Nov 30, 2012
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MarketWatch | European Markets at Close Report -November 30, 2012-.: European stocks tally 2% rise in November Narrow moves mark major bourses’ final session of the month
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets ended a choppy Friday session on a modestly downbeat note, as worries over the U.S. ”fiscal cliff” weighed on investors’ minds, although German approval for Greece’s latest rescue deal served to underpin bullish sentiment.
The Stoxx Europe 600 index XX:SXXP -0.19% fell 0.2% to close at 275.78, breaking a three-day winning streak.
The benchmark’s performance, however, was more upbeat both in weekly and monthly terms: It closed out November 2% higher, marking the sixth straight month of gains, and added 0.9% on the week.
“What’s been remarkable this week is that we have seen a strong improvement in the euro and 10-year Italian [government] bond yields have fallen to 4.5%,” said Andreas Hurkamp, equity market strategist at Commerzbank.
“It becomes more and more clear that the ECB’s [Outright Monetary Transactions] program is really the game changer in the crisis,” he added, referring to the European Central Bank.
The yield on 10-year Italian bonds yields IT:10YR_ITA -0.05% ended Friday’s session at 4.52%.
“Now investors really realize that and are trying to figure out what to do with their money. German and corporate bonds are not attractive anymore, so first they move into government bonds with higher yields like Italy’s, but they also buy into the equity market,” Hurkamp said.
Among notable equity movers in Europe, shares of LVMH Moët Hennessy Louis Vuitton FR:MC +1.28% LVMHF +2.50% rose 1.3% after Goldman Sachs upgraded its rating to buy from neutral.
Shares of Royal Bank of Scotland Group PLC UK:RBS -1.27% RBS -1.35% dropped 1.3% as the bank said that a sale of its Indian retail- and commercial-banking operations to HSBC Holdings PLC UK:HSBA +0.97% HBC +0.85% HK:5 +1.42% had collapsed and that it would wind down the business instead. See: RBS India retail business sale to HSBC collapses
Shares of HSBC rose 1% in London.
Shares of HSBC rose 1% in London.Broader sentiment was weighed by concerns that U.S. policy makers won’t agree on a deal in time to avert hundreds of billions in automatic spending cuts and tax hikes — the so-called fiscal cliff. See: Republicans say no to Obama’s opening ‘cliff’ bid.
Also in the U.S., the Chicago purchasing managers’ index rose to 50.4 in October, just a shade below expectations of a 50.5 print. See: Chicago PMI inches into expansion territory
Germany approves Greece debt plan
Markets, however, got a helping hand from Germany, where the Bundestag reportedly approved the latest measures to help reduce Greece’s debt pile. Euro-zone finance ministers agreed earlier this week to cut interest rates on Greece’s bailout loans, defer interest payments and allow the country to buy back around 30 billion euros in debt.
“Many investors fear that Greece has to leave the euro zone, but the probability of such a negative outcome has decreased significantly these last two weeks,” Hurkamp said.
“Our point of view is that we have the election in Germany in September and until then Germany will do everything it can to support Greece.”
Also Friday, German data showed retail sales slumped 2.8% in October, worse than expected by analysts polled by Reuters. Germany is Europe’s largest economy.
“One of the biggest headwinds for equity markets is that investors have to learn that Germany is not as strong as many think. We expect a contraction in economic activity in fourth quarter,” Hurkamp said.
“Earnings expectations for German companies are 5-10% too high, which could be the next catalyst for a selloff. We’ll get a relief rally triggered by the U.S., but in the first quarter we might see earnings disappoint.”
On the data front in the euro zone, a report showed unemployment for the currency bloc rose to 11.7% in October from 11.6% in September, marking an euro-era high.
Running down the action on major European bourses, shares of HeidelbergCement AG DE:HEI +1.18% rose 2.3%, after Morgan Stanley boosted its rating to overweight, up from equal weight previously.
Frankfurt’s DAX 30 index DX:DAX +0.06% added 0.1% to 7,405.50 and closed out November 2% higher, while ending the week with a 1.3% gain.
In Paris, the CAC 40 index FR:PX1 -0.33% fell 0.3% to 3,557.28, with shares of Total SA FR:FP -0.23% TOT -0.07% down 0.2%. On a monthly basis, the French benchmark jumped 3.7%, and it rose 0.8% on the week.
