Global Markets Overview - 03 December 2012
U.S. STOCK MARKETS
Stocks edged mostly higher, led by sectors seen as defensive, as weak spending and income data offset German parliamentary approval of bailout funds for Greece.
The Dow Jones Industrial Average added 3.76 points, or less than 0.1%, to 13025.58. The benchmark traded in a tight range throughout the day, swinging between gains and losses.
The Standard & Poor's 500-stock index ticked up 0.23 point, or less than 0.1%, to 1416.18. Utilities, telecommunications and consumer-staples shares--sectors perceived as relatively safe when the broader market struggles--led the index. The Nasdaq Composite Index fell 1.79 points, or 0.1%, to 3010.24.
The Dow capped its third monthly loss of the year, dropping 0.5% in November. The S&P 500 rose 0.3% for the month, while the Nasdaq jumped 1.1%.
Investors continued to weigh the chances U.S. lawmakers will reach a budget deal by the year-end, averting a raft of spending cuts and tax increases set to start at the beginning of 2013.
House Speaker John Boehner said talks between the White House and Congress were at a "stalemate" Friday. Senate Minority Leader Mitch McConnell told The Wall Street Journal he wants tighter eligibility requirements for safety-net programs.
On the economic front, U.S. consumer spending fell 0.2% last month, the first decline since May, the Commerce Department reported. The results fell short of economists' forecast for an unchanged reading. Personal incomes were little changed, bucking economists' estimate for a 0.2% gain.
The core price-consumption-expenditures index, which excludes food and energy prices, held steady. Economists had projected a 0.2% increase.
The Chicago-area purchasing managers' index for November rose to 50.4 from 49.9 a month earlier, slightly topping economists' expectations. Readings above 50 indicate expansion.
In corporate news, Zynga Inc. slumped 6.1%. Changes in the online game maker's agreement with Facebook Inc. (FB) could open the door for the social network to compete with Zynga in offering games. Facebook's shares rose 2.5% to cap a 33% monthly gain, the stock's biggest such rally since its May initial public offering.
Tellabs Inc. advanced 21% after the networking-equipment company declared a special dividend of $1 a share. Yum! Brands Inc. slid 9.9% after the Taco Bell and KFC parent provided a 2013 earnings growth outlook that was below analyst projections and said sales in China have softened recently.
EUROPEAN STOCK MARKETS
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 fell 0.2% to close at 275.78, breaking a three-day winning streak. It closed out November 2% higher, marking the sixth straight month of gains, and added 0.9% on the week.
Among notable equity movers in Europe, shares of LVMH Moet Hennessy Louis Vuitton rose 1.3% after Goldman Sachs upgraded its rating to buy from neutral.
Shares of Royal Bank of Scotland Group PLC dropped 1.3% as the bank said that a sale of its Indian retail- and commercial-banking operations to HSBC Holdings PLC had collapsed and that it would wind down the business instead.
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.
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 rose 2.3%, after Morgan Stanley boosted its rating to overweight, up from equal weight previously.
Frankfurt's DAX 30 index 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 fell 0.3% to 3,557.28, with shares of Total SA down 0.2%.
On a monthly basis, the French benchmark jumped 3.7%, and it rose 0.8% on the week. And in London, miners stood out among Friday's major decliners, tracking most metals prices lower. Shares of Anglo American PLC dropped 1.8%, while Vedanta Resources PLC fell 1.3%. The U.K.'s FTSE 100 index closed 0.1% lower at 5,866.82, but was up 1.5% on the month. For the week, the index ended 0.8% higher.
ASIA-PACIFIC STOCK MARKETS
Stock markets across Asia rallied in November with Japan leading the gains because of a sharply weaker yen while China bucked the trend to extend this year's slide.
Japan's Nikkei Stock Average shot up 5.8%, benefiting from the slump in the local currency as investors bet the opposition will win elections in December and pressure the central bank to take more aggressive monetary easing.
The yen hit seven-month lows against the euro and the dollar in November, benefiting Japan's exporters as their goods become cheaper to overseas buyers.
The outlier was China with the Shanghai Composite Index cementing its position as the region's worst performing index, losing 4.3% for November, and down 10% year-to-date.
A smooth leadership transition by the ruling Communist Party did little to restore faith in the market, with stocks falling as investors remain concerned over the state of Asia's biggest economy and the absence of sizable policy measures from Beijing.
Chinese shares that trade in Hong Kong, have fared better, with the Hang Seng China Enterprises Index up 0.4% in November. That's left Chinese stocks in the mainland now at the biggest discount to their Hong Kong counterparts since January 2011 at 4.2%.
On Friday, markets were digesting the most recent comments regarding U.S. fiscal cliff negotiations. A weaker yen gave Japanese stocks a boost, with the Nikkei up 0.5%.
Canon climbed 1.2% and semiconductor maker Advantest Corp. added 1.1%. Also in Tokyo, Hitachi and Mitsubishi Heavy Industries gained 4.2% and 3%, respectively, after the two companies announced that they would integrate their power system operations, with a new company to be established in January 2014.
In mainland China, the Shanghai Composite Index bounced back 0.9%, pushing away from the multi-year low it reached Thursday. In Hong Kong, the Hang Seng Index was 0.5% higher.
Bourse-operator Hong Kong Exchanges & Clearing fell 0.8% after saying it was raising around US$1 billion in a share placement after getting approval from the U.K.'s Financial Services Authority for its proposed US$2.2 billion acquisition of the London Metal Exchange.
COMMODITIES
Base metals on the London Metal Exchange closed mostly higher and little changed from the European morning, taking support from sustained dollar weakness and general stability in wider markets.
The metals wavered in the early afternoon but regained momentum to mostly make considerable gains at the close. At the end of open-outcry trading, LME three-month copper was 1.2% higher on the day at $7,994.50 a metric ton.
Crude-oil futures rose Friday, moving prices into positive territory for the week as traders were more hopeful that the U.S. fiscal cliff could be averted. Light, sweet crude for January delivery settled 84 cents, or 1%, higher at $88.91 a barrel on the New York Mercantile Exchange.
ICE Brent crude rose 34 cents to $111.10 a barrel. Gold and silver fell, as a steep selloff earlier in the week and concern about the U.S. fiscal cliff left some traders reluctant to hold onto bets that prices would rise going into the weekend.
The most actively traded gold contract, for February delivery, fell $16.80, or 1%, to settle at $1,712.70 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest ending price since Nov. 5. Silver for March delivery fell 3.4% to settle at $33.279 an ounce. Compiled from MORRISON SECURITIES PTY. LTD.