Stocks Fall Sharply On Worries About Fiscal Cliff, Europe
Stocks moved sharply lower at the start of trading on Wednesday, giving back ground after moving mostly higher over the course of the two previous sessions. The major averages all showed notable moves to the downside at the open.
The major averages have recently climbed off their lows for the young session but remain firmly in the red. The Dow is down 159.80 points or 1.2 percent at 13,085.88, the Nasdaq is down 36.79 points or 1.2 percent at 2,975.14 and the S&P 500 is down 18.18 points or 1.3 percent at 1,410.21.
The initial weakness on Wall Street came on the heels of news that President Barack Obama won re-election, defeating Republican challenger Mitt Romney.
While Obama's definitive victory has helped to eliminate some uncertainty, traders continue to worry about the upcoming fiscal cliff.
Without action by Congress, the end of the year will see the expiration of the Bush-era tax cuts as well as the automatic spending cuts that were part of last summer's debt ceiling deal.
"The re-election of President Obama removes one uncertainty that has been weighing on the markets over the last few months," Capital Economics said in a note. "But they are none the wiser about if, how and when Congress will deal with the colossal tightening in fiscal policy scheduled to occur early next year."
"And with Congress still split, President Obama will struggle to garner bipartisan support for a more comprehensive agreement that addresses the longer term issue of how to put the nation's finances back on a sustainable path," the firm added.
Lingering concerns about the financial situation in Europe are also weighing on the markets, with European Central Bank President Mario Draghi saying European economic activity is weak and is expected to remain weak in the near term.
In a speech in Frankfurt, Draghi also said the latest data suggest that the problems in the eurozone are now starting to affect the German economy, which had previously been insulated from some of the difficulties.
Most of the major sectors have moved to the downside in early trading, reflecting broad based selling pressure on Wall Street.
Banking stocks are seeing considerable weakness, dragging the KBW Bank Index down by 2.3 percent. The weakness in the sector comes as a Romney victory was expected to be better for the industry.
Electronic storage, oil service, steel, and defense stocks are also posting notable losses, while some healthcare provider and networking stocks are bucking the downtrend.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Hong Kong's Hang Seng Index and Australia's All Ordinaries Index both advanced by 0.7 percent, while Japan's Nikkei 225 Index bucked the uptrend and closed modestly lower.
Meanwhile, the major European markets have turned lower over the course of the trading day. While the U.K.'s FTSE 100 Index has fallen by 0.8 percent, the French CAC 40 Index and the German DAX Index are down by 1.3 percent and 1.6 percent, respectively.
In the bond market, treasuries have moved sharply higher amid the worries about the fiscal cliff and Europe. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, has tumbled by 11.2 basis points to 1.63 percent. | Canadian Market |  | | CADUSD | Oil | Gold | Allbanc |  |  |  |  | | Please click on the images to view our interactive charts | | TSX Dives At Open Wednesday
Toronto stocks opened sharply lower Wednesday amid selling in energy and base-metals stocks, with the S&P/TSX Composite Index diving 75.31 points or 0.61 percent to 12,285.89.
The Diversified Materials Index lost nearly 2 percent, with Teck Resources shedding about 3 percent. First Quantum Minerals and Inmet Mining were down nearly 2 percent each.
In the oil patch, Cenovus Energy and Imperial Oil were down nearly 2 percent each. Oil and gas transportation company Enbridge Inc. slipped 0.50 percent despite turning to profit in third-quarter.
Crude oil transportation company Pembina Pipeline Corp. eased 0.25 percent even after reporting improved third-quarter earnings.
Bombardier Inc. cost over 3 percent despite posting improved third-quarter net income.
Meanwhile gold stocks were trading firm amid steady bullion prices. Gold-focused royalty company Franco-Nevada Corp. gained 3 percent after reporting improved third-quarter net income.
Goldcorp. Allied Nevada Gold and Barrick Gold were up over 1 percent each.
The price of crude oil was moving lower as traders await cues from the official inventories data from the EIA, due out later during the trading session. Crude for December shed $1.10 to $87.61 a barrel.
The price of gold was steady at a two-week high Wednesday morning, with gold for December adding $6.00 to $1,721.00 an ounce.
