Global Markets Overview - 17 January 2013
U.S. STOCK MARKETS, BONDS
A drop at Boeing weighed on the Dow Jones Industrial Average, while strength in Apple and the technology sector lifted the other major U.S. indexes into positive territory.
The Dow Jones Industrial Average declined 25 points, or 0.2%, to 13510 in Wednesday afternoon trading, following five days of gains that pushed the index to within 1% of its highs from last October.
The Standard & Poor's 500-stock index gained one point, or 0.1%, to 1473, while the Nasdaq Composite added 10 points, or 0.3%, to 3120. Leading gains were tech companies, as Apple bounced back 4.3% after a two-day drop that shaved 6.6% off the consumer tech giant's market value and sent shares below $500 for the first time in about a year.
Hewlett-Packard topped the list of Dow gainers, rising 1.8%. Financial shares were also positive, after a spate of bank earnings led by J.P. Morgan Chase and Goldman Sachs Group. J.P. Morgan rose 0.5% after fourth-quarter earnings surged 53% on strong revenue and strengthening credit.
The bank also made public an internal report outlining mistakes and oversights by executives who played a role in its multibillion-dollar trading loss linked to outsized, complex trades on credit default swaps tied to corporate bonds.
Goldman Sachs advanced 4.1% after fourth-quarter profit exceeded expectations, powered by a 64% surge in investment bank revenue and a 53% jump in net revenue.
Comerica rose 3.8% after profits topped estimates, as the commercial lender saw net charge-offs, or loans the company no longer expects are collectible, fall from the prior quarter.
Northern Trust and Bank of New York Mellon fell 5.1% and 2.5% respectively, as both trust banks fell short of earnings expectations, partly due to higher expenses.
Boeing weighed most heavily on the Dow, falling 3.7% after Japan's All Nippon Airways grounded its fleet of 787-model Dreamliners following an emergency landing in Japan by one of its Dreamliners.
The latest emergency came just days after a series of similar technical woes, including a fire on a plane in Boston, underscoring concerns about the aerospace giant's new generation of aircrafts.
Also hurting sentiment was a cut in economic expectations by the World Bank, which now expects the global economy to expand by just 2.4% this year, down from its June projection for global growth of 3%.
In economic news, consumer prices remained unchanged and industrial production rose 0.3% in December--both in line with expectations. Meanwhile, an index of sentiment among homebuilders was unchanged at 47 in January, below expectations.
Concerns over global economic growth and a continuing political impasse surrounding the U.S. budget left European shares struggling for direction Wednesday.
EUROPEAN STOCKS, BONDS
The Stoxx 600 Europe index erased a small decline to finish at 286.03, a gain of 0.06 point, or less than 0.1%. Lingering questions about the outlook for global growth and, closer to home, the euro zone's ability to recover from recession helped cap upside for European shares after a strong run into the new year.
In Paris, the CAC-40 stock index rose 0.3% to 3,708.49, while Germany's DAX 30 index gained 0.2% to 7,691.13. London's FTSE 100 lost 0.2% to close at 6,103.98. Drug makers were the biggest contributors to the upside, with Sanofi SA rising 0.5% in Paris. Novartis AG gained 0.7% in Switzerland, while Novo Nordisk A/S added 1% in Copenhagen.
Shares of TUI AG rose 8.8% in Frankfurt. London-listed TUI Travel PLC said it had received an approach from TUI AG that "may or may not result in a combination of the two companies."
TUI Travel PLC rose 3.9%. Reflecting weakness across much of the mining sector in London, shares of Anglo American PLC slumped 3.1%.
Analysts at Societe Generale cut its rating to sell from hold, saying that a restructuring planed by incoming Chief Executive Mark Cutifani may not herald as radical a reshuffle as initially anticipated.
Lonmin PLC was the biggest percentage decliner on the Stoxx 600, chalking up a 5.9% loss in London, while Xstrata PLC dropped 3.4%.
ASIA-PACIFIC STOCK MARKETS
Asian markets mostly declined Wednesday, with Japanese stocks skidding on a firmer yen and shares in Hong Kong weakening as financials lost ground.
The Nikkei Stock Average tumbled 2.6% to 10,600.44. Hong Kong's Hang Seng Index declined 0.1%, the Shanghai Composite dropped 0.7%, South Korea's Kospi slid 0.3% and Taiwan's Taiex fell 0.8%.
Losses for Japanese stocks came after the dollar weakened against the yen following reports the country's economy minister Amira Amari will attend the next Bank of Japan meeting.
Companies that have seen some gains in recent sessions amid yen weakness pared some of that strength Wednesday.
Fuji Heavy Industries Ltd. fell 2.9%, Nikon Corp. down 4.6% and Honda Motor Co. dropped 3%. Heavyweight retailer Fast Retailing Co. fell 4.6% after a downgrade to neutral from buy at Goldman Sachs. Shares of All Nippon Airways Co. fell 1.6%, but outperformed the broader market.
Japanese broadcaster NHK reported the airline was to ground its entire fleet of 17 Boeing Co. (BA) Dreamliners after a 787 aircraft made an emergency landing as it headed toward western Japan.
Rival Japan Airlines Co. rose 1.8%, shrugging off reports that it would also ground its Dreamliners Wednesday.
Mainland Chinese financials retreated in Hong Kong, pulling back after recent gains. Bank of Communications Co. dropped 1.3% and Industrial & Commercial Bank of China Ltd. fell 0.7%.
China Petroleum & Chemical Corp. fell 1.6% in the energy sector, while China Coal Energy Co. slid 1.3%. On the Chinese mainland, losses were also concentrated in financials, with Bank of Communications Co. down 1.6%, and Agricultural Bank of China Ltd. off 2.1%.
COMMODITIES
Base metals closed mostly lower on the London Metal Exchange Wednesday, pressured by fresh concerns over global growth, and expected to remain relatively directionless until key economic data are released from China Friday. At the PM kerb close, LME three-month copper was 0.6% lower at $7,946/ton.
Tin held up the best, ending the session 0.5% higher at $24,995/ton. Crude-oil futures prices rose Wednesday after U.S. inventory data showed an unexpected drop in the nationwide crude-oil stockpile.
Data from the Energy Information Administration showed crude oil stocks fell by 951,000 barrels in the week ended Jan. 11, while forecasters called for a sizeable rise.
A drop of more than 300,000 barrels a day in crude oil imports contributed to the decline in the week, the EIA data show. Light, sweet crude oil for February delivery on the New York Mercantile Exchange settled 1% higher at $94.24 a barrel, a four-month high.
Gold futures slipped, pulling back after gains over the past two trading sessions, but prices finished well off their lows of the day amid upbeat prospects for investment demand. February gold settled at $1,683.20 an ounce on the Comex division of the New York Mercantile Exchange, down 70 cents, but recouping much of its earlier losses after touching a low at $1,673 an ounce. COMPILED FROM MORRISON SECURITIES PTY. LTD.