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Market Briefing - US markets ended in the green yesterday, buoyed by gains in banking shares

Published: 08:36 09 Dec 2016 GMT

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UK Market Snapshot

UK markets closed higher yesterday, after the European Central Bank (ECB) announced an extension to its quantitative easing programme while keeping its benchmark rates steady. WPP climbed 4.6%, after a leading broker upgraded its rating on the stock to ‘Buy’ from ‘Hold’.  TUI advanced 3.3%, as it posted a rise in its profit for the full year. Barclays gained 1.8%, following a broker upgrade on the stock to ‘Hold’ from ‘Underperform’. Other lenders, Lloyds Banking Group and Royal Bank of Scotland Group edged up 0.8% and 1.4%, respectively. On the flipside, Capita sank 14.0%, after it trimmed its profit outlook for 2016 and announced plans to sell most of its asset services unit and a small number of other non-core businesses. The FTSE 100 rose 0.4%, to close at 6,931.6, while the FTSE 250 added 0.3%, to settle at 17,682.0.

US Market Snapshot

US markets ended in the green yesterday, buoyed by gains in banking shares. JPMorgan Chase, Bank of America and Goldman Sachs Group advanced 1.3%, 1.7% and 2.5%, respectively.  Tailored Brands soared 39.7%, after its earnings for the third quarter surpassed market estimates. lululemon athletica rallied 15.0%, as it posted upbeat results for the third quarter. Edwards Lifesciences climbed 6.7%, even though it stated that sales for the fourth quarter are trending at the lower end of its outlook. Bucking the trend, Insys Therapeutics plummeted 11.9%, after the Justice Department in the US arrested several former pharmaceutical executives and managers on allegations over defrauding health insurers. The S&P 500 added 0.2%, to settle at 2,246.2. The DJIA edged up 0.3%, to settle at 19,614.8, while the NASDAQ gained 0.4%, to close at 5,417.4.

Europe Market Snapshot

Other European markets finished in positive territory yesterday, after the ECB stated that it will continue to purchase Government bonds through coming year, but at a slower pace each month starting in April. Financial sector shares, Deutsche Bank, Societe Generale and Commerzbank rallied 3.4%, 4.5% and 4.9%, respectively. Auto makers, Continental, Daimler and Bayerische Motoren Werke gained 1.3%, 1.7% and 2.0%, respectively.  On the losing side, E.ON and RWE tumbled 2.0% and 4.5%, respectively. Telefonaktiebolaget LM Ericsson slipped 0.2%. The telecom-network equipment maker stated that its staff lay-off plan is running ahead of schedule which will led to higher restructuring costs than previously estimated this year. The FTSEurofirst 300 index added 1.2%, to close at 1,390.7. Among other European markets, the German DAX Xetra 30 gained 1.8%, to close at 11,179.4, while the French CAC-40 edged up 0.9%, to settle at 4,735.5.

Asia Market Snapshot

Markets in Asia are trading mostly lower this morning. In Japan, Marui Group, Sumco and Konami Holdings have advanced 2.1%, 3.7% and 5.4%, respectively. Oil stocks, JX Holdings and Inpex have gained 2.5% and 3.3%, respectively. Honda Motor has risen 0.7%, after it unveiled plans to build an auto plant worth $435.0 million in China. On the contrary, Komatsu and NGK Insulators have shed 1.5% and 2.3%, respectively. In Hong Kong, gaming stocks, Galaxy Entertainment Group and Melco International Development have tumbled 3.7% and 7.5%, respectively, on the back of report that China will slash UnionPay ATM withdrawal limits in Macau. In South Korea, index majors, Samsung Electronics and POSCO have slid 0.3% and 0.7%, respectively. The Nikkei 225 index is trading 1.2% higher at 18,992.2. The Hang Seng index is trading 0.3% down at 22,797.9, while the Kospi index is trading 0.5% lower at 2,021.7.

