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Stocks Showing A Lack Of Direction In Early Trading
After
ending each of the two previous sessions notably higher, stocks are
turning in a lackluster performance in early trading on Wednesday. The
major averages are lingering near the unchanged line, showing only
modest moves.
The major averages are currently turning in a mixed performance, with the Nasdaq posting a modest gain. While the Nasdaq is
up 1.01 points or less than a tenth of a percent at 3,055.54, the Dow
is down 8.31 points or 0.1 percent at 13,342.65 and the S&P 500 is down 1.72 points or 0.1 percent at 1,445.07.
The
choppy trading on Wall Street comes as traders are taking a break after
the rallies seen earlier in the week lifted the major averages to their
best closing levels in about two months.
Traders are also
keeping a close eye on developments in Washington, looking for further
signs of progress in budget negotiations between President Barack Obama
and House Speaker John Boehner.
News that Standard & Poor's
raised its credit rating on Greece generated some positive sentiment,
with S&P upgrading the rating on Greece to B-minus from selective
default.
S&P said the upgrade reflects the recent completion
of Greece's distressed debt buyback as well as the eurozone's strong
determination to preserve Greek membership.
However, the buying interest
was offset by the release of a report from the Commerce Department
showing that U.S. housing starts came in below economist estimates in
November.
The report said housing starts fell 3.0 percent
to an annual rate of 861,000 in November from the revised October
estimate of 888,000. Economists had expected housing starts to fall to
865,000 from the 894,000 originally reported for the previous month.
At the same time, the Commerce Department said building permits rose 3.6 percent to an annual rate of 899,000 in November from the revised October rate of 868,000.
Most
of the major sectors are showing only modest moves, although software
stocks are seeing notable strength. Business software giant Oracle (ORCL) is leading the sector higher after reporting better than expected second quarter results.
Computer hardware and brokerage stocks are also seeing early strength, while housing starts have come under pressure following the disappointing data.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index surged up by 2.4 percent, while Hong Kong's Hang Seng Index rose by 0.6 percent.
The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index has risen by 0.6 percent, the German DAX Index and the French CAC 40 Index are both up by 0.3 percent.
In the bond market, treasuries are
regaining some ground following recent weakness. Subsequently, the
yield on the benchmark ten-year note, which moves opposite of its price,
is down by 2.7 basis points at 1.80 percent after ending the previous
session at its highest closing level in well over a month.
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TSX Up At Open Wednesday
Toronto
stocks moved up at open Wednesday amid marginal buying across a variety
of sectors, with the S&P/TSX Composite Index adding 33.52 points or
0.27 percent to 12,367.86.
The Diversified Materials Index rose close to 1 percent, with First Quantum Minerals and Teck Resources adding around 1 percent each.
In the oil patch, Niko Resources gained about 3 percent, while Paramount Resources and Nexen Inc. added about 1 percent each.
Oil
and gas firm Perpetual Energy gained 3 percent after it said it would
divest its Elmworth, Alberta property for about $155 million.
In the IT spaced, MacDonald Dettwiler gathered close to 3 percent, while Open Text was adding about 1 percent.
Transat A.T. Inc. surged 9 percent after reporting fourth-quarter profit of C$16.61 million compared to a loss of C$7.27 million last year.
The price of crude oil
was moving higher Wednesday morning Also, traders await cues from the
official weekly inventories data from the EIA. Analysts expect 2.3
million decline in crude oil supplies, while gasoline stocks are seen
adding 2 million barrels last week.
Crude for February delivery, the most actively traded contract, added $0.36 to $88.76 a barrel
The price of gold was
little changed near its four-month low Wednesday morning as the US
dollar was extending losses amid the housing starts report. Gold for
February edged down $2.90 to $1,667.70 an ounce.
Contract drilling and work-over services provider Tuscany International Drilling said it appointed Kiel Clark as its Chief Operating Officer.
In economic news Statistics Canada
said wholesale sales advanced 0.9 percent to $49.2 billion in October,
following a decline of 1.5 percent the previous month. Higher sales were
reported in six of seven sub-sectors, representing 87 percent of
wholesale sales.
