Fiscal Cliff Deal Drives Stocks Sharply Higher At The Open
With
traders reacting positively to news that Congress approved an agreement
to avoid the fiscal cliff, stocks moved sharply higher at the start of
trading on Wednesday. The major averages showed strong moves to the
upside, adding to the gains posted on Monday.
The major averages have pulled back off their highs for the young session but are holding on to substantial gains. The Dow is up 227.06 points or 1.7 percent at 13,331.20, the Nasdaq is up 72.75 points or 2.4 percent at 3,092.26 and the S&P 500 is up 26.66 points or 1.9 percent at 1,452.85.
The
initial strength on Wall Street comes on the heels of news that both
the Senate and the House have finally approved a budget agreement.
President Barack Obama has said he will sign the bill.
The
agreement calls for the expiration of the Bush-era tax rates for
individuals earning more than $400,000 and households earning more than
$450,000. Payroll taxes and taxes on capital gains and dividends also go
up under the agreement, which also extends unemployment benefits.
Meanwhile,
the legislation delays the automatic spending cuts that were due to go
into effect for two months, meaning that there are future budget
negotiations ahead.
"I think we all recognize this law is just
one step in the broader effort to strengthen our economy and broaden
opportunity for everybody," Obama said in a statement.
"The fact
is the deficit is still too high, and we're still investing too little
in the things that we need for the economy to grow as fast as it
should," he added. "But we are continuing to chip away at this problem,
step by step."
Computer hardware stocks have shown a
particularly strong upward move in early trading, driving the NYSE Arca
Computer Hardware Index up by 3.5 percent. With the gain, the index has
risen to a three-month intraday high.
Significant strength has
also emerged among steel stocks, as reflected by the 3.6 percent gain
being posted by the NYSE Arca Steel Index. The gain has lifted the index
to its best intraday level in eight months.
Semiconductor, housing, banking, and internet stocks are also posting notable gains, moving sharply higher along with most of the major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, although the markets in Japan and mainland China remained closed. Hong Kong's Hang Seng Index surged up by 2.9 percent, while Australia's All Ordinaries Index jumped 1.3 percent.
The major European markets have also shown strong moves to the upside on the day. While the U.K.'s FTSE 100 Index has advanced by 2.4 percent, the French CAC 40 Index and the German DAX Index are both up by 2.2 percent.
In the bond market, treasuries have
come under pressure on the heels of the news of the fiscal cliff deal.
Subsequently, the yield on the benchmark ten-year note, which moves
opposite of its price, is up by 8.1 basis points at 1.837 percent.
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TSX Jumps At Open Wednesday
Bay Street stocks
rallied at open Wednesday amid buying across a variety of sectors, with
the S&P/TSX Composite Index adding 134.05 points or 1.08 percent to
12,567.59.
The Diversified Materials Index surged nearly 3 percent, with Teck Resources gaining about 6 percent. First Quantum Minerals was up 3 percent.
In the oil patch, Canadian Natural Resources gathered 3 percent. Niko Resources and Suncor Energy rose over 1 percent each.
Among gold stocks, Seabridge Gold gained 5 percent. Goldcorp. and Barrick Gold gathered nearly 2 percent each.
Petrobank Energy and Resources and PetroBakken Energy Ltd.
announced the completion of their reorganization, which will result in
Petrobank shareholders effectively receiving Petrobank's share holdings
in PetroBakken while maintaining their interest in the remaining
Petrobank assets. Shares of Petrobank Energy and Resources dived 90
percent, while PetroBakken Energy edged up 1 percent.
The price
of crude oil was advancing toward a four-month high Wednesday morning
amid hopes of demand recovery after the US Congress passed the "fiscal
cliff" deal and China reported strong manufacturing data. China's
official manufacturing purchasing managers' index held steady in
December at 50.6, matching November's seven-month high, data released by
the China Federation of Logistics & Purchasing showed yesterday.
Crude for February added $1.55 to $93.37 a barrel.
The price of gold was
moving higher Wednesday morning after the US Congress passed the
"fiscal cliff" deal, easing concern that a recovery in the world's
biggest economy may be derailed. Gold for February gained $14.50 to
$1,690.30 an ounce.
