|
Stocks Modestly Higher In Mid-Morning Trading
Stocks are showing modest strength in mid-morning trading on Monday after news of a possible resolution to the Greek debt crisis and ahead of the start of what is forecast to be a healthy earnings season. The major averages are up by slim margins, extending recent gains.
Earlier, fears of a Greek default eased after the Finance Ministers of the 16-nation Eurozone agreed to provide up to 30 billion euros (roughly $41 billion) in emergency loans at below-market interest rates to the debt-stricken nation if it requires them.
The package also involves the International Monetary Fund, which will make a further 10 billion euros (roughly $14 billion) available to Athens this year.
First quarter earnings season unofficially kicks off this afternoon, with aluminum producer Alcoa (AA) slated to release its quarterly report card after the market closes for trading. Alcoa is traditionally the first Dow component to report its quarterly results.
Ahead of earnings, smartphone maker Palm has opened itself up for bidding, according to Bloomberg News, which cited people familiar with the situation.
Defense contractor DynCorp International Inc. said it has agreed to be taken private by private investment firm Cerberus Capital Management, L.P. in a transaction worth about $1.5 billion, including the assumption of debt.
On the economic front, the Treasury Department will release the monthly treasury budget for March at 2:00 p.m. ET, providing a view of the budgetary trends and the thrust of fiscal policy.
The major averages have all seen choppy movement in recent dealing, treading above the unchanged mark. The Dow is up 16.86 points or 0.2 percent at 11,014.21, the Nasdaq is up 1.89 points or 0.1 percent at 2,455.94 and the S&P 500 is up 2.67 points or 0.2 percent at 1,197.04.
Sector News
Airline stocks are some of the best performer in the early going, driving the NYSE Arca Airline Index up by 1.4 points. With the upward move, the index has jumped to its best intraday level in two and a half years.
Computer hardware stocks are also moving notably higher, as reflected by the 1.2 percent climb by the NYSE Arca Computer Hardware Index. The advance has lifted the index to a two and a half month intraday high.
Networking, banking and oil service stocks are also on the upside, helping to buoy the markets, while weakness is visible among housing and commercial real estate stocks, limiting the upside for the major averages.
Stocks Driven By Analyst Comments
Joy Global is on the rise in mid-morning trading after being upgraded by analysts at Robert W. Baird from Neutral to Outperform. Analysts also boosted the stock's target price from $61 to $82. The stock is up by 3.2 percent, setting a nineteen-month intraday high.
Texas Instruments is also moving higher following an upgrade at Credit Suisse from Neutral to Outperform. The broker also raised its target price to $32 from $24. Shares are currently up by 2.5 percent after rising to a three-month intraday high in earlier dealing.
On the other hand, Vertex Pharmaceuticals Inc. is under pressure after being downgraded by JP Morgan Chase from Overweight to Neutral. The stock has lost 3 percent, slipping to a two-month intraday low. |
|
Asian Markets End Mixed Ahead Of US Earnings Season
The markets in Asia ended the trading session on a mixed note Monday with the markets in India, China, HongKong and South Korea ending in negative territory, while the markets in Australia, Japan, Singapore, Taiwan and Indonesia ended in positive territory with marginal gains. Optimism about global economic recovery and finalization of a debt package for Greece by the EU nations lifted market sentiment while caution ahead of earnings season in the U.S kept traders on the sidelines.
In Japan, the benchmark Nikkei-225 Index rose 47.56 points, or 0.4%, to 11,252, while the broader Topix index of all First Section issues advanced 5.36 points, or 0.5%, to 995.
On the economic front, minutes of the recently concluded Bank of Japan monetary policy board meeting held on March 16-17 revealed that the members of the policy board were surprised at how quickly the global economy was showing signs of improvement, while expressing concerns that the recovery could remain fragile. The board members conceded that uncertainty remains high regarding the outlook for capital spending, but they agreed that private consumption would remain flat and that deflationary pressures would begin to moderate.
In a separate statement, the Bank of Japan revealed that the country's M3 money stock increased 2% year-on-year in March, in line with analysts' expectations, following similar increase in the previous month. The statement further noted that the value of M2 money stock plus CDs was up 2.6% on year, roughly in line with expectations for a 2.7% annual increase following the 2.7% gain in the previous month.
