Stocks Showing A Lack Of Direction In Early Trading
After
seeing considerable volatility in the previous session, stocks are
turning in a lackluster performance in early trading on Thursday. The
major averages are lingering near the unchanged line after ending
Wednesday's trading mixed.
The major averages currently remain nearly flat, showing moves of less than a tenth of a percent. The Dow is up 6.83 points at 13,041.32, the Nasdaq is up 2.31 points at 2,976.01 and the S&P 500 is up 0.14 points at 1,409.43.
The
choppy trading comes as traders continue to keep a close eye on
developments in Washington, where lawmakers continue to struggle to
reach an agreement to avoid the looming fiscal cliff.
Unless
Congress takes action, approximately $600 billion in automatic tax
increases and government spending cut are due to take effect at the end
of the year.
Reports on Wednesday indicated that some
rank-and-file Republicans might compromise on higher tax rates on the
wealthy in exchange for entitlement reforms, but GOP leaders remain
staunchly opposed to the increase in rates proposed by President Obama.
As
a result of the focus on the fiscal cliff negotiations, traders have
largely shrugged off a report from the Labor Department showing a bigger
than expected drop by initial jobless claims in the week ended December
1st.
The Labor Department said jobless claims fell to
370,000, a decrease of 25,000 from the previous week's revised figure of
395,000. Economists had expected jobless claims to drop to 380,000 from
the 393,000 originally reported for the previous week.
With the
drop, jobless claims continued to settle down after seeing considerable
volatility due to the impact of Superstorm Sandy.
Most of the
major sectors are showing only modest moves, contributing to the lack of
direction being shown by the broader markets.
While commercial
real estate and gold stocks are seeing some early strength, modest
weakness is visible among networking and defense stocks.
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 advanced by 0.8 percent, Hong Kong's Hang Seng Index edged down by 0.1 percent.
Meanwhile, the major European markets have all moved to the upside on the day. The German DAX Index has risen by 1 percent, while the U.K.'s FTSE 100 Index and the French CAC 40 Index are both up by 0.3 percent.
In the bond market, treasuries are moving modestly higher, adding to the gains seen in the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.9 basis points at 1.572 percent.
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TSX Flat At Open Thursday
Canadian stocks were little changed at open Thursday amid marginal selling in commodities and financial stocks, with the S&P/TSX Composite Index edging up 7.68 points or 0.06 percent to 12,164.97.
Among
financial stocks, National Bank shed over 2 percent even after
reporting improved fourth-quarter net income of C$1.93, that came inline
with analysts' estimates.
TD Bank Group slipped 1 percent
despite reporting fourth quarter net adjusted income of C$1.83 per
share, beating consensus estimates of C$1.81 per share.
CIBC
edged up 0.25 percent after reporting improved fourth-quarter net
income Among base-metal stocks, First Quantum Minerals lost about 2
percent, while Inmet Mining was easing 0.50 percent.
Meanwhile, Niko Resources rose close to 3 percent, while Suncor Energy was shedding 0.60 percent.
Dollar stores operator Dollarama Inc. edged up 0.10 percent after reporting improved third quarter net income.
The price of gold was
little changed Thursday morning as the US dollar was ticking lower amid
weekly jobless claims data from the Labor Department. Gold for February
edged down $3.60 to $1,690.20 an ounce.
National Bank of Canada
reported improved fourth-quarter net income at C$333 million or C$1.97
per share up from C$274 million or C$1.62 per share last year. Excluding
items, net income was C$325 million or C$1.93 per share compared to
C$285 million or C$1.68 per share prior year. Analysts expected the
company to report profit per share of C$1.93 for the quarter
Athletic
apparel company Lululemon Athletica Inc. reported the third quarter net
of $57.3 million or $0.39 per share, up from $38.8 million or $0.27 per
share last year. Analysts expected the company to earn $0.37 per share
for the quarter.
Airlines services provider Air Canada
reported that its System traffic in November 2012 increased 4.6 percent
from November 2011, on a system-wide capacity increase of 1.7 percent.
In economic news, a report from the Statistics Canada
revealed that the total value of building permits rose 15 percent to
$7.5 billion in October, reversing a 12.7 percent decline in September.
The increase was primarily the result of higher construction intentions
for non-residential buildings, mostly in Ontario and Quebec.
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European Markets Higher Before Rate Decisions
The European markets
are modest to moderately higher on Thursday, ahead of key interest rate
decisions from the Bank of England and the European Central Bank, after
Standard and Poor's lowered Greece's credit rating. The Asian markets
were mostly weak amid growth concerns.
Standard and Poor's
lowered Greece's credit rating to 'selective default' from 'CCC',
stating the Greek government's invitation to private sector bondholders
on December 3 to participate in a series of debt buyback auctions
amounted to a distressed debt restricting.
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 375
billion pounds 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.
The Euro Stoxx 50 index of eurozone bluechip stocks is adding 0.39 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is gaining 0.37 percent.
