European shares edged up and the euro hit a one-week low against the dollar.]]> |||
London - European shares edged up and the euro hit a one-week low against the dollar on Wednesday, driven by upbeat company earnings results and hopes of corporate bond buying by the European Central Bank.
Shares in Swiss engineering group ABB gained 3.1 percent after posting a bigger-than-expected rise in orders, helped by demand from the oil and gas industries.
Outdoor equipment maker Husqvarna surged 6.1 percent after reporting a rise in earnings that was above forecasts.
The market moves were tentative as investors remain nervous about the state of the global economy, with the euro zone a key soft spot.
Such worries may intensify on Thursday when regional business surveys are due.
Several sources told Reuters on Tuesday the ECB was considering buying corporate bonds on the secondary market and may make a final decision as soon as December with a view to begin purchases early next year.
That would expand the private sector asset-buying programme the ECB began on Monday with the aim of giving the economy a shot in the arm and safeguarding the euro zone from deflation, which has already gripped five of its 18 members.
The FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,300.72 points, after surging 2.1 percent on Tuesday.
The euro hit a one-week low of 1.27025 before bouncing to 1.2719, virtually flat on the day.
“The general takeaway here for a lot of people is that it shows commitment from the ECB trying to find ways to expand its balance sheet. And also it shows ... the ECB wanting to pick up the pace,” said Paul Robson, a currency strategist at RBS.
In the United States, Apple and Texas Instruments posted stronger-than-expected quarterly earnings, lifting the tech-heavy Nasdaq Composite Index more than 2 percent on Tuesday.
That, together with data showing a stronger-than-expected 2.4 percent rise in US domestic home resales last month provided evidence that the US economic recovery maintained some momentum.
“Sentiment turned positive overnight on good earnings reported by US corporates, much better than expected US existing home sales data and the rumours that the ECB is considering the option of buying corporate bonds in the secondary market,” said Daniel Lee at Credit Agricole.
Some hopes were also coming from Japan, where trade data showed exports rose 6.9 percent in September from a year earlier, the fastest pace in seven months.
The upbeat signals from the United States bolstered the dollar, although traders were wary of US inflation data due at 14:30 SA time.
Economists expect annual core CPI inflation to stay flat at 1.7 percent in September, and a cooler reading would add to speculation that the Federal Reserve will wait longer before raising interest rates.
The consensus view is that the US central bank will decide at its October 28 to 29 policy meeting to wrap up its third round of asset purchases with new money, known as quantitative easing.
But short-term interest rates futures imply markets do not expect the Fed to hike rates until late 2015.
The dollar inched lower on the day against the yen to 106.88 yen.
Euro zone bond yields extended their falls on the back of the ECB's plans.
German 10-year Bund yields, which set the standard for euro zone borrowing costs, fell 1 basis point to 0.86 percent.
Peripheral bond yields fell by more.
“The news of bond buying had quite a beneficial effect on the non-German bond markets, for good reason, so spread narrowing was quite substantial and today there is still some after-effect of that,” said KBC strategist Piet Lammens. - Reuters]]>
Hong Kong shares had its best daily gain since early September, underpinned by a rally in US shares and optimism the Chinese government will roll out more stimulus to prop up growth.]]> |||
Shanghai - Hong Kong shares had its best daily gain since early September, underpinned by a rally in US shares and optimism the Chinese government will roll out more stimulus to prop up growth.
The Hang Seng Index closed up 1.4 percent at 23,403.97 points, its biggest daily rise since September 3.
The China Enterprises Index of the leading offshore Chinese listings in Hong Kong rose 1.5 percent.
The October HSBC/Markit flash China Purchasing Managers' Index (PMI) is due on Thursday.
If factory activity shows signs of slowing, Beijing may introduce additional stimulus measures to bolster growth, analysts said.
Oil firms were the biggest gainers.
Sinopec ended up 1.5 percent, China Oilfield Service rose 2.8 percent and PetroChina surged 3 percent.
Technology shares rallied on the back of strong performances in US peers.
Analysts said reports that Tencent Holdings would set up a cross-border online trading platform with a Taiwan company, pushed its shares up by 3.4 percent.