In corporate news from Canada, Petrobank Energy and Resources and PetroBakken Energy Ltd.
announced the completion of their reorganization, which will result in
Petrobank shareholders effectively receiving Petrobank's share holdings
in PetroBakken while maintaining their interest in the remaining
Petrobank assets.
International Mining & Infrastructure Corporation plc
confirmed that it has made an approach to Afferro Mining Inc. (AFF.V)
regarding a possible offer and said it has not yet received a formal
response from Afferro to its possible offer.
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European Markets Rally On Fiscal Cliff Deal; Banks, Miners Gain
The European markets
are surging on Wednesday, after the U.S. Senate on Tuesday approved the
"fiscal cliff" bill that seeks to avoid tax increases that took effect
on the first of January. Banks and miners are particularly buoyant.
With
a majority of 89-8, the U.S. Senate approved the "fiscal cliff"
legislation, making permanent the tax reductions for most households and
delayed the automatic spending cuts for two months. These tax
reductions were granted in 2001 and 2003 during George Bush's
presidency.
The U.S. House of Representatives voted late Tuesday
to approve the Senate-backed deal. The House approved the original
version of the bill in a 257- 167 vote despite earlier demands by some
Republican lawmakers to amend the measure to include huge spending cuts.
The Euro Stoxx 50
index of eurozone bluechip stocks is gaining 2.6 percent, while the
Stoxx Europe 50 index, which includes some major U.K. companies, is
rising 1.7 percent.
The German DAX, the French CAC 40 and the UK's FTSE 100 are gaining between 2.2 percent and 2 percent. Switzerland's SMI is closed today.
In Frankfurt, Commerzbank is gaining 4.5 percent and Deutsche Bank is adding 3.3 percent. ThyssenKrupp and HeidelbergCement are advancing 3.9 percent and 3.8 percent, respectively. Volkswagen, BMW and Daimler are rising between 3.7 percent and 2.3 percent.
In Paris, Societe Generale, BNP Paribas and Credit Agricole are climbing between 4.9 percent and 3.3 percent. Insurer Axa is up 3.2 percent.
Real estate investment trust Unibail-Rodamco and building materials maker Saint-Gobain are climbing around 3 percent each.
Builders Vinci and Bouygues, oil giant Total and grocery retailer Carrefour are among notable gainers.
In London, Steel giant Evraz is climbing 6.8 percent. Eurasian Natural Resources, Rio Tinto, Vedanta, Glencore, Anglo American, Kazakhmys, Xstrata, Antofagasta and BHP Billiton are gaining between 6 percent and 4 percent.
Manufacturing buy-out specialist Melrose Industries is climbing 4.1 percent. BAE Systems is gaining 3.4 percent.
ArcelorMittal
is gaining 3.9 percent in Amsterdam after the steel giant announced the
sale of a 15 percent stake in its Canadian iron ore unit for $1.1
billion.
Nokia is climbing over 8 percent in Helsinki.
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Asian Stocks Rally On Fiscal Cliff Deal
Asian stocks
rose sharply on the first day of trading since the New Year's holiday
after U.S. politicians finally agreed a bipartisan Senate-backed deal on
tax increases and spending aimed at averting the so-called "fiscal
cliff" that risked the return of the world's largest economy back to
recession. The Republican-controlled House of Representatives late
Tuesday night voted 257-167 to approve the fiscal cliff bill, ending the
deadlock over the issue for the past several weeks.
The
legislation makes permanent the tax reductions for most households and
delays the automatic spending cuts for two months. President Barack
Obama thanked his "extraordinary" vice president for his work in
brokering the deal and called the measure one step in a broader effort
to strengthen the American economy and cut deficit.
Encouraging economic reports from China, South Korea, Taiwan and Singapore also helped improve investor sentiment. The official China PMI
index released yesterday indicated expansion in manufacturing activity
at a mild pace in December, while a similar survey by HSBC suggested the
pace of activity in the manufacturing sector hit its fastest rate in
the month since May 2011.
