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Subject:  Asian Morning Briefing: U.S. Stocks Rise; China Data, Syria News Provide Support |
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Author: Monday 9/9/2013 start week 37 financial 11 | [ Next Thread |
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] Date Posted: 11:26:44 09/10/13 Tue Asian Morning Briefing: U.S. Stocks Rise; China Data, Syria News Provide Support 10/09/2013 8:00AM DJIA 15063.12 +140.62 +0.94% Nasdaq 3706.18 +46.17 +1.26% S&P 500 1671.71 +16.54 +1.00% FTSE 100 6530.74 -16.59 -0.25% Xetra DAX 8276.32 +0.65 +0.01% 2Y Tsy 99 28/32 +2/32 0.439% -2.5BP 5Y Tsy 99 1/32 +10/32 1.704% -6.2BP 10Y Tsy 96 19/32 +10/32 2.898% -3.8BP USD/JPY 99.57-60 -0.14% Range 100.10-99.34 EUR/USD 1.3251-54 +0.68% Range 1.3280-1.3166 AUD/USD 0.9226-30 +0.28% Range 0.9241-0.9168 Comex Gold $1,386.70 +$0.20 Comex Gold Range $1,381.90-$1,395.00 Nymex Crude (NY) $109.52 -$1.01 U.S. SUMMARY & ASIAN OUTLOOK: STOCKS: U.S. stocks kicked off the week with a rally, as investors embraced signs of economic and political stability overseas. The Dow Jones Industrial Average advanced 140.62 points, or 0.9%, to 15063.12 Monday. The S&P 500-stock index rose 16.54 points, or 1%, to 1671.71, with all 10 sectors higher. The Nasdaq Composite Index gained 46.17 points, or 1.3%, to 3706.18. Stock benchmarks rallied after China reported a pickup in exports in August and news from Syria helped calm investor jitters about potential military action in the region. But trading volumes were light, said Doug Crafton, managing director of cash equities for Bank of America Merrill Lynch. "We'd like to see more volume on a move like this to get a bit more conviction," he said. Mr. Crafton said that investors were caught chasing the day's gains, and those that had bet stocks would see broader losses were forced to cover their positions as the market rose. "People were looking for a pullback, but they're not getting it, so they're forced to pay up," he said. Strong data out of China helped spark early gains. The country reported that exports rose 7.2% in August from a year earlier, a fresh sign of resilience from the world's second-biggest economy. "It seems like the Chinese export engine is gearing up a little bit," said Paul Zemsky, chief investment officer overseeing about $25 billion in multiasset strategies at ING U.S. Investment Management. Mr. Zemsky said that data on overseas growth have been key recently, since large U.S. companies get a significant chunk of sales from international markets. The materials sector, seen as closely tied to commodities demand from China, led the S&P 500, rallying 1.5%. Industrials shares, also seen as linked to the region's economy, were up 1.2%. Meanwhile, political tension around Syria, which has prompted sharp market moves in recent weeks, continued to subside. A Russian official showed signs of a rare agreement between the Russian and U.S. governments, urging Syria to destroy its chemical weapons. Syria said it welcomed a Russian proposal to put its chemical weapons under international control, without indicating whether it would comply. Also helping prop up stocks was speculation that the Federal Reserve won't severely scale back stimulus measures this month. On Friday, the government's closely watched jobs report showed fewer jobs were created in August than expected, and figures from previous months were revised sharply lower. Monday's U.S. economic calendar was nearly bare. Consumer credit for July increased by $10.4 billion, compared with expectations of a $14 billion rise. In corporate news, technology shares also gave stock benchmarks a boost, rising 1.3% as heavyweight Apple rallied 1.6%. The company is expected to unveil two new iPhones this week and is preparing to ship iPhones to China Mobile, China's largest wireless carrier. Delta Air Lines gained 9.4% after S&P Dow Jones Indices said late Friday it was adding the air carrier's stock to the S&P 500 after Tuesday's close. On international markets, European indexes were mostly lower with the Stoxx Europe 600 down 0.1% and snapping a three-session winning streak. Asian markets rallied, highlighted by a 3.4% surge in China's Shanghai Composite to a three-month high. Analysts said China's market may extend gains as investors pin hopes on a brighter economic outlook following the release of stronger-than-expected exports and subdued inflation. They pegged immediate resistance for the Shanghai index at 2250. "Upbeat economic indicators will underpin the rebound in the stock markets with the release of more encouraging data, such as investment and industrial output, due this week," said Zhang Haidong, an analyst with Tebon Securities. Tokyo stocks surged to a one-month high as shares in Olympics-related sectors gained after Tokyo won the right to host the 2020 Summer Games and confidence in the economic recovery grew following an upward revision to Japan's gross domestic product. Traders expect the immediate psychological lift from the Olympics will last at least a month, before a decision on a controversial sales tax plan takes central stage. The faster-than-thought growth in the second