WORLD MARKET UPDATES
https://globaleconomic-trendsanalysis.blogspot.com/2011/03/world-market-updates_18.html
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Stocks are seeing notable strength in mid-morning trading on Thursday, as traders have gone bargain hunting following the weakness seen in recent sessions. However, the markets remain well off their recent highs amid continued concerns about the nuclear crisis in Japan. The major averages have moved to the upside in recent trading, with the Dow and theS&P 500 reaching new highs for the session. The Dow is up 164.73 points or 1.4 percent at 11,778.03, the Nasdaq is up 39.57 points or 1.5 percent at 2,656.39 and theS&P 500 is up 20.95 points or 1.7 percent at 1,277.83. Along with bargain hunting, the strength in the markets also comes on the heels of a report from the Labor Department showing a drop in first-time claims forunemployment benefits in the week ended March 12th. The report showed that initial jobless claims fell by 16,000 to 385,000 from the previous week's revised figure of 401,000. Economists had expected claims to fall to 385,000 from the 397,000 originally reported for the previous week. Buying interest was also generated by a report from the Philadelphia Federal Reserveshowing that its index of regional manufacturing activity jumped to its highest level in twenty-seven years in March. The Philly Fed said its diffusion index of current activity surged up to 43.4 in March from 35.9 in February, with a positive reading indicating growth in regional manufacturing activity. The increase surprised economists, who had expected the index to fall to a reading of 32.0. While the Federal Reserve released a separate report showing an unexpected drop in industrial production in February, the decrease largely reflected a sharp drop in utilities output amid unseasonably warm weather. "A drop in utilities output masks an otherwise decent report," said Robert Kavcic, an economist at BMO Capital Markets. "As the Fed said earlier this week, "the economic recovery is on firmer footing," and the industrial sector is an important reason why." Among individual stocks, shares of FedEx (FDX) are surging up by 5.2 percent after the delivery company reported third quarter earnings that fell year-over-year but provided upbeat guidance. With the gain, FedEx is bouncing off its worst closing level in well over five months. Looking ahead, FedEx forecast fourth quarter earnings of $1.66 to $1.83 per share and full year adjusted earnings of $4.83 to $5.00 per share. Analysts currently expect the company to earn $1.68 per share for the quarter and $4.90 per share for the year. Sector News Bargain hunting is contributing to significant strength in a variety of sectors, with oil service stocks posting particularly strong gains. The Philadelphia Oil Service Index is currently up by 3.4 percent after ending the previous session at a one-month closing low. A sharp rise by the price of crude oil is contributing to the rebound by oil service stocks, with crude for April delivery currently up $2.42 at $100.40 a barrel. The price increase is partly due to news of an intensification of violence in Libya. Transportation stocks are also seeing considerable strength in morning trading, driving the Dow Jones Transportation Average up by 2.6 percent. With the gain, the average is bouncing well off the three-month closing low it set on Wednesday. Most of the other major sectors have also moved to the upside, with steel, wireless, and defense stocks posting significant gains on the day. On the other hand, modest weakness is visible among utilities stocks. | |||||||||||
European Market Reports | |||||||||||
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French Market Climbs, Led By Construction Stocks, Carmakers The French market is rising in afternoon trading Thursday, shrugging off weak cues from Asia/Pacific, amid global efforts to tackle the crisis in Japan. Construction stocks, carmakers and lenders are mostly higher. The CAC 40 index opened higher at 3,794, compared to the previous close of 3,697. The index has been in positive territory and is currently climbing 2.10 percent. The Euro Stoxx 50 index of euro zone blue chippers is adding 2.10 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is advancing 1.78 percent. In economic news, the Federal Statistical Office said the number of people working in Germany's local manufacturing units rose 1.5 percent year-on-year in January. Meanwhile, Eurozone's seasonally adjusted construction output increased 1.8 percent month-on-month in January, after a 2 percent fall in December, Eurostat said. A survey from the Bank of England and GfK NOP showed that Britons' inflationexpectations for the year ahead rose to the highest level since August 2008. Consumers' one-year ahead inflation expectations rose to 4 percent from 3.9 percent in November. Swiss industrial production grew 6.1 percent year-on-year in the fourth quarter, reversing a 1.2 percent fall in the third quarter, the Federal Statistical Office said Thursday. However, it was smaller than the 6.3 percent forecast. Meanwhile, The Swiss National Bank left its key interest rate, the three-month Libor, unchanged at 0.25 percent. Machinery & equipment maker Alstom is surging 4.5 percent. Axa is climbing 3.5 percent, reflecting the upside seen in insurance stocks in the region. Car manufacturers Renault and Peugeot are gaining 3.3 percent and 1.6 percent, respectively. Among construction stocks, Vinci is adding 1.6 percent and Bouygues is rising 1.1 percent. Saint-Gobain and real estate investment trust Unibail-Rodamco are each adding 1.5 percent. Veolia Environnement and Suez Environnement are gaining 2.2 percent and 1.5 percent in that order. Grocery retailer Carrefour is rising 1.6 percent. Among banks, BNP Paribas and Societe Generale are notably higher, while Natixis is rising modestly. However, Credit Agricole is losing notably after issuing its medium-term strategic plan. Elsewhere in Europe, the German DAX is gaining 2.08 percent and the UK's FTSE 100is adding 1.47 percent. However, Switzerland's SMI Index is losing 0.95 percent. Across Asia/Pacific, major markets ended lower. Australia's All Ordinaries slipped 0.12 percent, China's Shanghai Composite Index lost 1.14 percent and Hong Kong'sHang Seng retreated 1.83 percent. Japan's Nikkei 225 and India's BSE Sensex fell 1.44 percent and 1.14 percent, respectively. In the U.S., futures point to a higher open on Wall Street. In the previous session, theDow plummeted 2 percent, the Nasdaq dropped 1.9 percent and the S&P 500 plunged 2 percent. In commodities, crude for April delivery is advancing $2.34 to $100.32 per barrel andgold is adding $4 to $1400.1 a troy ounce. | |||||||||||
