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Global Markets Overview - 11 January 2013

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By Christine Gaylican | January 11, 2013 10:05 AM EST

U.S. STOCK MARKET, BONDS

Financial shares led broad gains in major benchmarks, as market-watchers found reasons for bullishness in economic data. The Dow Jones Industrial Average rose 42 points, or 0.3%, to 13433.

Bank of America paced the blue chips, rising 2.5%. The Standard & Poor's 500-stock index rose 5.5 points, or 0.4%, to 1467, led by the financial sector.

The Nasdaq Composite Index rose 2.2 points, or 0.1%, to 3107. Stocks rose broadly, and nine of 10 sectors in the S&P 500 edged higher as investors waited for corporate earnings reporting season to pick up steam. Initial claims for unemployment benefits in the latest week were higher than expected, but some bullish investors were heartened by data in the report.

China's trade surplus in December increased sharply to $31.6 billion from $19.6 billion in November, boosted by a 14% jump in exports from year-earlier levels, a sign that China's recovery may be picking up steam.

Economists were expecting an unchanged trade surplus and a 4.6% rise in exports. Tiffany declined 5.1%. The high-end jewelry retailer said it expects earnings for the full fiscal year to be at the low end of its previously forecast range, given lackluster holiday sales.

Molycorp slumped 22% after the rare-earth mining company said it expects 2013 revenue and cash flow to be lower than anticipated. Facebook shares rose 2.1%, building on recent sharp gains. Nokia jumped 17% after it said it expects better fourth-quarter earnings than expected.

EUROPEAN STOCK MARKETS, BONDS
 
European stocks saw mixed price action as the European Central Bank and the Bank of England both left monetary policy unchanged Thursday, while investors also digested well-received debt auctions in Spain and Italy.

The Stoxx Europe 600 index fell 0.3% to 287.44, after closing at its highest level since February 2011 on Wednesday. European indexes struggled for direction most of the session, as investors focused on the two central banks' latest monetary decisions.

The Bank of England made no changes to its asset-purchase program and left its key lending rate at a record low 0.5%, as had been widely anticipated.

The European Central Bank also stood pat, keeping its interest rate at 0.75% as was expected. ECB President Mario Draghi said at the subsequent news conference that the decision to leave rates untouched was unanimous, while also stressing that risks to the economic outlook remain weighted to the downside.

He did say, however, that the central bank expects a gradual recovery in 2013. Among notable movers in Europe, Nokia Corp. shares surged 11% after the handset maker released preliminary fourth-quarter results.

It highlighted that its Devices & Services unit "exceeded expectations" as the Mobile Phones unit and Lumia smartphones performed better than expected.

Shares of MAN SE jumped 3.5% in Frankfurt trading. Late Wednesday, Volkswagen AG said it would seek a domination agreement with the German truck maker and offer to buy out the rest of the company's shareholders.

Shares of Volkswagen rose 1%. Spain's Treasury sold more public debt than targeted and at lower interest rates compared with previous auctions.

The yield on 10-year Spanish government bonds fell in the secondary market to 4.89%, the lowest level in about 10 months, according to electronic trading platform Tradeweb. Madrid's IBEX 35 index rose 0.2% to 8,618.90.

The Italian Treasury also saw high demand at its debt auction. The 10-year yield dropped to 4.15%, while the FTSE MIB index gained 0.7% to 17,451.07.

France's CAC 40 index closed 0.4% lower at 3,703.12. Shares of GDF Suez SA fell 1.9% after J.P. Morgan Cazenove downgraded the gas distributor to underweight from neutral. Shares of Alstom SA gained 3.4% as Citigroup upgraded it to buy from neutral.

London's FTSE 100 index added 0.1% to 6,101.51. Shares of Standard Chartered PLC gained 0.8% as Societe Generale lifted its rating to buy from hold, while sector heavyweight HSBC Holdings PLC rose 0.5%.

Germany's DAX 30 index lost 0.2% to 7,708.47. Shares of RWE AG gave up 1.9% after Barclays downgraded the utility firm to underweight from equal weight.

ASIA-PACIFIC STOCK MARKETS

Asian markets were higher Thursday, as sentiment was supported by China's above-view trade surplus, while Japanese stocks rose as the yen resumed its weakening trend.

China's trade surplus increased sharply in December, to $31.6 billion from $19.6 billion in November, as exports surprised on the upside. Exports were up 14.1% in December compared with the year-earlier period, far above the median estimate of a 4.6% increase by 16 economists.

In other data, new yuan loans came in at CNY454.3 billion in December compared with the CNY550 billion forecast in a Dow Jones poll.

Hong Kong's market started the day little changed, but the trade data put it on an upward trajectory, with the Hang Seng Index rising 0.9%.

The Shanghai Composite Index was up 0.5%. Mainland companies outperforming in Hong Kong included China Unicom, up 2.4%, Aluminum Corp. of China, up 8.1%, and Bank of China, up 1.7%.

The Hang Seng China Enterprises Index, which tracks Chinese companies listed in Hong Kong, has soared 31% from early September to Wednesday, and added another 1.4% on Thursday.

A weaker yen paved the way for more gains in Japanese stocks, with the Nikkei Stock Average up 0.9%. Exporters were once again the main beneficiaries, especially in the automobile sector.

Honda Motor and Isuzu Motors were up 2.6% and 4.2%, respectively. There was also some strength in steel and insurers: Dai-Ichi Life Insurance pushed 4.2% higher and Nippon Steel & Sumitomo Metal Corporation was up 5.2%.

South Korea's Kospi Composite also turned positive after the trade data, rising 0.5%. Chinese inflation numbers are due Friday.

COMMODITIES

Base metals on the London Metal Exchange closed mostly in positive territory after stronger-than-expected Chinese trade data set the tone for a risk-on move, and a reiteration of accommodative monetary policies in Europe added support.

At the close of open-outcry trading, flagship of LME three-month copper was 0.4% higher at $8,111/ton. Nickel, however, closed 0.9% lower on the day at $17,400/ton. London-based traders said this was likely partly due to the news that LME inventories rose substantially over 2012.

Data Thursday showed nickel stocks rose 56.5% on the year in 2012, to 141,690 metric tons. Tin stocks meanwhile rose 5.8% to 12,800 tons.

The thinly traded metal closed flat on the day, relinquishing gains at $24,645/ton. The other industrial metals rose, initially after trade data for China the largest consumer of copper showed the trade surplus was wider than expected.

Oil futures rose Thursday, pushing toward $94 a barrel after unexpectedly strong December export data from China and a report that Saudi Arabia cut crude production. February crude futures rose 72 cents, or 0.8%, to $93.82 a barrel on the New York Mercantile Exchange.

The contract touched a high of $94.70. Front-month crude contract prices haven't closed above $94 since mid-September. A weaker U.S. dollar in the wake of China's report that exports jumped 14.1% also spurred gains for dollar-denominated oil.

Gold climbed on hopes for higher physical demand from top buyers India and China and currency swings after the European Central Bank's interest-rate decision weighed on the U.S. dollar. The most actively traded contract, for February delivery, rose $22.50, or 1.4%, to settle at $1,678 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest price since Jan. 2. Compiled from MORRISON SECURITIES PTY. LTD.

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