the Taiwan Weighted average added 0.7 percent, while Malaysia's KLSE Composite index was down marginally.
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Crude Slips Ahead Of Official Inventories Data
The price of crude oil
was moving lower as traders await cues from the official inventories
data from the EIA, due out later during the trading session.
Light Sweet Crude Oil
(WTI) futures for December delivery, lost $0.96 to $87.75 a barrel.
Yesterday, oil gained over 3 percent to settle at a 2-week high on
global cues with the dollar trading lower even as equity markets in
Europe and U.S. trended higher. Prices were helped by supply concerns
with refineries along the East Cost struggles to get back into full
operation.
Tuesday after the market hours, the API said U.S. crude oil inventories eased 27,000 barrels, while gasoline stocks rose 1.40 million barrels in the weekended November 02.
The price of gold
was steady at a two-week high Wednesday morning after Barack Obama's
re-election in the US sustained hopes for continued monetary stimulus in
the world's largest economy.
Gold for December delivery,
the most actively traded contract, gained $9.50 to $1,724.50 an ounce.
Yesterday, gold settled above the $1,700-mark for the first time in two
days mostly as investors sought the safe haven status of the precious
metal while awaiting the outcome of the U.S. presidential elections
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved up to 1,334.49 tons from 1,332.38 tons.
This morning, the U.S. dollar
was hovering around a two-month high versus the euro and near a
two-week high against sterling. The buck was trading around its 4-month
high versus the yen, while leveling off from a two-month high against
.the Swiss franc.
In economic news, retail sales in the
euro area decreased at a slightly faster rate than economists expected
in September, after recording a modest increase in the previous month,
data released by statistical office Eurostat showed. Retail sales volume
decreased 0.2 percent month-on-month in September, reversing the
previous month's 0.2 percent rise. Economists had forecast a more modest
decrease by 0.1 percent for September.
Meanwhile, Germany's industrial production
declined 1.8 percent in September from a month ago, the Federal
Ministry of Economics and Technology said. It follows a slower 0.4
percent drop in August and exceeded a 0.7 percent decline forecast by
economists. Industrial production adjusted for working days, slipped
unexpectedly by 1.2 percent annually after falling 1.3 percent in
August. Economists had forecast output to grow 0.1 percent.
Traders will look to the U.S. crude oil inventories
report from the EIA, due out during trading hours today. Analysts
expect crude oil inventories to gain 1.8 million barrels last week.
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