Global Markets Overview - 8 February 2013
U.S. STOCKS, BONDS
Major stock benchmarks pared sharp losses but remained solidly in the red Thursday, weighed down by growth-sensitive sectors amid worries on Europe and underwhelming data on the U.S. economy.
The Dow Jones Industrial Average declined 65 points, or 0.9%, to 13862. The Standard & Poor's 500-stock index tilted lower by six points, or 0.4%, to 1506. The materials, energy and technology sector--all considered closely tied to global growth--were the biggest decliners.
The Nasdaq Composite Index declined 16 points, or 0.5%, to 3152. Thursday was the fourth trading session of five in February in which the Dow industrials had triple-digit swings intraday.
In the U.S., jobless claims declined in the latest week to 366,000. While those were more claims than the 360,000 expected, the four-week moving average of initial claims, which smoothes out week-to-week volatility, fell to levels not seen since 2008.
The first read of fourth-quarter productivity showed a decline of 2% on the quarter, a bigger drop than the 1.6% expected. Unit labor costs rose 4.5%, more than the 3.2% gain expected.
In corporate news, US Airways Group rallied 2.5% after The Wall Street Journal reported that the airline and American Airlines parent AMR are working out details of a merger agreement. The combination would get American out of bankruptcy, and create the world's largest airline.
Apple shares advanced 0.6% after noted hedge-fund manager David Einhorn urged shareholders to vote against a company proposal that would eliminate the technology giant's preferred stock.
His firm, Greenlight Capital, said in a statement that Mr. Einhorn had been having discussions with the company and was unhappy with its use of capital.
EUROPEAN STOCK MARKETS, BONDS
European stocks ended mostly lower Thursday, failing to hold gains that came after European Central Bank President Mario Draghi cited improved financial market conditions across the euro zone.
The Stoxx Europe 600 index fell 0.2% to close at 283.88, after trading as high as 286.20 after Mr. Draghi spoke. Germany's DAX 30 index gained 0.1% to 7,590.85, France's CAC 40 index fell 1.1% to 3,601.05, and the U.K.'s FTSE 100 index was down more than 1% at 6,228.42.
ECB President Mario Draghi said the euro-zone economy should begin to recover later this year partly due to the bank's "accommodative" monetary policy.
The central bank left its key lending rate unchanged at 0.75% as expected and made no changes to other key rates.
The Bank of England also left its lending rate unchanged, at a record low 0.5%, and maintained the size of its paused asset-purchase program at GBP375 billion.
Among major movers in the Stoxx Europe 600 index, shares of Alcatel-Lucent gave up early gains to end 4.9% lower. The telecom-equipment maker said Chief Executive Ben Verwaayen will step down from his post, and the company's board, after profit and revenue declined in the fourth quarter.
Vodafone Group PLC added 0.9% after affirming annual guidance for adjusted operating profit and free cash flow, even as the wireless-telecom firm reported a 2% drop in third-quarter revenue.
Credit Suisse Group AG fell 2.6%, even as the bank said it returned to profit in the fourth quarter.
Elsewhere, shares of luxury-goods firm Burberry Group PLC fell 6.5%. The company said Executive Vice President and Chief Financial Officer Stacey Cartwright will step down to pursue other interests.
HeidelbergCement AG added 5.1%, after it posted a 6.5% rise in fourth-quarter revenue and a 10.9% improvement in operating income.
Spain's financial markets were also in the limelight as the government reportedly sold 4.6 billion euros ($6.25 billion) in public debt, above the EUR3.5 billion to EUR4.5 billion target range.
Borrowing costs rose from previous auctions, however, as political uncertainty over a corruption scandal cast a shadow over investor confidence in the country.
The yield on 10-year Spanish government bonds fell 0.02 percentage point to 5.40% in the secondary market, according to electronic trading platform Tradeweb. The IBEX 35 index was down 0.1%.
ASIA-PACIFIC STOCKS, BONDS
Asian stock markets were lower Thursday ahead of economic data from China Friday, while Japan retreated after its strong gains in the previous session.
Markets were anticipating the latest set of economic numbers from China, with trade and inflation data scheduled to be released on Friday, just before the country shuts down for the Lunar New Year holiday.
China's shares finished lower Thursday for the first time in nine sessions, dragged down by financial firms that fell amid concerns that the sector has gained too rapidly in the recent rally.
The Shanghai Composite Index fell 0.7%. Hong Kong's Hang Seng Index fell 0.3%.
The world's largest personal computer maker Lenovo Group jumped 5.2% after news it would be added to the Hang Seng Index on March 4, while Aluminum Corp. of China, or Chalco, dropped 2.8% as it will be removed from the index.
In Tokyo, the Nikkei Stock Average declined 0.9% to 11357.07 on profit-taking after the market surged 3.8% Wednesday to end at its highest level since September 2008.
Japanese stocks were also reacting to a slight strengthening in the yen against the U.S. dollar. Nikon Corp. was the biggest mover in Tokyo, plunging 18.9% after its third-quarter earnings report undershot expectations.
The company also slashed its operating profit guidance for the fiscal year to Y48 billion from Y72 billion.
On the plus side, Mazda Motor Corp. jumped 12% after its third-quarter operating profit came out well above expectations. The company also bumped up its full-year guidance to Y45 billion from Y25 billion. South Korea's Kospi Composite fell 0.2% at 1931.77.
COMMODITIES
Base metals closed lower on the London Metal Exchange Thursday, losing ground in line with the euro following comments by European Central Bank President Mario Draghi.
At the PM kerb close, LME three-month copper was down 0.5% at $8,200 a metric ton. Tin was 0.1% lower at $24,675/ton. Oil futures fell Thursday, settling below $96 a barrel with a strong U.S. dollar prompting a decline across most of the commodities sector.
March crude settled at $95.83 a barrel on the New York Mercantile Exchange, down 79 cents, or 0.8%. That was the lowest front-month contract settlement since Jan. 23. Gold fell, and silver slumped to a one-week low, on pressure from a sharply higher U.S. dollar after comments from European Central Bank chief Mario Draghi.
The most actively traded gold contract, for April delivery, fell $7.50, or 0.5%, to settle at $1,671.30 a troy ounce on the Comex division of the New York Mercantile Exchange. Silver for March delivery fell 1.5% to $31.403 an ounce, the lowest since Jan. COMPILED FROM MORRISON SECURITIES PTY. LTD.