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Bargain Hunting Leads To Early Strength On Wall Street
Stocks have
moved moderately higher in early trading on Thursday, partly offsetting
the steep losses posted in the previous session. The major averages
have moved back to the upside, rebounding off yesterday's three-month
closing lows.
The major averages have recently pulled back off their highs for the young session but remain in positive territory. The Dow is up 27.43 points or 0.2 percent at 12,960.16, the Nasdaq is up 11.14 points or 0.4 percent at 12,960.16 and the S&P 500 is up 4.65 points or 0.3 percent at 1,399.18.
The
early strength on Wall Street is partly due to bargain hunting, with
traders picking up stocks at reduced levels following Wednesday's
sell-off.
Buying interest was also generated by some relatively
upbeat U.S. economic data, including a report from the Labor Department
showing an unexpected drop by initial jobless claims.
The report said jobless claims
fell to 355,000 in the week ended November 3rd, a decrease of 8,000
from the previous week's unrevised figure of 363,000. The drop surprised
economists, who had expected jobless claims to climb to 370,000.
However,
the data was likely skewed as a result of Hurricane Sandy, which
wreaked havoc along the East Coast and likely prevented some people from
filing claims.
A separate report from the Commerce Department showed
that the U.S. trade deficit unexpectedly narrowed in the month of
September, as the value of exports rose at a faster rate than the value
of imports.
Paul Dales, Senior U.S. Economist at Capital
Economics, said the unexpected narrowing by the trade deficit "opens the
door to an upward revision to third-quarter GDP growth, but probably
not a significant one."
Telecom stocks have shown a strong
move to the upside in early trading, with Qualcomm (QCOM) helping to
lead the sector higher. Shares of Qualcomm have jumped by 6.7 percent
after the wireless giant reported better than expected quarterly results
and provided upbeat guidance.
Networking, banking, and airline stocks
are also seeing early strength, regaining some ground after ending the
previous session sharply lower. Most of the other major sectors are
showing more modest moves.
In overseas trading, stock markets across the Asia-Pacific region saw considerable weakness following the overnight sell-off on Wall Street. Japan's Nikkei 225 Index fell by 1.5 percent, while Hong Kong's Hang Seng Index tumbled by 2.4 percent.
Meanwhile, the major European markets are regaining some ground after falling sharply on Wednesday. While the French CAC 40 Index has risen by 0.5 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both up by 0.4 percent.
In the bond market, treasuries are
giving back some ground after ending the previous session sharply
higher. Subsequently, the yield on the benchmark ten-year note, which
moves opposite of its price, is up by 6.3 basis points at 1.695 percent
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TSX Edges Up At Open Thursday
Bay Street stocks
edged up at open Thursday amid marginal buying in commodities, with the
S&P/TSX Composite Index adding 15.29 point or 0.12 percent to
12,245.87.
In the oil patch, Crescent Point Energy Corp. edged up 1 percent even after announcing that its quarterly net income decreased sharply. International gold miner Kinross Gold rose nearly 6 percent after reporting improved third-quarter net earnings.
Automotive supplier Magna International Inc. reported a much improved third quarter net income. The stock jumped nearly 5 percent.
Chile focused base-metals miner Andina Minerals Inc. soared 95 percent after it said it would be acquired by Hochschild Mining plc in exchange of C$0.80 per share
Meanwhile, quick service restaurant chain Tim Hortons Inc. slipped 1 percent even after reporting a higher third-quarter net income. Energy company Canadian Natural Resources lost about 4 percent after recording a plunge in third-quarter net earnings.
The price of crude oil
was recovering from its yesterday's steep fall Thursday morning even as
worries continued that US may not be able to avoid the deep spending
cuts and tax hikes set to automatically take place in January. Crude for
December added $0.94 to $85.38 a barrel.
The price of gold little
changed Thursday morning as the US dollar was steady versus a basket of
currencies amid today's macroeconomic data. Gold for December edged up
$1.30 to $1,715.30 an oucne.
In corporate news from Canada, energy company Canadian Natural Resources
reported a plunge in third-quarter net earnings to C$360 million or
C$0.33 per share from C$836 million or C$0.76 per share last year.
Adjusted net earnings from operations totaled C$353 million or C$0.32
per share, significantly lower than C$719 million or C$0.65 per share a
year ago.
Crescent Point Energy Corp. announced that its
quarterly net income decreased sharply to C$2.35 million or C$0.01 per
share from C$204.62 million or C$0.74 last year.