The German DAX is adding 1 percent and the French CAC 40 is rising 0.4 percent. The UK's FTSE 100 is gaining 0.2 percent and Switzerland's SMI is climbing 0.7 percent.
In Frankfurt, Bayer is gaining 3.7 percent and Merck is adding 2.4 percent. ThyssenKrupp is rising 2 percent. The steel giant said three of its executive board members are stepping down.
Daimler
is gaining around 1 percent. The company plans to cut its stake in
Airbus maker EADS by up to 7.44 percent before year-end. Beiersdorf is
climbing 1.8 percent after lifting its sales forecast for the year.
MunichRe is moderately higher even after Societe Generale reduced its
rating on the stock. Sky Deutschland is modestly down after Citigroup
downgraded the stock.
In Paris, EADS is gaining 7.4
percent. The firm late Wednesday announced a new shareholding structure
whereby France, Germany and Spain have agreed on a capped government
shareholding of about 12 percent, 12 percent and 4 percent,
respectively, with Germany taking a direct stake in EADS for the first
time. Merrill Lynch raised the stock to ''Buy'' from ''Neutral.''
Lafarge is advancing 1.8 percent and Technip is gaining 1.5 percent. Societe Generale, BNP Paribas and Credit Agricole are gaining between 1.5 percent and 1.3 percent.
GDF Suez
is plunging 10.4 percent. The utility expects recurring income to
decline year over year in 2013. Merrill Lynch cut the stock to
''Neutral.'' Lagardere is losing 1.4 percent, following a broker
downgrade.
In London, Miners Antofagasta, Vedanta Resources and Eurasian Natural Resources
are notably higher. Standard Chartered is gaining 1.1 percent. The
lender said it expects to pay around $330 million as settlement to U.S.
regulators for its failure to comply with sanctions against Iran.
Premier Farnell
is climbing 6.5 percent. The electronic components distributor reported
third-quarter results. TUI Travel is gaining 1.4 percent. Deutsche Bank cut the stock to ''Hold'' from ''Buy.''
easyJet is
up around 1 percent after the low-cost airline reported increases in
passengers and load factor for the month of November. Sage Group, which
reported results yesterday, is falling 3.1 percent.
Rolls Royce
is losing 2.7 percent. The engine maker said it has passed information
to the Serious Fraud Office, or SFO, about concerns regarding bribery
and corruption involving intermediaries in overseas markets. This
follows a request for information from the SFO about allegations of
malpractice in Indonesia and China.
Oil contractor Saipem is
declining 7.8 percent in Milan. The firm announced Wednesday
resignation of key executives, including that of CEO, as part of an
Italian probe into alleged corruption.
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Asian Stocks Mixed As US Worries Weigh
Asian markets turned
in a mixed performance on Thursday, as worries over the U.S. fiscal
cliff offset optimism about the Chinese economy. Investors reacted
cautiously to remarks by U.S. President Barack Obama indicating that
there will be no deal to avert the fiscal crisis unless Republicans are
willing to increase the income tax rates on the top 2 percent of
Americans. Eurozone concerns also returned to the fore after global
ratings agency Standard & Poor's cut Greece's credit rating to
"selective default" from triple-C in light of its offer to buy back
bonds up to 10 billion euros at well below their face value as part of
its bailout deal.
Japanese shares hit a seven-month high,
bolstered by the yen's weakness against the dollar and the euro
following reports of the likelihood of an opposition victory in the
upcoming December 16 Lower House elections. A sweep to power by the LDP
will put pressure on the Bank of Japan to ease monetary policy
aggressively. Bank of Japan Deputy Governor Kiyohiko Nishimura said
yesterday the central bank will debate whether its monetary easing in
September and October was enough to support the economy seen as
undershooting forecasts. The Nikkei average rose 0.8 percent to end at
its highest level since April 26, while the broader Topix index added 0.9 percent.
Export-linked
shares benefited the most from the yen's weakness. Honda Motor, Nikon
and Shin-Etsu Chemical rose about 2 percent each. China-linked Komatsu
and Fanuc added 1-2 percent on speculation about additional public
spending in China. Sharp soared 10 percent after Taiwanese contract
manufacturing giant Hon Hai Precision Industry Co. said it is in talks
to buy Sharp's TV factories in Japan or abroad.
China's Shanghai Composite index edged down 0.1 percent and Hong Kong's Hang Seng
index eased marginally following strong gains on Wednesday on remarks
by Communist Party chief Xi Jinping suggesting the country would
maintain its fine-tuning of economic policies in 2013 to ensure stable
economic growth.
Australian shares edged lower despite data showing a surprise drop in the nation's unemployment rate. Both the benchmark S&P/ASX 200
and the broader All Ordinaries index slipped about 0.3 percent each.
Australia saw a seasonally adjusted unemployment rate of 5.2 percent in
November, the Australian Bureau of Statistics said, blowing away
forecasts for a rate of 5.5 percent. The economy added 13,900
jobs in November to 11,546,400 - also shattering expectations for a flat
reading after adding a downwardly revised 10,200 in the previous month.