Chinese electric carmaker BYD posted its biggest rise in two months after the Chinese government said it would promote wider adoption of new energy vehicles for public transportation to tackle pollution in northern China. - Reuters]]>
Britain's FTSE 100 lagged small gains in main euro zone equity indexes as a gloomy update from British American Tobacco weighed on companies which sell consumer goods.]]> |||
London - Britain's FTSE 100 lagged small gains in main euro zone equity indexes on Wednesday as a gloomy update from British American Tobacco weighed on companies which sell consumer goods.
Shares in BAT fell 4 percent by 09:41 SA time as the tobacco firm reported a revenue drop in the first nine months of the year, citing a slow economic recovery in western Europe and adverse currency moves.
Imperial Tobacco fell 1.1 percent, with other companies exposed to weaker consumer demand and currency fluctuations against the pound, such as Diageo, also lower.
Companies which sell consumer staples knocked 14.6 points off the FTSE 100, which was down by 6.59 points, or 0.1 percent, at 6,365.74 points.
It lagged gains of between 0.2 percent and 0.6 percent for main euro zone indexes such as Germany's Dax, which benefited from a Reuters report suggesting the European Central Bank was considering buying corporate bonds to revive the region's economy.
“The BAT update is having an effect on the entire defensive sector,” Manoj Ladwa, head of trading at TJM Partners, said.
“The FTSE has underperformed because of its composition and we expect this to continue.”
MID CAPS OUTPERFORM
The mid-cap FTSE 250 index was up 0.5 percent, boosted by a bullish outlook update by gambling technology company Playtech and bid speculation surrounding specialty chemicals maker Croda International.
Shares in Croda rose 2.8 percent, adding to a 1.8 percent rise on Tuesday, which the Daily Mail and Daily Express attributed to talk of a 4 billion pound (R71 billion) offer for the firm.
Playtech rose 4.7 percent after saying it was confident it would exceed current market expectations after a strong start to its fourth quarter, which followed a 29 percent rise in revenue in the preceding period.
On the downside, Britain's biggest household goods retailer Home Retail Group fell 2.9 percent after announcing plans to close a quarter of its Homebase home improvement stores by 2018 as it prioritises the development of its main Argos chain.
SuperGroup, the British company behind the Superdry fashion brand, fell 3.5 percent after it named former Co-operative Group boss Euan Sutherland as its new chief executive, replacing its founder Julian Dunkerton. - Reuters]]>
European shares inched higher, extending the previous session's sharp gains.]]> |||
Paris - European shares inched higher in early trading on Wednesday, extending the previous session's sharp gains, with a raft of positive corporate results from companies including ABB and Husqvarna lifting sentiment.
Shares in Swiss engineering group ABB were the top gainers among European blue-chips, gaining 2.7 percent after posting a bigger-than-expected rise in orders, helped by demand from the oil and gas industries.
Outdoor equipment maker Husqvarna also reported a larger-than-expected rise in earnings, sending its shares surging 6.2 percent.
At 09:57 SA time, the FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,300.64 points.
The index rose 2.1 percent on Tuesday after sources told Reuters the European Central Bank was considering buying corporate bonds to revive the region's economy - a step that would help banks free up more of their balance sheets for lending.
The index's rebound that started late last week followed a 14 percent pull-back triggered in mid-September and fuelled in part by a rapid deterioration in Germany's macro data.
“The recent correction in stocks was healthy. Europe's valuation ratios are back at levels that match the trend in earnings growth,” said Francois Chevallier, strategist at Banque Leonardo.
“Now the focus will be on Europe's PMIs. As long as the composite PMI remains above 50, it's difficult to imagine that the correction in shares could drag on.”
The euro zone composite PMI, due on Thursday, is expected at 51.7, according to a Reuters survey of economists, down from 52 in September but still above the key 50 threshold dividing growth from contraction.
Shares in aluminium producer Norsk Hydro added 1.7 percent on Wednesday after posting third-quarter earnings above expectations and predicting the sector's first supply deficit since the start of the global financial crisis.
Heineken bucked the trend, losing 1.2 percent after the world's third largest brewer reported lower-than-expected beer sales in the third quarter.
