Wednesday: Oil Prices Slip on Global Growth Concerns -- 

By Georgi Kantchev And Nicole Friedman Oil prices slipped as concerns about global growth sent chills across the commodity markets. U.S. weekly inventory data set to be released later in the day is expected to show that supplies of oil and petroleum products rose, which could bring total U.S. crude and product supplies to a new record high. Ample global supplies and lackluster demand ...

[NEW YORK] US stocks opened Monday a busy week of corporate earnings sharply lower as oil prices slumped to fresh multi-year lows.

The Dow Jones Industrial Average dropped 96.53 points (0.54 per cent) to 17,640.84.

The broad-based S& P 500 sank 16.55 (0.81 per cent) to 2,028.26, while the tech-rich Nasdaq Composite Index tumbled 39.36 (0.84 per cent) to 4,664.71.

European benchmark Brent oil closed below US$50 a barrel for the first time since April 2009 following a gloomy petroleum-market forecast from Goldman Sachs.

Energy equities fell sharply, including Dow member Chevron and Marathon Oil, by 2.2 per cent and 5.1 per cent, respectively.

" The market is nervous about lower energy prices and whether they are forecasting a slowdown in global economic growth, and not just a supply-demand imbalance," said Sam Stovall, chief investment strategist at S& P Capital IQ.

NPS Pharmaceuticals bolted 8.2 per cent higher after announcing plans to be bought by Ireland-based Shire for US$5.2 billion.

Animal-health company MWI Veterinary Supply gained 8.2 per cent on news it will be acquired by pharmaceutical distributor AmerisourceBergen for US$2.5 billion. AmerisourceBergen lost 2.2 per cent.

Drugmaker Bristol-Myers Squibb advanced 3.1 per cent on news that a study for its Opdivo lung cancer drug was stopped because an independent panel found that the medicine succeeded in improving survival rates in patients.

Biotech company Celgene tacked on 2.9 per cent as it projected 2015 sales of US$9-$9.5 billion, a 22 per cent increase from last year.

Jewelry chain Tiffany slumped 14.0 per cent as it said sales during the key holiday period fell one percent from last year, with an especially weak performance in Japan. Chief Michael Kowalski characterized the results as " disappointing overall." SanDisk, which manufacturers data storage products in consumer electronics, lost 13.9 per cent after announcing that it expects fourth-quarter sales of US$1.73 billion, down from a previous forecast for US$1.80-$1.85 billion.

Bond prices rose. The yield on the 10-year US Treasury fell to 1.91 per cent from 1.96 per cent Friday, while the 30-year declined to 2.49 per cent from 2.54 per cent. Bond prices and yields move inversely.

 

WALL STREET INSIGHT

US stocks finished a volatile five sessions more or less flat for the week and the year after a puzzling jobs report, and observers expect more of the same in the first week of fourth-quarter earnings season.

The turn of the year is usually a time for steady gains on broad indexes since Dec 18, however, the Dow Jones Industrial Average has seen two of the biggest point gains in the current bull market, including a 323-point gain last Thursday, and some of the heftiest losses, such as a 331-point drop last Monday.

" Until crude oil can find three weeks of price normality, we' re going to continue to see this craziness," said Joe Kinahan, chief derivatives strategist at TD Ameritrade. The earnings season will help investors sort through the net effect of two jarring changes in the economic landscape: oil' s descent and the dollar' s ascent.

Analysts expect the demise of oil prices in the last three months to hurt earnings for not just oil companies but a range of heavy industrial companies that serve them.

During the week, the euro also neared the level where it debuted against the dollar in 1999, around US$1.17. Should the value fall much further, the prospect of " parity" - one dollar for one euro - will arise, potentially turning trade relations between the two most productive regions of the world on their head.

At US$1.17 to the euro, US exports to Europe are already about 20 per cent more expensive than they were during the summer, while profits repatriated to the US are worth less.

" With many of the multinationals that rely on much of their sales coming from overseas, people are starting to look at multinationals and saying even if they have good earnings reports, the CEOs may put a damper on it with the outlook," said Mr Kinahan, of TD Ameritrade.

Still, trepidation about the effects of oil and the dollar has lowered expectations, meaning that positive surprises are possible. Wall Street analysts have forecast an aggregate 4 per cent growth rate for Standard & Poor' s 500 companies in the fourth quarter, according to a tally by researchers at Thomson Reuters. That' s short of the gross domestic product growth rate.

Foreign exchange and oil have a modest impact on the bottom line of the first multinational company to report: aluminium maker Alcoa.

But the aluminium giant is still one to watch this earnings season as it has a bird' s eye view of the jet and auto markets - both of which are substantially affected by oil prices.

Alcoa shares have risen by more than half in the last 12 months as its customers at aerospace companies such as Boeing saw brisk demand, and as auto makers shifted to lighter aluminium from the traditional steel.

