Global Markets Overview - 02/09/2012

From Morrison Securities Pty. Ltd.


U.S. stocks pared losses to inch higher as investors digested headlines over a Greek debt-restructuring deal that would allow the euro-zone country to avoid a default.

The Dow Jones Industrial Average traded around the flat-line, edging up five points, or less than 0.1%, at 12884 in afternoon trading, a day after closing at its highest level since May 19, 2008.

The Standard & Poor's 500-stock index gained two points, or 0.2%, to 1349, while the Nasdaq Composite rose eight points, or 0.3%, to 2912. Energy stocks dragged the broader market lower, as crude-oil prices pulled back from morning gains.

Exxon Mobil fell 0.9%. Financial and technology stocks offset some of the declines. Bank of America gained 3.5% to lead the Dow components, while Hewlett-Packard rose 1.5%. Investors kept a close watch on developments in Europe, after The Wall Street

Journal reported that the European Central Bank, one of Greece's largest creditors, agreed to include its bonds in the debt restructuring.

In Athens, Greek Prime Minister Lucas Papademos was still looking to secure the approval of party leaders backing his government on a raft of painful reforms ahead of a possible meeting of euro-zone finance ministers in Brussels Thursday evening.

International lenders have asked Greece to come up with EUR3.2 billion in spending cuts for 2012 alone. They have also been demanding a reduction in private-sector minimum wages, new cutbacks in government spending, the mass layoff of some 15,000 civil servants in Greece's bloated public sector in 2012 and steep cuts in supplemental pensions paid to retirees.


Most European stock markets erased early gains to close lower, as investors were once again disappointed that an agreement on a second Greek rescue had yet to materialize.

The Stoxx Europe 600 index lost 0.2% Wednesday to end at 263.01. Although the index has fallen for three consecutive days, the combined losses have been a modest 0.6%.

Greece remained the center of attention as investors kept watch for a deal on additional austerity measures, a prerequisite for finalizing the bailout deal.

Sentiment was underpinned for much of the day on suggestions that the European Central Bank is willing to exchange its holdings in Greek government bonds with the European Financial Stability Facility at a discounted price, which would allow Greece to tap the first tranche of its second bailout.

But the modest gains evaporated into the closing bell on concerns that the ECB hadn't yet decided on whether it would contribute to a Greek debt restructuring deal.

The ECB talk nonetheless boosted banking shares. In Lisbon, Banco Espirito Santo surged 13%, and Banco Comercial Portugues jumped 5.1%. Commerzbank leapt 7.6% in Frankfurt, while Credit Agricole rose 3% in Paris. UniCredit gained 2.2%, and Banca Popolare di Milano advanced 2.3%, both in Milan.

Among major national benchmarks, the U.K. FTSE 100 index shed 0.2% to 5875.93, and Germany's DAX 30 index eased 0.1% to 6748.76. Both notched their third consecutive loss. The CAC 40 index fell fractionally to 3410.00.

Mining stocks dropped. BHP Billiton lost 2.3% after reporting a 5.5% decrease in first-half profit due to rising costs, production disruptions and falling commodity prices.

Glencore International, which announced a merger with Xstrata Tuesday, fell 2%, while Xstrata edged down 0.2%. Reckitt Benckiser gained 2.9% after reporting a 26% profit increase for the fourth quarter. Wind-turbine maker Vestas Wind Systems sank 14% after reporting a loss for 2011 and indicating it may not be profitable in 2012 either.


Asian markets rose Wednesday as growing optimism over a debt restructuring deal in Greece lifted sentiment, while an upbeat earnings outlook from Toyota Motor lifted car-makers in Tokyo.

An improvement in risk appetite led a handful of regional markets to close at multi-month highs. South Korea's Kospi rose 1.1% to 2003.73, its highest close in more than six months, Japan's Nikkei Stock Average advanced 1.1% to 9015.59, marking a more than three-month closing high, and Hong Kong's Hang Seng Index climbed 1.5% to 21,018.46, its highest close in six months.

China's Shanghai Composite gained 2.4% to 2347.53. Property firms were among the gainers in Hong Kong, after China's central bank said it planned measures to help first-time home buyers.

China Resources Land climbed 3.1%, China Overseas Land & Investment rose 5.3% and Agile Property Holdings jumped 4.2%. Energy stocks also gained ground after China's National Development and Reform Commission said China will raise gasoline and diesel prices by CNY300 a metric ton, effective Wednesday. PetroChina rose 2.2% and China Petroleum & Chemical Corp., or Sinopec, advanced 1.8%.

Toyota Motor rose 5.0% after raising its full-year earnings target despite late Tuesday posting an on-year decline in net profit for the three months ended in December. Other Japanese auto majors followed Toyota higher: Mazda Motor surged 7.3%, Honda Motor added 2.7%, and Mitsubishi Motors gained 3.2%.


Base metals closed mixed on the London Metal Exchange Wednesday after early market confidence was eroded by reports that the European Central Bank's well-received plan to swap Greek debt may be delayed.

At the close, LME three-month copper was 1.2% higher at $8,580 a metric ton, well below its intraday peak at $8,652/ton. Nickel fared the worst, closing 1.3% lower at $21,500/ton.

Early market optimism was dealt a blow Wednesday after Dow Jones Newswires reported that the ECB's plan to exchange Greek government bonds it purchased in the secondary market last year at a price below face value may be held off until after other key elements of its ongoing debt negotiations fall into place.

Oil futures pared gains but settled higher Wednesday after a government report showed U.S. oil inventories rising slightly, while oil demand weakened.

Light, sweet crude oil futures for March delivery settled $0.30 higher at $98.71 a barrel on the New York Mercantile Exchange. The contract traded as high as $100.09 a barrel prior to the release of the report from the Department of Energy.

U.S. oil inventories last week rose 300,000 barrels, the DOE reported, while an indirect measure of oil demand fell 0.5%. Gasoline inventories grew 1.6 million barrels, while stockpiles of distillates, including heating oil and diesel, climbed 1.2 million barrels.

Gold futures finished lower, giving up much of the previous day's gains as worries about further delays in Greece weighed on investor confidence. The most active contract, for April delivery, fell $17.10, or 1%, to settle at $1,731.30 a troy ounce on the Comex division of the New York Mercantile Exchange.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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