German Court Ruling Leads To Early Strength On Wall Street
Stocks have moved to the upside in early trading on Wednesday, benefiting from a positive reaction to the latest news out of Europe. The major averages have moved moderately higher, adding to the gains posted in the previous session.
The major averages have pulled back off their highs for the young session in the past few minutes but are holding on to gains. The Dow is up 44.82 points or 0.3 percent at 13,368.18, the Nasdaq is up 12.05 points or 0.4 percent at 3,116.58 and the S&P 500 is up 5.35 points or 0.4 percent at 1,438.91.
The early strength on Wall Street comes on the heels of news that Germany's Federal Constitutional Court cleared the way for the ratification of the European Stability Mechanism, or ESM, rejecting temporary injunctions against the European bailout fund.
At the same time, the court imposed certain conditions, including capping Germany's liability. The court said Germany must cap its bailout fund liability at 190 billion euros and said further expansion of the country's share needs to get the backing of Parliament.
Peter Boockvar, managing director at Miller Tabak, said, "Buy the rumor, buy the news continues to be the market pattern as long as participants have their central bank beer goggles on which turns all news into good news."
"The German Constitutional Court did what all expected them to do and blessed the ESM but did put a 190 billion euro limit on Germany's exposure that can only be exceeded with parliamentary approval," he added. "All the other 16 euro nations have approved the ESM."
While the news out of Germany has generated some positive sentiment, buying interest has remained somewhat subdued as traders look ahead to the Federal Reserve's monetary policy announcement on Thursday.
Uncertainty about whether the central bank will announce another round of quantitative easing is keeping some traders on the sidelines.
Nonetheless, networking stocks have shown a strong upward move in early trading, driving the NYSE Arca Networking Index up by 1.6 percent. Alcatel-Lucent (ALU) has helped to lead the sector higher, surging up by 4.3 percent.
Airline, housing, and steel stocks are also seeing notable strength, moving to the upside along with most of the major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index surged up by 1.7 percent, while Hong Kong's Hang Seng Index advanced by 1.1 percent.
The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index is just above the unchanged line, the French CAC 40 Index and the German DAX Index are up by 0.4 percent and 0.6 percent, respectivel
In the bond market, treasuries have come under pressure following the news out of Germany. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.7 basis points at 1.752 percent.
| European Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | European Markets Mostly Higher After German Court Ruling
The European markets are mostly higher in afternoon trading Wednesday, after Germany's Federal Constitutional Court allowed the ratification of the European Stability Mechanism, or ESM, with some conditions.
The Federal Constitutional Court said Germany must cap its bailout fund share at 190 billion euros. Also, both houses of the Parliament must be informed of decisions on the ESM in future.
Meanwhile, European Commission President Jose Manuel Barroso proposed a single supervisory mechanism for the euro area banks. The new mechanism will give ultimate supervisory responsibility related to financial stability of all banks in the euro area to the European Central Bank.
Sentiment was also influenced by the U.S. Federal Reserve's two-day meet beginning today, which is expected to throw more light on the much anticipated third round of quantitative easing.
The Euro Stoxx 50 index of eurozone bluechip stocks is climbing 0.83 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is falling 0.04 percent.
The German DAX is gaining 0.79 percent and the French CAC 40 is rising 0.58 percent. The UK's FTSE 100 is advancing 0.03 percent while Switzerland's SMI is losing 0.11 percent.
In Frankfurt, Commerzbank is gaining 3.4 percent and Deutsche Bank is rising 0.3 percent. Volkswagen is surging over 3 percent and BMW is rising 1.7 percent. Daimler is moderately lower. Infineon Technologies is gathering 3.2 percent. ThyssenKrupp is gaining 3.1 percent.
In Paris, Credit Agricole is surging 5.8 percent, after Credit Suisse raised its rating on the stock. Societe Generale is rising 1.1 percent and BNP Paribas is moderately higher.
Peugeot and Renault are gaining 4.7 percent and 2.9 percent, respectively. Safran is losing 1.8 percent. EADS and PPR are notably lower.
In London, Kingfisher is gaining 1.7 percent after reporting first-half results. Barclays is gaining 1.6 percent and Lloyds Banking is climbing 3.4 percent. Royal Bank of Scotland is advancing 3.3 percent.