Shares in PSA Peugeot Citroen gained 2.5 percent after the automaker lifted its 2014 European auto market growth forecast to 4-5 percent from 3 percent previously.
So far in Europe's earnings season, 9 percent of STOXX 600 companies have reported results, of which 65 percent have met or beaten profit forecasts, according to data from Thomson Reuters StarMine. - Reuters]]>
Japanese shares rose, with the Topix index reversing its recent fall, after global stocks surged on bets the European Central Bank will expand stimulus.]]> |||
Tokyo - Japanese shares rose, with the Topix index reversing yesterday’s drop, after global stocks surged on bets the European Central Bank will expand stimulus.
Toyota Motor gave the biggest support to the Topix.
Shippers jumped 4.7 percent, the most among the stock index’s industry groups, after a gauge tracking freight rates posted the largest advance since 2009.
Sony gained 3.4 percent after Third Point, the hedge-fund run by activist investor Daniel Loeb, sold its investment in the electronics maker.
The Topix jumped 2.6 percent to 1,236.41 at the close, with all 33 industry groups advancing.
The measure lost 1.6 percent yesterday after surging 4 percent on October 20.
The Nikkei 225 Stock Average increased 2.6 percent to 15,195.77 today.
US and European benchmark equity indexes gained at least 2 percent yesterday amid the ECB optimism.
“Everyone has become very sensitive to how the global economy is doing, and investors are especially swayed by news from the various authorities, as well as the macro data,” said Naoki Fujiwara, Tokyo-based chief fund manager at Shinkin Asset Management, which oversees about $6 billion (R66 billion).
“There’s no clear direction in the near term and we’ll probably see repeated risk-on, risk-off days. But domestic earnings are likely to be revised up, and the market has room to price that in.”
As the Federal Reserve winds down asset purchases, investors are looking to the ECB and Bank of Japan to bolster the outlook for the global economy.
The ECB bought Italian covered bonds as it returned to the market for a second day under its asset purchase program, according to two people familiar with the matter.
Reuters earlier reported the ECB is looking to buy corporate bonds on the secondary market amid growing concern the euro area’s economic growth is slowing.
“There are concerns about deflation in Europe and that Germany’s economy isn’t as strong, so there’s a chance the ECB will start to denote its intention to not let the economy deteriorate,” said Hiroichi Nishi, an equities manager at SMBC Nikko Securities in Tokyo.
“Japanese shares had fallen a lot because of concerns about a global economic slowdown. If these worries recede, it’s positive for Japanese stocks.”
Japan’s exports climbed the most in seven months in September, supporting a rebound in the economy as Prime Minister Shinzo Abe weighs another sales-tax increase.
Overseas shipments rose 6.9 percent from a year earlier, the finance ministry said in Tokyo today, compared with the median estimate for a 6.5 percent increase in a Bloomberg News survey of 27 economists.
Imports grew 6.2 percent, leaving a trade deficit of 958.3 billion yen ($9 billion).
Nippon Yusen, Japan’s biggest shipper by sales, rose 4.3 percent to 268 yen.
Mitsui, the No. 2, gained 5.4 percent to 333 yen, its steepest rally in a year.
Kawasaki Kisen Kaisha, the third-largest, added 5 percent to 233 yen.
The cost of shipping commodities soared amid speculation that Chinese traders are increasing purchases of iron ore, the raw material used in steel.
The Baltic Dry Index surged 12 percent, the biggest one-day gain since February 2009.
Sony jumped 3.4 percent to 1,909 yen.
Third Point said it made “nearly 20 percent” on its exited Sony investment, which was announced in May 2013, despite the Japanese company rejecting Loeb’s push that it spin out about one-fifth of its US-based entertainment business. - Bloomberg News]]>
The rand edged firmer against the US dollar after pushing to its strongest level in 25 days in the previous session.]]> |||
Johannesburg - South Africa's rand edged firmer against the dollar on Wednesday after pushing to its strongest level in 25 days in the previous session, as the currency was boosted by Chinese GDP data that came in stronger than market forecasts.
The local unit did, however, surrender some of its earlier gains as investors held their bets ahead of the finance minister's medium-term budget review later in the day.
