Global Markets Overview - 19 November 2012
U.S. STOCK MARKETS
Stocks posted their biggest daily gain Friday since the U.S. presidential election, after lawmakers said budget talks with the White House were "constructive." The Dow Jones Industrial Average rose 45.93 points, or 0.4%, to 12588.31, reversing a morning slide of as much as 71 points.
The Dow had tumbled since the Nov. 6 presidential election, which turned investors' attention to the looming "fiscal cliff," a series of tax increases and automatic spending cuts that would go into effect on Jan. 1 if a budget deal isn't reached.
The Standard & Poor's 500-stock index added 6.55 points, or 0.5%, to 1359.88. The Nasdaq Composite Index climbed 16.19 points, or 0.6%, to 2853.13.
Ranking Senate and House of Representatives members from both political parties said opening negotiations on a deal were productive. Senate Minority Leader Mitch McConnell, the Kentucky Republican, said measures to raise tax revenue were "on the table."
Major stocks benchmarks ended lower for the week. The Dow industrials fell for the fourth straight week, the longest such slump since August 2011.
The Nasdaq dropped for the sixth straight week, the longest losing streak since July 2008. On the economic front, U.S. industrial production fell 0.4% last month, the Federal Reserve reported, bucking economists' expectation for a 0.2% increase.
Superstorm Sandy's battering of the East Coast depressed manufacturing activity. Capacity utilization also decreased. Output figures for September were revised lower.
In corporate news, Dell tumbled 7.3% after reporting late Thursday that its quarterly earnings were nearly halved. Fellow PC maker Hewlett-Packard dropped 1.8%. Gap rose 1% after the retailer raised its earnings forecast for the year.
Sears Holdings tumbled 19% after reporting a bigger loss for the latest quarter. Same-store sales continued to weaken. Facebook jumped 6.3%, capping its biggest weekly gain since its May initial public offering.
EUROPEAN STOCK MARKETS
European stock markets closed a volatile week 2.7% lower Friday, as escalating tensions in the Middle East fueled fears of a wider conflict in the region and investors also braced for the start of U.S. negotiations over sidestepping the so-called fiscal cliff.
The Stoxx Europe 600 index lost 1% to 262.86, marking the lowest closing level since early August. Henkel AG & Co. KGaA fell 4.7% in Frankfurt. The maker of household products reported third-quarter earnings and said it's "fully committed" to achieving 2012 financial targets.
In Paris, shares of Renault SA added 1.2%. Data showed new car registrations in Europe dropped at a slower pace in October, according to Dow Jones Newswires.
In London, shares of Melrose PLC slumped 11% after the investment company said its 2013 sales outlook has become more uncertain and that its businesses aren't immune to worsening of macroeconomic conditions internationally.
In the other direction, shares of Serco Group PLC gained 1%, after the international services company said it sees improved performance in second half of the year. Investors mostly focused on developments in the U.S., as President Barack Obama met congressional leaders to discuss how to avert the looming cliff of tax rises and budget cuts.
Escalating tensions in the Middle East also spread jitters across financial markets, as Israel and Hamas stepped up attacks in and around the Gaza Strip.
In London, shares of BP PLC lost 2.1%. The oil major Thursday agreed to pay about $4.5 billion to settle federal charges related to its 2010 oil spill in the Gulf of Mexico.
Shares of Royal Dutch Shell PLC gave up 2.1%, while BG Group PLC dropped 1.7%. The U.K.'s FTSE 100 index lost 1.3% to 5,605.59 and was down 2.8% on the week.
In Paris, shares of French oil group Total SA fell 1.2%. The CAC 40 index slumped 1.2% to 3,341.52 and closed out the week 2.4% lower.
In Frankfurt, shares of Commerzbank AG dropped 5%, while those of Deutsche Bank AG shed 3.8%. The DAX 30 index closed 1.3% lower at 6,950.53, and fell 3% on the week.
ASIA-PACIFIC STOCK MARKETS
Asian shares were mixed Friday, with Japanese stocks extending their rally, adding 3% on the week thanks to an election-inspired weaker yen.
Hong Kong stocks stabilized after consistent declines during the week. Many regional markets continued to fall Friday however, on lingering concerns over the fiscal impasse in the U.S., though losses were more moderate.
The U.S. dollar's sharp rise against the Japanese yen took a breather early Friday. The yen softened Wednesday and Thursday to levels last seen in April, on expectations that a victory for Japan's Liberal Democratic Party in the upcoming elections could result in more aggressive monetary easing.
The recent yen weakness continued to support Japanese stocks, with the Nikkei Stock Average rising 2.2% to 9024.16, its third best day so far in 2012. Exporters led the gains: Nissan Motor climbed 5.1% and Canon jumped 5.8%.
Hong Kong's Hang Seng Index was 0.2% higher at 21159.01, though there were significant drops in certain blue chips: sourcing company Li & Fung sank 4.7% after negative comments after the firm met with analysts on Thursday, while fashion retailer Esprit dropped 6.2% after a 22% rise on Thursday on hopes that a former chairman might return to the company.
The index was 1.1% lower for the week. The Shanghai Composite Index was down 0.8% at 2014.72. South Korea's Kospi Composite was down 0.5% to 1860.83. In deal news, beverage maker Kirin Holdings didn't participate in the broader Japanese market rally, falling 2.2%, after the company said that it will team up with Indonesian real estate firm Overseas Union Enterprise to try and acquire Fraser & Neave.
COMMODITIES
Base metals on the London Metal Exchange closed mostly lower Friday amid euro weakness, with only nickel in positive territory. At the close of open-outcry trading LME copper was down 0.5% on the day at $7,605 a metric ton.
Aluminum was down 0.6% at $1,951/ton with support tipped between $1,900/ton and $1,925/ton. Lead suffered the heaviest decline, closing 2.2% lower on the day at $2,150/ton.
A weaker euro and weaker equity markets had weighed on the base metal complex. Oil futures rose more than 1% Friday, as escalating hostilities between Israel and Palestinian militants renewed fears about a broader conflict that would disrupt supplies of Mideast crude oil.
Light, sweet crude for December delivery, which expired at the close of trading Friday, settled $1.22, or 1.4%, higher at $86.67 a barrel on the New York Mercantile Exchange.
The more actively traded January contract settled $1.05, or 1.2%, higher at $86.92 a barrel. Brent crude on the ICE futures exchange settled 94 cents, or 0.9%, higher at $108.95 a barrel.
Gold prices gained slightly as traders who had bet on lower prices cashed out amid ongoing missile strikes in the Middle East.
Platinum futures slipped to a one-week low as a further easing of labor tension in top producer South Africa limited the risk of further supply disruptions.
The most actively traded gold contract, for December delivery, rose 90 cents, or 0.1%, to settle at $1,714.70 a troy ounce on the Comex division of the Nymex. Platinum for January delivery, the most actively traded contract, fell $11.50, or 0.7%, to settle at $1,561.80 a troy ounce. Compiled from MORRISON SECURITIES PTY. LTD.