Miners are notably higher. BHP Billiton is advancing 1.2 percent and Rio Tinto is climbing 1.5 percent. BT Group is gaining 2.9 percent.
Barratt Developments is declining 6.4 percent. The firm reported annual profit, but did not announce a dividend, stating it plans to resume dividend next year.
Nomura cut Vodafone to "Neutral" from "Buy." The stock is falling 0.7 percent. Morgan Stanley cut BBVA to "Equalweight" from "Overweight." The stock is rising 0.9 percent. Unicredit is climbing 3.8 percent in Milan, despite a broker downgrade.
On the economic front, in the U.K., the number of people claiming Jobseeker's Allowance fell by 15,000 in August from the prior month to 1.57 million, the Office for National Statistics said. The claimant count rate remained unchanged at 4.8 percent, slightly below the 4.9 percent forecast by economists. |
| Asia Market Reports | Asian Markets Trade Higher On Fed Stimulus Hopes
Asian stock markets are mostly trading notably higher on Wednesday amid expectations of further stimulus from the U.S. Federal Reserve. Besides the rate decision from the U.S. Federal Reserve, the market is also awaiting the ruling of a German court on the eurozone debt relief fund. Some encouraging economic data from the region too appear to be aiding sentiment.
The Australian market is trading higher thanks to some strong buying in mining and financial sectors. Shares from energy and property trusts sections are also mostly trading higher.
The benchmark S&P/ASX 200 index is up 36 points or 0.8 percent at 4,361.8. The broader All Ordinaries index is trading at 4,381, up 32.7 points or 0.8 percent from its previous close.
Among bank stocks, ANZ Bank, National Australia Bank and Westpac are up 0.5 to 0.8 percent, while Commonwealth Bank of Australia is gaining 1.3 percent. Bendigo & Adelaide Bank and Bank of Queensland are up 1.5 percent and 0.5 percent, respectively.
Among top miners, BHP Billiton is up 1.2 percent, Rio Tinto is gaining about 1.5 percent and Fortescue Metals is trading more than 3 percent up, while Newcrest Mining is down 0.6 percent.
In the energy sector, Woodside Petroleum, Oil Search, Origin Energy and Caltex Australia are trading modestly higher, while Santos is up nearly 2 percent.
Atlas Iron, Perseus Mining, Sims Metal Management and Orica are trading higher by 3 to 4 percent.
Iluka Resources, Seven West Media, Bluescope Steel, Boral, Leighton Holdings, ALS, Stockland, AMP, Incitec Pivot, CFS Retail Property Trust Group and Alumina are trading higher by 1.7 to 2.7 percent.
SP Ausnet is down 2.8 percent. Among other notable losers, Whitehaven Coal and APA Group are trading lower by 1.4 percent and 2.3 percent, respectively.
On the economic front, consumer confidence in Australia rose slightly in September. The Westpac/Melbourne Institute of Index of Consumer Sentiment rose 1.6 percent to 98.2 in September, from 96.6 in August. Westpac said the result was disappointing as it signals a long-term pessimism among Australian households, despite good economic conditions.
The Japanese market moved up smartly with investors indulging in fairly hectic buying at several counters following a positive lead from Wall Street. A better-than-expected surge in Japanese core machinery orders also aided sentiment to a significant extent.
Financial, automobile, warehousing, steel, non-ferrous metals, chemicals and pharmaceuticals stocks posted strong gains.
The benchmark Nikkei 225 index was up 128.2 points or almost 1.5 percent at 8,935.5 when the morning session ended.
Ricoh Co., Nisshin Steel, TDK Corp., Citizen Holdings, Sharp Corp., Sumitomo Osaka Cement, Nissan Chemical Industries, Taiheiyo Cement and Dentsu Inc. gained 3 to 4 percent.
Mitsubishi Materials, JFE Holdings, Mitsui Mining & Smelting, Panasonic Corp (PC:Quote)., Hino Motors, Shinsei Bank, Sumitomo Realty, Hino Motors, Daikin Industries, Isuzi Motors, Inpex Corp. and Konica Minolta Holdings moved up by over 2 percent.