In corporate news from Canada, fertilizer maker Agrium Inc. reported third-quarter net earnings of $129 million or $0.80 per share down from $293 million or $1.85 per share in the year ago quarter. Excluding one time items, net earnings would have been $215-million or $1.34 earnings per share for the third quarter. Analysts expected the company to report earnings of $1.82 per share.
Petroleum and natural gas company Pengrowth Energy Corp. said it has acquired additional Lochend Cardium assets with production capability of about 650 bod, weighted 95 percent to light oil.
Oil and gas transportation company Enbridge Inc. swung to profit in third-quarter, reporting net earnings of C$189 million or C$0.24 per share, as against a loss of C$5 million or C$0.01 per share last year. Quarterly adjusted earnings totaled C$269 million or C$0.34 per share up from C$239 million or C$0.32 a year ago. Analysts expected the company to report earnings of C$0.35 per share.
Crude oil transportation company Pembina Pipeline Corp. reported improved third-quarter earnings of C$30.7 million or C$0.11 per share compared to C$30.1 million or C$0.18 per share last year.
Gold-focused royalty company Franco-Nevada Corp. reported improved third-quarter net income at $52.0 million or $0.36 per share compared to $44.1 million or $0.35 per share in the same quarter last year. Adjusted net income was $45.3 million or $0.31 per share, compared to $39.8 million or $0.31 per share last year. Analysts expected the company to report earnings of $0.30 per share for the quarter. Separately the company said it would acquire an approximate 11.7 percent net royalty interest in the Weyburn Oil Unit from Penn West Petroleum Ltd. and Penn West Petroleum to for C$400 million in cash.
Bombardier Inc. posted third-quarter net income of $212 million or $0.12 per share versus $192 million or $0.11 per share last year.
Financial services company Intact Financial Corp. reported a lower third quarter net income of C$96 million or C$0.70 per share compared to C$101 million or C$0.87 per share last year. On an adjusted basis, per share earnings totaled C$0.93. Analysts expected the company to report earnings of C$0.56 per share for the quarter.
Food and beverages company Molson Coors Brewing Co. reported that its third-quarter net income attributable to the company was $198.4 million or $1.09 per share, up from $197.4 million or $1.06 per share in the same quarter last year. | European Market | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | European Markets Rise As Obama Wins
The European markets are higher on Wednesday, after U.S. President Barack Obama won a second four-year term in the White House, overcoming a stiff challenge from his Republican rival Mitt Romney in Tuesday's presidential elections.
Germany's industrial production declined 1.8 percent in September from a month ago, the Federal Ministry of Economics and Technology said. It follows a slower 0.4 percent drop in August and exceeded a 0.7 percent decline forecast by economists.
Germany's independent council of economic advisers, the so-called 'wise men,' predicts the gross domestic product to grow 0.8 percent in 2012 and 2013, while the government forecasts the economy to grow 1 percent next year, following a 0.8 percent expansion this year.
The council said the deceleration in the pace of economic activity will bottom out in the fourth quarter of 2012. They observed that there is a continuing need for action in the field of economic policy. Reforms that have been implemented or initiated, particularly in connection with the labor market and pension system, should not be retracted, they said.
Retail sales in the euro area decreased at a slightly faster rate than economists expected in September, after recording a modest increase in the previous month, data released by statistical office Eurostat showed.
The Euro Stoxx 50 index of eurozone bluechip stocks is adding 0.47 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is losing 0.49 percent.
The German DAX is adding 0.4 percent and the French CAC 40 is rising 0.6 percent. The UK's FTSE 100 is advancing 0.4 percent and Switzerland's SMI is gaining 0.7 percent.
In Frankfurt, Munich Re reported a significant rise in third-quarter profit and lifted its full year view. The insurer is advancing 2.5 percent.
BMW is gaining 1.9 percent. Daimler is adding 0.5 percent. Volkswagen is losing 0.1 percent. Hochtief is surging 6.1 percent. The company reported quarterly results today.
Kuka, which also reported financial results, is advancing 3.3 percent.
Pfeiffer Vacuum is up 1.1 percent. HSBC raised the stock to "Neutral" from "Underweight."
