UK Market Snapshot
UK markets ended higher yesterday, buoyed by an unexpected move by Bank of Japan for further asset purchases and as the US housing data climbed. United Utilities surged 2.8%, on renewed takeover rumors. AstraZeneca gained 1.9%, following a broker upgrade to Neutral from Underperform. Smiths Group edged up 1.2%, after it stated that its investments would boost its medium-term revenue growth. Oil titan, BP Plc rose 1.1%, on reports that the company plans to sell its Texas City refinery to Marathon Petroleum. PZ Cussons jumped 3.5%, after the company said that it will turn to profitable growth this year. Homebuilder, Redrow traded 2.2% higher, as the companys profits increased on a 15% rise in selling prices. The FTSE 100 gained 0.3%, to close at 5,888.5, while the FTSE 250 edged up 0.3%, to settle at 11,974.2.
US Market Snapshot
US markets finished slightly higher yesterday, on better than expected housing data and as Bank of Japan came up with an additional round of monetary easing to boost the ailing Japanese economy. Homebuilders led the index higher, as PulteGroup, DR Horton and Whirlpool Corporation climbed between 2.6% and 4.3%. Home Depot rose 1.0%, on better demand outlook. Sprint Nextel surged 7.2%, after CEO said that the company would be open to consolidation. General Mills rose 1.8%, after its earnings topped market expectations. Corning edged up 1.2%, on broker upgrade to Buy from Neutral. Groupon soared 13.9%, subsequent to the news of a new payment system that will reduce card fees for retailers. Cracker Barrel Old Country Store jumped 5.8%, as the companys fourth quarter earnings doubled. The DJIA edged up 0.1%, to settle at 13,578.0, while the NASDAQ gained 0.2% to close at 3,182.6. The S&P 500 rose 0.1%, to close at 1,461.1.
Europe Market Snapshot
Other European markets advanced yesterday, cheered by Bank of Japans decision to join the recent moves by global central banks for further purchase of government debt and as housing starts improved in the US. Porsche rallied 7.2%, after the company won a court case related to its disclosure in 2008. Heineken NV surged 6.4%, after it got closer to acquiring Fraser & Neave’sa stake of joint venture in Asia Pacific Breweries. Commerzbank gained 2.0%, following a newspaper report that the bank may cut jobs. Volkswagen rose 1.6%, after a news paper reported thatsupported by the automakers plans to sell 110,000 vehicles a year in Japan by 2018. French carmakers, Renault and Peugeot edged up 1.3% and 2.3%, respectively. , on better demand outlook. Retailer, Inditex rose 3.7%, after its first half profit surged 32%. The FTSEurofirst 300 index gained 0.4%, to close at 1,116.4. Among other European markets, the German DAX Xetra 30 jumped 0.6%, to close at 7,390.8, while the French CAC-40 edged up 0.5%, to settle at 3,531.8.
Asia Market Snapshot
Markets in Asia are trading lower this morning, after Japans exports fell for the third month in a row and as Chinas manufacturing data contracted in September for the 11th straight month. In Japan, energy stocks, Inpex Holdings and JX Holdings are trading 3.2% and 2.5% lower respectively, tracking a fall in crude oil prices. Exporters weighed on the index, with Cannon down 1.6% on stronger yen. In Hong Kong, energy companies, Cnooc and PetroChina are also down 2.5% and 0.6%, respectively. Property stocks, Sun Hung Kai Properties is down 1.5% and Henderson Land Development is trading 1.4% lower on weak demand outlook. In South Korea, Samsung is trading 0.8% lower, after a federal judge banned the company from selling its Galaxy Tab 10.1 in US. The Nikkei 225 index is trading 0.7% lower, at 9,167.8. Hang Seng index is trading 0.4% lower, at 20,754.6, while the Kospi index is trading 0.6% lower at 1,996.3.
Key Economic News
BoE unanimous on QE and kept its interest rate unchanged in September
According to minutes of the meeting held on 5 and 6 September, the Bank of England (BoE) policy makers voted unanimously in favour of maintaining the interest rate at a record low 0.50% as well as to continue with the program of asset purchases totalling 375.0 billion.
