Stocks Under Considerable Pressure In Early Trading
Stocks have shown a notable move to the downside over the course of early trading on Friday after ending the previous session sharply higher. The major averages have slid firmly into negative territory, offsetting yesterday's gains.
The major averages have seen some further downside in the past few minutes, hitting new lows for the young session. The Dow is down 106.51 points or 0.8 percent at 13,379.46, the Nasdaq is down 20.23 points or 0.6 percent at 3,116.37 and the S&P 500 is down 10.39 points or 0.7 percent at 1,436.76.
The early weakness on Wall Street is partly due to continued concerns about the financial situation in Europe, with traders waiting on the results of stress tests of Spanish banks.
While the unveiling of Spain's budget for 2013 contributed to the rally that was seen on Thursday, analysts have noted that the country still faces difficult times ahead.
Peter Boockvar, managing director at Miller Tabak, said, "The initial reaction yesterday was that maybe the Spanish news was enough to satisfy any potential conditions brought upon them with an eventual bailout request. Either way, Spain will be asking for help."
"Noon time we'll see how much money the Spanish banking system will be thought to need for recaps, with 60 billion euros expected," he added. "The ESM though won't give Spain the money until banking oversight in the Euro zone is up and running and that may not be until 2013."
Further selling pressure was recently generated by a report from the Institute for Supply Management - Chicago showing an unexpected contraction in Chicago-area business activity in the month of September.
The ISM Chicago said its business barometer dropped to 49.7 in September from 53.0 in August, with a reading below 50 indicating a contraction in business activity. With the drop, the barometer fell to its lowest level in three years.
Transportation stocks are seeing considerable weakness in early trading, dragging the Dow Jones Transportation Average down by 1.4 percent. With the loss, the average has fallen to its lowest intraday level in over three months.
Housing, trucking, and steel stocks are also posting notable losses, moving lower along with most of the major sectors.
In overseas trading, stock market across the Asia-Pacific region moved mostly higher on Friday, although Japanese stocks bucked the uptrend. While Japan's Nikkei 225 Index fell by 0.9 percent, Hong Kong's Hang Seng Index rose 0.4 percent and China's Shanghai Composite Index jumped 1.5 percent.
Meanwhile, the major European markets have turned lower over the course of the trading day. The French CAC 40 Index has tumbled 1.2 percent, while German DAX Index has dipped 0.3 percent and the U.K.'s FTSE 100 Index has edged down by 0.1 percent.
In the bond market, treasuries are moving modestly higher after ending a recent winning streak on Thursday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.3 basis points at 1.627 percent.
| European Market |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | European Markets Lower Ahead Of Spain Stress Test Results
The European markets are lower in afternoon trading Friday, as yield on Spanish 10-year bonds rose above 6 percent, ahead of the announcement of the results of the stress tests conducted on the country's banks.
The Spanish government on Thursday unveiled its budget for 2013, which focused on spending cuts rather than tax hikes. Under the new budget, government ministries will have their budgets slashed by 8.9 percent in 2013, while public spending will be cut by 58 percent overall. The government will also establish an independent fiscal authority to oversee the deficit cutting plans.
In Greece, the leaders of the three political parties supporting the coalition government have reached a tentative agreement on a new 11.5 billion euros package of spending cuts and tax increases demanded by international creditors in exchange for two major bailouts.
Retail sales in Germany recovered in August following a modest decline in the previous month. Sales rose 0.3 percent in August from a month earlier when adjusted for seasonal and calendar variations. This was a tad above the 0.2 percent growth expected by economists.
Eurozone inflation rose unexpectedly in September due to an increase in energy and food prices, flash estimate from Eurostat showed. Inflation increased to 2.7 percent in September from 2.6 percent in August. The rate was forecast to slow to 2.4 percent.
French President François Hollande, who unveiled details of his country's budget, said he aims to cut 2013 deficit to 3 percent of GDP. The country raised taxes on the super rich.
The Euro Stoxx 50 index of eurozone bluechip stocks is losing 0.90 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is falling 0.60 percent.
The German DAX is falling 0.37 percent and Switzerland's SMI is losing 0.30 percent. The French CAC 40 is declining 0.97 percent while the UK's FTSE 100 is dropping 0.07 percent.
In Frankfurt, steel maker ThyssenKrupp is gaining 2.6 percent and tire manufacturer Continental is advancing 1.2 percent. HSBC upgraded Linde to "Overweight" from "Neutral." The shares are modestly up.
