ADVFN III World Daily Markets Bulletin (February 1, 2013).

ADVFN III World Daily Markets Bulletin

Daily world financial news Friday, 01 February 2013

US Market

Positive Reaction To Jobs Data Drives Stocks Higher Stocks moved notably higher at the start of trading on Friday, offsetting the modest losses posted in the two previous sessions. The major averages all moved to the upside but have not seen much follow-through on the initial upward move. The major averages have pulled back off their highs for the young session but currently remain firmly positive. The Dow is up 83.67 points or 0.6 percent at 13,944.25, the Nasdaq is up 18.87 points or 0.6 percent at 3,161.00 and the S&P 500 is up 8.53 points or 0.6 percent at 1,506.64. The rally at the open reflected a positive reaction to the Labor Department's closely watched monthly employment report for January. While the report showed that employment increased by slightly less than expected in January, it also showed notable upward revisions to the job growth in previous months. Nonetheless, buying interest has waned since then, as traders seem reluctant to continue buying stocks after recent strength lifted the Dow and the S&P 500 to five-year highs. The report showed that non-farm payroll employment increased by 157,000 jobs in January following an upwardly revised increase of 196,000 jobs in December. Economists had been expecting employment to increase by about 165,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month. Despite the continued job growth, the unemployment rate unexpectedly edged up to 7.9 percent in January from 7.8 percent in December. The increase surprised economists, who had expected to unemployment rate to dip to 7.7 percent. Computer hardware stocks continue to see considerable strength, however, with the NYSE Arca Computer Hardware Index up by 1.2 percent. Dell (DELL) is leading the sector higher on reports that the company is close to a buyout agreement. Gold, steel, and airline stocks are also seeing notable strength, while most of the other major sectors have shown more modest moves to the upside. In overseas trading, stock markets across the Asia-Pacific region extended a recent trend and turned in another mixed performance on Friday. While Japan's Nikkei 225 Index rose by 0.5 percent, Hong Kong's Hang Seng Index closed just below the unchanged line. Meanwhile, the major European markets have all moved to the upside on the day. The French CAC 40 Index has advanced by 1.2 percent, while the U.K.'s FTSE 100 Index and the German DAX Index are up by 0.8 percent and 0.6 percent, respectively. In the bond market, treasuries have come under pressure in reaction to the jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.4 basis points at 1.931 percent.

Stocks in Focus

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Merck (MRK) reported better than expected fourth quarter results and issued a fairly robust guidance. Chevron (CVX) and Exxon Mobil (XOM) also reported better than expected fourth quarter earnings. Con Edison (ED) reported fourth quarter ongoing operating earnings of 69 cents per share on operating revenues of $2.90 billion. The results trailed estimates. However, the company boosted its dividend and also issued 2013 earnings guidance surrounding the consensus estimate. Manitowoc (MTW) reported fourth quarter adjusted earnings from continuing operations of 27 cents per share, higher than 14 cents per share last year. Sales rose slightly to $1.1 billion from the year-ago quarter’s $1.0 billion. The results exceeded estimates. Polaris Industries (PII) said its board approved a 14 percent increase in its quarterly dividend. Separately, the company announced that its board voted to elect its CEO Scott Wine as Chairman of the board. Ctrip.com (CTRP) reported fourth quarter non-GAAP earnings of 35 cents per share on net revenues of $177 million. The results were better than expected. For the first quarter, the company estimates net revenue growth of 15-20 percent. Reinsurance Group of America (RGA) reported better than expected fourth quarter operating earnings and its revenues trailed expectations. Emulex’s (ELX) fourth quarter earnings trailed estimates, while its guidance was also weak. Wynn Resorts (WYNN) reported fourth quarter adjusted earnings of $1.17 per share on net revenues of $1.29 billion. The earnings were below estimates, while the revenues exceeded estimates. Bebe Stores (BEBE) reported a second quarter net loss of 6 cents per share on revenues of $135.5 million. The loss was wider than what analysts had expected, while the revenues were above estimates. The company’s guidance was lackluster. Principal Financial Group (PFG) reported better than expected fourth quarter operating earnings, while its revenues trailed expectations. Brooks Automation (BRKS) reported a loss on an adjusted basis for its first quarter, although the loss was narrower than estimates. Revenues also exceeded estimates. The company’s second quarter guidance was also positive. McKesson’s (MCK) reported below-consensus third quarter earnings and also issued lackluster earnings guidance for the full year. Chubb Board (CB) said its board authorized a $1.3 billion new stock buyback program. The company also reported a steep decline in its fourth quarter earnings, which were below the consensus estimate. Tellabs (TLAB) reported fourth quarter non-GAAP earnings of 1 cent per share, flat with last year. Revenues fell to $242 million from $317 million last year. The company issued below-consensus revenue guidance for the first quarter. MetLife (MET) said it has agreed to acquire BBVA’s Chilean pension fund administrator AFP Provida for $2 billion through a cash tender offer. MetLife expects the deal to close in the third quarter of 2013 and also said it expects the deal to boost earnings by 5 cents per share in 2013 and by 15 cents per share in 2014. Research In Motion (RIMM) confirmed that the company will begin trading under the ticker symbol BBRY on the Nasdaq, effective February 4th.

