Stocks Seeing Modest Weakness Following Recent Strength
Stocks are seeing modest weakness in late morning trading on Tuesday
after showing a lack of direction earlier in the session. The major
averages have all slid into negative territory, with the Dow and the S&P 500 pulling back off last Friday's five-year closing highs.
Profit taking may be contributing to the weakness on Wall Street, with some traders cashing in on the recent strength in the . Selling pressure has remained subdued, however, limiting the downside.
Software
and semiconductor stocks have moved moderately lower on the day,
pulling back off last week's highs. Mellanox Technologies has helped to
lead the semiconductor sector lower.
Meanwhile, gold stocks have moved notably higher, benefiting from an increase by the price of the precious metal. With gold for February delivery climbing $5 to $1,692 an ounce, the NYSE Arca gold Bugs Index is up by 1.1 percent.
The major averages have recently climbed off their lows for the session but remain in the red. The Dow is down 8.45 points or 0.1 percent at 13,641.25, the Nasdaq is down 11.12 points or 0.4 percent at 3,123.59 and the S&P 500 is down 4.17 points or 0.3 percent at 1,481.81.
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TSX Slips Amid Flat Commodities - Canadian Commentary
Snapping their three-session winning streak, Canadian stocks were
lingering in the red Tuesday morning as traders turned cautious ahead of
key U.S. earnings. Meanwhile, commodities were steady after Japan
announced fresh monetary stimulus measures to rev up its sagging .
In
a radical move, the Bank of Japan announced asset purchase program
beginning in January 2014, with the central bank pledging to continue
with asset purchases as long as it is deemed necessary. The bank has
decided to buy about 13 trillion worth of assets, including 2 trillion
in Japanese government bonds and about 10 trillion in treasury bills. As
expected, the central bank announced an inflation target of 2 percent.
The S&P/TSX Composite Index was
down 18.70 points or 0.15 percent to 12,775.55, after adding nearly 200
points or 1.50 percent in the past three straight trading sessions.
In the financial space, Royal Bank (RY.TI) lost over 1 percent. Scotiabank was down 0.50 percent, while CIBC was adding about 0.25 percent.
The price of Crude oil was
trading firm around its four-month high Tuesday morning as demand
concerns eased after Japan announced fresh monetary stimulus measures. Crude for March edged up $0.31 to $96.35 a barrel.
In the oil patch, Vermilion Energy and Imperial Oil were down around 1 percent each.
BlackBerry Research In Motion pared recent gains, dipping nearly 2 percent.
Transportation
services provider Canadian National Railway Co. (CNR.TO) posted higher
fourth-quarter 2012 net income of C$610 million or C$1.41 per share
compared with last year's C$592 million or C$1.32 per share. The stock
was down 1.50 percent.
Global communications and information
company MacDonald, Dettwiler and Associates (MDA.TO) said Monday that it
has been awarded a contract valued at C$2.6 million from NASA's Johnson
Space Center to extend its support of the Robotic Work Station on the
International Space Station. The stock eased 0.20 percent
The price of gold was moving higher Tuesday morning with the U.S. dollar surrendering early trading gains against the Japanese yen. gold for February added $5.60 to $1,692.60 an ounce
In the gold space, Agnico-Eagle Mines and Franco-Nevada Corp. (FNV.TO) moved won around 1 percent each.
First
Quantum Minerals Ltd. lost 2 percent after even after announcing
increases in copper production of 26 percent for the fourth quarter and
16 percent for the year ended December 31, 2012
Inmet Mining moved up 0.50 percent after recommending its shareholders to reject the unsolicited offer by First Quantum Minerals to acquire Inmet, and not tender shares to the First Quantum Offer.
Meanwhile,
exploration and production company Bellatrix Exploration (BXE.TO)
surged 10 percent after announcing that a Seoul, Korea based company
will contribute 50 percent or C$150 million, to a C$300 million joint
venture to participate in an expected 83 Cardium well program.
In
economic news, Statistics Canada said retail sales rose for a fifth
straight month, edging up 0.2 percent to $39.4 billion in November.
Higher sales at motor vehicle and parts dealers as well as electronics
and appliance stores more than offset declines at most store types. In
volume terms, retail sales rose 0.8 percent.
From the U.S., the
National Association of Realtors said existing home sales fell 1.0
percent to a seasonally adjusted annual rate of 4.94 million in December
from a downwardly revised 4.99 million in November. The drop in sales
came as a surprise to economist, who had expected existing home sales to
edge up to an annual rate of 5.10 million in December from the 5.04
million originally reported for the previous month.
