GLOBAL MARKET REVIEW

GLOBAL MARKET REVIEW



( Dec 24th )




U.S Markets



U.S. stocks scored modest gains on Tuesday as investors exercised restraint from making big bets in a short session ahead of the Christmas holiday, with the Dow and S&P 500 once again ending at record highs.



Markets closed early on Tuesday and will remain shut until Thursday for the holiday. Trading was extremely light during the day's abbreviated session, which ended at 1 p.m. EST (1800 GMT). Many market participants were out of the office on the day before Christmas. Volume is expected to remain muted throughout the week and the light trading could allow for greater volatility.



While trading activity was somewhat subdued ahead of Christmas, stocks moved mostly higher during trading on Tuesday. The markets benefited from a positive reaction to a pair of better than expected economic reports.



The major averages closed moderately higher, near their best levels of the day. The Dow climbed 62.94 points or 0.4 percent to 16,357.55, the Nasdaq edged up 6.51 points or 0.2 percent to 4,155.42 and the S&P 500 rose 5.33 points or 0.3 percent to 1,833.32.



Both the Dow and S&P 500 continued to ascend to all-time highs, with the Dow reaching a record high for the fifth consecutive session, while the S&P 500's record streak stood at three days in a row. Further upside may be limited at these levels, especially in the absence of major trading catalysts.



"What we are seeing is the market heading into the Christmas holiday extended on a near-term basis, but we are not seeing any interest in profit taking," said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.



"We may see a little price consolidation across the week and headed into the New Year."



The strength on Wall Street was partly due to the release of a report from the Commerce Department showing that durable goods orders rose by much more than expected in the month of November.



The report said durable goods orders surged up by 3.5 percent in November following a revised 0.7 percent decrease in October. Economists had expected orders to increase by about 2.0 percent.



Excluding an 8.4 percent jump in orders for transportation equipment, durable goods orders still rose by 1.2 percent in November compared to economist estimates for a 0.7 percent increase.



Amna Asaf, an economist at Capital Economics, said the better than expected jump in durable goods orders "suggests that fourth-quarter business investment in equipment may have picked up a bit."



A separate report from the Commerce Department showed a drop in new home sales in November, although sales still came in above economist estimates due to an upward revision to the October data.



The report said new home sales fell 2.1 percent to a seasonally adjusted annual rate of 464,000 in November from the revised October rate of 474,000. With the upward revision, the annual rate seen in October reflected the highest since July of 2008.



Economists had expected new home sales to climb to edge up to 450,000 from the 444,000 originally reported for the previous month.



Nonetheless, trading activity was somewhat subdued as many investors stayed on the sidelines ahead of the early close for the markets at 1 pm ET. The Christmas Day holiday on Wednesday also kept some traders away from their desks.



Sector News



Gold stocks showed a substantial move to the upside over the course of the trading day, driving the NYSE Arca Gold Bugs Index up by 3 percent. With the gain, the index climbed further off the five-year closing low that it set last Friday.



The rally by gold stocks came amid a moderate increase by the price of the previous metal, with gold for February delivery rising $6.20 to $1,203.20 an ounce.



Notable strength also emerged among steel stocks, as reflected by the 1.1 percent gain posted by the NYSE Arca Steel Index. The gain lifted the index to a ten-month closing high.



Oil service, chemical, and software stocks also saw some strength on the day, while most of the other major sectors showed more modest moves.



The retail sector stayed in focus on the last shopping day before Christmas. Target Corp's general counsel, Timothy Baer, spoke with top state prosecutors on Monday to address their concerns about a massive data breach, as consumer lawsuits piled up against the discount retailer and two U.S. senators called for a federal probe. Target's stock slipped 0.3 percent to $61.71.



Walt Disney Co named Twitter Inc co-founder Jack Dorsey an independent board director. Shares of Disney, a Dow component, rose 0.8 percent to $73.85 while Twitter surged 8.4 percent to $69.96.



Private equity firm Carlyle Group LP is nearing an agreement to acquire Johnson & Johnson's ortho clinical diagnostics unit, four people familiar with the matter said on Monday, in a deal expected to be worth around $4 billion. Carlyle Group shares gained 2.1 percent to $36.11. Johnson & Johnson, a Dow component, edged up 3 cents, or 0.03 percent, to $92.06.



Historically, stocks perform well during the holiday season, albeit with light trading, and this year has followed that trend, with the market setting new records thanks to several strong reports indicating a strengthening recovery. The Fed's announcement that it will begin to slowly taper its economic stimulus has also removed a degree of uncertainty from the market.



On Monday, the Dow Jones industrial average rose 73.47 points, or 0.5%, to a record close of 16,294.61. The Standard & Poor's 500 index gained 9.67 points, or 0.5%, to close at at a record 1,827.99. The Nasdaq composite jumped 44.16 points, or 1.1%, to 4,148.90.