Automotive supplier Magna International Inc.
reported a much improved third quarter net income of $390 million or
$1.66 per share compared to $102 million or $0.42 per share reported for
the corresponding quarter last year.
Insurance services provider Manulife Financial Corp.
reported a narrower third-quarter net loss at C$258 million or C$0.14
per share compared to a net loss of C$1.299 billion or C$ 0.73 in the
year ago quarter.
Financial services company Home Capital Group
reported higher third-quarter net income of C$57 million or C$1.65 per
share, compared with C$48 million or C$1.39 per share last year.
Analysts expected the company to report earnings of C$1.61 per share for
the quarter.
Packaging and tissue products company Cascades Inc.
swung to profit in third quarter reporting net earnings of C$5 million
or C$0.05 per share compared with a net loss of C$20 million or C$0.19
per share reported for the corresponding quarter last year. Excluding
specific items, earnings per share were C$0.07 compared to loss per
share of C$0.02 in the corresponding period last year. Analysts expected
the company to report earnings of C$0.15 per share.
Quick service restaurant chain Tim Hortons Inc.
reported a higher third-quarter net income at C$105.7 million or C$0.68
per share compared to C$103.6 million or C$0.65 per share in the
comparable period. Analysts expected earnings per share of C$0.72 for
the quarter.
Food and beverages company Premium Brands Holdings Corp. posted lower third-quarter earnings of C$4.60 million or C$0.22 per share versus C$6.10 million or C$0.32 per share last year.
International gold miner Kinross Gold reported
improved third-quarter net earnings of $224.9 million or $0.20 per
share compared to $212.6 million or $0.19 per share in the year ago
quarter. Adjusted net earnings from continuing operations were $250.4
million or $0.22 per share, compared with $269.4 million or $0.24 per
share. Analysts expected the company to report earnings of $0.19 per
share for the quarter.
Chile focused base-metals miner Andina Minerals Inc.
said it would be acquired by Hochschild Mining plc in exchange of
C$0.80 per share, valuing it approximately C$103 million. The offer
price represents a premium of about 100 percent to its latest closing
price.
In economic news, Statistics Canada said trade
deficit with the world narrowed to $826 million in September from $1.5
billion in August as merchandise exports rose 1.9 percent and imports
were unchanged in September.
Separately, the agency said the New Housing Price Index (NHPI) rose 0.2 percent in September, following a similar increase in August.
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European Markets Rise Ahead Of Policy Decisions
The European markets are in in positive territory on Thursday, ahead of the key interest rate decisions from the European Central Bank and the Bank of England. Markets fell across Asia/Pacific amid worries about the U.S. fiscal cliff.
At 7.00 am ET, the Bank of England is
set to announce the results of the monetary policy meeting. The bank is
expected to maintain its quantitative easing at GBP 375 billion and the
interest rate at 0.50 percent.
At 7.45 am ET, the European Central Bank will announce its interest rate decision. The central bank is seen holding its interest rate at 0.75 percent. ECB President Mario Draghi is unlikely to announce any new liquidity programme today.
Germany's
exports declined in September at the fastest pace since December 2011,
reflecting subdued demand from Europe and underpinned the assessment
that the growth-engine of the single currency bloc will remain weak at
the end of 2012.
Greece's parliament on Wednesday narrowly
approved a law on austerity measures. The approval, amid protests by
people, clears the way for the country to secure the next bailout
tranche worth 31.5 billion euros.
The Euro Stoxx 50 index
of eurozone bluechip stocks is advancing 0.55 percent, while the Stoxx
Europe 50 index, which includes some major U.K. companies, is rising
0.42 percent.
The German DAX is gaining 0.5 percent and the French CAC 40 is rising 0.3 percent. The UK's FTSE 100 is adding 0.3 percent and Switzerland's SMI is advancing 0.4 percent.
In Frankfurt, Siemens said
it is targeting total sectors profit margin of at least 12 percent by
2014 and aims productivity gains of 6 billion euros over the coming two
years. The industrial conglomerate posted an increase in profit for the
fourth quarter, amid a modest growth in revenues. The stock is up 4
percent.
HeidelbergCement is gaining 2.6 percent. The firm announced quarterly results today. Deutsche Telekom is flat. The firm slipped to a third-quarter loss. Commerzbank, which reported third-quarter results, is falling 3.2 percent.
Adidas is declining 3.8 percent. The sports goods giant reported a rise in third-quarter profit and adjusted its sales guidance. Dialog Semiconductor is falling 2.2 percent, following a broker downgrade.
