Stocks Giving Back Ground After Yesterday's Rally
With traders cashing in on yesterday's substantial gains, stocks have moved moderately lower in early trading on Tuesday. The major averages have slid into negative territory, giving back some ground after ending the previous session sharply higher.
The major averages have recently bounced off their lows for the young session but remain in the red. The Dow is down 52.91 points or 0.4 percent at 12,743.05, the Nasdaq is down 5.12 points or 0.2 percent at 2,910.95 and the S&P 500 is down 3.80 points or 0.3 percent at 1,383.09.
The early weakness on Wall Street is partly due to news that Moody's Investors Service downgraded France's government bond rating by one notch to Aa1 from Aaa. The ratings agency added that the outlook remains negative.
Moody's said France's long-term economic growth outlook is negatively affected by multiple structural challenges and said the fiscal outlook is uncertain as a result of the deteriorating economic prospects.
Nonetheless, selling pressure is relatively subdued following the release of a report from the Commerce Department showing an unexpected increase in U.S. housing starts.
The report said housing starts climbed 3.6 percent to a seasonally adjusted annual rate of 894,000 in October, reaching their highest level in over four years.
While most of the major sectors are showing only modest moves, Hewlett-Packard has helped to lead the computer hardware sector lower. HP is down by 13.1 percent after revealing an $8.8 billion charge related to serious accounting improprieties at newly acquired Autonomy Corp.
Steel, semiconductor, and railroad stocks are also seeing early weakness, while strength is visible among housing stocks.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. While Japan's Nikkei 225 Index edged down by 0.1 percent, Australia's All Ordinaries Index rose by 0.6 percent.
The major European markets have also turned mixed on the day. The German DAX Index has risen by 0.2 percent, while the French CAC 40 Index is just below the unchanged line and the U.K.'s FTSE 100 is down by 0.2 percent.
In the bond market, treasuries are seeing modest weakness, pulling back further off their recent highs. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.2 basis points at 1.623 percent.
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| European Market | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | European Markets Fall On France Downgrade
The European markets are trading weak on Tuesday, after France was stripped of its coveted triple A rating by Moody's Investors Service, ahead of a meeting of Eurozone finance ministers in Brussels.
Moody's on Monday stripped France of its triple A rating with a one notch downgrade. The government bond rating on the Eurozone's second largest economy was cut to Aa1 from Aaa, while the rating outlook was maintained at 'negative.'
Moody's said the first driver underlying Moody's one-notch downgrade of France's sovereign rating was "the risk to economic growth and to the government's finances, posed by the country's persistent structural economic challenges."
France had lost its top rating at Standard and Poor's in January along with eight other euro area members.
Germany's industrial producer price inflation weakened more than economists expected in October, data released by statistical office Destatis showed. The producer price index rose 1.5 percent year-on-year in October, after gaining 1.7 percent in September. Economists had forecast growth to ease to 1.6 percent.
Later today, Eurozone finance ministers will meet in Brussels for another round of talks on Greece, seeking to thrash out a plan to bridge a financing gap created by a two-year extension of Greece's bailout program.
The euro Stoxx 50 index of eurozone bluechip stocks is falling 0.18 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is losing 0.34 percent.
The German DAX is fluctuating and is marginally up currently. The French CAC 40 is losing 0.4 percent and Switzerland's SMI is dropping 0.6 percent. The UK's FTSE 100 is falling 0.3 percent.
In Frankfurt, Deutsche Bank is declining 1.9 percent and Commerzbank is losing 1.8 percent.
E.ON is falling 1.9 percent and RWE is down around 1 percent. Citigroup removed E.ON from the ''Least Preferred List'' but added RWE to that list.
Bayer's Xarelto got European approval for blood clots in lungs. The stock is gaining 0.3 percent.
In Paris, Alcatel Lucent is declining 1.7 percent. Utility EDF and builder Bouygues are losing around 1.6 percent each.
Renault is losing 1.2 percent. The carmaker reportedly may recall 8,000 Twizy electric cars sold in Europe amid problems with brake fluid leaks.
Lenders BNP Paribas and Societe Generale are moderately lower while Credit Agricole is in positive territory.
Bucking the trend, Accor is rising 3.2 percent. Pernod-Ricard and Safran are advancing around 1 percent each.
Carrefour is climbing 1.5 percent. The grocery retailer announced the sale of its 60 percent holding in Carrefour Indonesia to its local partner CT Corp for 525 million euros.
In London, Lonmin is plunging 42 percent. The company announced the admission of 365.5 million new shares to the premium segment of the official list and to trading on the London Stock Exchange's main market.
ARM Holdings is losing 1.8 percent, Meggitt is falling 1.4 percent and Old Mutual is losing 1.3 percent.
easyJet is climbing 6.4 percent. The budget carrier reported increase in pre-tax profit for the fiscal year, and also boosted its annual dividend.
Xstrata is gaining 1.6 percent and Glencore is adding around 1 percent after Glencore shareholders voted in favor of the Xstrata deal.
Credit Suisse is losing 2.7 percent in Zurich. The firm has decided to combine its Private Banking and Asset Management Divisions to form the Private Banking & Wealth Management Division.
Across Asia/Pacific, major markets ended mostly lower. China's Shanghai Composite index rose 0.4 percent, Hong Kong's Hang Seng slid 0.2 percent and Japan's Nikkei 225 slipped 0.1 percent. Bucking the trend, Australia's All Ordinaries advanced 0.6 percent.
In the U.S., futures point to a mixed open on Wall Street. In the previous session, the Dow rallied 1.7 percent, the tech-heavy Nasdaq soared 2.2 percent and the S&P 500 jumped 2 percent.