Krones is gaining 3.5 percent. Berenberg raised the stock to "Buy" from "Hold." Commerzbank and Deutsche Bank are moderately down.
HSBC cut Basf to "Neutral" from "Overweight." The stock is down 0.4 percent. Cheuvreux cut its rating on HeidelbergCement. The stock is falling 1.8 percent. Infineon Technologies, Lufthansa and Volkswagen are notably lower.
In Paris, construction materials maker Saint-Gobain is losing 2.4 percent. Builders Bouygues and Vinci are moderately down. Credit Agricole and Societe Generale are moderately lower while BNP Paribas is gaining 0.8 percent. CapGemini, Publicis Groupe and Essilor International are rising notably.
HSBC raised Air Liquide to "Overweight" from "Neutral." The stock is up 0.2 percent. UBS raises Air France-KLM to "Buy" from "Neutral." The stock is adding 3.3 percent. UBS removed Renault from 'European Key Call List.' Renault shares are gaining 0.7 percent.
In London, Fresnillo is gaining 3.4 percent and Antofagasta is advancing 2.4 percent. Vedanta, Rio Tinto and Randgold are notably higher. Barclays is up 1 percent and Royal Bank of Scotland is rising 0.5 percent.
Travel operator Thomas Cook Group maintained its full year guidance, and said the UK turnaround plan is delivering against its goals. The stock is rising 3.3 percent. Compass Group is declining 1.9 percent. Admiral Group and Tesco are notably lower.
Electrocomponents is plunging over 9 percent. The distributor of electronics and maintenance products expects sales growth in the first half to be flat on the prior year.
Heineken is up 1.2 percent in Amsterdam after winning Fraser & Neave's shareholder approval for the purchase of the remaining shares of Tiger beer maker Asia Pacific Breweries Ltd. Syngenta is up 1.9 percent in Zurich, following a broker upgrade. |
| Asia Market | Asian Stocks Rise As Spain Budget Eases Debt Worries
Asian stocks posted widespread gains on Friday as news from both Spain and Greece where the respective governments outlined plans to further cut spending and raise taxes sent positive signals to financial markets. The proposed austerity measures announced amid fierce public protests and continued hopes for fresh Chinese stimulus following a record amount of liquidity injection into the banking system by China's central bank this week spurred some bargain hunting in beaten down shares following recent losses.
Spain unveiled yesterday a crisis budget for 2013 based mostly on severe budget cuts aimed at meeting deficit-reduction targets before the debt-laden nation formally requests a bailout. The publication of bank stress results later today will reveal how much more money is needed to recapitalize the Spanish banking system.
Meanwhile after reaching a "basic agreement' on a multibillion-euro austerity plan demanded by its international lenders, Greece's three-party coalition government said it would need an extra 13-15 billion euros to finance a two-year extension to its bailout.
Japanese stocks reversed early gains to end lower, weighed down by the strong yen against the dollar. The Nikkei average lost 0.9 percent, while the broader Topix index fell 1.1 percent. Auto makers were among the worst hit, with Toyota Motor and Honda losing 2-3 percent after data released today showed Japanese auto exports fell 5.4 percent in August following seven months of upturn. Heavyweight Fanuc edged down 0.9 percent, while semiconductor-related shares such as Sumco, Tokyo Electron and Advantest lost 2-3 percent.
Among those that gained, Fast Retailing edged up 0.2 percent and Japan Tobacco added 1.7 percent. Aozora Bank shares rallied 3 percent following the previous session's steep losses after the lender announced that top shareholder Cerberus Capital Management LP would sell its 55 percent stake in the bank. Steel maker Kobe Steel rallied 3.3 percent on reports the company may buy back part of its stake from the new company that will be created through the merger of Nippon Steel Corp. and Sumitomo Metal Industries.
China's Shanghai Composite index rallied 1.5 percent, extending gains for a second consecutive session, led by metal stocks and property developers. Hong Kong's Hang Seng index gained 0.4 percent. Mainland Chinese markets will be closed for week-long holidays from Oct. 1 to Oct. 7, while the Hong Kong market will remain closed on Monday and Tuesday.
Australian stocks posted modest gains, led by cyclical stocks as concerns over Europe eased. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index ended up about 0.1 percent each. BHP Billiton edged up marginally, but Rio Tinto slid 0.4 percent and Fortescue shed 0.9 percent. Gold miner Newcrest climbed 3.3 percent as gold prices hovered near one-week high.
