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Stocks Showing A Lack Of Direction In Early Trading
Stocks are
showing a lack of direction in early trading on Thursday following the
release of a slew of U.S. economic data. The major averages are once
again lingering unchanged line after ending the previous session roughly
flat.
The major averages are currently mixed, with the Dow posting a slim gain. The Dow is up 3.14 points or less than a tenth of a percent at 13,248.59, while the Nasdaq is down 3.04 points or 0.1 percent at 3,010.77 and the S&P 500 is down 0.64 points or less than a tenth of a percent at 1,427.84.
The choppy trading on
Wall Street comes as traders digest the latest batch of economic data
as well as yesterday's monetary policy announcement from the Federal
Reserve.
While the Commerce Department released a report
showing weaker than expected retail sales growth in the month of
November, a sharp drop in sales by gas stations offset strength in other
sectors.
The report showed that retail sales increased by
0.3 percent in November following a 0.3 percent decrease in October.
Economists had been expecting retail sales to increase by about 0.6
percent.
Excluding a 4.0 percent drop in sales by gas stations,
retail sales rose by 0.8 percent in November compared to a 0.5 percent
drop in October.
A separate report from the Labor Department unexpectedly
showed a notable decrease in initial jobless claims in the week ended
December 8th, with claims falling to a two-month low.
The report showed that jobless
claims fell to 343,000, a decrease of 29,000 from the previous week's
revised figure of 372,000. Economists had expected jobless claims to
come in unchanged compared to the 370,000 originally reported for the
previous week.
With the unexpected decrease, jobless claims fell to their lowest level since dropping to a four-year low of 342,000 in the week ended October 6th.
The Labor Department
also said its producer price index fell by 0.8 percent in November
following a 0.2 percent drop in October. Economists had been expecting
prices to fall by about 0.5 percent.
Excluding a sharp drop in
energy prices as well as an increase in food prices, the core producer
price index edged up by 0.1 percent in November after dipping by 0.2
percent in October. Core prices had been expected to rise by 0.2 percent.
Rob
Carnell, chief international economist at ING, said, "On balance,
today's data do not unduly threaten the Fed's assertion that rates will
be on hold until mid-2015, but keep watching that labor market data."
Most of the major sectors are showing only modest moves in early trading, although gold stocks have come under considerable selling pressure. The NYSE Arca Gold Bugs Index is down by 2.1 percent, with a drop by the price of gold contributing to the weakness in the sector.
On the other hand, early strength is visible among airline and networking stocks, which are extending recent upward trends.
In
overseas trading, stock markets across the Asia-Pacific region turned
in a mixed performance during trading on Thursday. While Japan's Nikkei 225 Index surged up by 1.7 percent, Hong Kong's Hang Seng Index fell by 0.3 percent.
Meanwhile, the major European markets have all moved to the downside on the day. The French CAC 40 Index is down by 0.2 percent, the U.K.'s FTSE 100 Index is down by 0.3 percent and the German DAX Index is down by 0.4 percent.
In the bond market, treasuries are
seeing moderate weakness, extending the downward move seen following
yesterday's Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.6 basis points at 1.723 percent.
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TSX Dips At Open Thursday
Toronto stocks
moved down at open Thursday amid selling in commodities, with the
S&P/TSX Composite Index shedding 68.53 points or 0.56 percent to
12,284.56.
The Diversified Materials Index was down over 1 percent, with First Quantum Minerals diving nearly 2 percent. Inmet Mining and Teck Resources slipped about 0.50 percent each.
The Global Gold
Index lost over 2 percent, with Kirkland Lake Gold diving about 30
percent. Centamin Plc plunged around 45 percent after the precious and
base metals miner said it is suspending operations at its principal
asset Sukari Gold Mine mainly following issues with Egyptian General
Petroleum Corp. Agnico-Eagle Mines, Allied Nevada Gold and Goldcorp. lost around 2 percent each.
In the oil patch, Cenovus Energy and Nexen Inc. slipped nearly 1 percent each. Meanwhile, oil and gas exploration and development company Angle Energy surged
10 percent after it announced that it would divest certain of its
non-core natural gas-weighted assets in the Edson area of Alberta for
$74 million.
