Giving you all the latest in Stock Market Information as it happens
 

Month: December 2012

Morning Market Update: Gains Overnight

International equity markets finished with gains overnight after House Speaker Boehner mentioned that he intends to work on the budget negotiations with President Obama.

Republicans in the US Congress are scheduled to vote on Boehner’s proposal of increasing taxes on citizens with income over US$1 million. Markets were further boosted after statistics showed that US GDP grew 3.1% in the third quarter—higher than the median estimate of 2.8%.

The UK’s FTSE fell three points (-0.1%) to settle at 5958 whilst Germany’s DAX added four points (+0.1%) to settle at 7672. France’s CAC put on two points (+0.1%) to settle at 3667.

In the US, the Dow Jones increased 60 points (+0.5%) to settle at 13312 whilst the S&P climbed eight points (+0.6%) to settle at 1444. The Nasdaq added six points (+0.2%) to settle at 3050.

In the commodity space, crude oil for February delivery increased $0.15 to settle at $90.13 a barrel due to the positive US data. Gold futures for February declined 1.3% to settle at $1645.90 due to speculation that the Fed might not implement further monetary policies given that the latest data showed a greater-than-expected expansion in the economy.

In the currency space, the yen fell against its peers after the BoJ announced that it will increase its asset-purchase program by another JPY10 trillion (US$119 billion) and review its inflation target.

The euro traded higher against the US dollar after data showed that its index of household confidence increased to -26.6 in December compared to the previous month’s -26.9. There is no major local economic data slated for release today.

Morning Market Update: Gains Overnight is a post from: Australian Stock Report Market Pulse Blog

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Morning Market Update: Global Markets Fizzle

The weeklong rally on global markets fizzled out overnight after US politicians put up another roadblock to a deal that may avert the year end fiscal cliff.

The past few days had offered hope that House Republican leader, John Boehner, and President Obama, were nearing an agreement on resolving the budget standoff.

However, both sides took to the camera last night, criticising each other’s respective proposals. The political posturing saw the Dow shed 99 points (-0.7%) to close at 13252. The Nasdaq let go of 0.3% whilst the S&P500 dropped 0.8%.

European equities fared better after an index tracking the business climate in Germany rose for a second month. The UK FTSE rose 0.4%, the German DAX climbed 0.2% and the French CAC put on 0.5%.

Oil surged 1.8% to US$89.51 as concerns over the fiscal cliff were overshadowed by a larger-than-expected fall in weekly US crude stockpiles.

In currency markets, the euro continued to strengthen against the greenback as the German business climate data eased concerns over the eurozone’s largest economy. There are no major economic data releases scheduled for today.

Morning Market Update: Global Markets Fizzle is a post from: Australian Stock Report Market Pulse Blog

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Morning Market Update: Bulls Run On

International equity markets finished with solid gains overnight amid optimism that the fiscal cliff may be averted before the year ends.

Obama and Boehner are coming closer to negotiating a compromise; Obama lowered his tax revenue demand by $200 billion and offered to start tax rate increases at $400,000 in income instead of $250,000, moving closer to a budget deal with House Speaker.

The UK’s FTSE increased 24 points (+0.4%) to settle at 5936 whilst Germany’s DAX climbed 49 points (+0.6%) to settle at 7654. France’s CAC added 11 points (+0.3%) to settle at 3649.

Markets in the US rallied yet again with the Dow Jones putting on 116 points (+0.9%) to settle at 13351 whilst the S&P rose 16 points (+1.2%) to settle at 1447. The Nasdaq increased 44 points (+1.5%) to settle at 3055.

In the commodity space, oil traded higher on the back of equity markets gains and after the American Petroleum Institute mentioned that US oil supplies fell by 4.1 million barrels in the previous week.

Crude oil for January delivery added $0.73 to settle at $87.93.

Gold fell to a three-month low as progress in the US budget discussions whet investor appetite for riskier alternatives. Gold futures for February delivery shed 1.6% to settle at $1670.70.

