Stocks Turning In A Lackluster Performance In Early Trading
Stocks are
showing a lack of direction in early trading on Friday, as traders seem
reluctant to make any significant moves. The major averages are
lingering near the unchanged line after ending the previous session
moderately lower.
The major averages are currently turning in a mixed performance, with the Nasdaq posting a slim loss. While the Nasdaq is down 1.81 points or 0.1 percent at 3,098.76, the Dow is up 13.63 points or 0.1 percent at 13,404.99 and the S&P 500 is up 2.23 points or 0.2 percent at 1,461.60.
The
choppy trading on Wall Street comes following the release of a report
from the Labor Department showing that U.S. employment increased in line
with economist estimates in the month of December.
The report showed that non-farm payroll employment increased by 155,000 jobs in December following an upwardly revised increase of 161,000 jobs in November.
Economists had
expected employment to increase by about 155,000 jobs compared to the
addition of 146,000 jobs originally reported for the previous month.
The Labor Department also said the unemployment rate came in at 7.8 percent in December, unchanged from the previous month's revised figure.
While the jobs data
was relatively upbeat in light of the uncertainty about the fiscal
cliff, the job growth was not strong enough to inspire further buying
following the rally seen earlier in the week.
Traders also
continue to digest yesterday's release of the minutes of the latest
Federal Reserve meeting, which suggested that the central bank could end
its quantitative easing program earlier than anticipated.
Most
of the major sectors are showing only modest moves, although notable
strength has emerged among healthcare provider stocks. The Morgan Stanley Healthcare Provider Index has risen by 1.5 percent, reaching a record intraday high.
Networking and oil service stocks
are also seeing early strength, while gold stocks have moved to the
downside amid a sharp drop by the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. While Japan's Nikkei 225 Index surged up by 2.8 percent in its first trading day of the new year, Hong Kong's Hang Seng Index fell by 0.3 percent.
Meanwhile, the major European markets have all moved to the upside on the day. The U.K.'s FTSE 100 Index has risen by 0.4 percent, while the German DAX Index and the French CAC 40 Index have both edged up by 0.1 percent.
In the bond market, treasuries have
moved moderately lower, extending a recent move to the downside.
Subsequently, the yield on the benchmark ten-year note, which moves
opposite of its price, is up by 2 basis points at 1.919 percent.
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TSX Flat At Open Friday
Bay Street stocks
opened marginally lower Friday amid selling in gold stocks, with the
S&P/TSX Composite Index slipping 2.73 points or 0.02 percent to
12,467.31.
The Global Gold Index lost close to 2 percent
amid a slump in bullion prices. Royal Gold, Agnico-Eagle Mines, Allied
Nevada Gold and Detour Gold were down around 2 percent each
Among base-metals stocks, Inmet Mining slipped nearly 1 percent, while Teck Resources and First Quantum Minerals were up around 0.50 percent each.
In the oil patch, Lundin Petroleum was down close to 3 percent.
In the financial space, TD Bank was up about 1 percent. Fairfax Financial Holdings edged up 0.25 percent after declaring a dividend of $10.00 per share.
The
price of crude oil was extending losses Friday morning as traders await
cues from the official inventories data from the EIA, due out later
today. Today during trading hours, the EIA will release its US crude oil
inventories report for the weekended December 28. Analysts expect crude
oil inventories to dip one million barrels and gasoline stocks to add
2.3 million barrels last week. Crude for February shed $0.79 to $92.13 a
barrel.
The price of gold slipped back near a five-month
low Friday morning as the US dollar was extending gains versus a basket
of currencies amid the release of jobs data. Gold for February lost
$31.00 to $1,643.60 an ounce.
In economic news, Statistics Canada
said the economy created 40,000 jobs in December, the fourth increase
in five months. December's increase was all in full-time work. The
unemployment rate declined 0.1 percentage points to 7.1 percent, the
lowest in four years. Economists expected a modest 5,000 job creations
and unemployment rate to come in at 7.3 percent.
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European Markets Fall On Stimulus Cut Concerns
The European markets
are in negative territory on Friday, as markets globally were upset by
indications that policymakers in the U.S. would probably end their $85
billion monthly bond-purchase program before year-end. The U.S. futures
are mixed ahead of the key jobs data.
According to the minutes of the Fed Reserve's
most recent policy making meeting, voting members were concerned about
the Fed's ballooning balance sheet. However, the Fed continued to
believe that its asset purchase plan should remain in place for at least
the next few months.
Some members of the rate-setting Federal
Open Market Committee thought asset buying would be warranted though
most of 2013. A smaller number of officials project that the Fed should
be able to end the program well before December.