In Paris, Vallourec is leading the gainers by adding 5.4 percent. Alcatel Lucent and Alstom are gaining 2.9 percent and 2.4 percent, respectively.
Societe Generale
is up 0.5 percent. The lender recorded about 130 million euros loss in
the third quarter after it agreed last month to sell its Greek unit
Geniki Bank to Greek lender Piraeus Bank.
STMicroelectronics is gaining around 1 percent after UBS removed the stock from "Least Preferred" tech shares. Michelin is losing 0.5 percent. UBS added the stock to "Most Preferred List'' in European automobiles.
EADS is dropping 0.9 percent. The company reported marginally lower profit in the third quarter. Cap Gemini is dropping 3.2 percent and EDF is losing 1.5 percent.
Renault is falling 1.4 percent. UBS removed the stock from "Most Preferred List'' in European automobiles.
In London, Burberry is gaining 2.9 percent. Randgold Resources and Johnson Matthey are up around 1.8 percent each.
Eurasian Natural Resources, which issued an Interim Management Statement, is dropping 3.3 percent.
Tate & Lyle is falling 1.4 percent and Land Securities is sliding 1.3 percent. Dexia is climbing 5.6 percent in Brussels. Belgian and French states,
which control Dexia, have agreed to pump in 5.5 billion euros of fresh
capital to the stricken lender, after the bank reported hefty losses and
write-downs.
KBC is climbing 3.8 percent in Brussels. Repsol is up 1.7 percent in Madrid. The company reported third-quarter results. Swiss Re is gaining 2.2 percent in Zurich on higher quarterly profit.
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Asian Stocks Retreat On Risk Aversion
Asian
stocks fell sharply on Thursday, as the initial cheer over Barack
Obama's victory in the U.S. presidential election faded and investors
looked ahead to the looming "fiscal cliff" crisis which if left
unattended may pose a real threat to the global economy. Fitch Ratings
warned that the U.S. may be downgraded next year unless lawmakers act
quickly on the so-called fiscal cliff and raise the debt ceiling in a
timely manner.
With worries about Europe's deteriorating growth
and a stronger U.S. dollar denting sentiment, investors awaited the
upcoming ECB and BOE rate decisions and the impending leadership
transition in China for further direction.
Japanese shares
fell almost across the board, weighed down by a range of issues
including festering U.S. fiscal problems, flagging growth prospects for
the euro zone's biggest economies, the yen's newfound strength against
the U.S. dollar and euro as well as weak core machinery data. The Nikkei average fell 1.5 percent to 8,837.15, its lowest close since Oct. 17, while the broader Topix index lost 1.4 percent.
Among
the prominent decliners, Advantest, Fast Retailing, Hitachi, Komatsu,
Canon, Fanuc and Sony fell 1-3 percent. Isuzu Motors rallied 4.7
percent, a day after the company lifted its earnings guidance for the
full-year to March. Shares of Softbank rose 0.3 percent, extending gains
for a third consecutive session.
In economic news, data released by the Cabinet Office showed
that Japan's core machinery orders fell a seasonally adjusted 4.3
percent in September from the previous month, falling for the second
straight month and missing forecasts for a decline of 2.1 percent. On a
yearly basis, core machine orders declined 7.8 percent - also missing
expectations for a 4.9 percent decline.
China's Shanghai Composite
index fell 1.6 percent, with resource stocks leading the declines on
worries about the fiscal crisis in the United States and Europe's growth
prospects. The Communist Party started its 18th Congress in Beijing
today that will usher in a once-in-a decade leadership change against a
backdrop of a slowing economy and bitter territorial disputes with
Japan. Hong Kong's Hang Seng index lost 2.4 percent, dragged down by
resource firms.
Australian shares lost ground following losses in
offshore markets as investors fretted over the looming fiscal cliff.
Both the benchmark S&P/ASX 200 and the broader All Ordinaries
index fell about 0.7 percent each, with positive employment figures
helping limit the downside to some extent. The Australian Bureau of
Statistics reported today that the economy added 10,700 jobs in October,
surpassing economists' estimates that only 1.000 jobs would be added.
Full-time employment increased by 18,700 jobs, while part-time
employment decreased by 8,000. The nation's unemployment rate stood
unchanged at 5.4 percent.
Among the major banks, ANZ fell
4.5 percent on going ex-dividend and NAB slid half a percent, while
Westpac edged up 0.3 percent and Commonwealth gained 0.7 percent. In the
resource sector, BHP Billiton, Rio Tinto, Newcrest Mining and Fortescue
Metals Group lost 1-3 percent. Maintenance service group Transfield
Services rose 1.3 percent after it won a $200 million contract to
provide maintenance and operations services to QGC's coal seam gas
assets in Queensland.
