Markets

Global Markets Overview - 03/13/2012

FROM MORRISON SECURITIES PTY. LTD:

U.S. STOCK MARKETS

U.S. stocks Monday struggled to extend a winning run into a fourth session ahead of a monetary-policy decision from the Federal Reserve the next day.

Extending gains into a fourth session, its longest run in six weeks, the Dow Jones Industrial Average climbed 48.51 points, or 0.4%, to 12,970.53. The S&P 500 Index added nearly 1 point to 1,371.7, with natural resource firms the hardest hit and utilities faring the best of the 10 major industry groups.

The Nasdaq Composite shed 4.41 points, or 0.1%, to 2,983.93. For every seven shares declining, eight gained on the New York Stock Exchange.

China reported the largest trade deficit in more than two decades, causing investors to reconsider global growth prospects and demand for commodities.

The Federal Open Market Committee releases its statement Tuesday afternoon, with investors looking for any hint of a change in the central bank's monetary policy.

Many analysts anticipate fewer moves by the Federal Reserve to support the economy after the positive February employment report released Friday. Sealy Corp.'s shares jumped 5.1% after its second-biggest shareholder asked the mattress maker to reshuffle its board and faulted Sealy's largest shareholder, private-equity firm KKR & Co., for the company's difficulties.

EUROPEAN STOCKS, BOND MARKETS

European stock markets flipped between small gains and losses Monday, as investors tried to come to grips with the latest news on Greece's debt, while basic-resources stocks edged lower following disappointing data out of China.

The Stoxx Europe 600 index ended down 0.2% at 264.87. The U.K.'s FTSE 100 index rose 0.1% to 5892.75 and Germany's DAX index rose 0.3% to 6901.35, while France's CAC-40 index edged 0.1% higher to 3490.06.

Greece's ASE Composite lost 2.5% to 733.89, while Portugal's PSI index fell 1.5% to 5570.12. Investors refrained from building positions, as they weighed the significance of a Greek credit event.

The International Swaps and Derivatives Association, the regulatory authority on credit-default swaps, ruled late Friday that the Greek debt restructuring was a credit event, thus triggering payouts.

This helps the integrity of the credit-default swaps market but adds to the nervousness in markets. Greek bonds issued after the country's bond-swap deal last week began trading Monday at the highest yields in the euro zone.

Meanwhile, the Stoxx Europe 600 basic resources index was one of the biggest sector decliners, falling 1.2% after China posted a surprisingly high $31.48 billion trade deficit for February, following a $27.28 billion surplus in January.

In London, heavyweight miner Rio Tinto declined 1.7% and Vedanta Resources PLC was off 3.7%. Energy firms were also lower: Petrofac lLC lost 1.1%, while Royal Dutch Shell was off 0.6%.

Economic data were sparse, although the release of fourth-quarter Italian gross-domestic-product data confirmed that the country fell into recession.

ASIA-PACIFIC MARKETS

Asian stock markets ended mostly lower Monday as a surprisingly large Chinese trade deficit stoked some concerns about demand for the country's exports, with Japanese stocks pulling back after sharp gains recently.

The day's broad losses came after China reported a $31.48 billion deficit in February, swinging from a surplus of $27.28 billion in January. The net deficit in the first two months of the year weighed on sentiment.

Japan's Nikkei Stock Average reversed early gains to finish 0.4% lower, after rising sharply in the previous two trading days. Also declining after rising in the previous two sessions, China's Shanghai Composite dropped 0.2%, South Korea's Kospi lost 0.8%, and Taiwan's Taiex declined 1.1%.

Hong Kong's Hang Seng Index finished 0.2% higher after a roller-coaster ride, aided by strong gains in shares of heavyweight China Mobile and mainland property major China Resources Land.

Following China's trade deficit in February, ports operator Cosco Pacific Ltd. fell 1.5%, shipping major China COSCO Holdings Co. dropped 1.8%, and merchandise sourcing firm Li & Fung Ltd. lost 1.5% in Hong Kong.

Chinese railway-related stocks also fell following reports that a section of high-speed railroad had collapsed after heavy rain. Shares in China Railway Group tumbled 5.4% and CSR Corp. dropped 4.1%.

But Hong Kong stocks finished higher, aided by a 3.9% rise for China Mobile after HSBC and Credit Suisse upgraded their respective ratings on the stock. Also providing some support to the market, shares of China Resources Land gained 0.4% on its 2011 results and upbeat outlook for 2012.

Japanese stocks let early gains fade away, with Fast Retailing and Japan Real Estate Investment Corp. dropping 0.5% each, while Kyocera Corp. shed 0.7%. Losses across the key shipbuilding sector dragged on the broader index in Seoul. Hyundai Heavy Industries dropped 2.5% and Daewoo Shipbuilding & Marine Engineering gave up 2.5%.

COMMODITIES

Base metals closed mixed on the London Metal Exchange Monday, starting the week on a subdued note as concerns over Chinese economic growth knocked the wind out of Friday's rally.

At the close, LME three-month copper was 0.6% lower at $8,444 a metric ton. LME three-month aluminum traded 0.5% lower at $2,228.50/ton at Monday's close.

Crude-oil futures ended lower as weak Chinese trade data and worries that more sovereign-debt troubles for Greece still loom reversed gains Friday caused by upbeat U.S. jobs data. April Nymex crude settled down $1.06 at $106.34/barrel.

Gold futures slipped as investors bet that the disappointing Chinese trade data foreshadowed a drop in the country's demand for the precious metal. The most actively traded gold contract, for April delivery, fell $11.70, or 0.7%, to $1,699.80 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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