From the euro zone,
Germany's economic confidence rose sharply in January to the highest
level since May 2010 as financial market experts see the economic
perspectives for the economy brightening up on a six months' time
horizon, a survey by the Center for European Economic Research showed.
The ZEW indicator of economic sentiment surged 24.6 points to 31.5 in
January, far exceeded the expected reading of 12. At the same time, the
assessment of the current economic situation improved slightly by 1.4
points to 7.1. |
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European Markets Largely Lower On U.S. Debt Ceiling Concerns
The majority of the European
ended Tuesday's session in negative territory. Investor concerns over
the U.S. debt ceiling were the main cause of the negative performance,
in addition to some mixed U.S. economic data and some weaker than
expected German data. U.S. Treasury Secretary Timothy Geithner warned
Congress in a letter that time is fast running out on the debt ceiling
issue. Federal Reserve Chairman Ben Bernanke also said that raising the
U.S. debt ceiling limit is critical to avoid a potentially disastrous
debt default.
Fitch Ratings warned that a delay in the increase of
the U.S. debt ceiling could trigger a formal review of its AAA rating,
despite the ratings agency's belief that a default is unlikely.
Federal
Reserve Chairman Ben Bernanke on Monday downplayed speculation that the
central bank plans to scale back its quantitative easing program in the
next few months.
Although the minutes from the most recent policy
meeting of the Federal Open Market Committee suggested that asset
purchases may soon wind down, Bernanke insists the Fed will fully
support the recovery until it is on firmer footing.
The euro Stoxx 50 index of eurozone bluechip stocks declined by 0.54 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.06 percent.
The DAX of Germany dropped by 0.69 percent and the CAC 40 of France fell by 0.29 percent. The FTSE 100 of the U.K. rose by 0.01 percent and the SMI of Switzerland gained 0.88 percent.
In Frankfurt, BMW fell
by 1.12 percent, despite stating that it is confident of continuing its
success in the U.S. - its largest single market - in 2013. HOCHTIEF climbed by 4.58 percent, after Goldman Sachs added the stock to its "Conviction Buy" list.
E.ON
declined by 1.65 percent after the German utility and France's GDF Suez
announced their agreement to sell their joint 49 percent stake in
Slovakian energy company Slovenský Plynárenský Priemysel a.s. to Czech
energy company Energetický a Prumyslový Holding.
In Paris, PPR
climbed by 2.58 percent. The department store operator and Christopher
Kane signed an agreement for PPR to acquire 51 percent of the luxury
designer brand "Christopher Kane" to develop the in partnership with its creator Scottish designer Christopher Kane.
Essilor
International fell by 0.30 percent, after saying it is in discussions
with PPG Industries Inc. regarding the future of Essilor's and PPG's
joint venture, Transitions Optical.
GDF Suez decreased by 0.84 percent, after the company said it is accelerating closure of power plants in Europe.
In London, Rio Tinto rose
by 0.48 percent. The mining giant posted a two percent increase in its
fourth- quarter global iron ore production to 66 million tons compared
to last year.
Anglo American sank by 4.03 percent. Anglo American
Platinum announced that it will suspend production at several of its
mines in South Africa.
ARM Holdings declined by 3.67 percent. Morgan Stanley downgraded its rating on the stock to "Equal weight" from "Overweight."
Burberry surged by 4.60 percent. The retailer's third quarter revenues exceeded expectations.
Pearson gained 3.30 percent, after UBS increased its price target on the stock and reiterated its "Buy" rating.
International
trade in the Eurozone resulted in a larger-than-expected surplus in
November as shipments recovered and imports declined, indicating that
the region's economic slump is showing signs of improvement, latest data
showed Tuesday.
The trade surplus, on an unadjusted basis, increased to EUR 13.7 billion in November from EUR 4.9 billion a year earlier, statistical office Eurostat said. Economists were looking for a EUR 10 billion surplus. In October, the balance was a surplus of EUR 9.3 billion.
The German expanded at a slower pace last year, as continued economic woes in euro area weighed down exports and delayed investments, preliminary figures from the Federal Statistical Office revealed Tuesday.
Meanwhile,
a report in the German newspaper Handelsblatt said the government has
cut its 2013 GDP forecast to 0.5 percent from an earlier projection of 1
percent.