Oil & gas exploration company Santos rose 0.7 percent and Aurora Oil and Gas added 2 percent after crude futures rebounded about 2 percent from two-month lows overnight on rising geopolitical tensions in the Middle East. Among major banks, ANZ, NAB and Westpac rose modestly, while Commonwealth edged down 0.1 percent.
South Korea's Kospi average rose 0.4 percent, with talk of fresh Chinese stimulus moves and relief over austerity measures outlined by Spain and Greece underpinning sentiment ahead of two local holidays next week. Shares of Korea Aerospace Industries soared 14.8 percent after Korean Air Lines and Hyundai Heavy Industries placed preliminary bids to buy a combined 41.8 percent stake in the company worth $1.02 billion. Tech shares also gained ground, with heavyweight Samsung Electronics up 0.6 percent, while LG Electronics added 2 percent.
New Zealand shares rose notably, led by Air New Zealand following its share buyback announcement. Shares of the national carrier climbed 5.5 percent, while the benchmark NZX-50 index ended 0.7 percent higher amid relatively light volumes. Fletcher Building, the nation's largest construction company, rose 1.6 percent, SkyCity Entertainment, the casino and hotel operator, gained 1.6 percent, container terminal operator Port of Tauranga added 1.9 percent and outdoor clothing and equipment retailer Kathmandu Holdings jumped 4.2 percent.
NZX rose 0.9 percent after the stock exchange operator appointed former commerce minister Simon Power and 2015 Cricket World Cup head Therese Walsh to its board. Retailer Pumpkin Patch, which reported a 20 percent decline in full-year earnings yesterday, fell 1.7 percent, heavyweight Telecom slid 1.7 percent and would-be bank Heartland New Zealand lost 1.5 percent.
Elsewhere, India's benchmark Sensex was last moving up 1.2 percent, Indonesia's Jakarta Composite index rose 0.9 percent, Malaysia's KLSE Composite added half a percent and the Taiwan Weighted average gained 0.4 percent, while Singapore's Straits Times index was little changed. |
| Commodities | | | | USDCAD | USDEUR | USDGBP | USDJPY |  |  |  |  | | Please click on the images to view our interactive charts | | Crude Extends Gains
The price of crude oil was extending gains Friday morning on supply concerns amid tensions between Israel and Iran, while plans for economic reform in Spain temporarily eased investors' worries over the euro zone debt situation.
Light Sweet Crude Oil (WTI) futures for November delivery added $0.14 to $91.99 a barrel. Yesterday, oil snapped its three-session losing streak to settle higher on renewed supply concerns from the Middle East even as the Israeli Prime Minister is expected to raise the level of rhetoric against the Iranian nuclear program when he addresses the U.N. General Assembly later in the day.
This morning, the U.S. dollar was leveling off from its 2-week high versus the euro and ticking higher against sterling. The buck was recovering from a 2-week low versus the yen, while ticking lower against the Swiss franc.
In economic news, euro zone inflation rose unexpectedly in September due to an increase in energy and food prices, flash estimate from Eurostat showed. Inflation increased to 2.7 percent in September from 2.6 percent in August. The rate was forecast to slow to 2.4 percent.
Meanwhile, retail sales in Germany recovered in August following a modest decline in the previous month, reviving expectations that private consumption, one of the main drivers of growth for euro zone's largest economy, could steer the economy through the turbulence in the rest of the single-currency bloc.
Traders will look to the Commerce Department's release of its personal income & outlays report for September at 8.30 a.m ET. Economists expect the report to show that personal income rose 0.2 percent, while personal spending is expected to have increased by 0.5 percent. In July, personal spending rose 0.4 percent. The price of gold was steady near its seven-month high Friday morning as risk appetite increased after the Spanish government revealed a tight 2013 budget focused on spending cuts rather than tax hikes.
Gold for December delivery, the most actively traded contract, edged up $1.20 to $1,781.70 an ounce. Yesterday, gold rebounded sharply to settle at a seven-month high after some soft economic data out of the U.S. and buyers back on track with the low prices for the precious metal. The gold miners strike in South Africa also helped push gold prices up with investors weighing the euro zone financial crisis as Spain revealed its 2013 budget.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,320.78 tons. |
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