US & World Daily Markets Financial Briefing 01-12-2010

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Stocks Rally At The Open On Upbeat Jobs Data - U.S. Commentary

Stocks moved sharply higher at the start of trading on Wednesday, with traders reacting positively to an upbeat employment report. The major averages all showed notable moves to the upside after ending the previous lower by varied margins.

The initial strength in the markets was due in large part to the release of a report from Automatic Data Processing, Inc. (ADP) showing that private sector employment increased by more than expected in the month of November.

ADP said private sector employment increased by 93,000 jobs in November following an upwardly revised increase of 82,000 jobs in October. Economists had expected employment to increase by 58,000 jobs compared to the addition of 43,000 jobs originally reported for the previous month.

At 10:00 a.m. ET, traders will look to the latest reading on the Institute for Supply Management's national manufacturing index. Economists expect the index to show a reading of 56.5 for November, slightly lower than 56.9 recorded in the previous month.

At the same time, the Commerce Department will issue a separate report on construction spending in October. Construction spending is expected to decline by 0.5 percent for the month following a 0.5 percent increase in September.

The Energy Information Administration will release its customary weekly petroleum inventory report for the week ended November 26th at 10:30 a.m. ET. Ahead of the report, the price of oil is up by $1.40 at $85.51 a barrel.

Over the course of the day, individual automakers are scheduled to release their monthly U.S. sales results for November. The data will reveal the unit sales of domestically produced cars and light duty trucks, including sports utility vehicles and mini-vans, during the month.

In other corporate news, State Street Corp. (STT) may be in focus after the custodial bank  revealed that it will cut 5 percent of its workforce, or 1,400 jobs, as part of a multi-year restructuring action.

Semiconductor stocks have helped to lead the way higher in early trading, driving the Philadelphia Semiconductor Index up by 2.7 percent to a seven-month intraday high. Health insurance, oil service, and transportation stocks are also seeing early strength.

The major averages have seen further upside in the past few minutes, rising to new highs for the young session. The Dow is currently up 201.21 points or 1.8 percent at 11,207.23, the Nasdaq is up 48.85 points or 2 percent at 2,547.08 and the S&P 500 is up 12.51 points or 1.1 percent at 1,200.27.

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TSX Logs Triple-digit Gain At Open Wednesday

Bay Street stocks  rallied at open Wednesday amid buying across a variety of sectors. The S&P/TSX Composite Index gained 127.86 points or 0.99% to 13,080.74, its fresh two-year high.

The Diversified Metals Index gathered 1.71%, with Inmet Mining and Thompson Creek Metals adding over 2% each.

In the gold space, Alamos Gold and Centerra Gold were up around 2% each.

Among financial plays, Scotiabank, Bank of Montreal and RBC gained over 1% each.

Lender NBC moved up close to 2% after it said its fourth quarter net income available to common shareholders rose 19%.

In the oil patch, Petrobakken Energy, Pacific Rubilaes Energy and Niko Resources were up over 2% each.

Communications and media company Rogers Communications added over 1% after media reports said the company is in talks to buy the Toronto Maple Leafs in a deal worth more than $1 billion.

Meanwhile, logistics technology solutions provider Descartes Systems Group edged down 0.50% even after reporting improved third quarter net income.

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The French market is gaining in afternoon trading Wednesday, led by banks. Sentiment was influenced by strong cues from Asia and encouraging economic reports.

In economic news, purchase managers' index data for the manufacturing sector in many countries was released by Markit Economics. French manufacturing PMI rose to 57.9 in November from 55.2 in October, the highest level for over ten years, while in Eurozone manufacturing activity improved to a four-month high of 55.3 from 54.6 in October.

German manufacturing PMI rose to a three-month high of 58.1 in November from 56.6 in October. Economists had forecast the PMI to match a preliminary reading of 58.9.

U.K.'s seasonally adjusted Markit/CIPS manufacturing PMI climbed to 58 in November from a revised figure of 55.4 in October, a sixteen-year high.

Meanwhile, UK house prices dipped for a second month in November, but the rate of decline slowed from October, data from the Nationwide Building Society showed. House prices in November were 0.3% lower than in October. The latest decline was smaller than the 0.7% decrease in October and the expected fall of 0.5%.

After opening slightly lower at 3,635, the CAC 40 has been trading in a range of 3,621-3,656. The index is currently advancing 1.28%.

Lender Natixis is rallying 4.7%, followed by Societe Generale, which is adding 4.2%. Credit Agricole and BNP Paribas are rising 4% and 1.8%, respectively.

Carmakers Renault and Peugeot are advancing 3.7% and 2.9%, in that order.

Steel giant ArcelorMittal is rising 3.3%, oil & gas services firm Technip is rising 2.8% and insurer Axa is advancing 2.6%.

Those making notable gains include drugmaker Sanofi-Aventis, telecom equipment maker Alcatel Lucent, cement giant Lafarge, Airbus maker EADS and hotel group Accor.

