Asian Morning Briefing: S&P 500 Closes at Record High
MARKETS AT A GLANCE
(Data as of approximately 5 p.m. ET)
LAST CHANGE % CHG
DJIA 16675.5 69.23 0.42%
Nasdaq 4237.07 51.26 1.22%
S&P 500 1911.91 11.38 0.60%
Japan: Nikkei 225 14636.52 34 0.23%
Hang Seng 22944.3 -18.88 -0.08%
Shanghai Composite 2034.57 -6.91 -0.34%
S&P BSE Sensex 24549.51 -167.37 -0.68%
Australia: S&P/ASX 5511.7 -1.1 -0.02%
UK: FTSE 100 6844.94 29.19 0.43%
PRICE CHG YIELD
U.S. 2 Year 0/32 0.346
U.S. 5 Year 0/32 1.529
U.S. 10 Year 6/32 2.515
Australia 10 Year -2/32 3.761
China 10 Year -21/32 4.2
India 10 Year -8/32 8.679
Japan 10 Year -1/32 0.593
German 10 Year 5/32 1.391
Australia $ (AUD/USD) 0.9259 -0.0001
Yen (USD/JPY) 101.98 0.01
S. Korean Won (USD/KRW) 1023.75 -0.08
Chinese Yuan (USD/CNY) 6.248 -0.0016
Euro (EUR/USD) 1.3635 -0.0001
WSJ Dollar Index 73.18 0
LAST CHANGE % CHG
Crude Oil 104.18 -0.17 -0.16%
Brent Crude 110.19 -0.13 -0.12%
Gold 1265 -26.9 -2.08%
U.S. stocks rallied Tuesday, pushing the S&P 500 to its second straight record high. Gold fell to a 15-week low.
Oil ended lower in muted trading as ongoing strife in Ukraine and Libya weighed. Upbeat U.S. durable-goods orders and
consumer confidence pushed the dollar higher against major currencies, while Treasurys gained despite the positive data.
On a light day for Asian data releases, Thailand will unveil its April industrial production and trade balance
figures Wednesday. Thailand's industrial production dropped 10.4% year-over-year in March, and the forecast is for a
4.45% yearly decrease in April. It had a $1.46 billion trade surplus in March, while the forecast calls for a $0.5
billion deficit in April.
U.S. stocks rallied, pushing the S&P 500 to its second straight record high, as the continued sharp bounce in
small-capitalization stocks helped underpin the gains.
Trading activity remained relatively muted, with market volatility readings hovering just above 14-month lows.
Stocks appear to have shaken off recent concerns about uneven economic growth, a Federal Reserve that was slowly
removing stimulus measures and tensions in Ukraine that have kept the market hemmed in tight trading range over the last
Through last week, the S&P 500 had traded within a 4.5% band since March 4, pushing the CBOE's Market Volatility
Index, or VIX, to its lowest close since March 2013. On Tuesday, the VIX was up 1.8% at 11.56.
"The small caps are providing an inordinate amount of validation to our move here today," said Peter Kenny chief
executive officer of Clearpool Group, a trade-execution firm. "Small caps have been a source of incredible pain, so an
uptick in that space, coupled with data that's clearly indicating an increase in velocity in the economy, add to the
positive narrative" for the market, he said.
In corporate news, Hillshire Brands surged 22% after Pilgrim's Pride unveiled a $5.5 billion bid for the meats
company, just two weeks after Hillshire agreed to buy Pinnacle Foods for $4.3 billion.
Asian markets were mixed Tuesday. Japan's Nikkei Stock Average rose 0.2% to notch a fourth straight gain, while
China's Shanghai Composite eased 0.3%.
Upbeat U.S. durable-goods orders and consumer confidence pushed the dollar higher against major currencies, showing
a U.S. economy that is on an upward trajectory.
The greenback also gained against the euro after comments by European Central Bank officials made during the London
session boosted investor expectations for a shift in monetary policy that would hurt the common currency.
Investors sought the dollar on the hope that the upbeat data would bolster the Federal Reserve's view that the U.S.
economy is pulling itself out of hibernation after a harsh winter. The central bank has said it would consider raising
interest rates when numbers for the labor market and consumer prices pick up and the wind-down of its bond-purchases
program concludes. Higher interest rates would make the dollar more attractive to investors.
Meanwhile, the euro is suffering from expectations of even lower interest rates. Over the past two days, ECB
President Mario Draghi and Ewald Nowotny, who sits on the central bank's governing council, spoke out against the
dangers of low inflation in the euro zone. Extremely low prices in the euro bloc could hurt economic growth, they said.