Gross domestic product rose 0.7 percent in
price-adjusted terms in 2012, much weaker than the 3 percent growth a
year ago and 4.2 percent expansion in 2010. The economy contracted 5.1
percent in 2009 amid the Global Financial Crisis.
Germany's EU
harmonized inflation increased less than initially estimated in
December, final data from the Federal Statistical Office showed Tuesday.
The harmonized index of consumer prices ,
measured under the EU methodology, increased 2 percent on an annual
basis in December, slower than the 2.1 percent growth estimated earlier.
In November, the HICP had gained 1.9 percent.
U.K. inflation
remained stable at above 2 percent target in December adding to the
central bank's concerns about a fragile economy. Consumer price
inflation was 2.7 percent for the third month in a row, the Office for
National Statistics said Tuesday. The rate also came in line with
economists' expectations.
A leading indicator of the British
economy increased in November after falling in the previous month,
signaling that output will likely expand in the first half of 2013, data
released by the Conference Board showed Tuesday.
The leading
economic index increased 0.2 percent sequentially to 103.4 in November,
reversing the 0.3 percent decrease seen in October. In September, the
index had increased by 0.4 percent.
An indicator for house prices
in the UK improved to its highest level in two and a half years in
December on rising optimism stemming from lending scheme, a survey by
the Royal Institution of Chartered Surveyors showed Tuesday.
The
RICS house price balance improved to zero in December from -9 in
November. This was the strongest reading recorded by RICS since June
2010. Economists expected a modest uptick to -8.
Retail sales in
the U.S. rose by more than anticipated in the month of December,
according to a report released by the Commerce Department on Tuesday,
with the sales growth partly due to a notable increase in auto sales.
The
report showed that retail sales rose by 0.5 percent in December
following a revised 0.4 percent increase in November. Economists had
expected sales to edge up by 0.2 percent compared to the 0.3 percent
growth originally reported for the previous month.
With food
prices showing a notable decrease, the Labor Department released a
report on Tuesday showing that U.S. producer prices fell by slightly
more than expected in December. The Labor Department said its producer
price index dipped by 0.2 percent in December after falling by 0.8
percent in November. Economists had expected the index to edge down by
0.1 percent.
Conditions for New York manufacturers have continued
to decline at a modest pace in January, according to a report released
by the Federal Reserve Bank of New York on Tuesday, with the index of
regional manufacturing activity stuck in negative territory for the
sixth consecutive month.
The New York Fed said its general
business conditions index edged down to a negative 7.8 in January from a
negative 7.3 in December, with a negative reading indicating a
contraction in regional manufacturing activity.
The decrease by
the general business conditions index came as a surprise to economists,
who had expected the index to climb to 0.0.
Business inventories
in the U.S. increased in line with economist estimates in the month of
November, according to a report released by the Commerce Department on
Tuesday, with the report also showing a notable rebound by business
sales.
The report showed that business inventories increased by
0.3 percent in November, matching economist estimates and the revised
increase seen in October. |
| Asia Market |
Asian Markets Trade Lower
Asian stock
are trading weak on Tuesday with investors mostly treading cautiously
and taking some profits amid a lack of fresh triggers. Activity is
mostly stock specific in most of the markets in the region with
investors awaiting key earnings reports and the Bank of Japan's monetary
policy.
After a flat start and a subsequent upmove, the
Australian stock market pared its gains. Energy, industrial and consumer
staples stocks are finding support, while financial, mining, care and property trusts stocks are trading mixed.
The benchmark S&P/ASX 200 index,
which advanced to 4,801.7, is currently trading at 4,772.7, down 4.8
points or 0.1 percent from its previous close. The broader All Ordinaries index is down 5.5 points at 4,796.7, well off the day's high of 4,825.6.
Among bank stocks, Commonwealth Bank of Australia and Westpac are trading modestly higher and ANZ Bank is trading flat.
National
Australia Bank, which lost nearly a percent early on in the session
after Spanish giant Santander denied it was interested in buying its
troubled UK banks, recovered lost ground subsequently and is currently
down just marginally from its previous closing price.
Bendigo & Adelaide Bank and Bank of Queensland are down 0.3 percent and 1.2 percent, respectively.
Among top miners, BHP Billiton (BHP, BBL) is up 0.6 percent, Rio Tinto (RIO, RIO.L) is adding 1.2 percent and Fortescue Metals is up nearly 2.5 percent, while Newcrest Mining is trading 0.3 percent up.