Australian shares rose to a
19-month high after the Senate-passed budget deal cleared a procedural
vote in the U.S. House of Representatives by an overwhelming margin. The
benchmark S&P/ASX 200 index rose 1.2 percent, its biggest one-day
percent gain in five months, led by miners. BHP Billiton rallied 2
percent, Rio Tinto jumped 2.4 percent and smaller rival Fortescue
Metals Group soared 5.8 percent after iron ore prices jumped to an
8-month high on the last trading day of 2012 on optimism over the
Chinese economy under the new leadership.
Lenders ANZ, Westpac, NAB and Commonwealth rose
between 0.2 percent and 0.9 percent, retailers Woolworths and
Wesfarmers added about 0.7 percent each and oil & gas producer
Woodside advanced 1.5 percent. In economic news, Australian
manufacturing activity contracted for the tenth successive month in
December, the latest results of a leading survey revealed. The
Australian Industry Group performance of manufacturing index came in at
44.3 in the month.
South Korea's Kospi average rose 1.7
percent to a nearly nine-month high, with sentiment boosted by the U.S.
fiscal cliff deal and some encouraging economic data. The local currency
soared to a 15-month high versus the U.S. dollar. Market heavyweight Samsung Electronics
rallied 3.6 percent to a record high. Shares of Hyundai Motor and its
affiliate Kia Motors ended on a subdued note after the automakers
unveiled a plan to increase their combined global sales in 2013 by 4.07
percent from the previous year, marking their slowest sales growth since
2003.
On the macroeconomic front, South Korea's manufacturing
sector expanded in December for the first time in seven months,
although operating conditions remained little changed since the previous
month, a survey by Markit Economics showed. The purchasing managers'
index rose to 50.1 in the month from 48.2 in November, marking the
highest reading since May. New order volumes increased after six months
of continuous decline, while new export orders fell for the seventh
successive month.
The markets in China, Japan and New Zealand remained closed on account of public holidays. India's benchmark Sensex
was moving up 0.7 percent, extending the previous session's rally, on
sustained buying by foreign investors and a firming trend across Asia,
while benchmark indexes in Indonesia, Taiwan and Singapore were up
between 0.7 percent and 1.1 percent. Taiwan's HSBC PMI reading
came in at 50.6 for December, moving into the expansionary zone from
47.4 in the previous month, while official data showed Singapore's
economy grew by an annualized 1.8 percent in the fourth quarter from the
previous three months after seasonal adjustments.
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Crude Gains On US Fiscal Deal
The price of crude oil
was advancing towards a four-month high Wednesday morning amid hopes of
demand recovery after the US Congress passed the "fiscal cliff" deal
and China reported strong manufacturing data.
China's official
manufacturing purchasing managers' index held steady in December at
50.6, matching November's seven-month high, data released by the China
Federation of Logistics & Purchasing showed yesterday.
Light Sweet Crude Oil (WTI) futures for February delivery, gained $1.21 to $93.03 a barrel.
The price of gold was
moving higher Wednesday morning after the US Congress passed the
"fiscal cliff" deal, easing concern that a recovery in the world's
biggest economy may be derailed.
Gold for February delivery, the most actively traded contract, gained $7.30 to $1,683.10 an ounce.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,350.82 tons.
This morning, the U.S. dollar
was lingering around its 7-month low versus the euro and near a
three-month low against sterling. The buck was extending its 2-year high
versus the yen and ticking lower against the Swiss franc.
In
economic news, the euro zone manufacturing sector ended the year on a
weak footing, with levels of production and new orders both contracting
further in December, final survey data from Markit Economics showed. The
final manufacturing Purchasing Managers' Index fell marginally to 46.1
in December from 46.2 in November.
Traders will look to
the release of the results of manufacturing survey for December from the
Institute for Supply Management, due out at 10 a.m. ET. The consensus
estimates call for an increase in the index to 50.5 from 49.5 in
November.
Simultaneously, the Commerce Department will
release its construction spending report for November. Economists expect
construction spending growth of 0.6 percent for the month compared to
1.4 percent growth in October.
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