Shares of Schneider Electric SA FR:SU +1.29% added 1.3% after HSBC upgraded its rating to overweight from neutral.
And in London, miners stood out among Friday’s major decliners, tracking most metals prices lower. Shares of Anglo American PLC UK:AAL -1.79% dropped 1.8%, while Vedanta Resources PLC UK:VED -1.29% fell 1.3%.
The U.K.’s FTSE 100 index UK:UKX -0.06% closed 0.1% lower at 5,866.82, but it was up 1.5% on the month. For the week, the index ended 0.8% higher. See: Gold trades mostly lower as ‘cliff’ woes dominate
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
|ADVFN III||World Daily Markets Bulletin|
Stocks Showing A Lack Of Direction In Early Trading
With traders keeping a close eye on developments in Washington, stocks are turning in a lackluster performance in early trading on Friday. The major averages are lingering near the unchanged line after closing higher in each of the two previous sessions.
The major averages are currently turning in a mixed performance, with the Dow posting a slim gain. While the Dow is up 4.45 points or less than a tenth of a percent at 13,026.27, the Nasdaq is down 4.76 points or 0.2 percent at 3,007.27 and the S&P 500 is down 1.48 points or 0.1 percent at 1,414.47.
The choppy trading on Wall Street comes as many traders have moved to the sidelines, waiting for the next headline out of Washington regarding the negotiations over the looming fiscal cliff.
Comments about the status of the talks have contributed to big swings by the markets in the past few sessions, leading to some apprehension.
While leaders of both parties have said they remain hopeful that a deal can be reached, familiar disagreements over taxes on the wealthy and entitlement reform remain major sticking points.
Amid the focus on Washington, traders have largely shrugged off a report showing an unexpected drop in U.S. personal spending as well as a separate report showing growth in Chicago-area business activity.
The Commerce Department said personal spending fell by 0.2 percent in October after climbing by 0.8 percent in September. The drop came as a surprise to economists, who had expected spending to inch up by 0.1 percent.
The report also showed that personal income came in nearly unchanged in October following a 0.4 percent increase in September. Economists had expected income to increase by about 0.3 percent.
Meanwhile, the Institute for Supply Management - Chicago said its business barometer climbed to 50.4 in November from 49.9 in October. A reading above 50 indicates an increase in activity.
Most of the major sectors are showing only modest moves in early trading, contributing to the lack of direction being shown by the broader markets.
While some strength is visible among telecom and commercial real estate stocks, railroad stocks are seeing early weakness.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both advanced by 0.5 percent, while Australia's All Ordinaries Index ended the day up by 0.6 percent.
The major European markets have also moved to the upside on the day. While the French CAC 40 Index has edged up by 0.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both up by 0.3 percent.
In the bond market, treasuries are seeing modest strength after ending the previous session nearly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 1.606 percent.
RTTNews Market Analysis | Beyond the Numbers -November 30, 2012-.: Soft Consumer Spending Could Accentuate Economic Worries
Beyond the Numbers
Soft Consumer Spending Could Accentuate Economic Worries
11/30/2012 9:01 AM
The major U.S. index futures are pointing to a narrowly mixed opening on Friday, as economic concerns are re-ignited following the release of a report showing an unexpected decline in consumer spending just ahead of the key holiday selling season. The advances in the past two sessions may introduce caution, given the conflicting stances of the Republicans and Democrats in tackling the fiscal cliff leading to a lack of an agreement. The markets may also take cues from the results of a regional manufacturing survey due to be released shortly after the markets open. Any potential news concerning the fiscal cliff could also impact trading.
U.S. stocks advanced on Thursday, as fiscal optimism lingered and economic data came in stronger than expected. The major U.S. averages opened higher and moved sideways until the mid-session. Although the averages pared most of their gains by the mid-session, they advanced until late afternoon trading before seeing some consolidation.
The Dow Industrials ended up 36.71 points or 0.28 percent at 13,022 and the S&P 500 Index closed 6.02 points or 0.43 percent higher at 1,416, while the Nasdaq Composite added 20.25 points or 0.68 percent before closing up 3,012.
