Global Markets Overview - 20 February 2013
U.S. STOCK MARKETS, BONDS
Blue chips rose to within 1% of all-time highs, as reports of corporate dealmaking and an upbeat reading on German investor sentiment emboldened stock-market bulls.
The Dow Jones Industrial Average added 46 points, or 0.3%, to 14027 in midafternoon Tuesday trading as investors returned from the three-day Presidents Day holiday weekend.
The S&P 500 advanced eight points, or 0.5%, to 1528, after capping its seventh-straight weekly gain, the longest such stretch since January 2011.
The Nasdaq Composite Index gained 11 points, or 0.4%, to 3203. OfficeMax jumped 21% and Office Depot surged 10% after The Wall Street Journal reported the companies are in advanced talks to merge in a stock-for-stock deal.
A 12% climb in rival Staples led gains among S&P 500 components. Humana tumbled 6.6%, the biggest decline among S&P 500 components, after a government agency proposed reimbursing insurance companies for Medicare Advantage, a health-care plan for seniors, at a lower rate than some analysts expected.
UnitedHealth notched the biggest drop among blue chips, and Cigna pulled back as well. Google rose 1.1%, topping $800 for the first time, something few other stocks have done.
The search giant's shares are up more than 13% this year, nearly double the advance of the S&P 500. In other corporate news, Red Robin Gourmet Burgers leapt 22% after the casual-dining chain reported its fourth-quarter profit doubled amid more traffic and higher average checks.
Dell was little changed ahead of its earnings report, due after the closing bell. Herbalife, also scheduled to report earnings, advanced 4%.
EUROPEAN STOCK MARKETS, BONDS
European stock markets posted broad-based gains Tuesday, boosted by stronger-than-expected German investor-sentiment data, while shares of Danone SA were among major advancers after a job-cut announcement.
The Stoxx Europe 600 index rallied 1.1% to 290.01, breaking a three-day losing streak. Stocks extended gains after the Mannheim-based Center for European Economic Research, or ZEW, said its monthly survey of financial professionals produced a rise in its expectations index.
The ZEW economic expectation index jumped 16.7 points to 48.2 in February, exceeding analysts' expectations of a 35.0 print. February's current economic-conditions indicator, however, dropped slightly to 5.2. Investors shook off U.S. data showing a gauge of confidence among home builders ticked lower in February.
Among the regional indexes, Germany's DAX 30 index added 1.6% to 7,752.45, France's CAC 40 index rose 1.9% to 3,735.82, and the U.K.'s FTSE 100 index advanced 1% to 6,379.07, marking its highest close since January 2008.
Among notable market movers, shares of Danone jumped 5.9% after the yogurt maker announced plans to slash around 900 jobs in Europe in response to the region's downturn.
The company further said total group sales rose 8% in 2012, beating analysts' expectations. Standard Chartered PLC gained 2.4%, as Morgan Stanley lifted the bank to overweight from equal weight. Shares of Drax Group PLC rallied 6.1% as the electric-utility firm's 2012 results beat expectations.
Health-care major Bayer AG rose 3.6%. The company said it had initiated trials on the blindness treatment VEGF Trap-Eye with Regeneron Pharmaceuticals Inc.
Shares of Carrefour SA gained 4.6% after J.P. Morgan Cazenove initiated coverage of the supermarket retailer with an overweight rating. Banks pushed higher in London with Barclays PLC up 1.5% and Royal Bank of Scotland Group PLC up 1.7%.
ASIA-PACIFIC STOCKS, BONDS
Asian stock markets were mixed Tuesday, with sharp falls in property developers pulling down stocks in Shanghai, while Australia ended at a fresh multi-year high despite mixed earnings.
The largest move was in mainland China, where the Shanghai Composite fell 1.6% to 2382.91 on fears the government could take action to rein in a rebound in property prices over the coming weeks.
Property and construction companies experienced heavy declines: developer Gemdale Corp. fell 7.9% and Poly Real Estate Group dropped 5.1%, while Anhui Chaodong Cement Co. lost 9.9%.
Weakness in mainland China weighed on Hong Kong, where the Hang Seng Index lost 1% to 23143.91.
A stronger yen put pressure on Japanese stocks as did profit-taking following Monday's sharp rise, with the Nikkei Stock Average down 0.3% at 11372.34.
The yen was pushed higher by comments from Finance Minister Taro Aso who said that Japan wasn't thinking about foreign bond purchases or changing the law governing the Bank of Japan.
Investors were also mulling over the minutes from the Bank of Japan's January policy meeting, which revealed that some of the central bank's board members said buying longer-term Japanese government bonds could be considered as part of its monetary easing strategy to tackle deflation.
In Tokyo, Bridgestone Corp. climbed 10.4% after the tire company reported that it expects net profit to increase by 37% to a record Y235 billion in 2013, higher than consensus estimates for a Y204 billion profit. The firm noted that the weaker yen has helped profitability. South Korea's Kospi Composite was up 0.2% to 1985.83.
COMMODITIES
Base metals on the London Metal Exchange closed lower Tuesday as worries about housing-based demand for the metals set a bearish tone early in the session, causing prices to extend Monday's declines, while general sentiment for the complex remained fragile.
At the close of open-outcry trading, LME three-month copper was 0.8% lower from Monday's settlement, at $8,050 a metric ton.
Crude-oil futures settled above $96 a barrel, finding some support from upbeat German economic-sentiment data ahead of supply and demand figures.
Crude oil for March delivery settled 80 cents higher at $96.66 a barrel on the New York Mercantile Exchange.
Gold fell for a fourth session, hitting a six-month low, as investors remained cautious after the metal's lackluster recent performance.
The most actively traded gold contract, for April delivery, fell $5.30, or 0.3%, to settle at $1,604.20 a troy ounce on the Comex division of the Nymex, the lowest ending price since Aug. 2.
Wheat futures fell, pressured by negative technical signals and greater precipitation appearing in this week's forecasts for the southern Plains. CBOT March wheat was down 10 1/4 cents, or 1.4%, at $7.32 a bushel. Compiled from MORRISON SECURITIES PTY. LTD.