Global Markets Overview - 19 January 2012

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By Christine Gaylican | January 19, 2012 9:52 AM EST

From: MORRISON SECURITIES PTY. LTD.

U.S. STOCK MARKETS

U.S. stocks pushed toward six-month highs as home-builder sentiment hit its highest level since 2007, and generally positive corporate earnings bolstered shares. The Dow Jones Industrial Average gained 75 points, or 0.6%, to 12556, in late trading Wednesday.

The Standard & Poor's 500-stock index rose 12 points, or 0.9%, to 1305, and the Nasdaq Composite added 37 points, or 1.3%, to 2765. The S&P 500 is on track to close above 1300 for the first time since July.

The broad market measure has finished with gains in 14 of the past 18 sessions and pushed above 1300 Tuesday before paring gains.

Technology and financial stocks led Wednesday's advance, helped by encouraging news at Yahoo and Goldman Sachs Group. Bank of America rose 3.7% and J.P. Morgan Chase gained 4.6% to lead the Dow components. Utilities and consumer-staple stocks pulled on the downside.

The National Association of Home Builders' housing-market index for January came in at a stronger-than-expected reading of 25. That level, while far short of the reading of 50 that indicates positive sentiment, was the highest since June 2007. The upbeat number sent shares in home builders higher. Hovnanian Enterprises shot up 13%, KB Home gained 7.7% and Beazer Homes USA rose 8%.

In U.S. economic news, U.S. wholesale prices fell 0.1% in December, though the underlying rate, which excludes food and energy costs, rose a higher-than-expected 0.3%. Industrial production increased 0.4% in December, while capacity utilization came in at 78.1%; both numbers were roughly in line with expectations. Goldman Sachs Group tacked on 7.7% after earnings and revenue slumped, though the Wall Street bank's profits topped lowered expectations.

Yahoo rose 3.1% after the company said co-founder Jerry Yang has resigned from the board, as well as from the boards of Yahoo Japan and Alibaba Group Holding. Bank of New York Mellon fell 5% after the trust bank reported fourth-quarter earnings and revenue that missed estimates, saying general uncertainty in the financial markets led to lower levels of client activity.

EUROPEAN STOCK MARKETS
European stocks closed slightly higher after a choppy session Wednesday, with Greek shares gaining as negotiators got back to the table to try and round out a deal with the nation's creditors.

The pan-European Stoxx 600 index was up 0.1% to 253.60. The Greek FTSE/ATHEX 20 index jumped 2.8% to 260.84, as the government resumed talks with bondholders to discuss a voluntary writedown on the country's sovereign debt.

Prime Minister Lucas Papademos said ahead of the meeting that he would consider forcing a private-sector haircut on the debt if a deal can't be reached, according to a New York Times interview published Wednesday.

Even with a deal, however, Greece is still likely to face a default down the road, analysts at FxPro said. The situation depends on how Greek banks respond to the pressure they're under and on any upfront payment demanded by private-sector bondholders, the analysts said in a note.

Stocks spiked earlier as the International Monetary Fund reportedly proposed expanding its lending fund to $1 trillion. The European market was also supported by a successful debt sale in Germany, which paid the lowest interest rate on record to sell two-year treasury notes.

The German DAX 30 index gained 0.4% to 6,358.47, led by a 3% gain for Infineon Technologies AG and as shares of Henkel AG & Co. KgaA Pfd. added 2.5%. In Portugal, the government sold EUR2.5 billion in short-term debt with borrowing costs declining slightly.

Italian debt markets were also in the spotlight as Alessandro Settepani, a senior Fitch Ratings director, said a two-notch downgrade could come by end of the month, according to news reports.

The French CAC 40 index edged 0.1% higher to 3,272.48. Banks Societe Generale SA and Credit Agricole SA boosted the index, their shares gaining 6.3% and 3.5%, respectively. More banks supported the stock markets across Europe, with National Bank of Greece SA gaining 7.3% and Banca Popolare di Milano trading 4.8% higher.

Telecommunications carrier weighed heavily on the European stock markets, however. Shares of France Telecom dropped 3%, Tele2 AB fell 2.6% and Telenor ASA shed 2.6%. In London, the FTSE 100 index rose 0.1% to 5,700.14, as shares of Essar Energy PLC jumped 7.1%. The India-focused firm plunged 26% Tuesday, after a court ruled subsidiary Essar Oil could no longer pay sales tax to the government in deferred installments.

ASIA-PACIFIC STOCK MARKETS
Asian stock markets ended mixed Wednesday, with mainland Chinese stocks falling on concerns Beijing may not ease its monetary policy aggressively, while Japanese stocks outperformed as fears about the global economic outlook abated.

Japan's Nikkei Stock Average ended 1% higher, Hong Kong's Hang Seng Index added 0.3%, South Korea's Kospi closed flat and Singapore's Straits Times Index fell 0.7%. China's Shanghai Composite Index lost 1.4%.

The drop in Shanghai came amid expectations that Beijing won't ease its monetary policy too much. Mainland Chinese stocks declined, giving up some of their gains Tuesday.

Among banks, China Citic Bank fell 1.4%, and Bank of China shed 1% in Shanghai. Many property developers gained in Hong Kong, reflecting improved sentiment toward the global economy. China Overseas Land & Investment rose 2.1% and Sino Land climbed 1.2%.

In Tokyo, shares of Elpida Memory rallied 6.6% after the Yomiuri Shimbun said the chip maker would seek a capital tie-up with U.S. firm Micron Technology Inc. Yahoo Japan gained 1.7% following news that Yahoo Inc. co-founder Jerry Yang was leaving the boards of both Yahoo-named firms, as well as Chinese Internet major Alibaba Group, the parent company of Alibaba.com Ltd.

Shares of Alibaba.com fell 1% in Hong Kong. Energy firms also advanced, as benchmark New York crude-oil futures rose back above $101 a barrel. JX Holdings rose 2.6% and Inpex rose 1.8%. Tokyo Electric Power jumped 7.8% after the company said Tuesday that it would raise electricity prices for corporate customers in April.

COMMODITIES
Base metals were mixed on the London Metal Exchange Wednesday, as prices continued to consolidate at higher levels and a stronger euro provided some underlying support for dollar-denominated assets.

At the close, LME three-month copper was up 0.5% on the day at $8,239 a metric ton, not far from Tuesday's near-three-month high at $8,262/ton. Crude-oil futures turned lower Wednesday after reports that the White House will reject a Canadian company's proposal to build a pipeline from the U.S.-Canada border to the Gulf of Mexico.

Prices had spent most of the day a tad higher, fending off weakness from predictions of lower demand by the International Energy Agency. A increasingly lower dollar through the day and a positive U.S. industrial-output report provided some support. Crude for February delivery settled 12 cents lower at $100.59 a barrel on the New York Mercantile Exchange.

Gold futures gained along with the euro as easing worries about a credit crunch in the euro zone spurred investment in the precious metal as an alternative asset. The most actively traded gold contract, for February delivery, rose $4.30, or 0.3%, to settle at $1,659.90 a troy ounce on the Comex division of the New York Mercantile Exchange.

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