In the currency space, the Japanese yen continued to trade lower ahead of the latest BoJ meeting, whilst the euro traded to a seven-month high against the US dollar due to market optimism. Today will see the release of the MI leading index (10:30am, AEDT).

Morning Market Update: Bulls Run On is a post from: Australian Stock Report Market Pulse Blog

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Morning Market Update: Bulls Bounce Back Overnight

International equity markets enjoyed solid gains overnight amid optimism that President Obama and House Speaker Boehner will eventually agree on a compromise with regard to the budget discussions.

Failure to avert the looming cliff, which involves $600 billion of tax hikes and spending cuts, may lead the world’s biggest economy into a recession in the first half of 2013.

The UK’s FTSE lost 10 points (-0.2%) to settle at 5912 whilst Germany’s DAX climbed eight points (+0.1%) to settle at 7605. France’s CAC fell five points (-0.1%) to settle at 3638.

Markets rallied in the US with the Dow Jones rising 100 points (+0.8%) to settle at 13235 whilst the S&P added 17 points (+1.2%) to settle at 1430. The Nasdaq climbed 39 points (+1.3%) to settle at 3011.

In the commodity space, crude oil for January delivery rose $0.47 to settle at $87.20 a barrel for the same reasons US equity markets rallied. Gold futures for February delivery added 0.1% to settle at $1698.20 after a bigger-than-expected contraction in New York’s manufacturing was reported.

The Fed Bank of New York mentioned that its general economic index fell to -8.1. In the currency space, the yen fell against the US dollar after Mr. Shinzo Abe’s Liberal Democratic Party, in favour of more aggressive monetary policies, won majority of the seats in parliament. The euro traded higher after ECB President, Mario Draghi, said that he expects the eurozone to make a recovery in the second half of 2013.

The US dollar traded higher against most of its peers as investors sought the currency’s safety since marked progress is yet to be made in the US budget discussions. There is no major local economic data slated for release today.

Morning Market Update: Bulls Bounce Back Overnight is a post from: Australian Stock Report Market Pulse Blog

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Morning Market Update: Soft Start Ahead

International equity markets were mixed on Friday night, as a compromise is yet to be reached by US lawmakers to avert the looming fiscal cliff. President Obama and House Speaker Boehner are still in the process of negotiations with substantial progress yet to be reported.

The UK’s FTSE shed eight points (-0.1%) to settle at 5922 whilst Germany’s DAX climbed 14 points (+0.2%) to settle at 7596. France’s CAC traded flat to settle at 3643.

In the US, the Dow Jones lost 36 points (-0.3%) to settle at 13135 whilst the S&P declined six points (-0.4%) to settle at 1414. The Nasdaq fell 21 points (-0.7%) to settle at 2971.

In the commodity space, crude oil for January delivery climbed $0.84 (+1%) to settle at $86.73 a barrel after a preliminary scan of China’s purchasing managers’ index reported a higher-than-expected result of 50.9 for the month of December. Gold for February delivery traded flat to settle at $1697 an ounce.

In the currency space, the Japanese yen fell against the US dollar just before the nation’s elections and after the BoJ mentioned that the Tankan index for large corporations fell to its lowest since March 2010.

Today will see RBA Assistant Governor Debelle Speak (11:00am, AEDT).

Morning Market Update: Soft Start Ahead is a post from: Australian Stock Report Market Pulse Blog

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Morning market Update: US Markets Dive

International markets finished firmly weaker overnight due to lack of progress regarding the US budget discussions, with President Obama saying nothing more than ‘negotiations are still in progress’. Conversely, House Speaker John Boehner is seemingly of the opinion that the President’s proposed solution is not balanced.

The lack of progress overshadowed positive US economic data showing that jobless benefit claims declined by 29,000 whilst retail sales in November increased.

The UK’s FTSE fell by 16 points (-0.3%) to settle at 5930 whilst Germany’s DAX declined 33 points (-0.4%) to settle at 7582. France’s CAC shed 4 points (-0.1%) to settle at 3643.

In the US, the Dow Jones decreased 75 points (-0.6%) to settle at 13171 whilst the S&P fell nine points (-0.6%) to settle at 1419. The Nasdaq declined 22 points (-0.7%) to settle at 2992.