Retail sales
in Germany topped expectations in November as higher income
expectations and unemployment that is close to a two-decade low boosted
consumer spending.
The Eurozone downturn eased further at
the end of 2012, as rates of contraction in economic output and new
business slowed, final data from Markit Economics showed. Meanwhile, the
French service sector contracted at a faster pace in December.
The Euro Stoxx 50
index of eurozone bluechip stocks is losing 0.25 percent, while the
Stoxx Europe 50 index, which includes some major U.K. companies, is
dropping 0.11 percent.
The French CAC 40 is declining 0.5 percent while the German DAX is losing 0.2 percent. The UK's FTSE 100 and Switzerland's SMI are marginally down.
In Frankfurt, chemicals firm
Lanxess is declining 3.2 percent. Tire maker Continental and chipmaker
Infineon Technologies are losing around 1.7 percent each. Steel
manufacturer ThyssenKrupp and sports goods giant Adidas are also notably lower.
Merck
is falling 0.9 percent after Nomura cut the stock to ''Neutral'' from
''Buy.'' Commerzbank and Deutsche Bank are in positive territory.
Sky Deutschland
is gaining 2.3 percent. The company reportedly reached an agreement
with Deutsche Telekom to offer Sky on its Entertain digital TV system.
In Paris, metal fabrication firm Vallourec is declining 2.1 percent. Media house Vivendi and oil & gas services firm Technip are falling 1.7 percent each.
Credit Agricole, BNP Paribas and Societe Generale are in negative territory. Bucking the trend, Gemalto is rising 1.4 percent. EADS, EDF and Carrefour are in the green.
In London, Fresnillo is declining 5.7 percent, after the silver producer reportedly received a broker downgrade. Randgold Resources is falling 3.1 percent and Polymetal International is dropping 3 percent. On the other hand, BP is gaining 1.4 percent. Standard Life and British American Tobacco are gaining notably.
Swiss Re
is falling 0.3 percent in Zurich. The insurer structured and placed
$270 million of notes issued by Lakeside Re III Ltd., covering North
American earthquake risk on behalf of Zurich Insurance Group.
A
significantly better-than-expected ADP employment report helped to limit
the downside to some extent. The Dow and the S&P 500 slipped about
0.2 percent each, while the tech-heavy Nasdaq fell 0.4 percent
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Asian Stocks Drift Lower On Fed Minutes
Asian stocks
fell broadly on Friday on speculation the U.S. Federal Reserve may end
its $85bn monthly bond buying program earlier than expected.
According
to minutes of the Fed's last meeting, "a few members expressed the view
that ongoing asset purchases would likely be warranted until about the
end of 2013" while "several others thought that it would probably be
appropriate to slow or to stop purchases well before the end of 2013,
citing concerns about financial stability or the size of the balance
sheet".
Investors also awaited U.S. employment data due
later in the global day, with analysts expecting the report to show a
gain of 155,000 jobs in December, while the unemployment rate is
expected to tick back up to 7.8 percent after falling to a nearly
four-year low of 7.7 percent in November.
Japan's Nikkei
index jumped to a 22-month high as stocks played catch-up with a two-day
global rally in the wake of the last-minute U.S. budget deal. The
Nikkei average soared 2.8 percent to its highest closing level since
March 4, while the broader Topix index added 3.3 percent.
Exporters led the gainers, after the yen dropped to its lowest level
against the dollar since July 2010. The yen also weakened against the euro on expectations of further monetary easing by the Bank of Japan.
Honda Motor, Fanuc, Nikon, Mazda Motor and Toyota Motor
jumped 4-6 percent. Dai-Ichi Life led financial stocks higher with a 7
percent gain, while Nomura Holdings advanced 4 percent and Sumitomo
Mitsui Financial Group added 3.5 percent. Sharp declined 2.6
percent on a report that the company is mulling options to increase
capital through a public offering later this year.
China's Shanghai Composite
index opened significantly higher but pared gains to end merely 0.4
percent higher. A survey by HSBC suggested China's service sector
activity expanded at a slower pace than the month before in December,
with the headline business activity index declining to 51.7 in the month
from 52.1 in November.
The composite output index, a gauge of
both manufacturing and services activities, stood at 51.8 in December,
up from 51.6 in the previous month. Hong Kong's Hang Seng index eased 0.3 percent following a rally in the previous two sessions.
Australian shares lost ground, dragged down by miners following recent sharp gains. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index slipped about 0.4 percent each. BHP Billiton
shed 0.6 percent and Rio Tinto lost a percent, while smaller rival
Fortescue and gold miner Newcrest tumbled around 4 percent each. Atlas
Iron fell 3.2 percent despite commencing production at its third iron
ore mine in the Western Australia's Pilbara region.
