World Market Overview Report 14/01/2011
The health care sector led U.S. stocks lower Thursday, after Merck halted a clinical study, but successful bond auctions in Spain and Italy helped shore up sentiment.
The Dow Jones Industrial Average was off 31 points, or 0.3%, at 11725 in afternoon trading. Merck was the measure's worst performer, taking 18 points off the DJIA.
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The drug maker sank 6.5% after its researchers halted one of two major studies of its experimental anti-clotting drug vorapaxar and made significant changes to the other, throwing into doubt the future of one of the most important medicines in its product pipeline.
The Nasdaq Composite edged up less than one point to 2738.
The Standard & Poor's 500 stock index fell 0.1% to 1285.
The health-care sector dragged on the S&P 500 as Merck sank.
Drug maker Pfizer fell 0.9%, while medical products maker Baxter International fell 1.2%.
A rush of U.S. economic data largely missed investors' expectations.
The number of workers filing for initial jobless claims unexpectedly increased by 35,000 to 445,000 in the week ended Jan. 8.
Economists surveyed by Dow Jones Newswires had expected a drop of 2,000 to 407,000.
However, investors said this week's data could have been affected by recent snowstorms.
The U.S. trade deficit unexpectedly narrowed for the third straight month in November, though the gap with China rebounded.
Investors are also waiting to see the results of chip giant Intel's fourth quarter earnings report, which will be released after the market's close.
European Markets
Spanish stocks surged again Thursday, led by gains for banks after a successful government bond auction, however other European markets finished mostly lower, with the Stoxx Europe 600 index falling 0.6% to 284.04.
The IBEX 35 index jumped 2.7% to 10,370.80 in Madrid after the Spanish government successfully sold around EUR3 billion of five year bonds, with yields rising, but demand also strengthening.
The index has advanced sharply in the last three sessions, helped by successful debt auctions at home and in Portugal, supportive comments from China and Japan and an apparently increased willingness by European politicians to tackle the sovereign debt crisis.
Banco Santander rose 4.8% and BBVA climbed 6.3%.
Financial stocks gained ground across most of the rest of Europe.
In Paris, Societe Generale advanced 4.5% and BNP Paribas SA added 2.9%, helping the French CAC 40 index rise 0.8% to 3,974.83.
A notable exception to banking-sector gains, however, was Germany's Commerzbank AG.
It dropped 1.2% in Frankfurt after the bank said it plans to increase its share capital by as much as 10%.
The fall kept a lid on the performance of the German DAX 30 index, which finished up just 0.1% at 7,075.11.
Italy's FTSE MIB index gained 0.9% to 21,308 after the country also completed a bond auction Thursday, selling EUR6 billion of debt.
The FTSE 100 index closed down 0.4% at 6,023.88 as mining stocks took a breather following recent strong gains.
Shares of Xstrata PLC slipped 1.4% as commodity prices weakened.
Supermarket giant Tesco dropped 4.3% after it said bad weather hurt trading over the Christmas period.
In economic news, both the Bank of England and the European Central Bank left their interest rates on hold, as expected, though ECB President Jean-Claude Trichet's emphasized that the central bank would be closely monitoring inflation.
Asian Markets
Asian markets ended mostly higher Thursday, with Australian stocks staging a strong rebound on relief that a flood in Queensland state had peaked, though South Korean shares retreated after a surprise interest-rate increase by the central bank.
Japan's Nikkei Stock Average rose 0.7%, while South Korea's Kospi Composite fell 0.3%.
Hong Kong's Hang Seng Index added 0.5% and China's Shanghai Composite was up 0.2%.
The Nikkei touched an eight month high of 10,620.57, helped by the Portuguese auction result and the yen's recent weakness against the euro.
Sumitomo Trust & Banking added 5.3% and Chuo Mitsui Trust Holdings tacked on 5.0% after the president of the latter, Kazuo Tanabe, said in a Nikkei interview that Sumitomo Mitsui Trust Holdings is considering a dividend payout ratio of 30%.
Real estate shares gained on signs of improvement in the Tokyo office vacancy rate.
Nippon Building Fund added 1.3%, Mitsui Fudosan rose 1.3% and Mitsubishi Estate tacked on 3.3%.
South Korean shares declined after the Bank of Korea surprised markets with a quarter-point rate increase, to 2.75%.
Samsung Life Insurance rose 0.5% and Samsung Securities climbed 5.5%, while Shinhan Financial Group gained 3.1%.
Base Metals
Base metals closed lower on the London Metal Exchange Thursday, as conflicting macro economic news toyed with market sentiment and led to volatile trading.
Copper trading was particularly choppy, fluctuating in the $9,696 a metric ton to $9,555/ton range. The red metal closed down 0.8% at $9,610/ton at the PM kerb close.
Copper recovered some of its early day losses as successful bond auctions in Spain and Italy boosted risk sentiment.
Although the auctions proved expensive, both countries reached their maximum bond targets.
After falling to $9,573.25/ton, copper hit $9,654.50 in the wake of the news.
However, the release of higher than expected U.S. jobless numbers weighed on the copper market later in the day, prompting the metal to hit an intraday low of $9,555/ton.
Crude futures fell Thursday as concerns about supply faded.
Light, sweet crude for February delivery settled 46 cents lower at $91.40 a barrel on the New York Mercantile Exchange, halting its push above $92 a barrel.
Gold futures finished near steady as worries about European debt eased and participants figured a jump in U.S. unemployment claims wasn't as dire as originally thought.
The most actively traded gold contract, for February delivery, rose $1.20 to settle at $1,387 a troy ounce on the Comex division of the New York Mercantile Exchange.
Thinly traded nearby January futures also rose $1.20, to $1,386.90.
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