Infineon Technologies and Beiersdorf are notably lower. Lenders Commerzbank and Deutsche Bank are in negative territory.
In Paris, Veolia Environnement, which reported financial results, is surging 7.2 percent. Alstom is up 5.3 percent after the speed-train maker reported increased profit for the first half of the year.
BNP Paribas, which reported a surge in third-quarter profit, is gaining around 5 percent. Societe Generale and Credit Agricole are advancing 2.2 percent and 1.6 percent, respectively.
In London, Pearson is up 1.6 percent. The publisher is said to be mulling the sale of Financial Times newspaper so that it can focus better on its education business.
Randgold Resources is declining 4.2 percent. The company reported lower third-quarter profit. Marks & Spencer, which posted decreased profit for the first half of the year, is dropping 1.5 percent.
ArcelorMittal is up 1.5 percent in Amsterdam, following a positive broker recommendation. ING is up 1.5 percent in Amsterdam. The firm is cutting 2,350 positions.
Carlsberg is gaining around 5 percent in Copenhagen. The Danish brewer reported quarterly performance in line with its expectations and maintained its outlook for 2012.
Vestas is declining close to 13 percent. The Danish wind turbine maker reported a wider loss for the third quarter. Telefonica turned to a profit in the third quarter. The stock is gaining 1.3 percent in Madrid.
Delhaize is gaining over 10 percent in Brussels. The company reported higher profit for the third quarter. Fiat is declining 2.5 percent in Milan. Deutsche Bank reduced its rating on the stock.
In the commodity space, crude for December delivery is falling $0.85 to $87.86 per barrel while December gold is rising $8.6 to $1723.6 a troy ounce. |
| Asia Market | Asian Markets Cheer Obama's Victory
Asian stock markets rose broadly on Wednesday after incumbent U.S. President Barack Obama defeated Republican challenger Mitt Romney to win a second term defying the undertow of a slow-growth recovery and high unemployment. The re-election meant a continuation of easy monetary policy that would trigger more capital inflows into emerging markets.
Investors will now have to confront the prospect of the "fiscal-cliff", a mix of tax increases and spending cuts scheduled to take effect at the end of 2012, if lawmakers cannot agree on critical issues. Investors also kept an eye on Greece ahead of a parliamentary vote on austerity measures to unlock international aid.
Japanese shares ended little changed in directionless trading. The Nikkei average dropped 2 points or 0.03 percent to 8,973, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange ended up 0.1 percent. Utilities and metal firms ended firm, while airline companies and food makers closed on a subdued note.
Toyota Motor, which raised its outlook for the rest of the year ending March, closed unchanged, while Honda Motor edged up 0.4 percent and Nissan Motor climbed 4.2 percent. Nissan reported a better-than-expected 7.7 percent rise in the July-September net profit, but cut its full-year net profit forecast by 20 percent, citing faltering sales in China and the strength of the yen.
Shares of Softbank rallied 2.9 percent after subscriber data for October showed the mobile carrier won the most subscribers on a net basis in October, helping it retain the top spot for the 10th straight month. Shiseido climbed 3.8 percent on a brokerage upgrade. Sumitomo Metal Mining soared 6.2 percent after its full-year operating earnings forecast came in slightly above estimates. Yokogawa Electric plunged 10.7 percent after its net profit guidance for the fiscal year missed expectations.
China's Shanghai Composite index edged down 0.01 percent ahead of the once-in-a-decade top leadership change, while Hong Kong's Hang Seng index rose 0.7 percent, snapping two days of losses. Chinese property developer Evergrande soared 9.3 percent after posting its highest single-month contract sales in October.
Australian shares rose notably after Obama swept to re-election, ending a long period of uncertainty over fiscal policies and monetary easing. Both the benchmark S&P/ASX and the broader All Ordinaries index ended up about 0.7 percent each. Global miner BHP Billiton rose half a percent after the company said it has started the process to find a successor to chief executive Marius Kloppers as part of an ongoing process. Rio Tinto gained 0.8 percent, smaller rival Fortescue added 1.3 percent and gold miner Newcrest ended up 2.3 percent.