Oil & gas producer Woodside Petroleum
slipped 0.1 percent, while Oil Search shed 0.8 percent and Santos
retreated 0.6 percent. Banks ended on a firm note, posting modest gains.
Commonwealth edged up marginally, while ANZ, NAB and Westpac rose about 0.2 percent each. Macmahon Holdings
rose 1.8 percent after an Australia-based unit of India's Punj Lloyd
offered to buy the company's construction business.
Seoul
shares drifted lower for the second straight day as investors continued
to take profits following a recent sharp rally on enthusiasm over the
U.S. fiscal cliff deal. The benchmark Kospi average slid 0.4 percent. Kia Motors and Hyundai Heavy Industries fell about 2 percent each, while tech stocks Samsung Electronics and LG Display fell 1-3 percent.
New Zealand shares fell on profit taking after technical charts signaled overbought levels. The benchmark NZX-50 index edged down 0.2 percent. Heavyweight Telecom
paced the decliners, falling 1.4 percent on analyst downgrades, Chorus,
the network company spun off from Telecom in 2011, fell over 2 percent
and online accounting software maker Xero lost 1.1 percent.
Fletcher Building, the nation's largest construction company, edged up 0.2 percent, utility Contact Energy closed up 0.8 percent and Skellerup Holdings, which manufactures milking equipment and rubber goods, advanced 3.1 percent.
Elsewhere, benchmark indexes in Malaysia, Singapore, India and Taiwan were subdued, while Indonesia's Jakarta Composite index was moving up 0.2 percent.
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Crude Dips Ahead Of Official Inventories Data
The price of crude oil was extending losses Friday morning as traders await cues from the official inventories data from the EIA, due out later today.
Light Sweet Crude Oil
(WTI) futures for February delivery, shed $1.26 to $91.66 a barrel.
Yesterday, oil ended lower after the Federal Open Market Committee felt
that the fiscal cliff drama would have an adverse impact on the economy
late in 2012.
Thursday after the market hour, the API said
US crude oil inventories a massive fell 12.032 million barrels last
week, while gasoline stocks added 3.32 million barrels in the weekended
December 28.
The price of gold slipped back near a
five-month low Friday morning as the US dollar was extending gains
versus a basket of currencies ahead of today's jobs data.
Gold
for February delivery, the most actively traded contract, dived $44.80
to $1,629.80 an ounce. Yesterday, gold slipped nearly 1 percent mostly
on profit taking as the US dollar continued to strengthen. The
yellow metal gained nearly 2 percent in the previous two sessions after a
last-minute deal helped the U.S. Congress pass a budget bill to avoid a
fiscal cliff.
Holdings of SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, moved down to 1,349.92 tons from
1,350.82 tons.
This morning, the U.S. dollar was steady
around a three-week high versus the euro and sterling. The buck
continued to extend its 2-year high versus the yen and trading higher
against the Swiss franc.
In economic news from the euro zone, retail sales in Germany increased more than expected in November, data from the Federal Statistical Office showed. Sales increased
1.2 percent month-on-month on a seasonally and calendar adjusted basis
in November. This was better than the expected 0.8 percent growth.
Meanwhile,
euro zone's EU harmonized inflation remained unchanged in December,
defying economists' forecast for a modest slowdown, preliminary data
from statistical office Eurostat showed. The harmonized index of
consumer prices (HICP), measured under the EU methodology, increased 2.2
percent annually in December, unchanged from the growth seen in
November. In October, the inflation rate was 2.5 percent. Economists had
expected inflation to ease to 2.1 percent in December.
Final data from Markit Economics
showed that the euro zone downturn eased further at the end of the
2012, as rates of contraction in economic output and new business
slowed. The composite output index rose to 47.2 from 46.5 in November.
But it stayed marginally below the flash reading of 47.3 and the 50.0
no-change mark for the eleventh successive month.
Traders will
look to the jobs data from the U.S. Labor Department, due out at 8.30
a.m ET. Economists expect non-farm payroll growth of 155,000 compared to
146,000 in November, with the private payrolls expected to expand by
157,000. The unemployment rate is expected to edge up 0.1 points to 7.8
percent.
The Institute for Supply Management is also due
to release the results of its service sector survey at 10 am ET. The
consensus expectations call for a reading of 54.5 in December compared
to 54.7 in November.
Simultaneously, the Commerce Department
is scheduled to release its factory orders report for November.
Economists expect 0.3 percent increase in factory orders compared to 0.8
percent growth in October.
Today during trading hours, the EIA will
release its US crude oil inventories report for the weekended December
28. Analysts expect crude oil inventories to dip one million barrels and
gasoline stocks to add 2.3 million barrels last week.
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