The price of crude oil moved back near a
three-week low Thursday morning amid a generally steady U.S. dollar.
Crude for January shed $0.53 to $86.24 a barrel.
In corporate news from Canada, base-metals miner Primero Mining
said it would acquire Cerro Resources NL for a total transaction value
of approximately $119 million. Cerro shareholder will receive 0.023 of a
Primero common share for each share held.
Software solutions provider Enghouse Systems
reported lower fourth-quarter net income of C$8.35 million or C$0.32
per share compared to C$13.35 million or C$0.52 per share last year.
Adjusted EBITDA for the quarter was C$10.2 million or C$0.39 per share
compared to C$9.6 million or C$0.37 per share last year. Analysts
expected the company to report profit per share of C$0.17 for the
quarter.
Shares of Centamin Plc plunged around 40 percent
in the morning trading on London Stock Exchange after the precious and
base metals miner said it is suspending operations at its principal
asset Sukari Gold Mine mainly following issues with Egyptian General
Petroleum Corp.
Major household appliances and accessories company Coast Wholesale Appliances announced that it will not be declaring a cash dividend for the month of December 2012.
Pharmaceutical company Cangene Corp.
swung to profit in first quarter, reporting profit of $4.5 million or
$0.07 per share compared to a loss of $4.4 million or $0.07 per share in
the same year-ago quarter.
In economic news from Canada, the New Housing Price Index rose 0.2 percent in October, following similar increases throughout the year.
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European Markets Fall On Fiscal Cliff Worries
The European markets
are trading lower on Thursday, as fiscal cliff worries remained in the
forefront, even after the U.S. Federal Reserve announced new stimulus
measures and a banking union agreement was reached by the European
finance ministers.
Finance ministers from the 27 European
Union states on Thursday finalized an agreement, giving the European
Central Bank more powers to oversee the functioning of banks in the
crisis-hit region. The decision came ahead of the two-day EU summit in
Brussels starting today.
The ministers plan to make the
supervisory system fully operational by March 2014 or 12 months after
the entry into force of the legislation, whichever is later, a statement
issued after the meeting said.
The U.S. Federal Reserve,
at the end of the two-day meeting on Wednesday, said it would replace
its "Operation Twist" program, which expires at the end of the year,
with the purchase of longer-term Treasury securities at a pace of $45
billion per month. The central bank also said it would continue to
purchase additional agency mortgage-backed securities at a pace of $40
billion per month.
In a departure from its earlier pledge to keep
interest rates at historically low levels until mid-2015, the Fed will
hold off on rate hikes until the unemployment rate falls to 6.5 percent.
Policy makers do not see the unemployment rate falling to 6.5 percent
until 2015.
However, Fed Chairman Ben Bernanke warned that
Fed support cannot fully offset the downside risks presented by the
so-called fiscal cliff. Bernanke expects Congress to reach a deal, but
noted that inaction has already resulted in a troubling drop in business
confidence.
The Euro Stoxx 50 index of eurozone bluechip
stocks is losing 0.04 percent, while the Stoxx Europe 50 index, which
includes some major U.K. companies, is falling 0.09 percent.
The German DAX is losing 0.4 percent. The UK's FTSE 100 and Switzerland's SMI are losing 0.2 percent each. The French CAC 40 is marginally down.
In Frankfurt, RWE is declining 2.9 percent and peer EON is losing 0.7 percent. Both stocks received negative broker recommendations. Steel maker ThyssenKrupp is dropping 2.8 percent and sports goods giant adidas is falling 1.8 percent.
Commerzbank and Deutsche Bank are declining 1.6 percent and 1.4 percent, respectively. ProSiebenSat is declining 3.1 percent. Commerzbank cut
its rating on the stock. Delticom is retreating 4 percent after a
broker downgrade. Bucking the trend, Hochtief is advancing 1.2 percent
after Berenberg upgraded the stock.
