Global Markets Overview - 14 January 2013

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By Christine Gaylican | January 14, 2013 9:56 AM EST

U.S. STOCKS, BONDS

Blue-chip stocks edged higher Friday, capping a week of modest gains, though Wells Fargo & Co.'s earnings weighed on bank shares. The Dow Jones Industrial Average added 17.21 points, or 0.1%, to 13488.43 Friday.

The Standard & Poor's 500-stock index slipped 0.07 point, or less than 0.1%, to 1472.05, easing back from a five-year high on Thursday.

The Nasdaq Composite Index rose 3.87 points, or 0.1%, to 3125.63. Telecommunications and financial shares led declines across five of the S&P 500's 10 sectors, and KBW's index of 24 leading banks fell 0.8%.

Shares of Wells Fargo, the first major bank to report quarterly results, retreated 0.8% after its net interest margin--the difference between what a bank makes by borrowing money and lending or investing it--declined more than expected.

Bank of America Corp. slid 1.3%, and Citigroup Inc. dropped 1.1%. Boeing Co. fell 2.5%, the biggest decline among blue chips as the Federal Aviation Administration is planning to launch a safety review of the aerospace company's 787 Dreamliner.

The U.S. trade gap widened in November, the Commerce Department reported, bucking economists' projections for it to narrow, as imports of nonpetroleum goods such as cellphones and pharmaceuticals soared.

The budget deficit for December totaled $260 million, the best result for that month since 2007, the Treasury Department reported.

The shortfall was far narrower than economists had forecast, but the department said a shift in timing of some payments and receipts affected the final figures.

Elsewhere in the corporate arena, Ford Motor Co. climbed 1.2% after saying it plans to hire 2,200 salaried workers in 2013, primarily in product development, manufacturing and information technology.

Goldman Sachs analysts raised their rating on Ford's shares to "conviction buy" from "buy."

Chevron Corp. gained 1.1% after the blue-chip oil company said it expects fourth-quarter earnings to be notably higher than the previous quarter, given rises in both pricing and production.

American Express Co. rose 0.7% after reporting fourth-quarter earnings that exceeded analyst estimates and saying it would cut 5,400 jobs as part of a restructuring aimed at lower costs.

The U.S.-listed shares of India's Infosys Ltd. surged 19% after the outsourcing company reported better-than-expected fiscal third-quarter revenue and earnings and provided an upbeat full-year revenue outlook.

EUROPEAN EQUITIES, BONDS

European equities saw a mixed trading session Friday, moving sideways as investors focused on earnings season in the U.S. and worries that accelerating Chinese inflation will limit monetary easing by the nation's central bank.

The Stoxx Europe 600 index trimmed an earlier loss to the end the day with a 0.1% decline, posting a 0.3% loss for the week. The index remains up nearly 2.7% since the start of the new year.

The U.K.'s FTSE 100 index advanced 0.3% 6,121.58 and Germany's DAX 30 index edged up 0.1% to 7,715.53. France's CAC 40 index also managed a 0.1% rise, closing at 3,706.02.

Among notable movers in the pan-European index, some drug makers were on the rise after UBS upgraded the pharmaceutical sector to overweight from neutral and highlighted it as its preferred defensive play.

Shares of Roche Holdings AG gained 1.4% and Novo Nordisk AS moved 1% higher. International Consolidated Airlines Group SA jumped 5.4% as UBS lifted the British Airline-parent to buy from neutral.

Pointing in the other direction, shares of Getinge AB dropped 8.2%. The Swedish medical-equipment firm said demand for its products weakened during the final quarter of 2012, meaning net profit before taxes for the full year fell short of expectations.

Mining companies, which are sensitive to growth in China, dropped on news of accelerating Chinese inflation, with shares of BHP Billiton PLC down 2.7%, Rio Tinto PLC off 1.2% and Anglo American PLC dropping 1.4%.

On the data front in the U.K., a report on manufacturing production for November showed a 0.3% decline, missing analyst expectations of a 0.5% increase.

 ASIA-PACIFIC STOCK MARKETS
Japanese stocks ended higher for the ninth consecutive week, the market's longest consecutive weekly climb since in 1988, as the yen weakened after Japan announced a larger-than-expected trade deficit, while Chinese stocks dropped after a pick-up in inflation.

The weaker yen translated into another day of gains for Japanese stocks, with the Nikkei Stock Average advancing 1.4% to 10,801.57, breaking above 10,800 for the first time since late February 2011.

Exporters were higher: Mazda Motor Corp. was up 4.6%, and Nikon Corp. rose 3.3%. In addition, the Japanese government approved a Y10.3 trillion economic stimulus package designed to support the domestic economy, which includes spending on public works.

The government also said that it would strengthen its ties with the Bank of Japan. Japanese manufacturers of construction equipment outperformed the broader market: Komatsu was up 1.6% and Hitachi Construction Machinery was 2.2% higher.

Also in Tokyo, Sharp Corp. jumped 12.6% after an Asahi Shimbun report that the firm's two main creditor banks, Mizuho Corporate Bank and the Bank of Tokyo-Mitsubishi UFJ, are considering providing up to Y200 billion worth of loans to the struggling company.

Markets were also digesting Chinese inflation data, which came one day after the country's above-view trade data boosted regional sentiment.

China's consumer price index rose 2.5% in December from a year earlier, quicker than November's 2.0% rise, and roughly in line with the median 2.4% gain expected by economists surveyed by Dow Jones Newswires.

The Shanghai Composite dropped 1.8% to 2243.00, with stocks in Hong Kong following the mainland lower. The Hang Seng Index lost 0.4% to end at 23264.07. South Korea's Kospi Composite was down 0.5% to 1996.67.

COMMODITIES
Base metals on the London Metal Exchange closed mostly lower following downbeat news from top industrial metal consumer China, with opinions differing on the near-term outlook for the complex.

At the close of open-outcry trading, LME three-month copper closed 0.8% lower on the previous settlement at $8,045 a metric ton.

China's consumer-price index rose 2.5% from a year earlier in December, faster than November's 2% rise. U.S. crude-oil futures pulled back from a three-month high Friday after Chinese inflation data raised concerns about fuel demand in the world's largest energy consumer.

Light, sweet crude for February delivery settled 26 cents, or 0.3%, lower at $93.56 a barrel on the New York Mercantile Exchange.

Brent crude on the ICE futures exchange fell $1.34 to $110.55 a barrel. Gold slipped as the ECB chief's relatively optimistic outlook on Europe limited some investors' expectations for further easy-money policies.

The most actively traded contract, for February delivery, settled down $17.40, or 1%, at $1,660.60 a troy ounce on the Comex division of the New York Mercantile Exchange. Compiled from MORRISON SECURITIES PTY. LTD.

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