Albeit to a lesser extent than many other metals companies, Alcoa also sells wares to oil fields. Every well drilled using hydraulic fracturing techniques requires tonnes of steel or alloy piping to drill through the layers of rock. Steel makers were among the strongest stocks last year as they fed the voracious appetite of drillers. Recently, US Steel said it would have to lay off more than 600 workers in an Ohio plant that produced the tubular steel used as drill casing.

On Tuesday, the Commerce Department reports December retail sales, and economists expect a slight decrease from robust November levels. For US retailers, a stronger dollar and lower oil prices should be positive as most of their wares are imported. But traditional retailers are struggling to draw customers off their smart phones and into their stores.

And even as the US economy added more than 250,000 jobs and the unemployment rate declined to 5.6 per cent, the average wage reportedly dropped in December. While the drop in the price of petrol puts more money in people' s pockets, surveys show that consumers are conscious of the temporary nature, according to analysts at brokerage Morgan Stanley.

 

 

[HONG KONG] Asian shares climbed for a third straight day Friday following more advances on Wall Street, while bargain-buying helped oil recover slightly from its latest sell-off.

The euro was also struggling to staunch a sell-off against the dollar, with the European Central Bank expected to unleash a vast easing programme at the same time as the US Federal Reserve plots an interest rate hike.

There was little initial reaction to news that Chinese inflation for December edged up from the previous month but fell well short of the government' s target for the full year.

Tokyo rose 0.43 per cent, Hong Kong added 0.90 per cent, Sydney climbed 1.00 per cent and Seoul was up 0.89 per cent. Shanghai, which has clocked up gains of more than 50 per cent over the past year, was 0.57 per cent lower.

Confidence has picked up over the past few days as analysts predict the ECB will launch a bond-buying scheme - known as quantitative easing (QE) - to kickstart the eurozone economy.

Expectations were fanned when data Wednesday showed consumer prices in the region had fallen for the first time since October 2009, during the financial crisis.

A pause in the downward spiral of oil prices also provided relief after a report showed US stockpiles had fallen last week, giving some hope that demand is picking up.

US benchmark West Texas Intermediate for February delivery edged up 35 cents to finish at US$49.14 a barrel and Brent North Sea crude for rose 20 cents to US$51.16.

Eyes are now on a closely followed US jobs report due later in the day, with forecasts for another sharp rise in new posts, giving the Fed more ammunition to lift interest rates.

The release Wednesday of minutes from the bank' s December meeting boosted spirits after it showed policymakers are unlikely to announce a hike until at least April.

In New York the Dow surged 1.84 per cent, the S& P 500 jumped 1.79 per cent and the Nasdaq gained 1.84 per cent. And markets in Frankfurt, Paris and Milan closed up more than 3 per cent.

" When it comes to US economic reports there' s nothing more important to the Fed than labour market numbers," said Kathy Lien of BK Asset Management.

" The December employment report is scheduled for release on Friday and the big question is whether the strength in November carried into December." On currency markets the euro, which slipped below US$1.8 Thursday for the first time since 2009 bought US$1.1802 early Friday, compared with $1.1795 in New York Thursday afternoon. It also fetched 141.14 yen against 141.15 yen.

The dollar was at 119.59 yen Friday, compared with 119.65 yen in US trade.

In China the government said inflation came in at 1.5 per cent in December, in line with forecasts and up from the five-year low of 1.4 per cent the previous month.

However, for the full year 2014, consumer inflation was 2.0 per cent, down from 2.6 per cent in 2013 and well below the government' s target of about 3.5 per cent.

The soft inflation figures are the latest showing a slowdown in the world' s number two economy, with manufacturing, trade and investment all weak.

Gold fetched US$1,211.22 an ounce, compared with $1,206.35 on Thursday.

 

[NEW YORK] US stocks rallied for a second day on Thursday, boosted by expectations the US economy will continue to improve and by hopes for more aggressive action from the European Central Bank.

The S& P 500 added 3 per cent over the last two sessions, retracing most of its 4.2 per cent loss in the previous five trading days, leaving the index in positive territory for 2015. The Dow and Nasdaq also turned up for the year so far.

The advance was broad, with the S& P materials, energy and technology sectors each rising more than 2 per cent, leading the day' s gains.

Though slightly above expectations, initial claims for state unemployment benefits slipped from the prior week, pointing to a firming labor market ahead of Friday' s key monthly payrolls report. " We' re at the point where the jobs reports have been coming in consistently in the 200,000 or 200,000-plus range. I think that just keeps the Fed on track for everything we' re expecting," said Michael O' Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

Friday' s December jobs report is expected to show 240,000 non-farm payrolls added.

