Bargain Hunting Contributes To Initial Strength On Wall Street
Stocks moved
higher at the start of trading on Wednesday, regaining some ground
after moving sharply lower over the course of the previous session. The
major averages moved back 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 in positive territory. The Dow is up 20.91 points or 0.2 percent at 13,123.44, the Nasdaq is up 15.39 points or 0.5 percent at 3,005.85 and the S&P 500 is up 3.58 points or 0.3 percent at 1,416.69.
Bargain
hunting helped to drive stocks higher at the open, with some traders
picking up stocks at reduced levels following the sell-off that was seen
on Tuesday.
The Dow and the S&P 500 ended the previous session at their lowest closing levels in well over a month, while the Nasdaq set a two-month closing low.
The markets also benefited from the release of a relatively upbeat report on Chinese manufacturing activity, with a report from HSBC Holdings and Markit Economics showing a continued slowdown in the pace of contraction in the sector.
The report showed that the index of activity in the Chinese manufacturing sector
climbed to a three-month high of 49.1 in October from 47.9 in
September, although a reading below 50 indicates the twelfth straight
month of contraction.
A positive reaction to the latest batch of
earnings news has also generated some buying interest, with shares of
Boeing (BA) seeing early strength after the aerospace giant reported
better than expected third quarter earnings and raised its full-year
guidance.
Telecom giant AT&T (T) also reported third quarter earnings that exceeded analyst estimates, although its revenues came in below expectations.
After the close of trading on Tuesday, social networking giant Facebook (FB)
reported third quarter adjusted earnings that came in slightly above
analyst estimates on stronger than expected revenue growth.
Buying
interest has remained relatively subdued, however, as traders worry
about the outlook for the markets against the backdrop of a generally
disappointing earnings season.
Most of the major sectors are
showing only modest moves in early trading, although strength is visible
among biotechnology, banking, and chemical stocks.
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Wednesday. While Japan's Nikkei 225 Index ended the day down by 0.7 percent, Hong Kong's Hang Seng Index rose by 0.3 percent.
Meanwhile, the major European markets have all moved to the upside over the course of the trading day. The U.K.'s FTSE 100 Index has risen by 0.3 percent, while the German DAX Index and the French CAC 40 Index are both up by 0.5 percent.
In the bond market, treasuries are
giving back some ground after ending the previous session moderately
higher. Subsequently, the yield on the benchmark ten-year note, which
moves opposite of its price, is up by 2.3 basis points at 1.787 percent.
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TSX Up At Open Wednesday
Bay Street stocks opened higher Wednesday amid buying across a variety of sectors, with the S&P/TSX Composite Index adding 13.09 points or 0.11 percent to 12,238.93
The Diversified Materials
Index rose close to 1 percent. Teck Resources gained over 2 percent
even after reporting a sharply lower third quarter net profit. First
Quantum Minerals added nearly 1 percent.
Among gold plays, Detour Gold and Allied Nevada Gold moved up nearly 1 percent each. Energy producer Encana Corp. added 1 percent despite slipping into the red in third-quarter.
Canadian Pacific Railway
gained nearly 5 percent after reporting improved third-quarter net
income. Forest products company Canfor Corp. gathered over 1 percent
after turning to profit in third-quarter.
In corporate news from Canada, mining company Teck Resources
reported a sharply lower third quarter net profit of C$191 million or
C$0.31 per diluted share compared to a net profit of C$839 million or
C$1.37 per diluted share, reported a year ago. Excluding special items,
adjusted profit was C$349 million or C$0.60 per share compared with
adjusted profit of C$742 million, or C$1.26 per share reported fr the
year-ago period.
Energy producer Encana Corp. slipped into
the red in third-quarter, reporting net loss of $1.24 billion as
against a profit of $459 million a year before. Excluding items,
operating earnings dropped to $263 million or $0.36 per share from last
year's $389 million or $0.53 per share. Analysts expected the company to
report earnings of C$0.26 per share for the quarter.
Forest products company Canfor Corp.
swung to profit in third-quarter, reporting net income of C$22 million
or C$0.16 per share compared with net loss of C$21.5 million or C$0.15
per share last year. Excluding items, adjusted earnings for the quarter
were C$15 million or C$0.11 per share, compared with adjusted loss C$1.8
million or C$0.01 per share a year ago. Analysts expected the company
to report earnings of C$0.05 per share for the quarter.
Rogers Communications Inc.
posted lower third-quarter net income of C$466 million, compared with
C$491 million last year, while quarterly earnings per share rose to
C$0.90 from C$0.87 a year ago. On an adjusted basis, net income improved
to C$495 million or C$0.96 per share from the prior year's C$489
million or C$0.90 per share. Analysts expected the company to report
earnings of C$0.88 per share for the quarter.
Canadian Pacific Railway
reported improved third-quarter net income of $224 million or C$1.30
per share compared to C$187 million or C$1.10 per share last year.
Analysts expected the company to report earnings of C$1.23 per share for
the quarter.
