Asia shares take comfort from U.S. data, yen nurses losses

TOKYO - Asian shares took solace from data showing broad U.S. economic strength even as signs of spreading weakness in China and Europe checked risk appetite, while the yen nursed its losses after sliding to multi-year lows against the dollar and euro overnight.

MSCI's broadest index of Asia-Pacific shares outside Japan was up slightly in early trade. It was on track for a weekly loss of over 1 percent, but was underpinned by record finishes by the Dow Jones industrial average and S&P 500 after a spate of U.S. data added up to a picture of broad economic strength.

Initial U.S. weekly jobless claims fell, factory activity in the U.S. mid-Atlantic region grew at its fastest pace in two decades and existing home sales strengthened, in stark contrast to Thursday's disappointing data releases from Europe and China.

"The raft of data releases from the U.S. continues to paint an upbeat assessment for the U.S. economy at a time when numbers elsewhere have disappointed," strategists at Barclays wrote in a note.

Japan's Nikkei stock average edged down about 0.1 percent in early trade.

The dollar was steady against the yen from late U.S. levels at 118.20 yen, after it scaled a seven-year peak of 118.98 on the EBS trading platform on Thursday.

The euro was also flat on the day at 148.26 after it soared to a six-year high of 149.12 yen in the previous session.

In commodities markets, U.S. crude extended gains from Thursday, adding about 1 percent to $76.61 after closing higher on Thursday. The strong U.S. economic data helped it snap a three-day losing streak, though oil markets remained wary ahead of whether the Organization of the Petroleum Exporting Countries will agree on reducing production when it meets next week.

Spot gold was steady on the day at $1,192.80 an ounce, on track for a weekly gains despite pressure from the stronger greenback.

source: interaksyon.com

World equity indexes up on US data, gold slumps

NEW YORK - World equity markets rallied on Tuesday, with the S&P 500 ending at a new record following strong US economic data, while the euro softened against the dollar on expectations of more rate cuts from the European Central Bank.

Stronger-than-expected figures pressured safe-haven assets, including gold, which touched a 3-1/2 month low. Platinum also fell after South Africa's mining minister pledged to mediate in a long-running strike.

Wall Street was led by gains in financials, utilities and tech stocks. Data showed orders for long-lasting US manufactured goods unexpectedly rose in April while US single-family home prices also rose in March, beating expectations.

"People move out of one sector and into a different equity sector - there's always a sector picking up the slack, so that’s driving you higher," said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas. "People don't want to be out of equities."

The Dow Jones industrial average rose 69.23 points, or 0.42 percent, to 16,675.5, the S&P 500 gained 11.38 points, or 0.6 percent, to 1,911.91 and the Nasdaq Composite added 51.26 points, or 1.22 percent, to 4,237.07.

ECB chief Mario Draghi on Monday bolstered views that the bank will cut euro zone interest rates again next week, boosting appetite for risky assets. Other policymakers, including Austrian ECB board member Ewald Nowotny, drove home the message on Tuesday.

MSCI's all-world share index rose 0.2 percent to within two percentage points of its 2007 record.

Investors kept a wary eye on Ukraine, which launched air strikes and a paratroop assault against pro-Russian rebels who seized an airport on Monday. The escalation was tempered by a decisive win for billionaire Petro Poroshenko in Ukraine's weekend presidential election, which many hope will help stabilise the situation.

U.S. Treasury prices inched lower. The 10-year note fell 3/32 in price to yield 2.522 percent. The 30-year bond rose 19/32 to drop its yield to 3.365 percent, but light volume and the presence of month-end buying reduced the significance of the move.

The euro lost ground against the greenback on the better-than-expected U.S. data. The euro fell 0.1 percent to $1.3635, nearly touching Monday's three-month low of $1.3614. The dollar index slipped 0.05 percent.

Gold slumps

Spot gold fell 1.9 percent at $1,264.80 an ounce, its worst daily loss in two months. U.S. gold futures dropped 2 percent to $1,265.40 an ounce.

Platinum fell 1 percent to $1,456.20 after South Africa's mining minister pledged to mediate in a strike now in its fifth month. The metal reached its highest since September at $1,493.90 last week.