In the commodity space, crude oil for January delivery shed $0.88 to settle at $85.89a barrel after Boehner said that the looming fiscal cliff is not being taken seriously enough. Gold for February delivery shed 0.9% to settle at $1701.80.

In the currency space, the Japanese yen fell against the US dollar and the euro amid speculation that the opposition party in Japan will win the elections over the weekend.

The euro traded higher against most of its peers after EU leaders moved a step closer to forming a euro area banking union. The US dollar advanced against the euro as investors sought the currency’s safety on the back of budget discussions. There will be no major local economic data released today.

Morning market Update: US Markets Dive is a post from: Australian Stock Report Market Pulse Blog

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Morning Market Update: Twist And Yelp

International equity markets ended mixed overnight as word is yet to be heard from US lawmakers with regard to the nation’s budget discussions.

Markets were also affected by the Fed’s announcement that it will implement further monetary policies whilst interest rates will be held close to zero as long as inflation does not rise above 2.5%.

The UK’s FTSE added 21 points (+0.4%) to settle at 5946 whilst Germany’s DAX gained 25 points (+0.3%) to settle at 7615. France’s CAC traded flat to settle at 3647.

In the US, equity markets fell sharply after Federal Chairman Bernanke said that the Fed does not have all the tools necessary to staunch the effects of the fiscal cliff. The Dow Jones and the S&P ended flat, settling at 13426 and 1428 respectively whilst the Nasdaq lost nine points (-0.3%) to settle at 3014.

In the commodity space, crude oil for January delivery increased $0.98 (+1.1%) to settle at $86.77 a barrel after the International Energy Agency announced higher demand forecasts.

Gold for February delivery increased 0.5% to settle at $1717.90 an ounce after the Fed announced that it will purchase $45 billion of treasuries per month to take effect on January.

In the currency space, the Japanese yen fell to an eight-month low versus the US dollar after it was shown that the opposition, who is in favor of more aggressive monetary policies, is leading in the polls.

The euro traded higher against the euro for the same reasons European equity markets finished higher. The US dollar fell against most of its counterparts for the same reasons bullion advanced. Today will see the release of the MI inflation expectations (11:00am, AEDT) and the new motor vehicle sales data (11:30am, AEDT).

Morning Market Update: Twist And Yelp is a post from: Australian Stock Report Market Pulse Blog

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Are We Going Over The Fiscal Cliff? – Part Two

Yesterday our research team comprising of  Adam Halantas (Research Analyst) and Chris Conway (Head of Research) started the  debate on whether we are heading over the fiscal cliff. Toady Chris presents his thoughts on why in his opinion we are heading over the cliff.

WHY WE ARE GOING OVER THE FISCAL CLIFF – Chris Conway

TOO FAR APART

The main reason why I think we’re going over the fiscal cliff is because the sides presently remain too far apart have thus far made little progress in closing the gap;

Obama sent Treasury Secretary Timothy Geithner to Capitol Hill proposing $US1.6 trillion ($A1.53 trillion) in new tax revenues over the next decade, mainly from higher tax rates on the wealthiest two per cent of Americans.

A Republican counter-offer included a plan for $US800 billion in tax revenue raised through closing loopholes and ending some deductions.

Sorry guys but an $800 billion wide gap is no small thing and comments from both Boehner and Obama following a meeting at the weekend have done little to suggest the gap is narrowing.

POLITICAL POSTURING

I could write 5000 words here outlining the nuances of political wrangling in the US but the simplest way to say it is this; both Obama and Boehner and the Democrats and Republicans they represent have either too much to lose or not enough to gain by budging from their respective positions and, as such, won’t.

To put that into context let’s consider the following;

– Some Democrats are willing to let the deadline pass because they believe a rash of broad-based tax hikes would pressure Republicans to give more ground in renewed deficit-reduction negotiations. So they feel their negotiating position will be enhanced due to the increased financial pressure on the Republicans’ most powerful constituents – the rich.