European Market

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European Markets Rise Ahead Of Jobs Data The European markets are trading higher on Friday, ahead of the monthly jobs data from the U.S. Investor sentiment was lifted early on by data from China which showed that the country's manufacturing sector continued to grow in January amid sustained gains in new orders. An indicator of Germany's manufacturing sector performance improved more than primarily estimated in January, a survey by Markit Economics revealed. The seasonally adjusted purchasing managers' index for the manufacturing sector rose to 49.8 in January from 46 during December. Eurozone inflation slowed unexpectedly in January largely due to a slowdown in energy cost, flash estimate from Eurostat showed. Inflation fell to 2 percent in January from 2.2 percent in December. Inflation was forecast to remain unchanged 2.2 percent. A separate report showed that the unemployment rate in the 17-nation currency bloc remained unchanged at 11.7 percent in December. A survey by the National Bureau of Statistics and the China Federation of Logistics and Purchasing showed the Chinese manufacturing sector expanded for the fourth consecutive month in January, though business activity slowed from previous month. The official purchasing managers' index, measuring the manufacturing sector performance, scored 50.4 in January, but was down from 50.6 in December. This was also in contrast to expectations for an increase to 51. Results of a survey by Markit Economics showed today that Chinese manufacturing activity expanded at the fastest pace in two years in January. The headline HSBC/Markit purchasing managers' index rose to 52.3 in January from 51.5 in December. The Euro Stoxx 50 index of eurozone bluechip stocks is adding 0.27 percent , while the Stoxx Europe 50 index, which includes some major U.K. companies, is losing 0.07 percent. The German DAX, the French CAC 40 and the UK's FTSE 100 are moderately higher, while Switzerland's SMI is making modest gains. In Frankfurt, Commerzbank and Deutsche Bank are notably higher. Citigroup raised Deutsche Bank to ''Buy'' from ''Neutral.''S&P Equity raised EON to ''Buy'' from ''Hold.'' But the stock is modestly down. In Paris, Credit Agricole is gaining 2.2 percent. The lender has recognized a goodwill impairment charge of 2.676 billion euros in its fourth quarter. Saint-Gobain is trading flat, after a broker downgrade. In London, BT Group is surging 5.7 percent after announcing financial results. Tate & Lyle is falling 3.2 percent, after announcing third-quarter results. Royal Dutch Shell is in negative territory. UBS and S&P Equity reduced their rating on the stock. BBVA is up marginally in Madrid. The lender reported a profit in its fourth quarter and also agreed to sell its Chilean 's private pension fund AFP Provida S.A. to insurer MetLife, Inc. for about $2 billion. Teliasonera is losing 1.7 percent in Stockholm. The firm said its President and Chief Executive Lars Nyberg would leave the company, after the company was severely criticized by the Mannheimer Swartling review into corruption allegations in Uzbekistan.