Asia Market Reports | |||||||||||
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Inflation Worries Drag Indian Market Lower Weak cues from the rest of Asia on worries over Japan's nuclear crisis and concerns about slower economic growth following the central bank's move to raise policy rates by 25 basis points weighed on the Indian market Thursday. The Reserve Bank of India (RBI) also raised its March-end inflation forecast to 8 percent from 7 percent projected earlier, factoring in high crude prices and rising manufacturing costs. Crude prices rose over a percent in Asian trading Thursday, as rising tensions in Saudi Arabia and Bahrain fueled fears of further supply disruption. As expected, the Reserve Bank of India (RBI) raised its key policy rates, repo and the reverse repo rate, by 25 basis points each to tackle inflation that has spread beyond food to fuel and manufacturing. The cash reserve ratio (CRR) and statutory liquidity ratio(SLR) remain unaltered. This is the eighth occasion since March 2010 that the central bank has raised key policy rates to check soaring inflation. Based on the current and evolving growth and inflation scenario, the current anti-inflationary stance is likely to persist, the RBI said. Meanwhile, government data released today showed that India's food inflation for the week ended March 5 fell to a three-and-a-half-month low of 9.42 percent from 9.52 percent in the previous week, as prices of potato, pulses, onions and milk declined. The fuel price inflation during the week under review climbed to 12.79 percent from 9.48 percent a week earlier, while the primary articles prices index eased to 12.31 percent versus an annual rise of 13.96 percent a week before. With FMCG, IT, auto and metal stocks leading the declines, the benchmark 30-share Sensex ended down 209 points or 1.14 percent at 18,150, while the 50-share Niftyindex fell by 64 points or 1.17 percent to 5,447. Second-line stocks eased modestly and the market breadth was fairly negative, with 1638 decliners versus 1203 gainers. Maruti Suzuki plunged 4.44 percent on account of fluctuations in the value of Japanese yen vis-a-vis the U.S. dollar and the Indian rupee. Mortgage lender HDFC fell 3.68 percent, aluminum maker Hindalco declined 2.49 percent, property developer DLFshed 2.12 percent, software exporter Infosys lost 1.79 percent and diversified business conglomerate ITC ended down 1.72 percent. Hero Honda Motors, which is going for a brand makeover, eased half a percent. Tata Steel shed 0.78 percent on the buzz that it is mulling a perpetual bond sale. MindTreefell 3.11 percent after it reportedly lost a contract from Japan. IT services firm 3i Infotechfell nearly 2 percent on reports that it will sell its U.S. subsidiary, Regulus. Jyothy Laboratories slumped nearly 12 percent after it bought a 14.9 percent stake in Henkel India. On the positive side, financial services firm Reliance Capital rose 1.23 percent after the company said it expects higher new premium in the next two fiscal years. TVS Motoradded a percent on reports that it could enter the electric scooters market. Reliance Infrastructure gained 1.16 percent after it bagged a Rs.7,200-crore EPC contract. Reliance Communication rallied 3.50 percent after brokerage firm Citigroupreportedly raised its rating on the stock to "buy" from "sell." SKS Microfinanceadvanced 3.18 percent after the microfinance lender said it would raise funds from banks and financial institutions. On the global front, the other Asian markets closed mostly lower on Thursday, with losses ranging between 0.10 percent and 1.8 percent, on fears that Japan's nuclear crisis could worsen. However, European stocks edged higher on bargain hunting following steep losses over the past six sessions and the U.S. index futures pointed to solid gains for Wall Street Thursday. | |||||||||||
Forex Top Story | |||||||||||
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Dollar Steadies After Record Low Versus Yen The dollar was looking to stabilize Thursday morning in New York after dropping to its lowest ever against the yen last night. Repatriation of funds back to Japan in the wake of last week's catastrophic earthquake boosted the yen, prompting speculation that Japanese officials are preparing to intervene in the currency markets to halt the yen's rise. A strong yen hurts Japanese exporters at a time when the economy will struggle to emerge for the earthquake and subsequent nuclear crisis. The dollar dropped to an all-time low of Y76.30 versus the yen, then steadied near Y78 this morning. Versus the euro, the dollar dropped to a fresh 4-month low of $1.4052 before leveling off near $1.40. Key inflation data is due out from the U.S. government this morning. The consumer price index for February is scheduled to be released at 8:30 AM ET. The consensus estimates call for a 0.4 percent increase in the consumer price index, while the core consumer price index that excludes food and energy is likely to have risen 0.1 percent. The Labor Department is due to release its customary jobless claims report for the week ended March 12th at 8:30 AM ET. Economists expect claims to slip to 385,000. The industrial production report of the Federal Reserve is due out at 9:15 AM ET. Economists estimate 0.6 percent growth in industrial production for February, while capacity utilization is expected to come in at 76.5 percent. The Conference Board is scheduled to release a report on the U.S. leading index for February at 10 AM ET. The consensus estimate calls for a 1 percent increase in the leading indicators index for the month. The results of the Philadelphia Federal Reserve's manufacturing survey are due out at 10 AM ET. Economists expect the diffusion index of current activity to show a reading of 32 for March.
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