Other Markets



In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index edged up by 0.1 percent following a holiday on Monday, while Hong Kong's Hang Seng Index surged up by 1.1 percent.



The major European markets also saw modest strength amid an abbreviated trading session. The U.K.'s FTSE 100 Index and the French CAC 40 Index inched up by 0.2 percent and 0.1 percent, respectively. The German markets remained closed on the day.



In the bond market, treasuries moved to the downside, extending the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5.4 basis points to 2.983 percent.



Looking Ahead



Following the holiday on Wednesday, trading activity is likely to remain relatively subdued when the markets reopen on Thursday, although the Labor Department's weekly jobless claims report may still attract some attention.



Canada Markets



Canadian stocks ended higher for a fifth straight session Tuesday, tracking mostly rising global equity markets, led by mining stocks after some better than expected macroeconomic data out of the U.S. All major sub-indices of the main index ended in positive territory.



New orders for U.S. manufactured durable goods rose much more than expected in November, with the increase partly reflecting a rebound in orders for transportation equipment, a Commerce Department report showed Tuesday.



Meanwhile, a Commerce Department report on Tuesday showed new home sales in the U.S. to have dropped in November, although were still better than what analysts anticipated.



The S&P/TSX Composite Index closed Tuesday at 13,517.59, up 69.89 points or 0.52 percent. The index scaled an intraday high of 13,531.41 and a low of 13,447.70.



The Energy Index gained 0.25 percent, with U.S. crude oil futures for February delivery, the most actively traded contract, moving up $0.31 or 0.3 percent to close at $99.22 a barrel Tuesday on the Nymex.



Among energy stocks, Canadian Natural Resources Limited (CNQ.TO) ended flat at $35.23 a share, while Suncor Energy Inc. (SU.TO) added 0.41 percent. Talisman Energy Inc. (TLM.TO) gathered 0.32 percent, while Encana Corp. (ECA.TO) added 0.42 percent.



The Information Technology Index added 0.31 percent, with smartphone maker BlackBerry Limited (BB.TO) jumping 3.38 percent.



The Diversified Metals & Mining Index jumped 2.94 percent, with First Quantum Minerals Ltd. (FM.TO) up 1.88 percent, Lundin Mining Corp. (LUN.TO) up 2.72 percent, and Teck Resources Limited (TCK.B.TO) up 2.48 percent.



The Capped Materials Index gained 2.28 percent, with fertilizer giant Potash Corp. of Saskatchewan Inc. (POT.TO) adding 0.55 percent.



The Global Gold Index surged 3.36 percent, with gold futures for February delivery, the most actively traded contract, gaining $6.30 or 0.5 percent to close at $1,203.30 an ounce Tuesday on the Nymex.



Among gold stocks, Kinross Gold Corp. (K.TO) gained 2.41 percent, while Barrick Gold Corp. (ABX.TO) surged 3.84 percent. Yamana Gold Inc. (YRI.TO) jumped 3.56 percent.



The Financial Index gained 0.37 percent with Bank of Montreal (BMO.TO) up 0.20 percent, Royal Bank of Canada (RY.TO) adding 0.42 percent, the Bank of Nova Scotia (BNS.TO) up 0.41 percent, and Toronto-Dominion Bank (TD.TO) up 0.07 percent.



The Capped Industrials Index added 0.18 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) up 0.65 percent. Bombardier Aerospace, a unit of Bombardier, said Tuesday it has received a firm order for 10 Challenger business jets from an undisclosed customer, which includes five Challenger 300 jets and five Challenger 605 jets. The transaction is valued at about $280 million, based on the 2013 list price for typically equipped aircraft.



European Markets



European stocks rose on Tuesday, extending four days of gains, although trading remained thin ahead of the Christmas break. Several European markets such as Germany, Denmark, Norway, Switzerland and Italy are fully closed.



France's CAC 40 gained 0.3 percent, while the U.K.'s FTSE 100 added 0.4 percent. Storms across Britain and France kept gains in check.



The Asian markets rose broadly after strong data on U.S. consumer sentiment and personal spending brightened U.S. economic outlook. China's central bank moved to ease cash crunch fears, further bolstering investor confidence.



Trading in the U.S. index futures indicate a flat start ahead of data on durable goods orders and new home sales slated for release later in the day. The U.S. markets will have an abbreviated session before the Christmas holiday on Wednesday.



Asian Markets



Asian stocks rose broadly on Tuesday after strong data on U.S. consumer sentiment and personal spending brightened U.S. economic outlook. China's central bank moved to ease cash crunch fears, further bolstering investor confidence.



