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| | US Market | The major U.S. index futures are pointing to a notably higher opening on Monday, with sentiment suggesting strength after the previous week's retreat. Notwithstanding lackluster global cues, early indications suggest that the markets may be staging a rebound on the back of solid domestic earnings and positive German business sentiment data. Caterpillar reported strong earnings and was upbeat on its outlook, while deal news, characteristic of a Monday, trickled in, reaffirming corporate America's faith in profit growth. Sustenance of the early optimism may also hinge on the new home sales data due to be released shortly after the markets open.
U.S. stocks closed the holiday-shortened week ended January 24th on a downbeat note, as mixed earnings and weak Chinese data amid a lack of any major domestic economic catalysts generated weakness.
Last Tuesday, when the markets opened after last Monday's public holiday, stocks ended on a mixed note, as the positive sentiment generated by Chinese measures to cool domestic money market rates was offset by the negativity triggered by insipid earnings released by some blue chip companies. The mood continued to be uncertain and nervous on Wednesday, leading to another mixed close, as traders reacted to mixed earnings news.
The release of weak Chinese manufacturing data exerted downward pressure on stocks on Thursday, resulting in a notably lower close in the session. Stocks retreated sharply on Friday amid a lack of any major economic catalysts. The averages all ended down about 2 percent.
For the week ended January 24th, The Dow Industrials was down 3.52 percent, while the S&P 500 Index and the Nasdaq Composite fell 2.63 percent and 1.65 percent for the week, respectively.
Among the sector indexes, the Philadelphia Oil Service Index declined 3.06 percent for the week. Additionally, The Dow Jones Transportation Average, the Philadelphia Housing Sector Index, the NYSE Arca Securities Broker/Dealer Index and the KBW Bank Index ended down over 2 percent each. Meanwhile, the NYSE Arca Gold Bugs Index rose 1.11 percent.
Friday's sell-off took The Dow Industrials below its 21-day and 50-day MA (currently at 16,403 and 16,155, respectively). If the sell-off continues, immediate downside supports could be 15,821 and 15,743. However, if traders go bargain hunting, the index could challenge resistance levels around 15,963, 16,025, 16,130, 16,198 and 16,297 as well as its 21 and 50-day MA.
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| | US Economic Reports |  | | CADUSD | Oil | Gold | Allbanc |  |  |  |  | | Please click on the images to view our interactive charts | | | The 2-day FOMC meeting beginning Tuesday is likely to headline the economic events of the unfolding week. Traders may also focus on some key housing market reports, including the Commerce Department’s new home sales report for December, the National Association of Realtors’ pending home sales index for December and the S&P Case-Shiller house price index for November.
The results of consumer confidence surveys for January by both the Conference Board and Reuters and the University of Michigan, the advance fourth quarter GDP estimate, the jobless claims report, the Commerce Department’s durable goods orders report and the personal income and spending reports, both for December are also among the closely watched reports. The results of a few regional manufacturing surveys, the Labor Department’s employment cost index for the fourth quarter and the results of the Treasury auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.
The Commerce Department is scheduled to release its new home sales report for December at 10 am ET. Economists expect new home sales to come in at a seasonally adjusted annual rate of 450,000 compared to 464,000 units in November.
New home sales fell 2.4 percent month-over-month to a seasonally adjusted annual rate of 464,000 in November. Regionally, the Midwest and South saw sales declines, while the Northeast and West reported increases in new home sales. However, the November reading is 16.6 percent higher than a year ago. The median price of a new home was $270,900, up 4.5 percent from October. Inventories measured in terms of the months of supply came in at 4.3 months compared to 4.5 months in October.
The Dallas Federal Reserve is due to release the results of the regional business activity index for January at 10:30 am ET. The consensus estimates call for an increase in the index to 5 from 3.1 in December.
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| | Stocks in Focus | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | Caterpillar (CAT) reported better than expected fourth quarter results and guided full year 2014 earnings above estimates. The company also announced a $10 billion stock buyback program.
American Electric Power’s (AEP) fourth quarter results also exceeded estimates. The company backed its operating earnings forecast for 2014.
YRC Worldwide (YRCW) announced that Teamsters working for the company have approved a tentative agreement aimed at protecting more than 30,000 jobs.