The rand has been unable to hold beyond a recent resistance level of 10.980, which it has failed to breach three times in the past three weeks.
At 08:43 SA time, the rand inched 0.1 percent firmer versus the dollar to 11.0305 compared to its New York close, after racing to a 5-week record-high of 10.9725 in the previous session.
Analysts expect the rand to take direction from minister Nhlanhla Nene's maiden budget speech at 14:00 SA time, as well as inflation data scheduled for release 10:00 SA time.
“Dips below 11.00 on USD/ZAR have not been sustained as the market awaits today's key budget speech,” said John Cairns, an analyst at Rand Merchant Bank, in a note to clients.
Market-watchers expect Nene to reveal a budget deficit that has widened since February's figure of 4.4 percent of gross domestic product.
“We do not expect any positive surprises, implying the rand should struggle to extend gains,” Cairns added.
Government bonds tracked the currency lower, with yields on the benchmark paper rising by 5 basis points to 8.015 percent. - Reuters]]>
High hopes for Finance Minister Nhlanhla Nene’s first medium-term budget policy statement boosted the rand.]]> |||
The rand on Tuesday strengthened below R11 against the US dollar ahead of Finance Minister Nhlanhla Nene’s first medium-term budget policy statement to Parliament on Wednesday.
Analysts said the market was betting that Nene would reassure investors that South Africa would stick to fiscal prudence by containing expenditure while working to spur growth.
But if Nene provided no credible plan to narrow the budget and current account deficits, the strength in the rand could be short-lived.
Another factor that helped the rand edge up to its strongest intraday level since mid-September was the news of stronger-than-expected GDP data from South Africa’s key commodity importer, China. During the day it hit R10.96.
Nene is expected to target a budget deficit of 4.4 percent of gross domestic product for the 2014/15 fiscal year, according to a Reuters poll.
The Treasury’s initial forecast was for 4 percent. This prospect is a worry for credit-rating agencies but they might be reassured if Nene is able to counter it with a clear and consistent message that spending will be reined in.
Government debt was also bid higher, pushing the yield for the 2026 secondary market benchmark 5 basis points lower to 8.025 percent.
“Today has seen a minor push back into risky assets with local government bonds the recipient of some investment capital and this filtered through into a rather blasé rand market,” Standard Bank trader Inshaan Omar said.
Nene, who was promoted in May after serving as deputy to Pravin Gordhan, may use his first mid-term budget to announce something the government has been loath to try for years: selling assets to plug funding holes in the embattled power utility and elsewhere.
“Nene could announce the complete or partial privatisation of some assets, which would mean a smaller liability for government,” Maarten Ackerman, an investment strategist at Citadel Asset Management, said yesterday. “Then, on paper, he would be able to put down numbers which will keep the rating agencies happy.”
Other positive news came from the Reserve Bank’s leading indicator yesterday, up 0.8 percent in August, showing that the economy is picking up. This was the leading indicator’s best level since February.
This was due to an increase in the number of building plans passed and higher volumes in manufacturing orders.
Azar Jammine, chief economist at Econometrix, said the positive outcome for the leading indicator confirmed the economy was resuming modest growth in the aftermath of all the debilitating industrial action in the first seven months of the year.
He said what was especially encouraging was the fact that the main drivers of the improvement in the indicator related to developments in domestic real economic activity rather than financial indicators or global economic growth indicators.
“The inferences to draw is that economic growth should see some improvement to well over 2 percent in 2015, off a very low base for 2014, other things being equal,” he said.
Jammine said unfortunately there was one huge cloud on this horizon, the possibility of a strike in the public sector in the face of exorbitant wage demands. - With additional reporting by Bloomberg and Reuters]]>
American stocks rallied on Tuesday, with the S&P 500 notching a fourth straight session of gains boosted by strong corporate results.]]> |||
New York - US stocks rallied on Tuesday, with the S&P 500 notching a fourth straight session of gains boosted by strong corporate results, including Apple's.
The S&P 500 and Dow Jones were up more than 1 percent while the Nasdaq rose more than 2 percent, thanks to better-than-expected results from several major tech companies.
The bullish tone was helped by a Reuters story that said the European Central Bank is considering buying corporate bonds. It led to active futures trading before the opening bell and helped lift European stocks from last week's 13-month low.