– Some Republicans also feel that it is best to let the deadline pass because there is no major concession that they can extract in negotiations. They know that taxes for the rich are going up if they do or don’t get a deal done, and that is the main thing they are fighting against. So unless there is some political pay dirt to be had, which at present there does not appear to be, they’re not inclined to negotiate in earnest.

So, here we have factions within both parties not overly concerned with the country going over the fiscal cliff. The Democrats because they want to use it as a pressure tactic and the Republicans because they don’t have enough to gain by coming to the party.

Both of these positions are borne out of political posturing and how many pounds of flesh can be extracted from the other side by whatever means necessary – to hell with the economy and the American people if it serves political interests.

That doesn’t sound like a good place from which to start negotiating and with these types of people entrenched on both sides of the divide, I just can’t see a deal getting done.

THE PROCESS

One of the major factors as to why I think we’re going over the fiscal cliff lies not in the adversarial nature of the politicians trying to reach agreement, but rather the process by which they must get ANY deal done. It is not simply a matter of President Obama and House Speaker Boehner agreeing and shaking hands.

What we’re talking about here is a piece of complex, bipartisan legislation that goes directly to the heart of the US economy – it will cover taxes, social-safety-net spending and the federal debt limit.

The end result will likely be a complicated bill that will have direct consequences for average Americans and, as such, will likely be fiercely debated.

At this point in the process, it is becoming increasingly unlikely that there will enough time to turn a framework into enactable legislation and then get it passed.

For senators to responsibly vote on a big, bold framework or package, they need time to review, debate and discuss. They are rapidly running out of that time.

EVEN IF WE DO GO OVER, IT WON’T BE AS BAD AS EVERYONE IS MAKING OUT

If the cliff is breached, US taxes will revert to the levels collected under the Clinton regime and will yield $500 billion more taxes next year.

Defence and Medicare will each have $100 billion sliced off their allotments. That $700 billion represents an economic contraction of roughly 4.7% over the year, enough to put the already sluggish US economy back into a recession. After the initial hysteria and political blame game subsides, it could be argued that markets will react favourably to this.

Sure, nobody likes tax increases but they would return to tax levels that still remain among the lowest in the developed world and were in place when the greatest economic expansion in history took place.

THE U.S. ACTUALLY MUST GO OVER THE CLIFF FOR ITS OWN GOOD

Some have legitimately argued that the US has long been writing cheques with its mouth that its wallet can’t cash and now it’s time to pay the piper.

Let’s not forget that the magnitude of the tax-breaks we’re talking about – $500 billion a year – is the size of the Swedish economy. This means that the richest half of Americans have been spared trillions of dollars in taxes since George Bush handed them these gifts.

Furthermore, this half a trillion in taxes per year returns Americans’ tax rates to levels that are still considerably lower than that paid by Canadians or Europeans.

This $500-billion giveaway means that Bush’s tax cuts represent the biggest entitlement anywhere by any nation in history to the very people who need it the least.

Are We Going Over The Fiscal Cliff? – Part Two is a post from: Australian Stock Report Market Pulse Blog

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Are We Going Over The Fiscal Cliff? – Two Opposing Views

Over the next two days our research team, Adam Halantas (Research Analyst) and Chris Conway (Head of Research) will debate whether we are heading over the fiscal cliff. Toady Adam presents his thoughts on why in his opinion we are not heading over the cliff.

WHY WE ARE NOT GOING OVER THE FISCAL CLIFF – Adam Halantas

If you have lived on the planet earth over the past month chances are you have heard about the impending fiscal cliff. The fiscal cliff involves the combination of US spending cuts and tax increases all coming in to effect simultaneously on January 1st, 2013.

Unless you believe the Mayan prophecy about the world ending December 21st, 2012, you should be worried about the fiscal cliff. If the US economy did ‘fall off the cliff’, a US recession would be guaranteed and the follow-on effect to the global economy could be horrific. However, do not fear, we are not going to be diving off the metaphorical cliff, a deal will get done!

Why am I so confident? Let’s look at the players involved in the fiscal cliff saga; we have Wall Street, the media and I guess the politicians are involved.

