Global Markets Overview - 21 January 2013
U.S. STOCKS
A broad rise in U.S. stocks revved up in afternoon trading Thursday, following talk of additional central-bank stimulus from Japan and a pair of encouraging U.S. economic reports. The Dow Jones Industrial Average rose 94 points, or 0.7%, to 13605.
The Standard & Poor's 500-stock index added nine points, or 0.6%, to 1482. The Nasdaq Composite Index advanced 20 points, or 0.6%, to 3137.
Major indexes churned higher midday, as Japanese news outlet Nikkei reported the Bank of Japan was discussing further action to stimulate the country's economy.
In recent trading, the Dow industrials were less than 10 points away from a multiyear closing high, and the S&P 500 had hit a multiyear high. In the U.S., data showed housing starts jumped 12% in December, well above the 3.4% climb expected by economists.
Building permits rose 0.3% in December. Consumer-discretionary stocks, which include home builders, led the S&P 500-stock index higher.
Home builders Toll Brothers, D.R. Horton and PulteGroup all gained, rising 2.2%, 1.8% and 5%, respectively. Jobless claims fell more sharply than expected, to 335,000 in the latest week, seasonally adjusted, compared with the 370,000 expected.
Investors shrugged off a reading that indicated business conditions for mid-Atlantic manufacturers unexpectedly contracted.
The Federal Reserve Bank of Philadelphia's regional manufacturing gauge for January fell to -5.8. But the index measuring expectations for the next six months rose to 29.2 in January from 23.7 the previous month.
The financial sector was the sole decliner in the S&P 500, losing 0.2%. Bank of America was a laggard among blue chips, dropping 4.8% after the bank reported its fourth-quarter profit tumbled 63%.
The bank's results beat analyst expectations, but those expectations were weighed down by billions of dollars in charges related to a dispute with Fannie Mae and a foreclosure settlement. Citigroup shares dropped 3.1% after the company's earnings missed expectations.
EUROPEAN STOCK MARKETS
European stocks rallied Thursday, boosted by the region's retailers, while robust U.S. economic data helped to overshadow disappointing quarterly earnings from Citigroup and Bank of America.
The benchmark Stoxx 600 index rose 0.5% to 287.35. The U.K.'s FTSE 100 index also gained 0.5% to 6132.36, Germany's DAX advanced 0.6% to 7735.46 and France's CAC-40 added 1% to 3744.11.
Greece's ASE Composite index rose 0.1% to 953.71. Italy's FTSE Mib advanced 1.4% to 17587.30 and Spain's IBEX-35 gained 0.6% to 8628.90.
European stocks struggled for direction in early trade but were finally helped higher by solid U.S. data releases, including jobless claims and home building figures. Retailers put on a good show.
French retailer Carrefour rose 6.1% after reporting modest revenue growth in the fourth quarter, while reassuring that full-year operating profit would meet market expectations.
Belgian food retailer Delhaize Group surged 10.2% on signs that weakness in its U.S. market was starting to ease. In London, Associated British Foods gained 3.2% as its first-quarter revenue beat expectations, helped by an outstanding performance from its discount fashion chain Primark.
Mid-cap peer Home Retail Group rallied 12% as it said it expected full-year profit to be ahead of current market consensus. Shares in Dutch semiconductor equipment maker ASML Holding pared heavy losses to end 7.4% higher, as investors weighed an increase in third-quarter net profit against flat sales guidance for 2013.
Nokia lost 1.6% after the Finnish handset maker disclosed another round of job cuts as part of a plan announced last June to slash 10,000 jobs by the end of this year. Miners ended down, but well off session lows, after Rio Tinto said it would book a $14 billion impairment charge, adding that Chief Executive Tom Albanese would be stepping down. Rio Tinto fell 0.5%.
ASIA-PACIFIC STOCK MARKETS
Asian stocks finished mostly lower, with Chinese stocks extending losses ahead of a reading on economic-growth data due Friday.
The recent pick-up in the Chinese economy has helped regional sentiment and brought about a strong rally in Hong Kong. Friday's data will provide investors with an opportunity to see whether the economic recovery is still on track.
China's gross domestic product is expected to rise 7.8% from a year earlier in the final quarter of 2012, up from 7.4% growth in the third quarter, according to the median forecast of 17 economists surveyed by Dow Jones Newswires.
Hong Kong's Hang Seng Index was down 0.4%, while the Shanghai Composite fell 1.1%. The yen started Thursday's session weaker, only to strengthen as the session progressed.
The currency weakened once again after Economy Minister Akira Amari said that although the yen was still in the process of correcting from its recent strength, he added that comments that he made earlier in the week about the potential effects of a strong yen had been misinterpreted.
Japan's Nikkei swung between profits and losses as the yen weakened and strengthened, ending the daily little changed, up just 0.1% at 10609.64.
The Bank of Japan's policy meeting next week will be the next major focal point for the yen, as it will give investors a chance to see how much the central bank aligns its policy with the new government's monetary policy goals.
A number of Japanese companies fell after the U.S. Federal Aviation Authority decided to halt flights of the Boeing 787 Dreamliner.
All Nippon Airways was 0.6% lower; while local component makers that supply Boeing with parts for the Dreamliner also declined: carbon fiber maker Toray Industries dropped 2% and battery maker GS Yuasa lost 5%. Sharp Corp. climbed 7.3% after a Nikkei report said the company is in the final stages of talks with Chinese PC maker Lenovo Group over a tie-up in TVs.
COMMODITIES
Base metals closed higher on the London Metal Exchange Thursday, boosted by positive news on the U.S. economy. At the close, LME three-month copper was up 1.3% at $8,053 a metric ton while zinc saw the biggest rise, up 1.5% at $2,009.50/ton.
Crude-oil futures finished at a four-month high Thursday, keying off supply concerns arising from the takeover of a natural-gas plant in Algeria by Islamist militants and the subsequent deaths of some hostages.
Light, sweet crude for February delivery closed up $1.25, or 1.3%, at $95.49 a barrel on the New York Mercantile Exchange. The contract traded as high as $96.04 a barrel.
A report of better-than-expected housing starts in December and a decline in weekly jobless claims also provided support for oil futures.
Gold climbed to a one-month high as a weak reading on mid-Atlantic manufacturing underlined the view that U.S. growth may not be robust enough for the Federal Reserve to pull back on its accommodative monetary policy. The most actively traded contract, for February delivery, rose $7.60, or 0.5%, to settle at $1,690.80 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest ending price since Dec. 17.