Among the losers, Oki Electric Industry plunged as much as 12 percent. Unitika, Fujitsu, Nippon Sheet Glass and Nippon Yusen KK lost 1 to 2 percent.
According to data released by the Cabinet Office, core machine orders in Japan were up a seasonally adjusted 4.6 percent on month in July. That was sharply higher than forecasts for an increase of 2.0 percent following the 5.6 percent jump in June.
On a yearly basis, core machine orders collected 1.7 percent - also topping expectations for a contraction of 3.6 percent following the 9.9 percent plunge in the previous month.
The Ministry of Economy, Trade and Industry said that the index measuring tertiary industry activity in Japan was down a seasonally adjusted 0.8 percent on month in July, coming in at 98.7. That missed forecasts for a contraction of 0.5 percent following the upwardly revised 0.2 percent increase in June.
Industries that contributed to the decrease included wholesale and retail trade, transportation, finance, personal services, accommodations and learning support. Industries that contributed to the increase included utilities, real estate, communications, scientific research and health care.
Meanwhile, an index measuring the prices of domestic corporate goods was up 0.3 percent on month in August, the Bank of Japan said on Wednesday, standing at 100.3. That beat forecasts for an increase of 0.1 percent following the downwardly revised contraction of 0.5 percent in July.
On a yearly basis, prices were down 1.8 percent versus expectations for a decline of 1.9 percent following the downwardly revised 2.2 percent fall in the previous month.
Export prices were up 0.3 percent on month and down 2.6 percent on year, while import prices were up 0.4 percent on month and down 4.8 percent on year.
In the currency market, the U.S. dollar traded in the upper 77 yen range in early deals in Tokyo. The yen is currently at 77.76 to the dollar.
Among other markets in the Asia-Pacific region, Hong Kong, New Zealand, South Korea and Taiwan are trading notably higher. Shanghai, Indonesia and Singapore are also trading firm, while Malaysia is down marginally. |
| Commodities | | | | USDCAD | USDEUR | USDGBP | USDJPY |  |  |  |  | | Please click on the images to view our interactive charts | | Crude Gains Ahead Of Inventories Data
The price of crude oil was extending gains Wednesday morning as traders await cues from the official inventories data from the EIA. Also, the U.S. dollar was trading lower versus a basket of currencies amid hopes for additional monetary stimulus measures from the Federal Reserve, helping crude prices.
Earlier today, the International Energy Agency in its monthly oil market report, maintained its global oil demand forecast for 2013 even as demand grew in the second quarter of 2012.
Light Sweet Crude Oil (WTI) futures for October delivery, added $0.56 to $97.73 a barrel. Yesterday, oil ended higher as investors await cues from the Federal Reserve meeting this week and the weekly crude oil inventory data. Traders also await a ruling by Germany's constitutional court on the country's participation in Europe's permanent bailout fund due Wednesday.
Tuesday after the market hours, the API said U.S. crude oil inventories moved up 221,000 barrels while gasoline stocks dipped 4.16 million barrels in the weekended September 07.
This morning, the U.S. dollar dived to a fresh four-month low versus the euro, after lawmakers ratified the ESM, and extended losses against sterling. The buck slipped back to a seven-month low versus the yen and a fresh four-month low against the Swiss franc.
In economic news from the euro zone, Germany's inflation, measured by the harmonized index of consumer prices (HICP), rose to 2.2 percent in August from 1.9 percent in July, final data released by the Federal Statistical Office confirmed. At the same time, the consumer price index (CPI) climbed 2.1 percent year-on-year in August, up from July's 1.7 percent. This was slightly above the flash estimate of 2 percent.
Meanwhile, industrial production in the euro area increased in July, recovering from the previous month's decline, and the rate of growth exceeded economists' forecast, data released by statistical office Eurostat showed. Industrial production increased 0.6 percent on a monthly basis in July, reversing June's 0.6 percent decrease. Economists were looking for a 0.1percent gain.
Today during trading hours, the EIA will release its crude oil inventories report for the weekended September 07. Analysts expect crude oil inventories to shed by 2.90 million barrels and gasoline stock to 1.70 million barrels last week. |
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