Additionally, the Bank of Japan stated that bank lending in the country declined 2.0% on year in March, after shedding an annual 1.6% in February. The central bank further noted that bank lending, including trusts, declined 1.8% on year after shedding an annual 1.5% in the previous month. Adjusted bank lending was down 1.7% on year after retreating an annual 1.3% in February.
Exporters, technology and machinery stocks advanced on optimism about economic recovery. Fanuc Ltd, added 0.68%, Kyocera Corp. advanced 0.64%, Canon Inc. gained 0.59%, Tokyo Electron climbed 0.79%, Advantest Corp. rose 0.27% and TDK Corp. was up by 0.32%.
Banking stocks also ended in positive territory. Sumitomo Mitsui Financial gained added 0.31%, Resona Holdings advanced 0.58%, Mitsubishi UFJ Financial gained 0.79% and Mizuho Financial climbed 1.06%.
Real estate stocks edged higher. Sumitomo Realty & Development advanced 2.10%, Mitsubishi Estate gained 2.08%, Mitsui Fudosan added 0.63%, Heiwa Real Estate edged up 0.34% and Tokyu Land Corp. climbed 1.64%.
Trading stocks also ended in positive territory. Mitsui & Co., climbed 2.42%, Mitsubishi Corp. gained 1.56%, Itochu Corp. surged up 4.37%, Toyota Tsusho Corp. advanced 1.52% and Sumitomo Corp. rose 1.70%.
In Australia, the bench mark S&P/ASX 200 Index gained 36.20 points, or 0.73% to close at 4,984, while the All-Ordinaries Index ended at 5,012, representing a gain of 38.70 points, or 0.78%.
On the economic front, the Australian Treasurer Wayne Swan, in his weekly economic note, said that recent data gives a good running report card on the progress of the recovery and gives confidence to withdraw stimulus gradually. He further noted that the stimulus measures provided vital support to businesses during the global recession.
A report released by the Australian Bureau of Statistics revealed that the total value of home loans extended in the country were down a seasonally adjusted 3.4% month-on-month to A$20.49 billion in February. As per the report, the number of home loans extended, in volume terms, decreased 1.8% to 50,287 in February. The report further noted that the volume of loans extended for the construction of new dwellings were down 3%, and those for the purchase of established dwellings were down 1.8%. Home loans for the purchase of new dwellings were up 0.7%.
Reserve Bank of Australia assistant governor Guy Debelle said that the official cash rate is now closer to "average" levels, suggesting that the central bank might slow the pace of its monetary tightening. "We are deciding that the situation where we needed historically low interest rates is no longer necessary, so we're moving back to something around about average levels, which is not far away from where we are at the moment," he reportedly told a Senate committee inquiry in Sydney.
Mining and mineral stocks led the gains on increasing optimism about higher demand for commodities in the global market. BHP Billiton gained 1.25%, Rio Tinto rose 1.50%, Fortescue Metals climbed 4.79%, Gindalbie Metals surged up 5.29%, Iluka Resources advanced 1.63%, Mincor Resources increased 4.11% and Oz Minerals was up by 1.64%.
Speculation that Swiss mining company Xstrata might also join the race to acquire Macarthur Coal lifted the stock by 6.24%.
Oil stocks also ended in positive territory. Woodside Petroleum advanced 0.57%, Santos added 0.27%, Oil Search gained 0.33% and Origin Energy rose 0.71%.
Gold stocks however bucked the trend and ended in negative territory on profit taking. Lihir Gold shed 0.25% and Newcrest Mining fell 1.96%.
Bank stocks ended in positive territory on optimism about economic recovery. ANZ Bank advanced 0.83%, Commonwealth Bank of Australia added 0.45%, National Australia Bank edged up 0.18% and Westpac Banking rose 0.43%. Investment banker Macquarie Group was higher by 0.16%.
In Hong Kong, the benchmark Hang Sang Index ended in negative territory with a loss of 70.33 points, or 0.33%, to close at 22,138, as traders offloaded property stocks, china-related stocks and resource stocks on profit taking ahead of the start of earnings season in the U.S later in the day. The finalization of a debt-package for Greece from the 16-nation Euro Zone and positive closing on Wall Street in the previous session lifted stocks in the morning session while profit taking in the last hour of trade, especially in property stocks such as Henderson Land, SHK Property., etc and resource stocks dragged the index into the red.