Japan's Nikkei index eked out modest gains, with strong cues from Wall Street overnight and a weaker yen bolstering sentiment as trading resumed following a public holiday. Also, Japan's Government Pension Investment Fund plans to invest 400 billion yen in inflation-linked Japanese government bonds, the Nikkei reported. The Nikkei average rose above 16,000 for the first time in six years before paring gains to end up 19 points or 0.1 percent at 15,889.



Mitsubishi Motors Corp. soared 4.3 percent after lifting its operating profit forecast for this financial year. SoftBank Corp fell 1.2 percent on reports its CEO has approached six banks to finance a bid to buy the majority of T-Mobile US Inc. Sony Corp dropped 1.3 percent. The consumer electronics giant has agreed to sell its audio-recognition software business Gracenote, Inc. to media company Tribune Company for $170 million, subject to standard adjustments.



China's Shanghai Composite index rose 0.2 percent and Hong Kong's Hang Seng rallied 1.1 percent after China's central bank injected cash into the banking system via collateralized repo's - repurchase agreements to ease a cash crunch.



Australian shares extended gains for the fourth day in thin holiday trade. The benchmark S&P/ASX 200 rose 0.7 percent to 5,327, its highest level since November 29, in an abbreviated trading session on account of Christmas Eve. Banks rose across the board, with NAB, Commonwealth, ANZ and Westpac gaining between 0.5 percent and 0.7 percent. Retailers also gained ground. Wesfarmers rose 0.6 percent, Woolworths gained 0.3 percent and Harvey Norman Holdings rallied 1.6 percent.



Miners ended mixed, with BHP Billiton rising 0.4 percent, while Rio Tinto edged down marginally and Fortescue Metals Group dropped 1.1 percent. Rio Tinto said today that it is considering selling its 19.1 percent stake in a proposed copper and gold mine in Alaska that has been opposed by the local community and several of Rio Tinto's shareholders. Transurban Group shares advanced 0.9 percent on reports the company is close to completing the purchase of A$475 million of debt held by Sydney's Cross City Tunnel.



Seoul shares advanced modestly, with a string of encouraging data from the U.S. underpinning sentiment. The benchmark Kospi average rose 0.2 percent to finish at 2,002, a three-week high.



New Zealand's benchmark NZX-50 index gained a percent to 4,768, a three-week high, in the shortened pre-Christmas session. Fletcher Building, which hit a four-month low last week, rose 2.1 percent, retailer Warehouse Group rallied 2.7 percent, building products manufacturer Steel & Tube Holdings advanced 2 percent and logistics firm Freightways soared 5.4 percent.



Elsewhere, India's Sensex was down 0.2 percent and the Taiwan Weighted average edged down marginally, while Indonesia's Jakarta Composite index was up 0.2 percent, Malaysia's KLSE Composite was gaining 0.1 percent and Singapore's Straits Times was up 0.4 percent.



** Indian Shares End Volatile Session Lower



Indian shares ended a volatile session lower on Tuesday ahead of the Christmas day holiday on Wednesday and the expiry of December series F&O contracts on Thursday. The rupee traded firmer for the third consecutive session, helping to limit the downside to some extent.



The benchmark BSE Sensex fell 68.32 points or 0.32 percent to 21,032.71, while the broader Nifty index finished at 6,267.10, down 17.40 points or 0.28 percent from its previous close.



Tata Power tumbled 3.2 percent, leading the decliners in the Sensex pack. Sesa Sterlite dropped 2.3 percent after the Central Bureau of Investigation started a preliminary probe against billionaire Anil Agarwal in connection with alleged irregularities in the disinvestment of Hindustan Zinc.



Tata Steel, Gail India, HDFC Bank, Hindalco Industries, HDFC, Cipla, Hero MotoCorp, Sun Pharma and Wipro lost 1-2 percent.



Infosys rose 0.6 percent on bargain hunting after falling over 2 percent yesterday. Larsen & Toubro finished 0.7 percent higher after the engineering & construction giant said it has completed the sale of 1.72 crore shares of L&T Finance Holdings to comply with the minimum public shareholding requirements.



Lanco Infratech rose 1.5 percent after receiving lenders' approval to restructure debt worth more than Rs. 7,000 crore. Century Textiles & Industries soared over 13 percent on heavy volumes.



UltraTech Cement rallied 1.8 percent after the Competition Commission of India approved its nearly Rs 3,800-crore deal with Jaypee Cement Corporation to acquire its facilities in Gujarat.



Apollo Tyres climbed 8 percent to hit a 15-month high, extending recent gains, on expectations the company will drop its $2.5 billion deal to buy U.S.-based Cooper Tire & Rubber Company.



The Asian markets rose broadly after strong data on U.S. consumer sentiment and personal spending brightened U.S. economic outlook. China's central bank moved to ease cash crunch fears, further bolstering investor confidence. European stocks were modestly higher amid shortened trading hours.
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