Global Markets Overview - 09 January 2013
U.S. STOCK MARKET
Slumping telecommunications and industrial shares weighed on U.S. stock benchmarks as investors struck a cautious tone ahead of corporate earnings season.
The Dow Jones Industrial Average shed 71 points, or 0.5%, to 13313 midafternoon trading on Tuesday. The S&P 500 gave up seven points, or 0.5%, to 1455, extending its slide from a five-year closing high on Friday.
The Nasdaq Composite Index slipped 11 points, or 0.4%, to 3088. Shares of Boeing dropped 3.3%, pacing declines among industrial shares in the S&P 500 and the biggest drop among Dow components, after a fuel leak on one of the aerospace giant's 787 Dreamliner aircraft forced the plane to return to the terminal after taking off.
Among telecommunications companies to decline were MetroPCS Communications, which fell 2.7%. GameStop slumped 5.8% after lowering the high end of its quarterly same-store sales outlook on weaker holiday results.
Yum Brands slumped 4.1% after warning its same-store sales in China will fall more than expected. A government review of China poultry supply weighed on sales at Yum's KFC restaurants there, the fast-food chain operator said. Alcoa rose 0.3%. The blue-chip aluminum producer's fourth-quarter results, seen by many investors as the start of earnings season, are due after the closing bell.
EUROPEAN STOCK MARKETS
European stocks mostly posted small losses Tuesday, as investors focused on the unofficial start to the U.S. earnings season and discounted euro-zone data that painted a mixed picture of the region's economic recovery.
The Stoxx Europe 600 index closed 0.1% lower at 286.25. Germany's DAX 30 index fell 0.5% to 7,695.83, while the U.K.'s FTSE 100 index lost 0.2% to 6,053.63.
France's CAC 40 index closed slightly higher at 3,705.88. Among Tuesday's movers, shares of Vodafone Group PLC gained 1.7%. Lowell McAdam, chief executive of Verizon Communications Inc., said it is possible the U.S. blue-chip could buy out Vodafone's 45% stake in joint venture Verizon Wireless.
Nokia Corp. sank 6.2%, as Credit Suisse reiterated its underperform rating on the handset firm and said it faces material challenges in turning the business around over the next 12 months.
Shares of Ericsson LM slumped 4.8%. Credit Suisse also reiterated an underperform rating on that firm, saying it faces muted growth in 2013. Shares of Telekom Austria AG lost 3.2%.
The carrier said it expects the challenges which characterized the operational environment during 2012 to continue to dominate in 2013. A raft of macroeconomic data kept investors busy.
The European Commission reported unemployment in the 17-nation euro area rose to 11.8% in November, up from 11.7% in October, hitting a euro-era record.
Meanwhile, retail sales for the region rose a less-than-expected 0.1% in November. On a more hopeful note, the European Commission's economic sentiment index for the euro zone rose to 87 in December, beating analysts' expectations.
Separately, German data showed exports dropped 3.4% in November, adding to concerns that Europe's largest economy might have slipped into contraction in the fourth quarter.
Greek stocks, on the other hand, rallied, after the Public Debt Management Agency said it successfully sold a total of EUR2.6 billion in four- and 26-week Treasury bills at higher demand and lower borrowing costs than at previous auctions. The ASE Composite index gained 1.1% to 980.52.
ASIA-PACIFIC STOCKS, BONDS
Asian stocks fell Tuesday as investors locked in profits after strong recent gains and on caution ahead of the U.S. earnings season, with Japanese shares dropping as the yen strengthened. Japan's Nikkei Stock Average and Hong Kong's Hang Seng Index each ended 0.9% lower.
China's Shanghai Composite and Taiwan's Taiex gave up 0.4% each, while South Korea's Kospi slid 0.7%. Tuesday's decline came after a lower finish on Wall Street Monday, before the start of the fourth-quarter earnings season this week.
Several exporters weakened in Tokyo as the dollar slipped against the yen. Mazda Motor Corp. fell 5%, Nissan Motor Co. dropped 1.1% and Casio Computer Co. lost 3.1%.
Consumer electronics firm Sharp Corp. managed to buck the lower trend, rebounding 3.9% from recent losses. The stock is still down more than 3% so far this month.
In Hong Kong, meanwhile, losses were led by profit-taking in energy, insurance and property sectors after their strong performance recently.
Shares of China Resources Land Ltd. dropped 2.7%, oil major Cnooc Ltd. fell 1.8% and China Life Insurance Co. lost 3.3%.
Elsewhere in the region, South Korean heavyweight Samsung Electronics Inc. fell 1.1% after announcing fourth-quarter operating profit and sales guidance figures that broadly met analyst estimates.
COMMODITIES
Base metals on the London Metal Exchange were mostly a touch higher at the close of open-outcry trading ahead of Chinese data due later in the week, although ranges remained narrow as investors waited on the sidelines for clear drivers.
Flagship copper added just 0.05% to $8,075 a metric ton by the close. Price moves were extremely subtle. Crude-oil futures ended nearly where they began as traders paused ahead of weekly data on domestic oil inventories.
Last week's data showed a massive 11.1 million barrel drop in crude stockpiles, and analysts attributed most of the decline to year-end inventory shuffles to minimize taxes.
Still, traders worry a sharp rebound in inventories in data due Wednesday could rattle the market, particularly with crude near four-month highs. Nymex crude settled 4 cents lower at $93.15/bbl.
Gold prices rose on signals that Chinese buyers were stocking up on the precious metal ahead of the lunar new year. The most actively traded contract, for February delivery, rose $15.90, or 1%, to settle at $1,662.20 troy ounce on the Comex division of the New York Mercantile Exchange. Front-month January gold also rose 1%, to settle at $1,661.50 an ounce. Compiled from MORRISON SECURITIES PTY. LTD.