In South Korea, the benchmark KOSPI Index ended in negative territory with a loss of 14.17 points, or 0.82%, at 1,710, dragged down by exporters after the local currency won appreciated against the US dollar. Foreign institutional investors sold stocks of exporters amid profit taking and concerns that bottom lines might be impacted by lower revenues when realized in local currency terms. Volume was relatively moderate as most of the traders preferred to stay in the sidelines ahead of US earnings season beginning today with Alcoa's earnings results.
A stand-off between regulators on the oversight of unit linked insurance products or Ulips and weaker-than-expected February's industrial output data dragged the Indian market notably lower on Monday. Caution also prevailed as investors awaited IT bellwether Infosys' March-quarter results and its earnings guidance for FY11 due tomorrow. Infosys edged up 0.16% and TCS gained 0.64%, while Wipro, Mahindra Satyam and Tech Mahindra closed on a subdued note. The 30-share Sensex average fell to a low of 17,816 before ending down 80 points or 0.45% at 17,853, while the 50-share Nifty fell 22 points or 0.41% to 5,340.
Among the other major markets open for trading, Indonesia's Jakarta Composite Index advanced 36.32 points, or 1.28%, to close at 2,881, Singapore's Strait Times Index added 5.20 points, or 0.17%, to close at 2,977, and Taiwan's Weighted Index gained 25.72 points, or 0.32%, to close at 8,118. However, China's Shanghai Composite Index ended in negative terriory with a loss of 16.08 points, or 0.51%, to close at 3,129. |
|
The major European markets are moving to the downside after seeing some strength in early trading on Monday. The French CAC 40 Index and the German DAX Index are moving down 0.43% and 0.27%, respectively, while the French CAC 40 Index is declining 0.18%.
In corporate news, UBS (UBS) pre-announced first quarter results, forecasting a pre-tax profit of at least $2.4 billion. In another encouraging aspect, the bank said net withdrawals from its wealth management units are slowing.
U.S. Economic Reports
A flurry of data is due to be released in the unfolding week, with traders anxiously looking ahead to any piece of economic evidence that can clarify the economic outlook. The week starts with very little action on Monday, but the crescendo builds up over the course of the week, peaking on Thursday before tapering off on Friday.
The Commerce Department's retail sales report for March, the Federal Reserve's Beige Book, the results of the manufacturing surveys of the New York Federal Reserve and the Philadelphia Federal Reserve, the Federal Reserve's industrial production report, the Commerce Department's housing starts report, the National Association of Homebuilders’ housing market index, the weekly jobless claims report and the preliminary reading of the Reuters/University of Michigan's consumer sentiment survey are among the first-tier economic reports that could influence market direction in the unfolding week.
A host of Fed speakers are also scheduled to speak over the course of the week and traders may look to these speeches for any clues on the economic recovery's progress and the direction of monetary policy. Also on tap are the Commerce Department's trade balance and business inventories reports, the Labor Department's export and import prices and consumer price inflation reports and the Treasury Budget.
Retail sales are likely to have continued their recovery in March, with the rebound in retail sales attributed to the release of pent-up demand in the wake of the recession. Strong auto and chain store sales for March add strength to the optimism. However, the recovery could be muted, given the absence of a pick up in real wage growth. Therefore, retail sales growth in the near to medium term is contingent on how quickly wage growth accelerates.
Manufacturing output should rebound in March, but the headline industrial output number is expected to see a drag from weakness in the output of utilities. Electricity output may have seen a pullback from the previous months' sharp increases triggered by the unusually cold winter weather.
After narrowing in January, the trade deficit is expected to widen in February from the month-ago levels. Capital Economics estimates modest increases in exports and non-petroleum imports in February. With the level of imports greater than that of the exports, similar sized increases in both components should widen the trade deficit.
Regional manufacturing surveys have remained upbeat in recent months, with the headline manufacturing indexes of the New York as well as the Philadelphia Federal Reserve hovering at relatively elevated levels. However, the bounce should moderate in the coming months, as the pick up in world trade slows. The focus this time around will be to see whether the weak sentiment relayed by manufacturers regarding their capital expenditure investments mitigates.
Core consumer price inflation is set to slide, with some economists predicting a sub-1% annual rate by the end of the year. The housing cost component, which has a notable weighting in the index, has remained tame and over the course of the year, this stagnation is expected to lead to an outright decline in costs.
The Treasury Budget, a monthly account of the surplus or deficit of the federal government, is due to be released at 2 PM ET. The budget is considered an indicator of budgetary trends and the thrust of fiscal policy. Economists estimate a deficit of $60 billion for March. |