Also boosting sentiment, continued weak euro zone data has been lifting optimism that the European Central Bank will take more aggressive action.

US crude oil, whose free-fall was among the catalysts for the recent selloff in stocks, gained for a second day, settling at US$48.79 per barrel. The S& P energy index rose 2.2 per cent.

Signs that oil prices may be stabilizing have boosted investor sentiment, although market analysts were still not ready to say prices had found a floor.

The Dow Jones industrial average rose 323.35 points, or 1.84 per cent, to 17,907.87, the S& P 500 gained 36.24 points, or 1.79 per cent, to 2,062.14 and the Nasdaq Composite added 85.72 points, or 1.84 per cent, to 4,736.19.

The S& P 500' s two-day gains were its biggest since the Dec. 17-18 Federal Reserve-fueled rally of 4.5 per cent. Minutes from that December Fed meeting released Wednesday reassured investors the central bank was in no hurry to start raising interest rates.

The S& P also snapped back above its 50-day average, a technical support level it fell below on Monday. " Weak hands are being forced to chase. There' s a fear of missing out on the rally," O' Rourke said.

About 7.1 billion shares changed hands on US exchanges, above the 6.7 billion average for the last five sessions, according to BATS Global Markets.

Biotechs were among the most active shares. Bind Therapeutics shares surged 37.1 per cent to US$7.06, a day after the company said it enrolled its first patient in a mid-stage trial for its lung cancer drug.

Advancing issues outnumbered declining ones on the NYSE by 2,396 to 718, for a 3.34-to-1 ratio on the Nasdaq, 2,048 issues rose and 702 fell, for a 2.92-to-1 ratio.

The S& P 500 posted 60 new 52-week highs and 8 new lows the Nasdaq Composite recorded 88 new highs and 32 new lows.

 

European stocks extend rebound AFP News - 1 hour 14 minutes ago

European equities rebounded sharply Thursday on eurozone stimulus hopes, bright US data and a modest recovery in oil prices, dealers said. &hellip More »

[HONG KONG] Asian equity markets rallied on Thursday, while oil prices enjoyed a rare fillip following a surge in New York and Europe on strong US data and expectations for fresh eurozone stimulus measures.

Confidence was also given a much needed boost by minutes from the US Federal Reserve' s December meeting suggesting it will not hike interest rates before April.

Tokyo rallied 1.67 per cent by lunch as the yen gave up recent gains against the dollar, while Hong Kong added 0.88 per cent, Sydney added 0.77 per cent and Seoul surged 1.14 per cent. However, Shanghai was flat after already climbing more than four percent so far this year.

The advances come as welcome relief for global markets, which have been hammered by a slump in oil prices and growing fears that Greece could exit the eurozone as an anti-austerity party looks set to win this month' s general election.

Investors were given a lift after data showed consumer prices in the eurozone fell in December for the first time since October 2009, at the height of the financial crisis.

The news, raising fears the bloc is about to slip into a deflationary spiral, fuelled expectations the European Central Bank will embark on a vast bond-buying programme known as quantitative easing (QE).

" (ECB chief) Mario Draghi will find it very difficult to deny" that deflation is negatively affecting the eurozone " and this could force him to fire up the printing press" , said IG analyst David Madden.

However, the likelihood the ECB will begin pumping out extra cash pushed the euro to US$1.1802 at one point on Wednesday, its lowest since January 2006.

On Thursday it bought US$1.1827, down from 1.1842 late in New York. It also fetched 141.56 yen compared with 141.70 yen in US trade.

The dollar was at 119.64 yen compared with 119.17 yen in New York.

" The inflation data is taking a toll on the euro," Naohiro Nomoto, an associate for currency trading at Bank of Tokyo-Mitsubishi UFJ in New York, told Bloomberg News.

" I can' t think of any excuse for the ECB not to act (at its next policy meeting) in January." Adding to selling pressure on the single currency was the release of Fed minutes showing its board members would remain " patient" when deciding when to hike interest rates, indicating the process was unlikely to begin " for at least the next couple of meetings" . This, analysts say, suggests April at the earliest.

Wall Street rallied on the report after suffering a five-day sell-off. The Dow added 1.23 per cent, the S& P 500 gained 1.16 per cent and the Nasdaq rallied 1.26 per cent.

US shares were also helped by data showing the trade deficit shrinking sharply to its smallest size in nearly a year and the private sector adding a higher-than-expected 241,000 jobs in December.

Oil prices rose for a second day, helped by the gains across equity markets.

US benchmark West Texas Intermediate for February delivery rose 41 US cents to US$49.06 and Brent North Sea crude edged up 23 US cents to US$51.38. However, economists remain wary and warn they could resume their downtrend from five-and-a-half-year lows.

Gold fetched US$1,213.93 an ounce, compared with US$1,214.38 on Wednesday.