Retailer Carrefour is falling 7.4% after cutting its full-year guidance.

Elsewhere in Europe, the UK's FTSE 100 is gaining 1.64% and the German DAX is advancing 2.04%.

Across Asia/Pacific, major markets closed in the green as China reported strong manufacturing data. Australia's All Ordinaries edged up 0.01% and China's Shanghai Composite Index gained 0.12%. Hong Kong's Hang Seng and BSE Sensex climbed 1.05% and 1.68%, respectively. Japan's benchmark index Nikkei 225 added 0.51%.

In the U.S., futures point to a higher open on Wall Street. In the previous session, the Dow fell 0.4%, the Nasdaq slid 1.1% and the S&P 500 declined 0.6%.

Crude for January delivery is trading higher by $1.42 at $85.53 per barrel and gold is advancing $7.3 at $1393.4 an ounce.

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Indian Market Extends Gains For Third Session

Bulls made a roaring comeback on Wednesday after a higher-than-expected GDP data for the July-September quarter showed that the Indian economy continues to maintain its growth momentum despite the challenging external environment.

A string of reports on manufacturing, core sector output and exports also helped investors shrug off lingering European debt concerns and speculation about possible interest rate hikes in China.

Extending its gains for a third consecutive session, the benchmark 30-share Sensex climbed about 330 points or 1.7% to 19,850, with 24 of its components advancing. Bharti Airtel (down 2.51%), Hero Honda Motors (down 2.28%), Wipro (down 1.34%), Maruti Suzuki (down 0.77%), Hindustan Unilever (down 0.57%) and TCS (down 0.07%) were the laggards.

With global cues remaining supportive, the broader Nifty jumped by about 100 points or 1.7% to 5,961. The BSE mid-cap and small-cap indexes led the rally, rising 2.83% and 3.14%, respectively. In the broader market, gaining shares outpaced declining ones by 2381 to 579 shares on the BSE.

Sector-wise, the BSE metal, public sector, realty, banking and capital goods indexes rallied about 3% each, the auto index climbed 1.9% and the consumer durable index by 1.6%.

Cipla (up 6.30%), Tata Steel (up 5.04%), Larsen & Toubro (up 4.04%), DLF (up 3.79%), SBI (up 3.71%) and Hindalco (up 3.66%) were among the prominent gainers.

In the auto space, Tata Motors climbed 4.13% after reporting a marginal 1% rise in its November vehicle sales. Mahindra & Mahindra jumped 4.53% after posting a 125% rise in its two-wheeler sales for November.

Telecom stocks closed on a mixed note after state-run BSNL increased the pulse rate on STD calls from its landline numbers to any other landline number across the country to 3 minutes from 1 minute. Bharti Airtel fell 2.51% on profit taking and Idea Cellular shed 0.69%, while Tata Teleservices rose 2.57% and Reliance Communication rallied nearly 4%.

Anil Dhirubhai Ambani group stocks were in demand. Reliance MediaWorks soared 10.62%, Reliance Capital jumped 6.40%, Reliance Power added 1.56% and Reliance Infrastructure advanced 3.10%.

Pratibha Industries rallied 3.39% after the infrastructure firm raised funds by way of a preferential allotment of shares to Van Dyck, a subsidiary of Chrys Capital V, LLC. Coal India gained 1.33% on reports that it is eying a 10% stake in a coal producing mine in Australia. Strides Arcolab soared 5.35% after securing the U.S. FDA approval for selling anaesthetic midazolam hydrochloride injections.

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ONGC gained 3.23% on reports of stock split ahead of its follow-on public offering in March. Great Offshore (up 3.85%) and Suzlon Energy (up 8.40%) jumped on winning new orders. BPCL (up 2.95%) and HPCL (up 4.46%) rallied after they reportedly hiked jet fuel prices. IOC climbed nearly 11% on divestment reports.

In economic news, India's merchandise exports rose 21.36% year-on-year to $18 billion in October, outpacing the 6.8% increase in imports to $27.68 billion, official data released today showed.

Separately, a survey carried out by Markit Economics showed that the headline seasonally adjusted HSBC Purchasing Managers' Index rose to 58.4 in November from 57.2 in October, with a reading above 50 indicating expansion. The rate of growth accelerated for a second consecutive month and was above the long-run average for the series, the Markit said.

Meanwhile, the latest data for the six core industries having a combined weight of 26.7% in the Index of Industrial Production also cheered investors. The country's infrastructure sector output grew by an impressive 7 percent in October versus 3.9% in the same month last year.

Elsewhere, Asian stocks rose across the board, commodities advanced and the euro stabilized on Wednesday, after data showing an expansion in China's manufacturing and buoyant U.S. consumer confidence figures signaled the global economic recovery is intact.

In Europe, Britain's FTSE 100 and Germany's DAX were up over a percent each in early trading and trading in the U.S. index futures suggested that the Dow index could rise 79 points at the opening bell on Wednesday.

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