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European Stocks Extend Gains On Fiscal Cliff Hopes
European stocks
extended gains on Wednesday, with banks pacing the gainers, on
continued hopes that U.S. lawmakers will reach a deal on the fiscal
cliff by the end of the year. Investors remain focused on the talks
aimed at breaking the deadlock and averting automatic tax hikes and
spending cuts slated to come into effect in the new year.
Investor
sentiment also got a boost after ratings agency Standard and Poor's
upgraded Greece's credit rating from 'selective default', citing the
successful completion of the country's debt buyback program and the
strong determination of member states to preserve Greek membership in
the Eurozone.
The Euro Stoxx 50 index of Eurozone bluechip
stocks is moving up 0.6 percent and the Stoxx Europe 50 index, which
includes some major U.K. companies, is up 0.4 percent, while benchmark
indexes in Germany, France, the U.K. and Switzerland are up between 0.3
percent and 0.6 percent.
German lender Commerzbank is up 1.5 percent, while HSBC Holdings Plc is gaining 1.6 percent and BNP Paribas is adding 1.7 percent. Heidelberg Cement is climbing 3.6 percent after Deutsche Bank reiterated its buy rating on the stock.
UBS AG is rallying 2 percent in Zurich after the Swiss banking giant agreed to pay nearly 1.4 billion Swiss Francs
in fines and disgorgement to settle a multi-regulator probe over
allegations that it tried to manipulated yen Libor and euroyen
contracts.
Shares of Acta SpA are rallying over 9 percent
in London after the Italian clean energy products company said it has
signed a Letter of Intent with Indian supplier of industrial gas
equipment and solutions MVS Engineering.
German drugmaker Merck KgaA
is tumbling 3.4 percent after the drugmaker announced that its
investigational product L-BLP25, formerly referred to as Stimuvax,
failed to demonstrate a statistically significant improvement in overall
survival in the START study.
In economic releases, Germany's
business confidence improved more than expected in December, the latest
survey results from the Ifo Institute revealed. The headline business
climate index rose to 102.4 from 101.4 in November. Another report from
the European Central bank showed that Eurozone's current account surplus
increased in October, but was lower than expected by economists.
Meanwhile, the Bank of England
policymakers voted 8-1 to leave the stimulus program unchanged at GBP
375 billion, the minutes of the December monetary policy meeting
revealed.
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Asian Stocks Rise On US Optimism, BoJ Easing Hopes
Asian stocks rose
on Wednesday, taking cues from gains in the U.S. and European markets
overnight amid optimism American politicians will reach an agreement to
avert the looming fiscal cliff.
While continuing negotiations with President Barack Obama
to avoid the fiscal cliff, Republican House leader John Boehner has
come up with a "plan B" yesterday that includes tax hikes on income over
$1 million. Senate Majority Leader Harry Reid labeled the new plan dead
on arrival, saying it is not "balanced" and can't pass the
Democratic-run Senate. Both sides have made compromises in recent days,
keeping alive investor hopes for a deal before the end of the year.
Japanese shares rallied, with the Nikkei average
breaching the psychologically important 10,000 level for the first time
in more than eight months, as investors continued to bet on aggressive
central bank policy easing under presumptive Prime Minister Shinzo Abe.
An upgrade of Greece's sovereign long-term credit rating by Standard and
Poor's also supported risk sentiment.
The ratings agency lifted
the nation's credit rating to 'B-minus' with a stable outlook from
'selective default', reflecting its view of the strong determination of
member states to preserve Greek membership in the Eurozone.
The Nikkei average jumped 2.4 percent, while the broader Topix
index climbed 2.8 percent. Financials led the rally ahead of the Bank
of Japan's policy decision due on Thursday. After leading his
conservative party to a landslide victory in Sunday's general election,
Abe has asked central bank governor to set an inflation target of 2
percent, increasing expectations of more policy easing.
Dai-Ichi Life Insurance soared over 9 percent, Mitsubishi UFJ Financial Group jumped 6 percent, Nomura Holdings rallied 4.7 percent and Daiwa Securities Group advanced 3.5 percent. The weaker yen lifted export-linked shares such as Toyota Motor, Honda Motor and Canon up
4-6 percent. General contractor Obayashi soared 7.4 percent on
expectations that an increase in fiscal spending would help Japan's
economy.
China's Shanghai Composite index ended little
changed with a negative bias, as gains in retailers and automakers
offset losses in banks. The underlying mood remained somewhat positive
in anticipation of fresh measures from Beijing to support growth. Hong
Kong's Hang Seng index rose 0.6 percent to reach its highest level since August last year.