Key Corporate Announcements Today

AGMs

Associated British Foods, Conroy Gold & Natural Resources, Petro Matad Ltd., Plant Impact, River and Mercantile Group, Volution Group (WI), Waterman Group

EGMs

PJSC Megafon GDR (Reg S)

Final Dividend Payment Date

Avingtrans, CVS Group, JPMorgan Smaller Companies Inv Trust, Jupiter European Opportunities Trust, London Finance & Investment Group, Revolution Bars Group

Interim Dividend Payment Date

Hadrian's Wall Secured Investments, Invesco Perpetual UK Small Companies Inv Trust, Maruwa Co Ltd., PCI-PAL

SThree, Young & Co's Brewery 'A' Shares

Quarterly Payment Date

Honeywell International Inc.

Trading Announcements

SThree, John Laing Group, Marshalls

Key Corporate Announcements for Monday

AGMs

Concha

Final Dividend Payment Date

YouGov

Interim Dividend Payment Date

Chenavari Capital Solutions Limited Red, DCC, Mediclinic International, Redefine International

Trading Announcements

LHR Airports

Commodity, Currency and Fixed Income Snapshots

Crude Oil

At 0430GMT today, Brent Crude Oil one month futures contract is trading 0.11% or $0.06 lower at $53.83 per barrel, ahead of Baker Hughes weekly oil rig count data, scheduled to release later in the day. Yesterday, the contract climbed 1.68% or $0.89, to settle at $53.89 per barrel, as traders turned their focus to a meeting of OPEC and non-OPEC producers this weekend, on possible further crude oil production cuts.

Gold

At 0430GMT today, Gold futures contract is trading 0.05% or $0.60 lower at $1169.20 per ounce. Yesterday, the contract declined 0.44% or $5.20, to settle at $1169.80 per ounce, amid a strong US Dollar and gains in global equities. 

Currency

At 0430GMT today, the EUR is trading 0.10% lower against the USD at $1.0604, ahead of German trade balance figures for October, due for release in some time. Yesterday, the EUR weakened 1.26% versus the USD, to close at $1.0615, after the ECB’s decision to extend its quantitative easing programme.

At 0430GMT today, the GBP is trading marginally higher against the USD at $1.2584, ahead of UK consumer inflation expectations and trade balance data for October, slated to release in a few hours. Yesterday, the GBP weakened 0.29% versus the USD, to close at $1.2584.

Fixed Income

In the US, long term treasury prices fell and pushed yields higher, after the ECB announced an extension to its Government bond buying programme, but at a lower pace beginning in April next year. Yesterday, yield on 10-year notes climbed 6 basis points to 2.40%, while yield on 2-year notes gained 2 basis points to 1.12%. Meanwhile, 30-year bond yield jumped 8 basis points to 3.10%.

Key Economic News

ECB held rates, revamps asset-purchase programme

The ECB, at its latest monetary policy meeting, announced a continuation of the bank's asset-buying programme. However, a reduced pace of purchases is set to start from April next year. The current asset purchases of €80 billion a month, which ends in March 2017, will now be extended until at least December 2017 and will be cut to €60 billion a month from April 2017. Meanwhile, benchmark interest rates were left unchanged. The deposit rate was held at -0.40% with the main refinancing rate at 0.0% and the marginal lending facility at 0.25%.

French non-farm payrolls rose as expected in 3Q 2016

On a QoQ basis, the final non-farm payrolls rose 0.30% in 3Q 2016, in France, in line with market expectations. The preliminary figures had also indicated an advance of 0.30%. Non-farm payrolls had recorded a rise of 0.20% in the prior quarter.

French business sentiment index rose in November

The business sentiment index in France advanced to 101.00 in November, higher than market expectations of an advance to 100.00. The business sentiment index had registered a level of 99.00 in the previous month.

US household wealth registered a rise in 3Q 2016

Household wealth rose $1593.00 billion in 3Q 2016, in the US. In the previous quarter, household wealth had climbed by a revised $838.00 billion.