Global oil prices fell. Brent was down 26 cents at $111.06 a barrel and U.S. light crude oil was down 22 cents at $104.13.

source: interaksyon.com

Wall Street Week Ahead: Cliff fight may knock out December rally

NEW YORK - In normal times, next week's slew of U.S. economic data could be a springboard for a December rally in the stock market.

December is historically a strong month for markets. The S&P 500 has risen 16 times in the past 20 years during the month.

But the market hasn't been operating under normal circumstances since November 7 when a day after the U.S. election, investors' focus shifted squarely to the looming "fiscal cliff."

Investors are increasingly nervous about the ability of lawmakers to undo the $600 billion in tax increases and spending cuts that are set to begin in January; those changes, if they go into effect, could send the U.S.economy into a recession.

A string of economic indicators next week, which includes a key reading of the manufacturing sector on Monday, culminates with the November jobs report on Friday.

But the impact of those economic reports could be muted. Distortions in the data caused by Superstorm Sandy are discounted.

The spotlight will be more firmly on signs from Washington that politicians can settle their differences on how to avoid the fiscal cliff.

"We have a week with a lot of economic data, and obviously most of the economic data is going to reflect the effects of Sandy, and that might be a little bit negative for the market next week, but most of that is already expected - the main focus remains the fiscal cliff," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

Concerns about the cliff sent the S&P 500 into a two-week decline after the elections, dropping as much as 5.3 percent, only to rally back nearly 4 percent as the initial tone of talks offered hope that a compromise could be reached and investors snapped up stocks that were viewed as undervalued.

On Wednesday, the S&P 500 gained more than 20 points from its intraday low after House Speaker John Boehner said he was optimistic that a budget deal to avoid big spending cuts and tax hikes could be worked out. The next day, more pessimistic comments from Boehner, an Ohio Republican, briefly wiped out the day's gains in stocks.

On Friday, the sharp divide between the Democrats and the Republicans on taxes and spending was evident in comments from President Barack Obama, who favors raising taxes on the wealthy, and Boehner, the top Republican in Congress, who said Obama's plan was the wrong approach and declared that the talks had reached a stalemate.

"It's unusual to end up with one variable in this industry, it's unusual to have a single bullet that is the causal factor effect, and you are sitting here for the next maybe two weeks or more, on that kind of condition," said Sandy Lincoln, chief market strategist at BMO Asset Management U.S. in Chicago.

"And that is what is grabbing the markets."

Be contrary and make merry

But investor attitudes and seasonality could also help spur a rally for the final month of the year.

The most recent survey by the American Association of Individual Investors reflected investor caution about the cliff. Although bullish sentiment rose above 40 percent for the first time since August 23, bearish sentiment remained above its historical average of 30.5 percent for the 14th straight week.

December is a critical month for retailers such as Target Corp and Macy's Inc. They saw monthly retail sales results dented by Sandy, although the start of the holiday shopping season fared better.

With consumer spending making up roughly 70 percent of the U.S. economy, a solid showing for retailers during the holiday season could help fuel any gains.

Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, believes the recent drop after the election could be a market bottom, with sentiment leaving stocks poised for a December rally.

"The concerns on the fiscal cliff - as valid as they might be - could be overblown. When you look at a lot of the overriding sentiment, that has gotten extremely negative," said Detrick.

"From that contrarian point of view with the historically bullish time frame of December, we once again could be setting ourselves up for a pretty nice end-of-year rally, based on lowered expectations."

Some feel the big chill

Others view the fiscal cliff as such an unusual event that any historical comparisons should be thrown out the window, with a rally unlikely because of a lack of confidence in Washington to reach an agreement and the economic hit caused by Sandy.

"History doesn't matter. You're dealing with an extraordinary set of circumstances that could very well end up in the U.S. economy going into a recession," said Phil Orlando, chief equity market strategist at Federated Investors in New York.

"And the likelihood of that is exclusively in the hands of our elected officials in Washington. They could absolutely drag us into a completely voluntary recession."

source: interaksyon.com