French Leading Index rebounded in July, indicates Conference Board
The Conference Board reported that, the Leading Economic Index in France increased 0.3% to 113.3 in July, after falling for three consecutive months and compared to a 0.3% fall recorded in June. Meanwhile on a month-on-month basis, the Coincident Economic Index edged up 0.1% to 104.4 in July.
Euro-zone construction output declined for second month in July
On a seasonally adjusted monthly basis, construction output in the Euro-zone fell 0.3% in July, following a 0.6% decline recorded in June. On a working day adjusted annual basis, construction output dropped 4.7% in July, compared to a 2.8% decrease recorded in the previous month. Meanwhile, on a year-on-year basis, the building construction fell 4.6% in July, following a 2.8% drop recorded in June. Additionally, civil engineering fell 3.3% in July, following a 3.5% decline reported in the previous month.
Swiss economic sentiment dropped unexpectedly in September
The Center for European Economic Research (ZEW) and Credit Suisse reported that the Economic Expectations Index in Switzerland declined to a reading of -34.9 in September from a reading of -33.3 posted in August. Market had expected the index to rise to a reading of -25.0 in September.
US housing starts rose less-than-expected, while building permits fell in August
On a seasonally adjusted basis, the housing starts in the US rose 2.3% to an annual rate of 750,000 in August, compared to a downwardly revised rate of 733,000 recorded in July. Market had expected housing starts to increase to 765,000 in August, compared to an annual rate of 746,000 originally reported in the previous month. However, on a seasonally adjusted basis, new building permits in the US fell 1.0% to an annual rate of 803,000 in August, compared to the revised rate of 811,000 reported in July. Market had expected new building permits to drop to an annual rate of about 795,000 in August, compared to 811,000 initially reported in July.
US existing home sales rose more-than-expected in August
The National Association of Realtors (NAR) reported that, sales of previously owned homes in the US jumped 7.8% to an annual rate of 4.82 million in August, from 4.47 million recorded in July. Market had expected purchases of existing houses to climb to an annual rate of 4.55 million in August.
US weekly MBA mortgage applications fell
According to Mortgage Bankers Association (MBA), for the week ended 14 September 2012, mortgage application volume in the US, on a seasonally adjusted basis, fell 0.2% from one week earlier. Meanwhile, the refinancing demand for the week gained 0.80% from the week before.
US inflation expectations rising, says Fisher
Richard Fisher, the President of the Federal Reserve Bank of Dallas, stated that the central banks third round of quantitative easing has led to an increase in market expectations for higher inflation.
Japans Leading Index fell for a fourth consecutive month in July
Japan’s Leading Economic Index was revised up to a reading of 93.0 in July, marking a fourth consecutive monthly decline and compared to an initial estimate of 91.8. The index stood at a reading of 94.1 in June. Meanwhile, the Coincident Index was revised higher to a reading of 93.8 in July, from 92.8 initially estimated. The index stood at a reading of 94.9 in June. Additionally, the Lagging Index was revised up to a reading of 86.7 in July, from 86.3 initially estimated. The index stood at a reading of 86.8 in the previous month.
Japan trade deficit widened less-than-estimated in August
Japans merchandise trade deficit rose to 754.127 billion in August, following a downwardly revised deficit of 518.9 billion recorded in July. Market had estimated a deficit of 829.3 billion in August, compared to a deficit of 517.382 billion originally reported for the previous month. The adjusted trade deficit stood at 472.8 billion in August, compared to a revised deficit of 371.9 billion recorded in July. Meanwhile, on a year-on-year basis, the exports fell 5.8% in August, following an 8.1% decline recorded in the previous month. Additionally, the imports fell 5.4% YoY in August, compared to a 2.1% rise recorded in July.
Chinas manufacturing activity improved in September
The HSBC flash manufacturing Purchasing Managers Index (PMI) in China climbed to a reading of 47.8 in September compared to a reading of 47.6 reported in August.
S&P says outlook for China’s property development sector remains negative
In a report titled China Property Market Outlook Improves on Easing Liquidity Pressure, Standard & Poors (S&P) stated that its outlook for the Chinese property development sector remains negative despite some improvement in the last six months from strengthening liquidity and higher sales volumes. Standard & Poor’s is forecasting further downgrades for some Chinese mainland developers over the next six months, as the slowing economy and government measures continue to curb property demand.
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