In Paris, GDF Suez is losing 1.6 percent. Nomura cut the stock to ''Neutral'' from ''Buy.'' Retailer Carrefour and technology firm Cap Gemini are losing 1.5 percent each.
Renault is gaining 1.8 percent. The car maker sold
its remaining 6.5 percent stake in Swedish automaker AB Volvo for 12.78
billion Swedish kroner or about $1.92 billion. Volvo is losing 3.4
percent in Stockholm.
Dairy giant Danone is preparing a
cost reduction and adaptation plan. It will be deployed over two years
and is targeted at adjusting costs to generate savings of some 200
million euros in Europe. The stock is advancing 1.4 percent.
In London, Oil and gas explorer BG Group
appointed Chris Finlayson, currently Executive Director and Managing
Director of BG Advance, as chief executive officer of the company,
succeeding ailing Frank Chapman. The stock is down 1.1 percent.
Energy services company John Wood Group
said conditions in energy markets remain favorable and that it expects
to deliver good growth for 2012 in line with expectations. In the
Canadian oil sands market, the company anticipates some reduction in
activity in 2013. The stock is down 2.8 percent.
Sports Direct International
is declining 5.4 percent. The company reported a higher profit for its
first half, but has decided not to pay a dividend in respect of the
half-year.
Centamin has received a $65 million claim from the Egyptian General Petroleum Corp.
for diesel fuel supplied from December 2009 to January 2012. The
company said its mine will be put on care and maintenance until the
issues are satisfactorily resolved. The stock is plunging 37 percent.
Deutsche Bank
raised HSBC to ''Buy'' from ''Hold.'' The stock is up modestly.
Heineken is losing around 1 percent in Amsterdam. Barclays reduced its
rating on the stock. Nestle was raised to ''Overweight'' from
''Equalweight'' at Barclays. The stock is rising 0.3 percent in Zurich.
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Asian Stocks Mixed Despite Fed Boost
Asian stocks ended
mixed on Thursday, paring early gains despite the Fed's announcement of
a new bond-buying program and the central bank's pledge to keep pumping
money into the economy until the job market improved substantially. Fed
Chairman Ben Bernanke's comments that the central bank lacks tools to
cushion the impact from the looming fiscal cliff added to worries over
the European economic outlook, tempering gains.
The Fed more
than met investor expectations for a ramp up in its asset purchase
program. In a somewhat surprising move, the Fed set numerical targets
regarding future decisions, indicating that interest rates will remain
exceptionally low as long as the unemployment rate remains above 6.5
percent and inflation is projected to be below 2.5 percent.
Japanese
shares rallied to an eight-month high, as the yen's slide following the
announcement of the Federal Reserve's new bond buying program as well
as expectations that the Bank of Japan will pursue aggressive monetary
easing after Sunday's elections boosted the outlook for exporters'
earnings. The Nikkei average jumped 1.7 percent to 9,743, its highest
level since April 5, while the broader Topix index added a percent.
Canon, Kyocera, Honda Motor, Fanuc, Nikon and TDK jumped 2-6 percent. Financials such as Dai-ichi Life Insurance, Daiwa Securities and Nomura Holdings also climbed 2-4 percent, drawing support from a general improvement in risk appetite. Tokyo Electron added 2.4 percent on a Nikkei report that it will begin producing equipment for the manufacture of large LCD panels in China. Sharp jumped
6.4 percent on news that Apple is working with component suppliers in
Asia and testing out several designs for television sets.
China's Shanghai Composite
index lost a percent mainly affected by domestic factors such as tight
liquidity conditions ahead of the upcoming central economic work
conference on Saturday and Sunday, jointly organized by the Central Committee
of the Communist Party and the State Council, where policymakers will
lay out economic policy goals for the next year. Hong Kong's Hang Seng index slipped 0.3 percent.
Australian
shares swung between gains and losses before closing on a flat note.