In the commodity space, Crude for January delivery is falling $0.38 to $88.90 per barrel and December gold is losing $1.1 to $1733.3 a troy ounce. |
| Asia Market | Asian Markets Trade Higher
Asian stock markets are mostly trading higher on Tuesday with investors tracking positive cues from the U.S. as well as European markets and picking up stocks. The U.S. market ended sharply higher overnight amid expectations the U.S. legislators would bring about a solution to fix the looming fiscal cliff.
In the Australian market, energy, mining and healthcare stocks are among the notable gainers. Consumer discretionary stocks are also mostly trading in positive territory, while financial stocks are mixed.
The benchmark S&P/ASX 200 index is trading at 4,385, up 23.6 points or 0.5 percent from its previous close. The broader All Ordinaries index is up 23.7 points or 0.5 percent at 4,406.3.
Top miners BHP Billiton (BHP, BBL) and Rio Tinto (RIO, RIO.L) are up 1.7 percent and 1.8 percent, respectively.
Among bank stocks, ANZ Bank and Commonwealth Bank of Australia are down with modest losses, while National Australia Bank and Westpac are trading in positive territory, gaining 1.4 percent and 1.2 percent, respectively.
Paladin Energy is trading higher by nearly 10 percent. Iluka Resources and Lynas Corporation are up 8.6 percent and 8 percent, respectively.
Fortescue Metals, Monadelphous Group, Atlas Iron, ALS, Seven West Media, Whitehaven Coal and Origin Energy are up 3 to 5 percent.
Regis Resources, ResMed Inc. , Incitec Pivot, Harvey Norman Holdings, PanAust, Sonic Healthcare, Perseus Mining and WorleyParsons are up 1.7 to 2.7 percent.
In economic news, the Conference Board's Leading Index for Australia declined 0.3 percent for September. The Board's Coincident Index was unchanged.
The Conference Board said Tuesday that its Leading Index fell for the third straight month. The largest negative contribution cam from the building approvals category. Four of the seven components of the Leading index increased, the Board said.
The Coincident Index, which measures current economic conditions, saw two of four components increase.
According to the minutes of the Reserve Bank of Australia's November 6 meeting, improved conditions in the global economy and hints of higher inflation prompted the bank to keep the cash rate unchanged at 3.25 percent.
"Members considered that further easing may be appropriate in the period ahead," the RBA said.
"However, with prices data for the September quarter slightly higher than expected and recent information on the world economy slightly more positive, the board judged that the stance of monetary policy was appropriate for the time being."
The Japanese stock market opened on a firm note with investors indulging in some hectic buying, tracking the overnight strong close on Wall Street. The yen's decline against the U.S. dollar and expectations that the Japanese government will come out with a stimulus to boost the economy too contributed to the bright start.
However, with investors turning cautious at higher levels and choosing to wait for the central bank's decision on interest rates, the market retreated from its high and was up just marginally above the unchanged line when the morning session ended.
Electric power, mining, shipbuilding, automobile and non-ferrous metals stocks started off on a high note, but gave up most of their gains subsequently. Shares from financial, real estate, railway and retail stocks traded mixed.
The benchmark Nikkei 225 index, which rose to 9,200.9 in early trades, was up 8.9 points or 0.1 percent at 9,162.1 at the end of the morning session.
Mitsui OSK Lines, up more than 5 percent, was the top gainer in the Nikkei index. Nippon Yusen KK gained nearly 5 percent and Kawasaki Kisen Kaisha moved up by 4.8 percent.
Nippon Sheet Glass, Tokio Marine Holdings Inc., NTN Corp., MS&AD Insurance Group Holdings, JX Holdings, Mitsubishi Chemical Holdings and Tokyo Gas were all trading higher by over 2.5 percent.
Osaka Gas, Sapporo Holdings, Ricoh, All Nippon Airways, Softbank Corp., Toppan Printing, Trend Micro, Nippon Telegraph, Nippon Light Metal Holdings, Nippon Express, Mitsubishi Motors, Yahoo Japan and East Japan Railway also posted strong gains.
Meanwhile, Mitsubishi Paper Mills, Unitika, Mazda Motor, Sumco Corp., Panasonic Corp. , Credit Saison, Furukawa Electric, Fujikura, Japan Tobacco, Advantest Corp. and Kansai Electric Power traded weak, losing 1 to 3 percent.
In economic news, the Bank of Japan will conclude its monetary policy meeting and then announce its decision on interest rates, with analysts widely expecting no change at 0 to 0.10 percent.
In the currency market, the U.S. dollar traded in the lower 81 yen level in early deals in Tokyo. The yen is currently trading at 81.21 to the dollar.
Among other markets in the Asia-Pacific region, Hong Kong, New Zealand, Singapore, South Korea and Taiwan are trading notably higher. Indonesia and Malaysia are up with modest gains, while Shanghai is trading weak.
On Wall Street, stocks rallied sharply on Monday, with traders going on a buying spree, amid optimism the U.S. legislators would reach an agreement to avoid the fiscal cliff and on some upbeat housing data.
The major averages ended the session at their best levels of the day. The Dow jumped 207.7 points or 1.7 percent to 12,796, the Nasdaq soared 62.9 points or 2.2 percent to 2,916.1 and the S&P 500 surged up 27 points or 2 percent to 1,386.9.
Major European markets too ended with strong gains on Monday. While the French CAC 40 Index soared 2.9 percent, the German DAX index and the U.K.'s FTSE 100 index jumped 2.5 percent and 2.4 percent, respectively.
U.S. Crude oil settled sharply higher Monday on a weak dollar and concerns over supply disruption as tensions between Israel and the Hamas-controlled Gaza in the Middle East intensified. Oil was also supported by some positive macroeconomic data out of the U.S.
Crude for January delivery surged $2.36 or 2.7 percent to close at $89.28 a barrel on the New York Mercantile Exchange. |
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