In the energy sector, Woodside Petroleum, Santos, Origin Energy and Caltex Australia are up 0.3 to 1 percent, while Oil Search is trading weak, losing about 0.2 percent.
Perseus
Mining is down 5.6 percent. Aristocrat Leisure, Bluescope Steel, QBE
Insurance Group and Cochlear are trading lower by 2 to 2.8 percent.
Incitec Pivot, Ansell, Insurance Australia Group and Sims Metal
Management are also trading notably lower.
Monadelphous Group,
Brambles, Atlas Iron, Beach Energy, Myer Holdings, ALS, Duet Group and
Transurban Group are trading higher, gaining 1.2 to 2.4 percent.
Macmahon Holdings shares gained over 15 percent on reports the company has bagged a deal worth A$1.8 billion to help Fortescue Metals
Group expand its Christmas Creek iron ore mine in Western Australia's
Pilbara region. The stock is currently up nearly 10 percent.
The
Japanese stock market moved higher in early trades, tracking cues from
European markets where stocks surged higher overnight. However, with
investors turning cautious at higher levels, choosing to wait for the
outcome of the the central bank's policy meeting, the market faltered
into negative territory subsequently.
Mining, foods,
electric power and pulp & paper stocks opened on a firm note, but
came off higher levels subsequently. Pharmaceuticals, machinery,
automobile and marine transport stocks are trading slightly weak.
The benchmark Nikkei 225 index, which rose to 10,803.6, was down 42.2 points or 0.4 percent at 10,705.5 when the morning session ended.
Kawasaki
Kisen Kaisha, Sumco Corp., Nisshin Steel Holdings, Toho Zinc, Pacific
Metals, Showa Denko KK, Canon Inc. , Kansai Electric Power, Honda Motor , NEC Corp., Japan Steel Works and Sharp Corp. lost 2 to 4 percent.
Mitsubishi
Chemical Holdings, Mazda Motor, Hino Motors, Suzuki Motor, Fujitsu, IHI
Corp., J Front Retailing, Nippon Electric Glass and Furukawa Electric
also declined sharply.
Among the gainers in the index, Olympus Corp. shares were up nearly 6 percent. Kirin Holdings moved up by over 4 percent.
Shinsei Bank, JGC Corp., Fast Retailing, Mitsubishi Estate, Sony Financial Holdings Inc., Tokyo Tatemono, Inpex Corp., Central Japan Railway and Casio Computer also posted notable gains.
On
the economic front, it is widely expected that the Bank of Japan will
announce additional asset purchases to the tune of around 10 trillion
yen.
In the currency market, the U.S. dollar traded in the upper 89 yen range in early deals in Tokyo. The yen is currently trading at 89.40 to the dollar.
Among
other markets in the Asia-Pacific region, Shanghai and Malaysia are
trading notably lower. Indonesia, New Zealand, Singapore and Taiwan are
down with modest losses, while Hong Kong and South Korea are trading
flat.
While the U.S. markets were closed on Monday, major European markets ended higher. The French CAC 40 Index and the German DAX index both ended higher by 0.6 percent, while the U.K.'s FTSE 100 index moved up 0.8 percent. |
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Crude Steady Near 4-month High
The price of Crude oil was
trading firm around its four-month high Tuesday morning as demand
concerns eased after Japan announced fresh monetary stimulus money to
rev up its sagging .
Light Sweet Crude oil futures for March delivery, edged up $0.05 to $96.09 a barrel.
This morning, the U.S. dollar was
lingering round its11-month low versus the euro, while trading flat
against sterling. The buck was steady around its 30-month high versus
the yen and ticking lower against the Swiss franc.
In economic news from the euro zone,
Germany's economic confidence rose sharply in January to the highest
level since May 2010 as financial market experts see the economic
perspectives for the economy brightening up on a six months' time
horizon, a survey by the Center for European Economic Research showed.
The ZEW indicator of economic sentiment surged 24.6 points to 31.5 in
January, far exceeded the expected reading of 12. At the same time, the
assessment of the current economic situation improved slightly by 1.4
points to 7.1.
Traders will look to the existing home sales
report for December from the U.S. Commerce Department, due out at 10
a.m. ET. Economists expect home sales to come in at a seasonally
adjusted annual rate of 5.10 million units compared to 5.04 million
units in November. |
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