Twenty-one of the thirty Dow components closed higher and one stock ended unchanged, while the remaining eight stocks fell. UnitedHealth (UNH), Caterpillar (CAT), Disney (DIS), Hewlett-Packard (HPQ), JP Morgan Chase (JPM), Coca-Cola (KO), AT&T (T) and Verizon (VZ) were among the best performers of the session. On the other hand, Intel (INTC), Microsoft (MSFT) and Home Depot (HD) declined sharply.
Biotechnology, airline and oil service stocks saw notable buying interest.
On the economic front, the Labor Department reported that initial jobless claims declined to 393,000 in the week ended November 24th from 416,000 in the previous week. The decline retraced most of the Sandy-related increase in claims. Continuing claims fell 124,300 to 2.82 million in the week ended November 17th.
Meanwhile, U.S. third quarter GDP growth was upwardly revised to 2.7 percent from the initially estimated 2 percent, according to another government report. The improvement reflected an upward revision to exports, while most other expenditure areas were downwardly revised. Consumer spending growth was downwardly revised to 1.4 percent from 2 percent.
BMO Capital Markets expects a slowdown in GDP growth in the fourth quarter due to soft business spending, the impact of Hurricane Sandy, less inventory investment and an anticipated pullback in federal defense spending.
The National Association of Realtors reported that pending home sales rose by 5.2 percent month-over-month in October, much better than the expected increase. Annually, the index was up 18 percent. The Midwest and the South saw notable increases in pending home sales.
Currency, Commodity Markets
Crude oil futures are slipping $0.23 to $87.84 a barrel after rising $1.58 to $88.07 a barrel on Thursday. Gold futures, which rose $10.70 to $1,729.50 an ounce in the previous session, are currently slipping $2.60 to $1,726.90.
Among currencies, the U.S. dollar is trading at 82.60 yen compared to the 82.12 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.2972 compared to yesterday’s $1.2979.
Most major Asian markets closed higher, as the positive close on Wall Street overnight prompted traders to stay invested in stocks. Positive industrial production data from Japan also supported sentiment.
Japan’s Nikkei 225 average opened higher and saw some volatility in early trading. Thereafter, the index rose steadily till early afternoon trading before going about a consolidation move for the rest of the session. The index closed up 45.13 points or 0.48 percent at 9,446. Export stocks advanced, while real estate, utility, financial, telecom, pharma and resource stocks declined.
Australia’s All Ordinaries hovered in positive territory throughout the session before closing up 27.90 points of 0.62 percent at 4,518. Energy and material stocks led the gains in the session, while consumer staple and real estate stocks saw some weakness.
Hong Kong’s Hang Seng Index closed at 22,030, up 107.50 points or 0.49 percent, while China’s Shanghai Composite Index broke a four session losing streak and ended 16.63 points or 0.85 percent higher at 1980.
India’s Sensex added close to 1 percent despite the release of a September quarter GDP report showing that growth eased to a three-year low of 5.3 percent. Meanwhile, the Indonesian and South Korean markets closed lower.
On the economic front, the Ministry of Economy, Trade and Industry reported that Japan’s industrial output rose 1.8 percent month-over-month in October, belying expectations for a 2 percent drop. Annually, output fell 4.3 percent compared to the 8 percent decline expected by economists.
Meanwhile, a report released by Japan’s Ministry of Internal Affairs and Communication showed that the jobless rate was unchanged at 4.2 percent in October.
A separate report showed that average household spending in Japan edged down 0.1 percent year-over-year in October compared to expectations for a 0.8 percent drop. Housing starts also increased more than expected in October.
Meanwhile, the Japanese government approved a second round of economic stimulus worth 880 billion yen to kick start growth.
After some volatility, European stocks turned higher in late morning trading. Since then, the averages are moving roughly sideways. The gains have come despite the release of some bleak domestic economic data.
On the economic front, German retail sales declined 2.8 percent month-over-month on a calendar and seasonally adjusted basis in October, the Federal Statistical Office said. Economists expected sales to decline a more modest 0.4 percent after the 0.5 percent increase in September.
An INSEE report showed that French household spending fell 0.2 percent month-over-month in October after remaining unchanged in September. The decline was in line with expectations.