quarter is seen as favoring the implementation of the tax plan. "Although profit-taking may drag down share prices, the psychological impact of the Olympics could push the Nikkei above 15,000 by the beginning of October," said Haruhiko Kuramochi, strategist at Mizuho Securities. Others said the positive effects of the Olympics will continue to be felt for the next six years as Olympics-related projects benefit individual shares. "News such as infrastructure-related projects related to preparation for the Olympics will likely move individual shares that are beneficiaries of those projects," said Kenichi Hirano, operating officer at Tachibana Securities. Fund managers and strategists also noted that the Olympics will provide a tailwind for Prime Minister Shinzo Abe's reflationary policies and structural reforms. "The Olympics will make it easier for Mr. Abe to move forward with his growth strategies, the implementation of a consumption tax hike and corporate tax cuts," said Mitsushige Akino, fund manager at Ichiyoshi Asset Management. Hong Kong shares lagged the rally across Asia's major markets as uncertainty over when the Federal Reserve would taper its bond-buying program weighed on interest-rate sensitive utility and property stocks. "In the short term, the HSI may have the chance to hit resistance at 23,000 but it really depends on the U.S. market performance this week," said Castor Pang, head of research at Core Pacific Yamaichi. Oil futures fell Monday as the White House and Russia called on Syria to turn over its chemical weapons supply, amid reports that several U.S lawmakers oppose a potential military strike against the country. Gold futures settled near unchanged as traders remained on the sidelines given the absence of definitive news about Syria. Base metals on the London Metal Exchange closed mostly lower Monday, holding narrow ranges as investors waited for further clues about the future of U.S. economic stimulus, while copper found support from Chinese macroeconomic data. FOREX: The dollar fell against the euro and a host of emerging market currencies Monday as investors prepare for the possibility the Federal Reserve may not follow through with a decisive pullback from its bond-buying program later this month. Following an employment report Friday that showed the U.S. economy added slightly fewer jobs in August than economists were expecting, investors began reassessing their view on when the Fed will begin to taper its monetary stimulus programs. Traders had speculated that U.S. policy makers might begin to scale back the program as early as its meeting scheduled for next week. But signs the economy may not be growing as quickly as previously thought have cast doubts on whether the Fed will act, and by how much the bond buying will be reduced. That prompted investors to sell the dollar and move into the euro as well as higher-yielding currencies such as the Australian dollar and currencies from emerging markets. The bond-buying program is designed to keep interest rates in the U.S. low to spur the economy, and any delay in tapering the program may mean rates will stay low for a longer period, diminishing the appeal of owning the dollar. "The market's bias was the be long dollars looking for the Fed tapering to begin in September," said Matt Perrier, managing director of foreign exchange sales at BMO Capital Markets. "The percentage chance of that happening has been pared back." The dollar's drop pushed the euro up to $1.3254 late Monday from $1.3181, according to EBS via CQG. The dollar also fell against the Swiss franc, to CHF0.9324 from CHF0.9378. And the U.S. currency weakened versus the Australian dollar, which rose to $0.9228 from $0.9185. Against the yen, the dollar was at Y99.57 from Y99.13. The Wall Street Journal Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 74.050 from 74.261. The Aussie briefly touched its strongest level since late July after a report showed a rising trade surplus in China, which is a top customer for Australia's exports of iron ore and coal. "Another focus for FX markets today is better-than-expected Chinese external trade data, a factor that is likely contributing in part to the gains in the Australian and New Zealand dollars," noted Nick Bennenbroek, head of currency strategy at Wells Fargo. The Aussie was also bolstered by a strong report on its domestic housing sector, and by Tony Abbott's election as prime minister at the head of the Australia's Liberal-National coalition on Saturday. The euro strengthened against the yen after the Bank of France reported a rise in its business sentiment index. The common currency was at Y131.95 from Y130.61. The U.K. pound was at $1.5700 from $1.5630. BONDS: U.S. Treasury prices rose Monday, extending gains into a second-straight day after a tepid jobs report Friday raised new questions about the country's economic strength and upended positions in the safe-haven market. (MORE TO FOLLOW) Dow Jones Newswires September 09, 2013 18:00 ET (22:00 GMT) Copyright (c) 2013 Dow Jones & Company, Inc. [ Next Thread | Previous Thread | Next Message | Previous Message ] |
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