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| | US Market | The major U.S. index futures are pointing to a higher opening on Tuesday, with sentiment reflecting relief at China taking measures to cool off money market rates. Meanwhile, earnings from some blue chips have also been encouraging. Earlier in the global trading day, Asian stocks closed higher, while European stocks are also seeing some strength despite lukewarm German investor sentiment reading and mixed earnings. The China news could impart some momentum to the markets, although a lack of domestic economic catalysts could lead to some uncertainty.
U.S. stocks closed mixed in the week ended January 17th, as mixed economic data and earnings led to indecision among traders, causing some volatility.
Last Monday, the major averages retreated sharply amid indecision ahead of the week's data releases, with all the three averages declining over 1 percent each. Helped by solid retail sales data and encouraging bank earnings, the averages rebounded strongly on Tuesday.
The twin factors of positive economic data and earnings continued to benefit the markets on Wednesday. The averages ended the session moderately higher. With economic data and earnings coming in mixed, the major averages moved about showing a lack of direction on Thursday before closing mixed. The Dow Industrials and the S&P 500 Index closed lower, while the Nasdaq Composite ended marginally higher. Lukewarm economic data and mixed earnings continued to pressure stocks on Friday, resulting in a mixed close by the averages once again.
For the week ended January 17th, The Dow Industrials added 0.14 percent and the Nasdaq Composite rose 0.55 percent, while the S&P 500 Index slipped 0.20 percent.
Among the sector indexes, the NYSE Arca Gold Bugs Index rallied 6.46 percent for the week and the NYSE Arca Biotechnology Index added 3.51 percent, while the NYSE Arca Oil Index and the Philadelphia Housing Sector Index fell over 2 percent each.
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| | US Economic Reports |  | | CADUSD | Oil | Gold | Allbanc |  |  |  |  | | Please click on the images to view our interactive charts | | | The unfolding holiday-shortened week’s economic calendar is very light, with only a few market moving economic reports due for the week. Traders are likely to closely track the jobless claims report and the National Association of Realtors’ existing home sales report for December to get some clarity on the economic outlook.
Preliminary results of Markit’s U.S. manufacturing survey for January, the Federal House Finance Agency’s house price index for November, the Conference Board’s leading economic indicators index for December and announcements concerning the Treasury auctions of 2-year, 5-year and 7-year notes round up the economic events of the week. |
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| | Stocks in Focus | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | Reports suggest that Lenovo is in preliminary discussion to buy IBM’s (IBM) low-end server business. Lenovo has reportedly completed due diligence.
Verizon (VZ) reported a profit for its fourth quarter and its adjusted earnings per share topped analysts' estimate. Total operating revenues for the quarter increased 3.4 percent, with 84 percent of revenues generated by Verizon Wireless, FiOS and strategic enterprise services.
Johnson & Johnson (JNJ) reported better than expected fourth quarter results, while its 2014 earnings guidance was lukewarm.
Travelers Companies (TRV) reported fourth quarter operating earnings that exceeded estimates. Revenues were also ahead of estimates.
Forest Labs (FRX) swung to a profit in its third quarter and its adjusted earnings per share topped Wall Street view. Net sales for the quarter grew 24.9 percent and came above the consensus estimate. The company also raised its fiscal year adjusted earnings per share guidance range.
General Electric (GE) and Cameron (CAM) announced that GE has agreed to acquire Cameron’s reciprocating compression division for $550 million. The division generated sales of about $355 million in 2012. The companies expect the deal to be completed later this year.
Jos. A. Bank Clothiers (JOSB) announced that its board has determined that the unsolicited tender offer from Men’s Warehouse (MW) to acquire all of the outstanding shares of Jos. A. Bank Clothiers at $57.50 per share is inadequate. Accordingly, the company has recommended that its shareholders reject the offer.
Eaton (ETN) announced an agreement to sell its Aerospace Power Distribution Management Solutions and Integrated Cockpit Solutions business to Saran for $270 million. The deal is expected to close in the first half of 2014. The business generated sales of about $102 million in 2013.
East West Bancorp (EWBC), the parent of East West Bank, announced the completion of its acquisition of Motorcar Bancshares (MCBI) for $268 million in cash and stock.
UTStarcom (UTSI) announced that the company along with Shah Capital Opportunity Fund bought the entire stake SoftBank held in UTStarcom or 4.88 million ordinary shares for $2.54 per ordinary share. Following the completion of the transaction, Shah Capital’s stake in UTStarcom will increase to 21.9 percent from 17.2 percent.
YRC Worldwide (YRCW) said it has reached a tentative agreement with the officials of the International Brotherhood of Teamsters on an extension of its collective bargaining agreement to March 2019. The company noted that the revised proposals will be reviewed by local union officials at a 2-person meeting of local union officials to be held on January 21st, 2014.
Kroger (KR) and Harris Teeter Supermarket (HTSI) announced that the Federal Trade Commission has granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to the pending merger between the two companies.
Brocade (BRCD) announced the sale of its network adapter business to Qlogic (QLGC) in a bid to focus on its data center networking business. The two companies also announced a collaboration agreement that would facilitate the development of enhanced fibre channel technology among other things.