The media likes nothing more than chaos. Chaos is the backbone of the media industry, the more chaos, the more people buy newspapers, and the more people watch news programs. So it is in their best interest to perpetuate the illusion that there is a possibility that a deal won’t get done.

Now let us look at the next player, Wall Street. Wall Street makes money, that’s what it does, and that’s what it is usually good at. If people believe that there is a chance of another recession, what do they do? They sell their shares which earns investment banks money. This is why Wall Street is happy join in on the fear-mongering.

The last players we need to discuss are the politicians. Unlike the media and Wall Street, politicians are not directly trying to create fear; it’s just the by-product of having two so diametrical opposed political parties. However, both parties do know that a deal needs to be done; they know they can’t keep kicking the proverbial ‘can’ down the road.

In essence both parties do want the same two outcomes, the fiscal cliff to be avoided and for their respective parties to gain credit for any deal achieved. Mark my words, when a deal is reached, one party will win, one party will lose (my money is on Obama). As such neither party is going to want a deal to be done straight away.

Why don’t politicians want a deal to be done as soon as possible? Simple, it would leave the loser little room for political manoeuvring or what is commonly referred to as spin.  If a deal is done to early the losing party will have their constituents complaining about how they did not try hard enough and they gave up too much. However, if a deal is reached at the eleventh hour the losing party can say they were acting responsibly, for the best interest of the country.

If you don’t believe me when I say a deal will be done, why not see what markets view on the issue is.

If the market was worried about falling off the cliff, we would see the S&P tanking, the VIX index (aka the fear index) rising and US treasury yields soaring. Instead what have we seen since the issue took prominence after the November 6th US elections?

  • -The S&P is only down 10 points or 0.7%
  • -The VIX index is actually down 10%
  • -10 year US Treasury yields have also actually fallen 13 basis points

 

These are not indications of a market that is worried; in fact they are more signs of a market being calm.

Overall I am not worried about the fiscal cliff; I believe US politicians will avert the cliff because ultimately the consequences of falling are too dire. My guess is they will have a deal done by Christmas, because let’s face it, no politicians would prefer to be working on a debt deal over being at home with their families. Winston Churchill once said, “You can always count on Americans to do the right thing – after they’ve tried everything else”. I think they have tried everything else and it’s now time to do the right thing.

Are We Going Over The Fiscal Cliff? – Two Opposing Views is a post from: Australian Stock Report Market Pulse Blog

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Morning Market Update: US Market Solid Overnight

International equity markets finished with solid gains overnight amid speculation US lawmakers will finally reach an agreement with regard to the budget discussions.

Markets were given an extra boost after Germany released better-than-expected investor confidence data. Germany’s index of investor and analyst expectations increased to a seven-month high of 6.9 in December, from -15.7 in the previous month.

The UK’s FTSE put on three points (+0.1%) to settle at 5925 whilst Germany’s DAX climbed 59 points (+0.8%) to settle at 7590. France’s CAC added 34 points (+0.9%) to settle at 3646.

The Dow Jones firmed 79 points (+0.6%) to settle at 13248 whilst the S&P increased nine points (+0.7%) to settle at 1428. The Nasdaq rose 35 points (1.2%) to settle at 3022.

In the commodity space, crude oil for January delivery increased $0.23 (+0.3%) to settle at $85.79 a barrel after Germany, oil’s biggest consumer in the euro area, released positive data.

Gold futures for February delivery declined 0.3% to settle at $1709.60 an ounce as the investing public wait on the Federal Open Market Committee’s (FOMC) decision with regard to monetary policy. The euro regained its strength after the euro area’s largest economy, Germany, released better-than-forecasted data.

The US dollar fell against most of its counterparts due to the high likelihood that the FOMC meeting will result in the announcement of more asset purchases. Today we will hear from RBA Governor Stevens (3:30pm, AEDT) and receive Westpac Consumer Sentiment data (10:30am, AEDT).

Morning Market Update: US Market Solid Overnight is a post from: Australian Stock Report Market Pulse Blog

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