Electronics products company Celestica Inc.
reported that its third-quarter net earnings declined to $43.7 million
or $0.21 per share from $50.2 million or $0.23 per share in the same
quarter last year. Adjusted net earnings were $54.8 million or $0.26 per
share, compared to $57.4 million or $0.26 per share. Analysts expected
the company to report earnings of $0.20 per share for the quarter.
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Europe Slips As Traders Digest Mixed Earnings And Sour Economic Data
European stocks
have pulled back on Wednesday after opening higher on a rebound from
yesterday's disappointing showing. The early bounce was supported by
bargain hunting, with a few positive domestic earnings such as that from
German software maker SAP and a Chinese manufacturing data lending some
support. That said, as traders digested some mixed earnings and bleak
German business confidence and worse than expected results of the
eurozone purchasing managers' survey, sentiment soured. The market mood
may also hinge on another barrage of key earnings from across the
Atlantic and the U.S. new home sales data due later in the global
trading day.
Preliminary results of the manufacturing survey
carried out by Markit Economics and the HSBC Bank showed that China's
manufacturing sector contracted at a slower pace in October. The
manufacturing purchasing managers' index rose 1.2 points to 49.1 in
October, as the rate of contraction by new orders as well as output
decelerated.
The French CAC 40 Index is trading down 0.30 percent at 3,397, the German DAX Index is receding 0.24 percent to 7,156 and the U.K.'s FTSE 100 Index is 0.24 percent lower at 5,784. Switzerland's key average, the Swiss Market Index is down 0.17 percent.
Technology and chemicals makers are higher, while auto stocks are weaker. Financial and utility stocks have also come under selling pressure.
The Euro Stoxx 50 Index is declining 0.34 percent and the Stoxx Europe 50 is moving down 0.03 percent.
Stocks in the region succumbed to earning-induced sell-off on Tuesday after U.S. blue chips such as DuPont (DD) and 3M Co.
(MMM) released disappointing results and issued bleak guidance. Wall
Street mood was also hampered by the earnings disappointment, with the
key averages closing notably lower.
The earnings news flow
continues. SAP reported third quarter non-IFRS earnings of 70-euro cents
per share on revenues of 3.97 billion euros. New software license
revenues rose 12 percent and beat estimates. The company raised its full
year guidance, banking on its recent acquisitions. The stock is up over
3 percent.
Brewer Heineken continues to see flat full
year profits, given the weakness in Europe, while it reported higher
third quarter profits and sales. The stock is down over 2 percent.
Nordea Bank reported third quarter profit growth, which though trailed
estimates by many analysts.
Germany's Volkswagen reported
broadly in line third quarter results. Krone reported better than
expected third quarter results. The stock is slightly higher. Puma is
lower after it reported disappointing third quarter results, as weak
European and Chinese performance weighed.
France's Peugeot
is plunging over 7 percent after it announced a decline in third
quarter sales and profits. The company also announced a decision by its
board to suspend dividends, buyback and performance bonuses. Meanwhile,
the French government is set to provide the company 7 billion euros in
refinancing guarantees for new bond issues over the next three years.
Swedish truck maker Volvo reported declines in its third quarter sales
and profits.
In its interim statement British American Tobacco
said it experienced a decline in volumes for the nine-month period,
although revenues rose 4 percent. The stock is down moderately.
U.K.'s Home Retail announced
plans to close about 75 stores over the next five years after it
reported broadly in line sales for its first half. Pub group Punch
Taverns reported a drop in its full year pre-tax profits.
Spanish utility Iberdrola ringed in EBITDA of 5.78 billion euros for the nine-month period, in line with expectations.
Preliminary results of the manufacturing surveys by Markit Economics
showed that the French manufacturing sector contracted at a slower rate
in October. Meanwhile, the rate of contraction by the German private
sector quickened, with the composite output index coming in at 48.1 in
October compared to 49.2 in September, as the service sector as well as
the manufacturing sector contracted at a faster rate.
The results for eurozone as a whole showed that the composite output index fell to 45.8 in October from 46.1 in September.
The
German business confidence survey revealed that confidence among
businesses in Europe's largest economy deteriorated in October. The
business confidence index fell to a 2-1/2 month low of 100 from 101.6 in
September
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Asian Stocks Settle Lower Despite China PMI
Tracking
a sharp fall on Wall Street overnight, most Asian markets settled lower
Wednesday as traders overlooked an upbeat report on Chinese
manufacturing growth. Traders were also cautious ahead of the outcome of
the two-day FOMC meeting.
Business conditions across Chinese
manufacturing sector showed early signs of recovery in October with the
rate of contraction in both output and new orders decelerating,
preliminary results of a survey by Markit Economics revealed.
In
the commodities markets, the price of crude oil was leveling off from
its three-month low amid upbeat Chinese manufacturing data that eased
demand growth worries. Crude for December delivery added $0.10 to $86.77 a barrel.
The price of gold was little changed after falling in the previous session. Gold for December delivery edged up $0.40 to $1,709.80 an ounce.
After seven-straight sessions of gains, the Japanese market ended lower, with the Nikkei Index losing 0.67% to 8,954.30.