"The chorus of comments from core euro-zone officials leaves little doubt there will be some package of policy
easing next week," said Omer Esiner, chief market analyst at the currency brokerage Commonwealth Foreign Exchange.
Treasury bonds strengthened, shaking off two upbeat U.S. economic releases, a lukewarm two-year note auction and
U.S. stocks that hit a fresh record high.
Signs of uneven growth, contained inflation and major central banks' signals to keep interest rates low for longer
have sent the 10-year yield lower from about 3% at the start of the year, which have confounded many investors and
interest-rate strategists predicting bond yields to rise.
On Tuesday, bond prices pulled back initially as gains in business spending and consumer sentiment sapped demand
for safe assets.
Buyers stepped in to purchase bonds at relatively lower prices. Traders said some fund managers bought bonds near
the end of the month to adjust their portfolios.
On the last trading session of each month, newly minted bonds replace maturing bonds in bond indexes, prompting
bond-buying from fund managers whose portfolios closely track these indexes.
"Investors are trying to get ahead of all the buying that needs to be done prior to Friday," said Tom di Galoma,
head of fixed income rates in New York at ED & F Man Capital Markets.
Crude-oil prices ended lower in muted trading as ongoing strife in Ukraine and Libya weighed on the market.
The June contract expires later this week and much of the volume in the market has already shifted into July
futures. In a note to clients, research consultancy Ritterbusch and Associates said speculators may be looking to scale
back bullish bets on gasoline futures now that driving season is here.
With the long U.S. holiday weekend delaying weekly oil inventory reports until later in the week, analysts said
there was little in the way of supply-and-demand fundamentals to drive trading. Rather, violence in Ukraine following
national elections and a continued lack of crude production and exports from Libya weighed on the market, they said.
"There's no main story driving oil prices at the moment," said Gareth Lewis-Davies, oil strategist at BNP Paribas
in London. He said the lack of more dire events in Ukraine kept oil prices from running higher. Traders have focused on
the possibility, considered remote, that more aggressive Russian action in the region could lead to sanctions that would
curtail global oil supplies from Russia, the world's second-largest oil exporter behind Saudi Arabia.
Gold fell to its lowest level in 15 weeks as signs of improvement in the U.S. economy and hopes of a more
politically stable Ukraine dimmed investor appetite for the haven asset.
Samsung To Shutter Music, E-Book Service
Samsung Electronics, in the latest sign of the company's struggle to offer attractive apps, said it is pulling the
plug on its proprietary music service as well as e-book service beginning July 1.
KKR to Acquire Singapore's Goodpack
KKR plans to buy Singaporean packaging company Goodpack for roughly $1.1 billion, in what would be one of Asia's
largest private-equity acquisitions so far this year.
Thai Military Relaxes Curfew to Boost Tourism
Thailand's ruling military eased its curfew to minimize the impact on the public and tourism, as some industry
groups and foreign investors expressed optimism the junta will quickly take steps to reverse the Thai economy's slide
after months of political gridlock.
Intel-Rockchip Deal Aimed at Android Tablets
Intel is turning to a Chinese chip maker to help accelerate its uphill push into tablet computers.
Bankruptcy Judge Rejects Complaints Over Potential Mt. Gox Deal
A bitcoin business that planned to use the blueprints for the once-successful Japanese bitcoin exchange Mt. Gox
couldn't convince a bankruptcy judge that an early sale proposal to salvage the frozen exchange is being unfairly
Bank of America Resubmits Capital Plan
Bank of America said that it had resubmitted its smaller stress-test capital plan to the Federal Reserve. The
announcement is the latest step as the bank navigates aftermath of a $4 billion capital error it disclosed last month.
Obama Close to Authorizing Military Training of Syrian Rebels
President Barack Obama is close to authorizing a mission led by the U.S. military to train moderate Syrian rebels
to fight the regime of Bashar al-Assad and al Qaeda-linked groups, a move that would expand Washington's role in the
conflict, U.S. officials said.
Dozens Dead After Ukraine Retakes Donetsk Airport
Dozens of pro-Russian separatists were killed by government forces in heavy fighting at a key regional airport that
is now back under Kiev's control, Ukraine's interior minister said.
May U.S. Consumer Confidence Rises
The Conference Board, a private research group, said its index of consumer confidence increased to 83.0 in May from
a revised 81.7 in April first reported as 82.3.
Citigroup Trading Revenue Likely to Drop Further, CFO Says
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