US composite leading indicator registered a rise in October

Composite leading indicator registered a rise to 99.30 in the US, in October, compared to a revised level of 99.20 in the prior month.

US initial jobless claims declined in the last week

The seasonally adjusted initial jobless claims in the US registered a drop to 258.00 K in the week ended 03 December 2016, higher than market expectations of a drop to 257.00 K. Initial jobless claims had registered a reading of 268.00 K in the previous week.

US continuing jobless claims slid in the last week

The seasonally adjusted continuing jobless claims in the US recorded a drop to 2005.00 K in the week ended 26 November 2016, lower than market expectations of a drop to 2048.00 K. In the prior week, continuing jobless claims had registered a revised reading of 2084.00 K.

Canadian housing starts registered a drop in November

The seasonally adjusted housing starts in Canada fell to a level of 184.00 K in November, compared to a revised reading of 192.30 K in the previous month. Markets were expecting housing starts to fall to 191.00 K.

Canadian capacity utilisation registered a rise in 3Q 2016

Capacity utilisation recorded a rise to 81.90% in Canada, in 3Q 2016, compared to market expectations of an advance to 81.50%. Capacity utilisation had recorded a revised reading of 79.70% in the prior quarter.

Canadian building permits rose more than expected in October

On a MoM basis, building permits climbed 8.70% in October, in Canada, compared to a revised fall of 4.60% in the previous month. Market expectation was for building permits to climb 1.50%.

Canadian new housing price index rose more than expected in October

The new housing price index registered a rise of 3.00% in Canada on a YoY basis in October, compared to a rise of 2.80% in the previous month. Market anticipation was for the new housing price index to climb 2.80%.

Canadian new housing price index rose more than expected in October

In October, on a MoM basis, the new housing price index recorded a rise of 0.40% in Canada, more than market expectations for an advance of 0.20%. In the previous month, the new housing price index had climbed 0.20%.

Japanese corporate bankruptcies eased in November

Corporate bankruptcies in Japan recorded a drop of 2.53% in November on a YoY basis. Corporate bankruptcies had dropped 7.95% in the prior month.

Japanese money supply M2+CD advanced more than expected in November

Money supply M2+CD in Japan recorded a rise of 4.00% in November on a YoY basis, compared to a rise of 3.70% in the previous month. Markets were expecting money supply M2+CD to advance 3.70%.

Japanese business survey index (BSI) of large manufacturing industries recorded a rise in 4Q 2016

In 4Q 2016, on a quarterly basis, business survey index (BSI) of large manufacturing industries advanced 7.50% in Japan. In the prior quarter, business survey index (BSI) of large manufacturing industries had registered a rise of 2.90%.

Japanese Eco Watchers Survey for current situation climbed in November

Eco Watchers Survey for the current situation registered a rise to 48.60 in Japan, in November. Eco Watchers Survey for the current situation had registered a level of 46.20 in the prior month.

Japanese M3 money supply advanced more than expected in November

In November, M3 money supply recorded a rise of 3.40% on an annual basis in Japan, higher than market expectations for an advance of 3.20%. M3 money supply had advanced by a revised 3.10% in the previous month.

Japanese Eco Watchers Survey for future outlook climbed in November

Eco Watchers Survey for the future outlook in Japan climbed to 49.10 in November. Eco Watchers Survey for the future outlook had recorded a reading of 49.00 in the previous month.

Chinese CPI advanced more than expected in November

In November, on a YoY basis, the consumer price index (CPI) registered a rise of 2.30% in China, higher than market expectations for a rise of 2.20%. The CPI had registered a rise of 2.10% in the previous month.

Chinese PPI rose more than expected in November

The producer price index (PPI) in China registered a rise of 3.30% on a YoY basis in November, higher than market expectations for a rise of 2.30%. In the prior month, the PPI had risen 1.20%.

Chinese CPI rose in November

The CPI advanced 0.10% in China on a MoM basis, in November. The CPI had registered a drop of 0.10% in the prior month.

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