Australian
shares ended a choppy session higher, as continued hopes about progress
in U.S. budget negotiations outweighed weak domestic data. The
benchmark S&P/ASX 200 index rose half a percent to close at a
fresh 17-month high. On the macroeconomic front, a survey by Westpac
and the Melbourne Institute revealed that Australia's economic growth is
likely to slow in the near future. The leading index, which indicates
the likely pace of economic activity three to nine months into the
future, slowed to 2.9 percent in October, around its long term trend of
2.7 percent.
Miners led the gainers, with sentiment lifted by rising iron ore prices. BHP Billiton added 1.1 percent, Rio Tinto rallied 1.6 percent and smaller rival Fortescue Metals Group rose 1.3 percent.
Billabong plunged
over 13 percent after the surfwear company cut its profit forecast for
the year and confirmed that it has received a A$556m takeover offer from
a consortium led by company executive Paul Naude.
Whitehaven Coal soared
8 percent after the company confirmed it had held discussion over
potential business developments with China's largest coal company,
Shenhua Group. Banks ended mixed, with ANZ rising half a percent and NAB
gaining 0.8 percent, while Westpac eased marginally and Commonwealth
slipped 0.2 percent.
New Zealand shares rallied, lifting the benchmark NZX-50 index up 1.1 percent to back above the 4,000 mark, as SkyCity Entertainment
unveiled plans to invest more than A$300 million ($375 million)
upgrading its Adelaide casino after agreeing on regulation with the
South Australian government. Shares of the casino and hotel operator
jumped 4.70 percent, while heavyweights Telecom, Contact Energy and Fletcher Building rose about 2 percent each. Rural services firm PGG Wrightson soared 5.3 percent to its highest level since April 20.
India's benchmark Sensex was
moving up half a percent after the government managed to push through
the banking law amendment bill in Lok Sabha. The South Korean market was
closed for the presidential election. Singapore's Straits Times index
was edging up marginally and the markets in Malaysia and Taiwan were up
about 0.4 percent each, while Indonesia's Jakarta Composite index was down 0.6 percent.
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Crude Ticks Up Ahead Of Inventories Data
The price of crude oil
was moving higher Wednesday morning on hopes that U.S. policy makers
will reach a deal in time to avert the fiscal cliff. Also, traders await
cues from the official weekly inventories data from the EIA.
Light Sweet Crude Oil (WTI)
futures for February delivery, the most actively traded contract, added
$0.41 to $88.81 a barrel. Yesterday, oil settled marginally higher
tracking rising equity markets, mostly on hopes of a resolution to the
U.S. budget talks that will avert the impending fiscal cliff and
optimism of oil demand growth after some upbeat macroeconomic data out
of the U.S.
Tuesday after the market hours, the API said US crude oil inventories fell 4.1 million barrels, while gasoline stocks gained 4.20 million in the weekended December 14.
This morning, the U.S. dollar
was extending its 7-month low versus the euro and a 2-month low against
sterling. The buck was hovering near its 9-month high versus the yen
and ticking lower against the Swiss franc.
In economic news from
the euro zone, Germany's business confidence improved more than expected
in December, survey results from the Ifo Institute revealed. The
headline business climate index rose to 102.4. The reading was forecast
to climb to 102 from 101.4 in November.
Euro zone's current
account surplus increased in October, but was lower than expected by
economists, a report from the European Central Bank showed The
seasonally adjusted current account surplus rose to EUR 3.9 billion in
October from EUR 2.4 billion in September. Economists expected the
surplus to rise to EUR 6.5 billion.
Meanwhile, the Bank of England
policymakers voted 8-1 to leave the stimulus programme unchanged at GBP
375 billion, the minutes of the December monetary policy meeting showed
Traders will
look to the data on housing starts and building permits from the US
Commerce Department, due out at 8.30 a.m ET. Economists expect housing
starts to come in at a seasonally adjusted annual rate of 865,000, while
building permits for the month are expected at 875,000.
Today during trading hours, the EIA will
release its US crude oil inventories report for the weekended December
14. Analysts expect 2.3 million decline in crude oil supplies, while
gasoline stocks are seen adding 2 million barrels last week.
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