Export
related stocks, which were supported by a soft yen in the recent
sessions, ended lower. Panasonic and Komatsu were down over 2 percent
each. Kawasaki Heavy Industries dived over 6 percent after cutting its
first half operating profit forecast.
Meanwhile, Japanese social gaming sites DeNa and Gree gained amid reports that mobile advertising revenue had roughly tripled in the third quarter. All Nippon Airways rose close to 2 percent ahead of the release of its half-yearly earnings report.
The China's Shanghai Composite
index pared losses to settle marginally higher after a report revealed
that business conditions across Chinese manufacturing sector showed
early signs of recovery. China's Shanghai Composite index edged up 0.07 percent to 2,115.99.
The Hong Kong
market advanced to a fresh 14-month high amid buying in property
developers after the Hong Kong Monetary Authority sold Hong Kong dollar
to contain the appreciation of its currency. The de facto central bank
on Tuesday sold $855 million worth of Hong Kong dollar in two separate
interventions. The first sale was worth $505 million and the second
action for $395 million.
The Hang Seng Index added 0.31 percent to 21,763.78. Cheung Kong
rallied over 4 percent and SHK Properties jumped nearly 4 percent.
Henderson Land, New World Development and Sino Land were other notable
gainers.
Australian stocks ended lower led down by mining stocks after gold and copper prices sank, with the benchmark S&P/ASX200 index losing 37.30 points to 4,505.80. Meanwhile, stocks in New Zealand settled lower, with the NZX 50 index slipping 0.07 percent to 4,001.45.
WORLEYPARSONS was the major loser, dipping nearly 6 percent, while Flight Centre topped the gainers' list.
Elsewhere, the South Korean Kospi shed 0.67 points to 1,913.96. Posco extended
losses for a second session, dipping over 2 percent. Yesterday, the
steel maker announce that its third-quarter operating profit fell 18
percent and is said it expects to fall further in the fourth quarter
too.
On the other hand, chip maker SK Hynix Inc rose nearly 4 percent after the firm reported it swung to a profit.
Meanwhile, the Singapore and Malaysia markets were mixed, while the Indian market remained closed for a public holiday.
In economic news out of China, the HSBC purchasing
managers' index for the manufacturing sector climbed to a three-month
high of 49.1 in October from 47.9 in September. However, the reading
below 50 suggested a contraction in activity, albeit at a more moderate
pace. The manufacturing output index increased to 48.4 from 47.3
in September. This was the highest reading in three months. New orders
as well as new export orders contracted at a slower pace during the
month, the survey showed.
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Crude Steady After China PMI
The price of crude oil edged up Wednesday morning after China's manufacturing sector showed signs of recovery.
Business
conditions across Chinese manufacturing sector showed early signs of
recovery in October with the rate of contraction in both output and new
orders decelerating, preliminary results of a survey by Markit Economics
revealed.
Light Sweet Crude Oil futures for December
delivery, edged up $0.13 to $86.80 a barrel. Yesterday, oil shed over 2
percent to settle at a fresh 3-month low on weak corporate earnings
fueling demand concerns for the commodity, even as supply worries eased
with reopening of a major oil pipeline in North America.
Tuesday after the market hours, the API said U.S. crude oil inventories rose 313,000 barrels and gasoline stocks added 181,000 barrels in the weekended October 19.
The price of gold was
little changed Wednesday morning as the U.S. dollar was trading firm
versus a basket of currencies ahead of the outcome of a two-day FOMC
meeting.
Gold for December delivery, the most actively
traded contract, edged up $1.40 to $1,710.80 an ounce. Yesterday, gold
shed nearly 1 percent to settle at a fresh 6-week low as investors
sought the safe haven status of the dollar even as lingering concerns
over the euro zone persisted with focus on Spain. The precious metal
also tracked declining equity markets globally as the euro zone
financial crisis loomed large.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,336.90 tons.
This morning, the U.S. dollar
moved back toward a two-week high versus the euro and trading around a
6-week high against sterling. The buck was hovering around a three-month
high versus the yen and ticking higher against the Swiss franc
In
economic news from the euro zone, Germany's business confidence
continued to deteriorate in October, reports said citing survey results
from Ifo Institute. The business climate index fell to 100 from 101.4
September. Economists were expecting a reading of 101.6.
Meanwhile,
survey data from Markit Economics revealed that euro zone private
sector output in October dropped at the sharpest rate since June 2009,
in a worrying sign that the downturn in the single-currency bloc will
likely deepen in the final quarter of the year. The composite output
index, which measures the combined output of the manufacturing and
service sectors, fell to 45.8 in October from 46.1 in September.
Economists had expected a higher score of 46.5.
Traders
will look to the report on new home sales for the month of September
from the U.S. Commerce Department, due out at 10 a.m. ET. Economists
expect new home sales to come in at a seasonally adjusted annual rate of
385,000 units compared to 373,000 units in August.
Today during trading hours, the EIA
will release its U.S. crude oil inventories report for the weekended
October 19. Analysts expect crude oil inventories to gain 1.7 million
barrels, while gasoline stocks are seen shedding 1 million barrels last
week.
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