Liberty Global (LBTYA) announced a deal to buy Dutch broadband company Ziggo for $13.7 billion. The company also announced a $1 billion increase to its stock buyback program. YRC Worldwide (YRCW) announced that Teamsters working for it have approved a tentative agreement aimed at protecting more than 30,000 jobs. Reports suggest that Google (GOOG) has acquired artificial intelligence company DeepMind Technologies for $400 million.
Reports suggest that Google (GOOG) has acquired artificial intelligence company DeepMind Technologies for $400 million.
Apple (AAPL), Crane (CR), J&J Snack Foods (JJSF), Plantronics (PLT), Plum Creek (PCL), Rambus (RMBS), Rent-A-Center (RCII), Sanmina (SANM), Seagate Technology (STX), Steel Dynamics (STLD), STMicroelectronics (STM), Swift Transportation (SWFT) and U.S. Steel (X) are among the companies due to release their results after the close of trading. |
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| | European Market | | European stocks opened mostly higher and saw violent gyrations in early trading. The French market has recovered much of its losses and are currently-trading marginally higher, while the German and the U.K. market are trading notably lower.
In corporate news, German chemical company Lanxess announced the appointment of Merck KgaA executive Matthias Zachert as its CEO, effective May 15th. The company’s CFO Bernhard Duettmann will replace the outgoing CEO Axel Heitmann, who will leave on February 28th, on an interim basis. AT&T (T) clarified that it does not intend to buy Vodafone (VOD).
On the economic front, the results of IfO's business sentiment survey showed that its current conditions index came in marginally below expectations at 112.4 in January. |
| | Asian Markets | | | | USDCAD | USDEUR | USDGBP | USDJPY |  |  |  |  | | Please click on the images to view our interactive charts | | | The Asian markets fell across the board amid twin fears of a slowdown in China and stimulus tapering by the Fed, which is exerting downward pressure on emerging market currencies. Geopolitical tensions in Turkey and Syria have also rendered the mood cautious.
Japan’s Nikkei 225 average fell sharply in early trading before moving sideways for the rest of the session. The index ended down 385.83 points or 2.51 percent at 15,006, its lowest level since November 14th. The yen continued to trade close to the 7-week highs reached earlier today, sending export stocks sharply lower. A majority of stocks retreated, with T&D Holdings, NTN and Advantest among the worst performers of the session.
Australia’s All Ordinaries languished below the unchanged line for the better part of the session before closing down 21.20 points or 0.40 percent at 5,254. Most stocks declined, led by financial stocks, while material and industrial stock saw some strength.
Hong Kong’s Hang Seng Index ended at anearly 4-month low of 21,976, down 473.96 points or 2.11 percent, and China’s Shanghai Composite closed 21.09 points or 1.03 percent lower at 2,033.
On the economic front, the Japanese Ministry of Finance reported that Japan’s trade deficit widened to 1.302 trillion yen in December from 1.293 trillion yen, wider than the 1.28 billion deficit expected by economists. Exports climbed 15.3 percent year-over-year compared to a 24.7 percent jump in imports.
The minutes of the December 19-20 Monetary Policy Board meeting of the Bank of Japan revealed that members opined that the Japanese economy is experiencing a modest recovery and that recovery is expected to continue. The members also stated that the central bank is finally starting to make some headway against the deflationary pressures that have plagued the nation for more than a decade, as inflation appears to be rising. |
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| | Currency and Commodities Markets | | Crude oil futures are rising $0.17 to $96.81 a barrel after advancing $2.27 or 2.41 percent to $96.64 a barrel in the week ended January 24th.
Last Tuesday, oil rose moderately on bargain hunting following the pullback in the previous two sessions. The commodity extended its gains on Wednesday, rising over $1.75-a-barrel. After rising moderately on Thursday, oil retreated moderately on Friday amid the global sell-off and yet ended higher for the week by virtue of the gains notched up in the first three sessions of the week.
Gold futures, which climbed $12.40 or 0.99 percent to $1,264.30 an ounce in the previous week, are currently slipping $3.10 to $1,261.20 an ounce.
The dollar weakened broadly in the week ended January 24th, with the yen benefiting from its role as a safe haven, while the euro rose despite the risk aversion prevalent in the market, as positive private sector activity data from the euro area increased confidence concerning economic growth in the region. The dollar fell 1.80 percent against the yen before ending the week at 102.31 and declined 0.93 percent against the euro to $1.3678.
The U.S. dollar is currently-trading at 102.76 yen and is valued at $1.3665 versus the euro. |
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