“That is allowing the market to breathe a little sigh of relief,” said Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey. “The market has come to fear the absence of central banks.”
The S&P 500 has gained more than 6 percent from its session low last Wednesday, when the benchmark nearly reached correction territory. It closed Tuesday above both its 14-day moving average and its 200-day average.
The Dow Jones industrial average rose 215.14 points, or 1.31 percent, to 16,614.81, the S&P 500 gained 37.27 points, or 1.96 percent, to 1,941.28 and the Nasdaq Composite added 103.40 points, or 2.4 percent, to 4,419.48.
Apple Inc rose 2.7 percent to $102.47 a day after revenue topped expectations, helped by strong iPhone sales. It also gave a strong outlook for the holiday quarter.
The largest percentage gainer and decliner on the S&P 500 were both related to earnings. The top gainer was Waters Corp , which rose 9.9 percent, while the largest decliner was Chipotle, down 7 percent.
The largest gainer on the Nasdaq 100 was Illumina, which rose 9.2 percent and the largest decliner was Starbucks, down only 0.5 percent.
While earnings have largely come in strong so far this quarter, concerns continue to swirl over the pace of global economic growth. China's gross domestic product grew 7.3 percent in the third quarter, the slowest pace since the first quarter of 2009.
“This rebound is going to be short-term in nature,” said Mohannad Aama, managing director at Beam Capital Management LLC in New York. “The reasons for the market meltdown from last week are still there.”
US existing home sales rose 2.4 percent in September, above expectations, hitting their highest level in a year. The PHLX Housing index rose 1.2 percent.
Advancing issues outnumbered decliners on the NYSE by 2,557 to 538, for a 4.75-to-1 ratio on the upside; on the Nasdaq, 2,008 issues rose and 668 fell for a 3.01-to-1 ratio.
The benchmark S&P 500 index posted 24 new 52-week highs and 1 new low; the Nasdaq Composite showed 45 new highs and 30 new lows.
About 7.2 billion shares changed hands on US exchanges, below the 8.3 billion October average, according to BATS Global Markets. - Reuters]]>
Asian shares were on track for solid gains on Wednesday after Wall Street's strong performance on upbeat results from two technology firms.]]> |||
Tokyo - Asian shares were on track for solid gains on Wednesday, after Wall Street's strong performance on upbeat results from two technology bellwethers offset investors' recent concerns about the outlook for the global economy.
MSCI's broadest index of Asia-Pacific shares outside Japan extended gains and was up 0.9 percent, while Japan's Nikkei stock average added 1.7 percent, rebounding from Tuesday's 2 percent drop.
Asian sentiment also got a lift from the European Central Bank's plan to buy corporate bonds, a step that would help banks free up more of their balance sheets for lending. The ECB might decide on the matter as soon as December with a view to begin purchases early next year, several sources familiar with the situation told Reuters.
“The news triggered bargain-hunting as Japanese shares have fallen to levels which priced in the worst case scenario,” said Toru Ibayashi, executive director at UBS Wealth Management, referring to fears that Europe's economy would fall back into recession.
In US trading, shares of Apple and Texas Instruments gained on stronger-than-expected quarterly earnings, lifting the tech-heavy Nasdaq Composite index more than 2 percent. The S&P 500 added 1.96 percent to mark its biggest daily percentage gain since October 2013 and its fourth straight rising session.
Japanese trade data released early Wednesday underpinned buying in Tokyo, as it showed Japan's exports rose 6.9 percent in September from a year earlier, the fastest pace in seven months, a tentative sign that external demand is starting to pick up.
The upbeat mood in global equities markets sapped the safe-haven appeal of US Treasuries, pushing their yields away from last week's 17-month lows. The yield on benchmark 10-year US Treasury notes stood at 2.209 percent in Asian trade, steady from Tuesday's US close of 2.208 percent.
Data on Tuesday showing a stronger-than-expected 2.4 percent rise in US domestic home resales last month provided evidence that the US economic recovery maintained momentum and also put upward pressure on yields.
Higher US yields supported bolster the greenback, with the dollar index steady on the day at 85.278.