Confidence among British consumers rose to its highest level in 18 months in November, according to the results of a survey done by the Gfk and NOP. The headline index rose to -22 in November from -30 in October. This was the highest reading since May 2011 and was better than forecasts for a no change.
U.S. Economic Reports
With personal income in the U.S. coming in nearly unchanged in the month of October, the Commerce Department released a report showing that personal spending for the month unexpectedly saw a modest decrease.
The report showed that personal income edged up by less than a tenth of a percent in October following a 0.4 percent increase in September. Economists had expected income to increase by about 0.3 percent.
Additionally, the Commerce Department said personal spending fell by 0.2 percent in October after climbing by 0.8 percent in September. The drop came as a surprise to economists, who had expected spending to inch up by 0.1 percent.
At 9:45 am ET, the ISM-Chicago is set to release the results of its manufacturing survey. The business barometer is expected to improve to 50.3 in November from 49.9 in October.
The October survey showed that manufacturing conditions continued to contract. The business barometer remained below the ‘50’ level at 49.9, despite edging up 0.2 points. The production index fell 3.6 points to 51.8, while the order backlogs index rose 2.7 points but remained below 50 at 44.3. Meanwhile the new orders index climbed to 50.6 from 47.4. The employment index slipped 1.7 points to 50.3.
Minneapolis Federal Reserve Bank President Narayana Kocherlakota will speak at the Boston Fed and Boston University Conference on Macro-Finance Linkages at 5 pm ET.
Stocks in Focus
Mentor Graphics (MENT) reported third quarter non-GAAP earnings of 32 cents per share on revenues of $166.30 million. The results exceeded estimates. For 2013, the company expects non-GAAP earnings of $1.22 per share on revenues of $1.1 billion, while for the fourth quarter the company expects non-GAAP earnings of 55 cents per share on revenues of $343 million. The 2013 guidance was positive, while the fourth quarter expectations trailed estimates.
J&J Snack Foods (JJSF) said its board approved a 23.1 percent increase in its quarterly dividend to 16 cents per share.
Christopher & Banks (CBK) reported third quarter earnings of 10 cents per share on revenues of $117.3 million, with revenues exceeding estimates. For the fourth quarter, the company expects high-single to low-double digit comparable store sales growth.
Ford (F) said it sold 6,000 units of hybrids in November, up from its previous record of 5,353 units sold in July 2009. The company also said it expects to achieve an all time high 11 percent share of the electrified vehicle market this year, reflecting a more than five-fold increase.
Duke Energy (DUK) said its Chairman and CEO Jim Rogers announced his intention to retire from the company by the end of 2013 following a 24-year stint at the company. Separately, the company said it has filed a settlement agreement with the North Carolina Utilities Commission to resolve all issues related to the matters under review regarding the change in president and CEO following the closing of the merger between Duke Energy Progress Energy on July 2nd, 2012.
Pacific Sunwear (PSUN) reported a third quarter non-GAAP loss from continuing operations of 3 cents per share, narrower than the loss of 11 cents per share last year. Revenues rose to $228.43 million from $226.79 million in the year-ago period. The loss was in line with estimates, while the revenues exceeded estimates. The company expects a non-GAAP loss from continuing operations of 9-17 cents per share on revenues of $225 million to $235 million. The guidance was positive.
Zumiez (ZUMZ) reported third quarter earnings of 40 cents per share, including 11 cents per share in charges, compared to 45 cents per share last year. Net sales rose 16.9 percent to $180 million. The results were better than expected. For the fourth quarter, the company expects net income of 59-62 cents per share, including an anticipated 8 cents per share in charges, on net sales of $218 million to $221 million. The guidance was weak.
Tellabs (TLAB) announced a special cash dividend of $1 per share. Separately, the company confirmed the appointment of acting CEO and president Daniel Kelly to the position permanently, effective today.
At its annual investor meeting, Yum Brands (YUM) reconfirmed its full year 2012 adjusted earnings per share growth forecast of at least 13 percent or $3.24 per share, which is below the consensus estimate of $3.28 per share. The company also said it expects to once again deliver at least 10 percent adjusted earnings per share growth in 2013. However, the company expects sales in China to soften in the fourth quarter.
St. Jude Medical (STJ) said its board has authorized a share repurchase of up to $1 billion worth of its outstanding stock.
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