Asia Market

Asian Stocks Mixed Before US Jobs Report Asian stocks swung between gains and losses on Friday as investors digested mixed economic data and looked ahead to the U.S. monthly jobs report due later in the global day, especially after reports on ADP private payrolls and jobless claims sent mixed signals on the health of the world's largest economy. Japanese stocks rose for a fourth straight session to end at a fresh 33-month high. The Nikkei average rose half a percent, led by automakers bolstered by the yen's weakness and receding concerns over the global economy. The broader Topix index advanced 0.3 percent. Automakers Suzuki Motor, Toyota Motor and Fuji Heavy Industries rallied 2-4 percent, heavyweight Softbank, which doubled its net profit in the last quarter, jumped 5.7 percent, Japan Tobacco climbed 4 percent after raising its full-year profit guidance and NEC soared 8.5 percent on returning to a net profit in the October-December quarter. TDK slumped 6.8 percent after slashing its full-year guidance. Toshiba fell 2.7 percent as it posted a weaker-than-expected rise in operating profit for the third quarter. In economic news, Japan's jobless rate edged up to 4.2 percent in December, government data showed, missing forecasts for 4.1 percent. China's Shanghai Composite index rallied 1.4 percent after a report from the National Bureau of Statistics and the China Federation of Logistics and Purchasing showed the official PMI measuring China's manufacturing sector performance stood at 50.4 in January, down slightly from 50.6 in the previous month although marking the fourth month of expansion in a row. Another survey by Markit Economics showed that China's manufacturing activity expanded at a faster pace than initially estimated. Hong Kong's Hang Seng index edged down 0.03 percent, as mainland property developers came under selling pressure following reports China will postpone the expansion of a program to implement a property tax beyond the current pilot cities. Australian shares rose to a 22-month high, with miners leading the gainers after iron ore prices hit a two-week high. The benchmark S&P/ASX 200 rose 0.9 percent to its highest level since April 11, 2011. Global miner BHP Billiton added 1.2 percent, Rio Tinto rose 1.3 percent and smaller rival Fortescue Metals Group advanced 2.4 percent. Lender NAB rallied 2.3 percent on a brokerage upgrade ahead of its results, while ANZ, Commonwealth and Westpac rose between 0.6 percent and 0.9 percent on reports that the crunch on bank margins may be easing. High-yield stock Telstra gained 1.1 percent and Karoon Gas Australia rallied 3.4 percent on announcing an oil discovery in offshore Brazil, while shares of Linc Energy plunged 11.5 percent after the company updated its outlook for oil and gas production. Seoul stocks fell modestly as foreign funds continued their selling spree and conflicting signals on the health of the Chinese economy increased concerns about the pace of global economic recovery. The benchmark Kospi average slipped 0.2 percent. Builder Doosan Engineering & Construction slumped 11 percent on equity dilution worries, while automaker Hyundai Motor added a percent and its affiliate Kia Motors edged up 0.6 percent. New Zealand stocks slid slightly, mirroring mixed regional cues. The benchmark NZX-50 index slipped 0.2 percent. Fletcher Building, the nation's largest construction company, fell 1.3 percent on profit taking after hitting a five-year high the day before, while rural services firm PGG Wrightson lost 2.3 percent. Kathmandu Holdings soared 4.1 percent after the outdoor equipment retailer raised its first-half profit forecast by as much as 75 percent over the previous year. The kiwi dollar climbed toward an 18-month high versus its Australian counterpart after the Reserve Bank of New Zealand Governor Graeme Wheeler said the central bank may hike rates if the nation's budget deficit remained higher. Wheeler said further that a return to fiscal surplus and lower public sector indebtedness should be New Zealand's priority. Elsewhere, Indonesia's Jakarta Composite index rose 0.6 percent, Singapore's Straits Times index was moving up 0.3 percent and the Taiwan Weighted average edged down marginally, while benchmark indexes in India and Malaysia were subdued.

Commodities

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Crude Oil Ends Lower On Soft Jobs Data U.S. crude oil settled lower Thursday, on demand concerns following some mixed macroeconomic data with first time jobless claims in the world's largest economy rising more than expected. Investors also weighed the huge build-up of U.S. crude stockpile last week, which was largely ignored yesterday. Nonetheless, crude oil gained 6.1 percent in January. First-time claims for U.S. unemployment benefits rebounded more than anticipated in the week ended January 26, while business activity in the Chicago area saw a notable improvement in January. Personal income in the U.S. showed a substantial increase in December, but not in pace with personal spending which also edged up for the month. While retail sales in Germany dropped more than expected, the country's unemployment declined unexpectedly in January. Light Sweet Crude Oil futures for March delivery, the most actively traded contract, shed $0.45 or 0.5 percent, to close at $97.49 a barrel on the New York Mercantile Exchange Thursday. Crude prices for March delivery scaled a high of $98.04 a barrel intraday and a low of $96.84. Yesterday, oil settled at a four-month high as the dollar continued to weaken against some major currencies on continued geopolitical tensions in the Middle East with fears of supply disruptions from Algeria and Egypt. Investors largely ignored an Energy Information Administration report that showed crude stockpile in the U.S. to have increased more than expected, even as the U.S. Federal Reserve indicated the asset purchase program to continue. The EIA yesterday revealed that U.S. crude oil inventories jumped 5.90 million barrels, while gasoline stocks shed 1.00 million barrels in the weekended January 25. Analysts expected crude oil inventories to climb 2.5 million barrels and little change in gasoline stocks last week. The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.20 on Thursday, down from 79.26 late Wednesday in North American trade. The dollar scaled a high of 79.37 intraday and a low of 79.13. The euro traded higher against the dollar at $1.3573 on Thursday, as compared to $1.3567 late Wednesday in North America. The euro scaled a high of $1.3592 intraday and a low of $1.3542. Gold Ends Sharply Lower On Profit Talking Gold futures snapped a two-day gain to end sharply lower Thursday, mostly on profit taking after impressive gains the precious metal made in the last two sessions following some soft macroeconomic data globally. The dollar continued to trade lower while the euro made gains, on some mixed global macroeconomic data. Gold shed 0.8 percent in January. Gold for April delivery, the most actively traded contract, shed $19.60 or 1.2 percent to close at $1,662.00 an ounce Thursday on the Comex division of the New York Mercantile Exchange. Gold for April delivery scaled an intraday high of $1,681.70 and a low of $1,658.40 an ounce. Yesterday, gold rose over 1 percent to settle near a 2-week high as investors sought safe haven in the precious metal after a report showed economic activity in the U.S. to have unexpectedly contracted in the fourth quarter. Gold also found support after a government official in India indicated no further action to curb gold imports at the current time.