Commonwealth Bank of Australia rose 0.6 percent as the lender reported a 5.7 percent rise in cash earnings in the quarter through September. ANZ added a percent and Westpac advanced 1.3 percent, while NAB edged down 0.2 percent. News Corp shares rallied 3.2 percent as the media firm posted a profit rise and maintained its earnings guidance. Harvey Norman fell 2.2 percent after the retailer reported a 20 percent fall in first-quarter earnings on the back of double digit fall in sales revenue and store closures.
Seoul shares gained ground as a second Obama administration meant that the Federal Reserve will stay the course on expansionary monetary policy. The benchmark Kospi average rose half a percent, led by exporters. Heavyweights Samsung Electronics and Hyundai Motor gained 1-2 percent, while utility Korea Electric Power Corp tumbled 3 percent after its president and CEO Kim Joong-kyum tendered his resignation, citing personal reasons.
New Zealand shares rose modestly, tracking firm regional cues. The benchmark NZX-50 index rose 0.4 percent, led by Fletcher Building on expectations that growing momentum in the Christchurch rebuild would translate into higher earnings for the company. Shares of the nation's largest construction company rose 1.7 percent, while steel building products supplier Steel & Tube rallied 2.8 percent ahead of its inclusion in the NZX-50 index on November 13.
Retailers also ended broadly higher, with Pumpkin Patch, Kathmandu Holdings and Michael Hill adding 2-3 percent. Among the prominent decliners, utility Contact Energy, telecommunications network operator Chorus, Auckland International Airport, the country's main international gateway, and rural services firm PGG Wrightson fell 1-3 percent.
Elsewhere, India's benchmark Sensex was up 0.3 percent, Indonesia's Jakarta Composite index rose 0.8 percent, Singapore's Straits Times index was gaining 0.8 percent and the Taiwan Weighted average added 0.7 percent, while Malaysia's KLSE Composite index was down marginally. |
| Commodities | | | | USDCAD | USDEUR | USDGBP | USDJPY |  |  |  |  | | Please click on the images to view our interactive charts | | Crude Slips Ahead Of Official Inventories Data
The price of crude oil was moving lower as traders await cues from the official inventories data from the EIA, due out later during the trading session.
Light Sweet Crude Oil (WTI) futures for December delivery, lost $0.96 to $87.75 a barrel. Yesterday, oil gained over 3 percent to settle at a 2-week high on global cues with the dollar trading lower even as equity markets in Europe and U.S. trended higher. Prices were helped by supply concerns with refineries along the East Cost struggles to get back into full operation.
Tuesday after the market hours, the API said U.S. crude oil inventories eased 27,000 barrels, while gasoline stocks rose 1.40 million barrels in the weekended November 02.
The price of gold was steady at a two-week high Wednesday morning after Barack Obama's re-election in the US sustained hopes for continued monetary stimulus in the world's largest economy.
Gold for December delivery, the most actively traded contract, gained $9.50 to $1,724.50 an ounce. Yesterday, gold settled above the $1,700-mark for the first time in two days mostly as investors sought the safe haven status of the precious metal while awaiting the outcome of the U.S. presidential elections
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved up to 1,334.49 tons from 1,332.38 tons.
This morning, the U.S. dollar was hovering around a two-month high versus the euro and near a two-week high against sterling. The buck was trading around its 4-month high versus the yen, while leveling off from a two-month high against .the Swiss franc.
In economic news, retail sales in the euro area decreased at a slightly faster rate than economists expected in September, after recording a modest increase in the previous month, data released by statistical office Eurostat showed. Retail sales volume decreased 0.2 percent month-on-month in September, reversing the previous month's 0.2 percent rise. Economists had forecast a more modest decrease by 0.1 percent for September.
Meanwhile, Germany's industrial production declined 1.8 percent in September from a month ago, the Federal Ministry of Economics and Technology said. It follows a slower 0.4 percent drop in August and exceeded a 0.7 percent decline forecast by economists. Industrial production adjusted for working days, slipped unexpectedly by 1.2 percent annually after falling 1.3 percent in August. Economists had forecast output to grow 0.1 percent.
Traders will look to the U.S. crude oil inventories report from the EIA, due out during trading hours today. Analysts expect crude oil inventories to gain 1.8 million barrels last week. |
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