Shares of Lynas Corporation soared
11.8 percent after the company won a legal battle on operating a
controversial rare earth plant in Malaysia. Qantas Airways declined 1.5
percent on reports it will cut a further 400 jobs in its engineering
unit.
Seoul stocks snapped a two-day winning streak as
investors locked in some recent gains following the conclusion of the
U.S. presidential election. The benchmark Kospi average fell 1.2
percent, with builders taking a beating on sluggish third-quarter
earnings. Shares of GS Engineering & Construction plummeted 11.2
percent after the company reported a 74 percent drop in its
third-quarter operating profit. Online game developer NCSoft slumped
12.9 percent on brokerage downgrades.
New Zealand shares
rose modestly in contrast to weak regional markets. The benchmark NZX-50
index rose 0.3 percent. Exporters Xero and Fisher & Paykel
Healthcare rose 6.4 percent and 0.8 percent, respectively, as the kiwi
dollar dropped to a two-month low versus its Australian counterpart
after official figures showed the Australian economy added 10,700 jobs
last month, beating expectations.
Meanwhile, New Zealand's labor
market report suggested that the nation's unemployment rate unexpectedly
jumped half a percentage point to a 13-year high of 7.3 percent.
Fletcher Building, the nation's largest construction company, gained 1.2
percent as a weak labor market stoked expectations of further
interest-rate cuts. Retailer Kathmandu Holdings led the declines on the
exchange, falling 4.5 percent on going ex-dividend.
Elsewhere, India's benchmark Sensex was down 0.3 percent, Indonesia's Jakarta Composite index slid half a percent, Malaysia's KLSE
Composite edged down 0.3 percent, Singapore's Straits Times index fell
1.2 percent and the Taiwan Weighted average shed 0.6 percent.
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Crude Rebounds After Sharp Fall
The
price of crude oil was recovering from its yesterday's steep fall
Thursday morning even as worries continued that US may not be able to
avoid the deep spending cuts and tax hikes set to automatically take
place in January.
Light Sweet Crude Oil (WTI) futures for
December delivery, added $0.88 to $85.32 a barrel. Yesterday, oil shed
nearly 5 percent after the Energy Information Administration's weekly
oil report showed an increase in U.S. crude stockpiles with the dollar
trading higher even as the euro slipped on euro zone worries. Oil prices
also were impacted by demand growth concerns over the ongoing euro zone
financial crisis.
Wednesday during trading hours, the EIA revealed
that US crude oil inventories moved up by 1.80 million barrels and
gasoline stocks added 2.90 million barrels in the weekended November 02.
Analysts expected crude oil inventories to gain 1.8 million barrels
last week.
The price of gold was little changed Thursday morning as the US dollar was steady versus a basket of currencies ahead today's macroeconomic data.
Gold
for December delivery, the most actively traded contract, edged up
$0.70 to $1,714.70 an ounce. Yesterday, gold ended flat after the dollar
strengthened against some of the major currencies, even as the euro
declined on concerns over the euro zone financial crisis. Nonetheless,
President Barack Obama's reelection for a second term somewhat limited
the precious metal's slide, reigniting hopes of continued monetary
stimulus support in the world's largest economy.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved up to 1,337.21 tons from 1,334.49 tons.
This morning, the U.S. dollar
was extending its 2-month high versus the euro and the Swiss franc,
while advancing towards a three-week high against sterling. The buck was
leveling off from its 4-month high versus the yen.
In economic
news, Germany's exports declined in September at the fastest pace since
December 2011, reflecting subdued demand from Europe. Exports declined
2.5 percent in September from a month ago, offsetting a 2.3 percent rise
in August, Destatis said. Economists had forecast a 1.5 percent monthly
fall for September.
The Bank of England today maintained its quantitative easing at GBP 375 billion and the interest rate at 0.50 percent, as widely expected.
The European Central Bank will announce its interest rate decision at 7.45 a.m. ET. The central bank is seen holding its interest rate at 0.75 percent.
Traders
will look to the weekly jobless claims report from the U.S. Labor
Department due out at 8.30 a.m.ET. Economists expect claims to increase
to 370,000 from 363,000 in the previous week.
Separately, the Commerce Department
will release the trade gap data for September. Economists estimate that
the trade gap widened to $45.4 billion from a deficit of $44.2 billion
in August.
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