Lingering concerns about the U.S. fiscal cliff kept investor mood
cautious after Senate Majority Leader Harry Reid, D-Nev., warned that
the U.S. will go over the cliff unless Republicans agree to raise tax
rates on wealthy Americans. The Australian dollar held close to a
multi-month high versus the greenback despite RBA governor Glenn
Stevens' comments cautioning over the "spill over" effects from central
banks policies. Miners ended mixed, with BHP Billiton rising 0.7 percent and Rio Tinto adding 0.9 percent, while smaller rival Fortescue Metals Group retreated 0.7 percent on profit taking following recent gains. Among the major banks, ANZ edged down marginally and NAB eased 0.2 percent, but Commonwealth rose 0.1 percent and Westpac advanced 0.3 percent. APN News & Media soared 10.5 percent and Fairfax Media shares jumped 11.3 percent.
Seoul shares rose to a three-month high after the Bank of Korea
held interest rates steady at 2.75 percent, resisting the pressure from
the market participants for additional stimulus measures. The forecasts
were split heading into the decision, with several analysts expecting a
reduction of 25 basis points, while others expected the bank to hold
rates steady ahead of the forthcoming national elections. The benchmark Kospi average jumped 1.4 percent. Market heavyweight Samsung Electronics soared 2.9 percent to close at a record high.
New Zealand shares extended losses as investors continued to take profits in heavyweight stocks. Telecom,
the nation's biggest phone company, fell 1.6 percent to a nine-month
low, Australian food ingredient maker Goodman Fielder slumped 4.7
percent, national carrier Air New Zealand lost 2.9 percent, New Zealand Refining, the nation's only refiner, declined 2.3 percent and utility Contact Energy edged down 0.2 percent, while the benchmark NZX-50 index shed half a percent.
Infrastructure firm Infratil tumbled
3.8 percent after its manager HRL Morrison & Co sold 10 million
shares in the company to institutional and high net worth investors.
Gold miner OceanaGold led the gainers on the exchange, climbing over 4 percent, while Xero and Diligent Board Member Services rose about 2 percent each.
Elsewhere, the markets in India and Indonesia were down about half a percent each, while Malaysia's KLSE Composite rose 0.2 percent, Singapore's Straits Times index was moving up half a percent and the Taiwan Weighted average advanced 0.9 percent.
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Crude Lingers Near 3-week Low
The price of crude oil moved back near a three-week low Thursday morning amid a generally steady U.S. dollar. Light Sweet Crude Oil
(WTI) futures for January delivery, shed $0.54 to $86.23 a barrel.
Yesterday, oil ended higher after the Fed announced that it will replace
its "Operation Twist" program, which expires at the end of the year,
with the purchase of longer-term Treasury securities at a pace of $45
billion per month.
Wednesday during trading hours, the EIA said
that U.S. crude oil inventories moved up 0.80 million barrels and
gasoline stocks jumped 5.00 million barrels in the weekended December
07. Analysts expected crude oil inventories to dip by 2.50 million
barrels last week.
The price of gold was moving lower Thursday
morning on profit taking after the U.S. Federal Reserve announced
additional bond purchase program.
Gold for February
delivery, the most actively traded contract, shed $23.70 to $1,694.20 an
ounce. Yesterday, gold settled higher after the Fed announced that it
will replace its "Operation Twist" program, which expires at the end of
the year, with the purchase of longer-term Treasury securities at a pace
of $45 billion per month.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,351.42 tons.
This
morning, the U.S. dollar was trading near its one-week low versus the
euro and a 5-week low against sterling. The buck was hovering near its
9-month high versus the yen and flat against the Swiss franc.
In economic news from the euro zone, the Swiss National Bank decided
to leave its minimum exchange rate of CHF 1.20 per euro unchanged as
widely expected by economists. The target range for the three-month
Libor was maintained at 0.0-0.25 percent.
Traders will
look to the report on producer price index for November from the Labor
Department, due out at 8:30 am ET. Economists expect the headline index
for November to have declined by 0.5 percent, while core producer prices
may have risen by 0.2 percent.
Simultaneously, the Commerce Department
will release its retail sales report. For November, economists estimate
a 0.6 percent increase each in retail sales. Excluding autos, sales are
expected to have remained unchanged.
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