Global Markets Overview - 02/22/2012
FROM MORRISON SECURITIES PTY. LTD:
U.S. STOCK MARKETS
The Dow Jones Industrial Average pierced the 13000 level for the first time since before the financial crisis, but traded largely below the mark during a choppy session in which stocks were negative at times.
The Dow broke 13,000 before noon Tuesday and a handful of other times throughout the day, but was down 17 points, or 0.1%, at 12933 in afternoon trading. The Dow last traded at 13,000 on May 20, 2008.
The last time the Dow closed above that level was May 19, 2008. Back then, the index was on the way down from its historic high of 14,198 in October 2007.
Now, the milestone is just the latest step in a rally that has brought the index up 22% since early October amid encouraging U.S. economic data, with stocks a bargain relative to corporate profits. Though the round number means little in terms of investing fundamentals, it signals resurgent market faith from investors.
The Standard & Poor's 500-stock index was down 2.8 points, or 0.2%, to 1358. The Nasdaq Composite was down 17 points, or 0.6%, at 2935.
Four of the S&P sectors were higher, led by energy and telecommunications stocks. Healthcare shares weighed on the index. Among blue chips, Alcoa rose the most, gaining 2.4%, followed by Chevron, which was up 1.5%.
Euro-zone finance ministers agreed to a EUR130 billion rescue deal that requires private creditors to take a 53.5% write-down on their Greek debt.
That is more than the 50% agreed on in October. In corporate news, Wal-Mart Stores slid 4.4% after the retailer reported somewhat disappointing fiscal fourth-quarter results.
Home Depot rose 0.2% after the home improvement retailer's fiscal fourth-quarter earnings exceeded expectations. Wynn Resorts climbed 6.5% after the casino operator said it has asked co-founder Kazuo Okada to resign from the board after an investigation found him to be unsuitable. GTx slumped 34%. The company said the Food and Drug Administration placed a hold on clinical trials evaluating GTx's prostate-cancer treatment following reports of increased risk of blood clots.
EUROPEAN STOCK MARKETS
European stock markets closed lower Tuesday, as investors shifted their focus to Greece's underlying debt problems after euro-zone finance ministers earlier approved terms of a bailout package for the country. The pan-European Stoxx Europe 600 index declined 0.5% to 266.78, snapping a four-day winning streak.
Negative sentiment spread across Europe, after euro-zone finance ministers ended a marathon meeting early Tuesday with an agreement to provide Greece with EUR130 billion as part of a fresh bailout package. Greece also reached a deal with private bond holders to cut more than 53% on around EUR200 billion worth of debt.
The Athens General Index fell 3.5% to 797.13, with National Bank of Greece SA off 9.5%. Among major banks, Deutsche Bank AG lost 2.1% and Commerzbank AG lost 0.6%, helping drag the German Dax 30 index 0.6% lower to 6,908.18.
Also adding downward pressure to the German index, Deutsche Lufthansa AG shed 2.3%. An ongoing strike in the airline's major hub, Frankfurt, was extended through Friday. Around 160 Lufthansa flights were cancelled Tuesday. The French CAC 40 index closed 0.2% lower at 3,465.24, weighed down by Total SA, which declined 0.4%.
Morgan Stanley Tuesday downgraded the stock to underweight from equal-weight. Also adding pressure in France, Schneider Electric SA lost 3.2% ahead of reporting earnings Wednesday. The broader oil sector weighed on the markets after rallying Monday. Tullow Oil PLC, off 3.6%, posted one of the biggest drops in Europe after what analysts viewed as a mixed well update. BG Group PLC declined 1.9%, pulling the U.K. FTSE 100 index down 0.3% to 5,928.20.
ASIA-PACIFIC STOCK MARKETS
Asian stock markets ended mixed Tuesday as reaction to European approval for new aid to Greece was muted by widespread anticipation of the deal.
Japan's Nikkei Stock Average slipped 0.2% and South Korea's Kospi closed flat, but Hong Kong's Hang Seng Index rose 0.3% after moving in and out of positive territory during the session.
The Shanghai Composite Index added 0.8%. Many blue-chip Japanese exporters lost ground after a strong rally Monday.
Sony dropped 1.4%, Sharp lost 2%, and Citizen Holdings fell 2.9%. Car makers were especially weak, with Mazda Motor Corp. suffering after reports that it would need to issue new stock in order to shore up its finances. Shares of Mazda dropped 9.9%, while Nissan Motor lost 1.5%, and Mitsubishi Motors finished down 2%.
In Hong Kong, telecom plays were among the outperformers, with China Telecom up 4.1% on news it would begin offering Apple Inc.'s popular iPhone 4S next month.
Rival iPhone carrier China Unicom Hong Kong Ltd. added 2.3%, while China Mobile closed 1% higher. In Seoul, Samsung Electronics added 0.4% a day after saying it would spin off its liquid-crystal display business into a separate company.
Meanwhile, Korea's key shipbuilding sector weighed on the market, with Hyundai Mipo Dockyard down 2.8%, Daewoo Shipbuilding & Marine Engineering down 2.7%, and Hanjin Heavy Industries & Construction down 2.2%.
Resource stocks diverged, but showed particular weakness in Hong Kong. Shares of Chinese oil giant Cnooc fell 2.9%, while China Petroleum & Chemical Corp., or Sinopec, dropped 1% after Citigroup downgraded its shares to neutral from buy. Aluminum Corp. of China and Jiangxi Copper each finished down 1.2%, and Angang Steel fell 0.5%.
COMMODITIES
Base metals closed sharply higher on the London Metal Exchange Tuesday, underpinned by investor relief over a second bailout package for Greece, market participants said. LME three-month copper ended the PM kerb at $8,449 a metric ton, up $213.50, or 2.6%, from Monday's close.
Oil futures climbed more than 2% to finish at their highest level in nine months Tuesday, lifted by optimism over Greece's latest bailout and mounting tensions with Iran.
Much of the gains came late in the session, with prices roughly doubling during the final two hours of trading. Light, sweet crude for March delivery expired $2.60, or 2.5%, higher at $105.84 a barrel on the New York Mercantile Exchange. That is the highest front-month settle since May 4.
The more heavily traded April contract finished $2.65, or 2.6%, higher at $106.25 a barrel. Brent crude on the ICE futures exchange rose $1.09, or 0.9%, to $121.13 a barrel, also poised to end at a nine-month high.
Gold futures rallied and silver ended at a three-month high amid elation over the long-awaited Greek bailout deal and a weaker dollar. The most actively traded gold contract, for April delivery, rose $32.60, or 1.9%, to settle at $1,758.50 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest settlement price since Feb 2. Silver rose 3.7%, or $1.213, to $34.429 a troy ounce, its highest level since Nov. 15.