“Given heightened concern about falling inflation expectations, attention turns to the US September CPI report,” strategists at Barclays said. “Our thesis of USD outperformance driven by relative US strength and interest rate divergence remains intact, but is at risk of delay pending soft underlying inflation trends.”
The CPI report is due at 1230 GMT. Economists expect annual core CPI inflation to stay flat at 1.7 percent in September, and a cooler reading would add to speculation that the Federal Reserve will wait longer before raising U.S. interest rates.
The consensus view is that the US central bank will decide to wrap up its asset purchases under its third round of quantitative easing later this month at its October 28-29 policy meeting, though short-term interest rates futures implied markets do not expect the Fed to hike rates until late 2015.
The dollar inched lower on the day against the yen to 106.84 yen, while the euro nursed its losses after dropping on the ECB news, and edged slightly higher to $1.2728.
In commodities markets, Brent crude added about 0.1 percent to $86.30 a barrel after posting solid gains on Tuesday, helped by data showing stronger-than-expected China demand and some technical price recovery after weeks of almost uninterrupted selling.
Spot gold was steady on the day at $1,248.75, not far from a six-week high marked in the previous session. - Reuters]]>
US stocks rose, with the S&P 500 on track for a fourth straight session of gains as Apple and Texas Instruments rallied after their results.]]> |||
New York - US stocks rose on Tuesday, with the S&P 500 on track for a fourth straight session of gains as Apple and Texas Instruments rallied after their results.
The results lifted the tech-heavy Nasdaq index up more than 1 percent, while the Dow's gains were limited following disappointing results from Coca-Cola.
The S&P 500 has gained 3.2 percent over the past four sessions, rebounding after a four-week decline that took the benchmark index down nearly 10 percent from its intraday record.
With the day's gain, the S&P advanced back above its 200-day and 14-day moving averages, a sign that momentum is turning more positive.
Apple rose 2.3 percent to $102 (R1,120) in heavy trading a day after revenue topped expectations, helped by strong sales of its iPhone line.
It also gave a strong outlook for the holiday quarter.
“This was strong across all sectors, and Apple gave a good guidance. Any fund manager who is underweight on Apple is probably rethinking that position today,” said Michael Binger, senior portfolio manager at Minneapolis-based Gradient Investments, which owns the stock.
Chipmaker Texas Instruments' shares rose 3 percent to $45.80 after its revenue beat forecasts, easing concerns about weak industry demand following IBM's results.
On the downside, Dow components Coca-Cola and McDonald's both fell following their results, with currency exchange rates a concern for both.
Coca-Cola fell 5.5 percent to $40.89 in its biggest one-day decline since October 2008. McDonald's lost 0.4 percent to $91.22.
“The earnings season is kind of average so far, and we're starting to see the strong dollar hurt stocks like McDonald's and Coke,” Binger said.
“The world is a little different because of slowing overseas, but I'd use any pullback as a buying opportunity.”
Also lower was Chipotle Mexican Grill, down 4.6 percent to $623, a day after signaling its current pace of growth couldn't last forever.
While earnings have largely come in strong so far this quarter, concerns continue to swirl over the pace of global economic growth.
An index of shares in China fell 0.7 percent after the country's gross domestic product grew 7.3 percent in the third quarter, the slowest pace since the first quarter of 2009, during the financial crisis.
At 10:03 am, the Dow Jones industrial average rose 57.42 points, or 0.35 percent, to 16,457.09, the S&P 500 gained 17.28 points, or 0.91 percent, to 1,921.29 and the Nasdaq Composite added 47.83 points, or 1.11 percent, to 4,363.90.
Existing home sales rose 2.4 percent in September, above expectations, hitting their highest level in a year.
The PHLX Housing index rose 1 percent.
Advancing issues outnumbered declining ones on the NYSE by 2,186 to 621, for a 3.52-to-1 ratio on the upside; on the Nasdaq, 1,588 issues rose and 685 fell for a 2.32-to-1 ratio favoring advancers.
The benchmark S&P 500 index was posting 8 new 52-week highs and 1 new lows; the Nasdaq Composite was recording 20 new highs and 8 new lows. - Reuters]]>