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13.09.2012 06:40

Stocks: Wednesday’s review



Asian stocks rose, with the regional benchmark index headed for the longest winning streak in two months, on speculation China and the U.S. will take more measures to spur growth in the world’s two biggest economies.

Nikkei 225 8,959.96 +152.58 +1.73%

S&P/ASX 200 4,361.3 +35.51 +0.82%

Shanghai Composite 2,120.3 -0.25 -0.01%

Electronics maker Samsung Electronics Co., which gets 48 percent of its revenue in China and the Americas, rose 3 percent in Seoul.

Fanuc Corp., the world’s biggest maker of industrial robots, gained 2.2 percent after Japan’s machinery orders beat estimates in July.

China Eastern Airlines Corp., the nation’s second-largest carrier by passengers, climbed 3.5 percent in Hong Kong after announcing plans to raise $570 million.

European stocks advanced to a 14- month high after Germany’s top constitutional court cleared the way for the ratification of the euro area’s permanent bailout fund.

BAE Systems jumped the most in nine years after the company began talks with European Aeronautic, Defence & Space Co., for a possible combination. Barratt Developments Plc (BDEV) lost 6.6 percent after the housebuilder said it won’t pay an annual dividend.

The Stoxx Europe 600 Index (SXXP) rose 0.1 percent to 272.91 at 4:30 p.m. in London, the highest close since July 8 last year.

The Stoxx 600 climbed in late afternoon trading yesterday as speculation grew that the U.S. Federal Reserve will boost stimulus. The gauge last week surged the most since June as European Central Bank policy makers agreed to an unlimited bond- buying plan to help lower borrowing costs in the region.

The Federal Constitutional Court in Karlsruhe today dismissed motions filed by groups including an opposition political party that sought to halt German ratification of the 500 billion-euro ($640 billion) fund, known as the European Stability Mechanism, and a deficit-control treaty championed by Chancellor Angela Merkel.

The court stipulated that Germany set a cap of about 190 billion euros on its liabilities before ratifying the ESM, unless parliament decides to back extra funds.

BAE jumped 10.6 percent to 363.6 pence, the biggest increase since January 2003. The talks with EADS are at an advanced stage and the two companies are exploring a transaction that would allow London-based BAE to maintain its independence to sell into the U.S. defense market, said one of the people, who asked not to be identified because the talks are private.

Commerzbank, Germany’s second-largest lender, rallied 7.2 percent to 1.58 euros as a gauge of European banks added 1.3 percent, the biggest advance among the 19 industry groups on the Stoxx 600. France’s Natixis (KN) SA jumped 6.4 percent to 2.65 euros, while Credit Agricole SA (ACA) advanced 6 percent to 5.90 euros.

ING, the largest Dutch financial-services firm, rose 1.9 percent to 6.79 euros. AXA SA (CS) climbed 2 percent to 12.78 euros and Allianz SE (ALV), Europe’s largest insurer, added 1.2 percent to 95.05 euros.

Investors also awaited the outcome of the Fed’s two-day policy meeting tomorrow amid expectations that the central bank will announce a third round of so-called quantitative easing to help support growth, according to almost two-thirds of economists in a Bloomberg survey.

National benchmark indexes rose in 14 of the 18 western European markets.

FTSE 100 5,782.08 -10.11 -0.17% CAC 40 3,543.79 +6.49 +0.18% DAX 7,343.53 +33.42 +0.46%      

Vestas (VWS) dropped 8.9 percent to 39.90 kroner, extending yesterday’s 6.1 percent decline. Sanford C. Bernstein & Co. downgraded the company to underperform, the equivalent of a sell rating, from market-perform.

Barratt Developments lost 6.6 percent to 158.5 pence after the U.K.’s largest housebuilder by volume refrained from paying a dividend. The company was expected to pay investors 0.7 pence a share. Barratt last paid a dividend in 2008.

The shares fell even after the company posted its first full-year profit since 2008 of 67.4 million pounds ($109 million) compared with a loss of 13.8 million pounds a year earlier. The shares have surged 71 percent so far this year.

Lonmin Plc (LMI) dropped 6.3 percent to 572.5 pence after the mining company’s workers refused to return to their jobs and begin wage talks. A strike entered its second month at Lonmin’s Marikana operation, which accounts for about 10 percent of global platinum production.

Novo Nordisk A/S (NOVOB) declined 3.2 percent to 896 kroner as Natixis SA reduced its recommendation for the world’s largest insulin maker to neutral from buy.

Major U.S. stock indexes during trading showed mixed results, but still managed to finish the session a slight increase

At the beginning of today's session, support the growth index has positive market sentiment amid reports of constitutional recognition of Germany's participation in the European Stabilization Mechanism (ESM) by the Constitutional Court of the country. However, the decision was made to a number of conditions. The German Constitutional Court ruled that the German contribution to the ESM should not exceed 190 billion euros. More - with the consent of the Bundestag lower house.

However, the growth index was restrained on expectations of market participants is the outcome of today's meeting starting Open Market Committee Federal Reserve. The Bloomberg survey shows that the majority of economists (two-thirds) are awaiting a decision on the third round of QE to begin today meeting of the Federal Open Market.

It is also expected that there will be a decision to hold the federal funds rate to near zero level by 2015.

Announcement of the upcoming meeting will be held tomorrow.

In the composition of the index DOW most components declined. The greatest show shares minus E. I. du Pont de Nemours and Company (DD, -1,9%) and Bank of America Corporation (BAC, -1,00%). More than others in the share price rose Verizon Communications Inc. (VZ, +1.38%) and General Electric Company (GE, +1.16%).

Most of the major economic sectors are growing. The leader is the sector of industrial goods (+0.7%). The biggest minus demonstrates sector utilities (-1.1%).

At the close:

Dow 13,333.66 +10.30 +0.08%

Nasdaq 3,114.31 +9.78 +0.32%

S & P 500 1,436.58 +3.02 +0.21%

Market Focus

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  • ECB's Mersch says as conditions normalise, it is unlikely that uncoventional policies will remain necessary
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