Global Markets Overview - 28 December 2012
U.S. STOCKS, BONDS
Financial and materials shares led U.S. stocks lower as the Senate's top Democrat warned a budget deal looks unlikely and a reading on consumer confidence tumbled. The Dow Jones Industrial Average dropped 131 points, or 1%, to 12984 in mid-afternoon trading, dipping below 13000 for the first time since Dec. 5. The Standard & Poor's 500-stock index slid 15 points, or 1.1%, to 1405, turning the benchmark negative for December.
The Nasdaq Composite Index dropped 30 points, or 1%, to 2960. Bank of America slipped 2.3% and J.P. Morgan Chase fell 2.2%, leading the Dow lower. Marvell Technology fell 4.7%, extending a 10% slide on Wednesday that followed a jury ruling against the semiconductor company in a patent lawsuit.
Senate Majority Leader Harry Reid said it looks like the U.S. is headed over the so-called fiscal cliff, setting in motion mandatory tax hikes and spending cuts that could trigger a recession.
Lawmakers trying to craft an alternative budget plan have faced gridlock in partisan negotiations. Adding to the fiscal drama, the Treasury Department said late Wednesday that the country's legal borrowing limit would be reached by Monday, but that it could enact some emergency measures to keep the government operating for several more weeks if needed.
The budget uncertainty is weighing on Americans' feelings about their future, according to the Conference Board. The private research group's consumer confidence index fell to the lowest level since August and far short of economists' forecasts.
Other economic data were more upbeat. New home sales rose in November to their highest level in more than two years, the Commerce Department said, the latest sign of a steady housing recovery.
The number of U.S. workers filing applications for jobless benefits fell last week, the Labor Department reported. Economists were expecting an increase. Elsewhere in the corporate arena, BCD Semiconductor Manufacturing surged 90% after the company agreed to be acquired by Diodes for $151 million. Diodes added 1.1%.
EUROPEAN STOCKS, BONDS
European stock markets ended Thursday's session with a broad-based advance as investors largely shrugged off the latest developments surrounding the so-called U.S. fiscal cliff. The Stoxx Europe 600 index squeezed out a fractional gain to close at 280.60.
The U.K.'s FTSE 100 index was marginally higher at 5,954.30, the French CAC 40 index gained 0.6% to 3,674.26, and Germany's DAX 30 index picked up 0.3% to 7,655.88. Shares of Clariant AG scored one of the biggest gains in the pan-European index, jumping 3%.
The company said it will sell its textile-chemicals, paper specialties and emulsions business to SK Capital for about 502 million Swiss francs ($550 million).
Mining shares also stood out among the gainers, keying off overnight gains for Asian peers. London-listed Rio Tinto PLC rose 0.9%, while BHP Billiton PLC climbed 0.8%.
Metals futures were mostly higher. Shares of France's Total SA rose 0.8%, tracking a day-earlier rally in crude-oil prices. Shares of Deutsche Bank AG closed 0.8% higher, while Commerzbank AG added 0.9%.
The Italian Treasury successfully sold the targeted EUR8.5 billion in six-month Treasury bills and the maximum planned EUR3.25 billion in two-year zero coupon notes. The FTSE MIB index added 0.5% to 16,408.28, with shares of Intesa Sanpaolo SpA gaining 1.4%. And in Greece, the Athens General Index gained 1.8% to 912.70.
ASIA-PACIFIC STOCKS, BONDS
Japanese stocks rallied Thursday to their highest level since the March 2011 earthquake as hopes for policy stimulus and a weakened yen spurred buyers, while gains in other regional markets were capped amid worries related to the U.S. fiscal cliff.
The Nikkei Stock Average climbed 0.9% to 10,322.98, a closing level it hasn't seen since March 10, 2011, one day before a massive earthquake and tsunami devastated the country.
Elsewhere in the region, Hong Kong's Hang Seng Index rose 0.4%, reopening for the first time since Monday. Taiwan's Taiex inched up 0.2% and South Korea's Kospi gained 0.3%, while China's Shanghai Composite fell 0.6%.
The advance in Tokyo marked a third straight day of gains, and came as the yen stayed close to its lowest level since September 2010 against the U.S. dollar.
Among the stocks to rise, Honda Motor Co. HMC climbed 1.6% and Mitsubishi Motors Corp. jumped 6.2%, while Panasonic Corp. added 1.4%. Toyota Motor Corp. climbed 2.6%, even as it was reported the auto giant had agreed to pay $1.1 billion to settle a class-action lawsuit related to a malfunction that caused unintended acceleration.
Several mining and metal shares in the region advanced, with Zhaojin Mining Industry rising 0.8% and Aluminum Corp. of China gaining 0.6% in Hong Kong. But on mainland Chinese bourses, the resource and financial sectors declined, paring gains recorded earlier in the week. Shares of Jiangxi Copper slipped 1.2% and Zijin Mining Group slid 0.8%, while China Minsheng Banking Corp. shed 1.4% and China Life Insurance fell 0.6%.
COMMODITIES
Base metals closed mostly higher on the London Metal Exchange Thursday, although early gains were pared somewhat following the release of disappointing U.S. consumer confidence data.
The industrial metals put in a strong start to the session, with the LME's flagship three-month copper contract rallying 1.7% to hit an eight-day high at $7,945.25/ton following strong industrial profits data from top metals consumer China.
At the close, LME three-month copper was up 1.3% at $7,914 a metric ton. Nickel lagged the complex, ending the session at $17,275/ton, down 0.1%. Crude-oil futures fell Thursday, as hopes that U.S. lawmakers would find a way to reach a budget agreement before the end of the year dimmed.
Crude for February delivery settled 11 cents lower at $90.87 a barrel, Palladium climbed to a nine-month high as investors bet that constrained supply from the world's top two producers and steady demand from a buoyant global auto sector would spell higher prices in 2013.
The most actively traded palladium contract, for March delivery, rose $16.10, or 2.3%, to settle at $708.50 a troy ounce on the New York Mercantile Exchange. That is the highest settlement price since mid-March. Gold traded sideways, with the February contract rising $3, or 0.2%, to settle at $1,663.70 a troy ounce on the Comex division of the Nymex. Compiled from MORRISON SECURITIES PTY. LTD.