Harris Corp. (HRS) announced that it has received orders totaling $18 million for Falcon III manpack and handheld tactical radios from the U.S. Special Operations Command during the second quarter of fiscal 2014.
CenterPoint Energy (CNP) said its board approved a 14.5 percent increase in its quarterly dividend to 23.75 cents per share.
NuPathe (PATH) terminated its agreement and plan of merger with Endo Health Solutions (ENDP) and entered into an agreement, under which Teva Pharma (TEVA) will acquire NuPathe for $3.65 per share in cash. Endo has received a $5 million termination fee from NuPathe.
Pioneer Energy (PXD) said its fourth quarter production averaged 173,000 barrels of oil equivalent per day, with the numbers excluding Alaskan operations that are being reflected as discontinued operations in the fourth quarter. The company also noted that fourth quarter production was curtailed by about 6 MBOEPD due to severe winter weather in Texas.
ADTRAN (ADTN), AMD (AMD), CA Technologies (CA), Cree (CREE), Fulton Financial (FULT), IBM (IBM), Interactive Brokers (IBKR), Texas Instruments (TXN) and Xilinx (XLNX) are among the companies due to release their quarterly results after the close of trading. |
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| | European Market | | European stocks opened higher and have been experiencing volatility in early trading, as traders digest domestic earnings and the cues from Asia. The major averages in the region are currently higher
In corporate news, SAP (SAP) reported higher profits and revenues for the fourth quarter, but the company pushed back its time schedule for achieving 35 percent in adjusted operating profit margin to 2017 from 2015, as it invests heavily in cloud.
French power equipment maker Alstom also cut its operating margin forecast for the fiscal year ending March 2014, citing weaker sales. Meanwhile, Unilever reported underlying sales growth of 4.1 percent for the fourth quarter. The company’s full year earnings and revenues were ahead of expectations.
Brewer SABMiller reported third quarter sales volumes that were below expectations. Remy Cointreau’s third quarter sales also missed estimates on weakness in China.
German investor confidence deteriorated for the first time in six months, while the assessment of current situation strengthened sharply at the start of the year, according to the results of the survey from the Centre for European Economic Research/ZEW. The indicator of economic sentiment fell 0.3 points to 61.7 in January from 62, a seven-year high. The score was expected to rise to 64. Nonetheless, it remains at an elevated level. |
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| | Asian Markets | | | | USDCAD | USDEUR | USDGBP | USDJPY |  |  |  |  | | Please click on the images to view our interactive charts | | | Asian stocks ended mostly higher, helped by the China boost, although the Taiwanese market retreated modestly. The Chinese and the Japanese markets were the best performers of the region.
The People Bank’s of China added funds into the markets twice this week ahead of the Lunar New Year holiday, easing short-term rates. On Tuesday, the bank pumped 225 billion yuan through reverse repurchase agreements. The action is seen as an effort to ensure adequate liquidity, ensuring stability in the financial markets.
The Japanese market was the beneficiary of a weaker yen, which fell on an increase in risk appetite. The Nikkei 225 average opened higher and moved steadily higher in the morning before moving sideways in the afternoon. The index ended up 154.28 points or 0.99 percent at 15,796.
A majority of stocks rose, led by Alps Electric, Sumitomo Heavy Industries, Sharp, Taiyo Yuden and Nippon Light Metal Holdings. On the other hand, Mitsubishi Motors and Okuma declined sharply.
Australia’s All Ordinaries ignored some weakness in the morning and moved decisively higher in the mid-session. After seeing a short sharp spike in the mid-session, the index moved sideways, ending up 34.40 points or 0.65 percent at 5,342. Most sectors advanced, led by financial stocks, although energy and material stocks came under selling pressure.
Hong Kong’s Hang Seng Index closed at 23,033, up 104.17 points or 0.45 percent, and China’s Shanghai Composite ended 17.06 points or 0.86 percent higher at 2,008. |
| | Currency and Commodities Markets | | Crude oil futures are rising $0.34 to $94.93 a barrel after rising $2.10 or 2.3 percent to $94.37 a barrel in the week ended January 17th.
Last Monday, oil fell by close to $1-a-barrel amid a lack of risk appetite. The commodity rebounded moderately on Tuesday, thanks to positive data.
Oil rallied by over $1.50-a-barrel on Wednesday only to pullback modestly on Thursday and moderately on Friday, but it had built up enough momentum to end the week higher, reversing the previous week’s over 1 percent retreat.
Gold futures, which added $5 or 0.40 percent to $1,251.90 an ounce in the previous week, are currently retreating $13.90 to $1,238 an ounce.
Among currencies, the U.S. dollar ended little changed against the yen at 104.18 yen in the week ended January 17th, while it appreciated about 1 percent against the euro, adding percent for the week to $1.3552.
Last week, the dollar was the beneficiary of the lackluster mood that prevailed in the financial markets for much of the week that led to the stifling of risk appetite. Comments by Federal Reserve officials that the central bank is firm in its intent to gradually pullback stimulus also supported the greenback.
The U.S. dollar is currently-trading at 104.56 yen and is valued at $1.3542 versus the euro. |
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