The Australian dollar rose sharply versus the dollar in the wake of the strong jobs data.
In stock-specific action, banks ended
on a subdued note amid worries the RBA hasn't done enough to shore up
growth. Commonwealth led the decliners, falling 1.2 percent, while ANZ
and NAB slid about 0.2 percent each. Global miners BHP Billiton and Rio Tinto rose between half a percent and 1 percent, but smaller rival Fortescue edged down 0.3 percent. Gold miner
Newcrest fell 1.8 percent as gold prices held near a one-month low.
Shares of Sirius Resources were placed in a trading halt pending a
capital raising.
Seoul shares ended slightly higher
despite concerns about stalled U.S. budget talks. The benchmark Kospi
average edged up 0.1 percent to a fresh seven-week high in relatively
thin trading. Steelmaker POSCO rallied 3 percent and Hyundai
Steel soared 4.7 percent on hopes of a recovery in China after the
nation's new leadership pledged to maintain economic policy and promote
domestic demand. Market heavyweight Samsung Electronics hit a fresh
record high early in the session before ending down marginally.
In economic news, the South Korean economy
grew a seasonally adjusted 0.1 percent in the July-September period
compared to the previous three months, marking the slowest rate of
increase in 11 quarters, the Bank of Korea said in a revised report,
strengthening expectations for another rate cut early next year.
New Zealand shares snapped a three-day losing streak despite mixed regional cues. The benchmark NZX-50
index rose 0.4 percent, led by Xero after it raised funds from U.S.
investors. Shares of the cloud-based accounting software provider soared
5.6 percent. Chorus, the telecommunications network operator, saw its
shares climbing 2.2 percent, extending recovery for a second session
after plunging 18.5 percent earlier this week on concerns about price
regulation.
Gold miner OceanaGold fell 1.9 percent,
extending the previous session's 12 percent loss after the company
completed a book-building process for capital raising. In economic news,
the Reserve Bank of New Zealand held its benchmark interest rate
steady at a record low of 2.50 percent, as widely expected, amid benign
domestic inflation and the strong kiwi dollar.
Elsewhere, India's benchmark Sensex
was moving down half a percent as investors exercised caution ahead of
FDI vote in the Rajya Sabha. The key benchmark indexes in Indonesia, Malaysia and Singapore were up modestly, while the Taiwan Weighted average slipped 0.3 percent.
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Crude Flat Ahead Of Weekly Jobs Data
The price of crude oil was
little changed Thursday morning as traders look to the developments in
the US budget talks. President Barack Obama said that a deal to avert
the so-called fiscal cliff was possible in 'about a week' if Republicans
compromised on taxes.
Light Sweet Crude Oil (WTI) futures
for January delivery, edged up $0.05 to $87.93 barrel. Yesterday, oil
settled lower on a stronger dollar and some soft jobs data,
notwithstanding a more-than-expected decline in oil inventories last
week. Meanwhile, investors also continued to worry over the stalemate in
the U.S. budget talks with no resolution in sight to avert the fiscal
cliff.
Wednesday during trading hours, the EIA said that US crude oil inventories
shed 2.40 million barrels, while gasoline stocks jumped 7.90 million
barrels in the weekended November 30. Analysts expected crude oil
inventories to dip 1.25 million barrels, while gasoline stocks were seen
adding 2 million barrels last week.
The price of gold was
little changed Thursday morning as the US dollar was ticking lower
ahead of weekly jobless claims data from the Labor Department.
Yesterday, Goldman Sachs
cut its 2013 gold forecasts and said gold's current price cycle will
likely turn next year as a rise in real interest rates on the back of
improved growth offsets any further balance sheet expansion from the
Federal Reserve. Goldman cut its three, six and 12-month forecasts for
gold prices to $1,825 an ounce, $1,805 an ounce and $1,800 an ounce
respectively. It also introduced a 2014 forecast of $1,750 an ounce,
indicating price growth could tail off.
Gold for February
delivery, the most actively traded contract, edged up $0.60 to $1,694.40
an ounce. Yesterday, gold extended losses for a second session as the
dollar strengthened against some major currencies, struggling to recover
from the heavy sell-off yesterday mainly on disappointment over the
lack of progress in the U.S. budget talks. There was also a slew of
encouraging macroeconomic data from the U.S. that checked the progress
of gold.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at a record high of 1,351.54 tons.
This morning, the U.S. dollar
was lingering around its one month low versus the euro and sterling.
The buck was hovering near its 7-month high versus the yen and trading
flat against the Swiss franc.
In economic news, the euro area
economy slid into recession in the third quarter, an updated report
from Eurostat confirmed. The gross domestic product fell 0.1 percent
from a quarter ago, when it dropped 0.2 percent. The figures matched the
preliminary estimate released on November 15.
The Bank of England 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 am ET. The central bank is seen holding its interest rate at 0.75 percent.
Traders will
look to the weekly jobless claims data form the U.S. Labor Department,
due out at 8.30 a.m ET. Economists expect claims to decline to 380,000
from 393,000 in the previous week.
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