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Friday, 12 October 2012

TSX lower amid strong JPMorgan earnings, rising consumer confidence

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TORONTO - The Toronto stock market was slightly lower late morning Friday with buyers inclined to do little at the end of a negative week amid rising oil prices and a strong earnings report from American banking giant JPMorgan Chase.

The S&P/TSX composite index eased 28.02 points to 12,205.93, while the TSX Venture Exchange was 5.85 points lower at 1,294.09.
The Canadian dollar shed early gains and was unchanged at 102.18 cents US.
New York markets were also listless as JPMorgan handed in a record quarterly profit of US$5.7 billion, up 34 per cent from a year ago as the bank set aside less money for bad loans. Earnings were $1.40 per share, far exceeding the $1.21 predicted by analysts polled by FactSet.
Revenue rose six per cent to $25.1 billion, beating expectations of $24.4 billion.
JPMorgan stock dropped 37 cents to US$41.73. However, the stock has already come back strongly from a low of $31 in early June after the bank announced a surprise trading loss that ballooned to $6 billion.
Indexes also failed to find support from a strong consumer confidence reading.
The Dow Jones industrials climbed 10.94 points to 13,337.33 as the University of Michigan's index for October came in at 83.1, up from 78.3 in September.
The Nasdaq composite index slipped 0.76 of a point to 3,048.65, while the S&P 500 index was down 2.22 points at 1,430.62.
Earnings expectations are low for the third quarter as the eurozone debt crisis continues to take a toll on economies in Europe, affecting the results of multinationals. The malaise has also spread to developing economies such as China.
Analysts expect a 2.1 per cent year-over-year decline in S&P 500 operating earnings, which would be the first year-over-year drop since the recession that followed the 2008 financial collapse.
Traders also took in better than expected earnings from U.S. bank Wells Fargo. It posted third-quarter earnings per share of 88 cents, beating estimates by a penny. Revenue rose eight per cent to $21.21 billion, which was slightly lower than analysts expected and its shares fell $1.23 to US$33.95.
The TSX is set to end the week lower in the wake of a gloomy assessment of the global economy by the International Monetary Fund, which reduced its growth forecast for the world economy to 3.3 per cent this year from its previous estimate of 3.5 per cent.
Still, the TSX is up over seven per cent from the market lows of early June, largely because of a commitment from European Central Bank president Mario Draghi to do whatever it takes to preserve the monetary union and another round of quantitative easing by the U.S. Federal Reserve.
"There had to be a letdown and we are getting it," said Pat McHugh, senior managing director and Canadian equities strategist at Manulife Asset Management.
"This move from the time Draghi made his comments (in early August) to now has all been policy driven, it hasn’t been earnings driven, it hasn’t been fundamentally driven. For the near term, I’m afraid I don’t see any triggers that will move this market."
The tech sector led TSX advancers with MacDonald Dettwiler and Associates (TSX:MDA) ahead 63 cents to $50.53.
The energy component rose 0.13 per cent as fears that the conflict in Syria could widen and threaten oil shipments from the Mideast continued to push crude prices higher. The November contract on the New York Mercantile Exchange rose 23 cents to US$92.30 a barrel. Canadian Natural Resources (TSX:CNQ) gained 19 cents to C$30.20.
The telecom component was down 0.3 per cent as BCE Inc. (TSX:BCE) gave back nine cents to $42.92.
The base metals sector was flat as metal prices backed off with December copper down three cents to US$3.72 a pound. Gold stocks were also little changed as December bullion was off $4.40 to US$1,766.20 an ounce.
It was a light day on the economic calendar.
In the U.S., a second month of sharp gains in gasoline costs drove wholesale prices higher in September. But outside of the surge in energy, prices were well contained. Wholesale prices rose 1.1 per cent in September following a 1.7 per cent gain in August.
European bourses were weak as London's FTSE 100 dipped 0.28 per cent, Frankfurt's DAX was down 0.3 per cent and the Paris CAC 40 declined 0.44 per cent.
Earlier in Asia, markets were mixed by the close.
Japan’s Nikkei 225 index ended a bad week with another 0.2 per cent decline. Telephone company Softbank led the way lower after it plunged 16.9 per cent on news that it is in talks to take a substantial stake in U.S. carrier Sprint Nextel Corp.
Hong Kong’s Hang Seng advanced 0.7 per cent and South Korea’s Kospi was flat.

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Workday leaps in trading debut on the New York Stock Exchange

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NEW YORK — Shares of Workday rocketed higher Friday in their first day of trading on the New York Stock Exchange.
The stock climbed $20.33, or 72.6 percent, to $48.33 in midmorning trading.Workday I
The shares opened at $48.05 and traded as high as $49.23 earlier in the session.
The Pleasanton, Calif.-based company raised $637 million in the offering. It is giving the underwriters a 30-day option to buy up to an additional 3.4 million shares to cover any excess demand.
Workday said in a filing with the Securities and Exchange Commission that it plans to use the offering’s net proceeds for working capital and other general corporate purposes. It may also use some of the proceeds for acquisitions.
The shares are trading under the “WDAY” ticker symbol.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Thursday, 11 October 2012

Direct Line shares rise on London Stock Exchange debut

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Direct Line shares open higher on London debut
Direct Line shares open higher on London debut
Royal Bank of Scotland said it had raised £787m sterling from the sale of 30% of the company's shares.
The initial public offering was priced at 175 pence per share, close to the middle of the range originally set and valuing the business at £2.6 billion.
The shares were trading at 181 pence in early deals.
RBS said it would sell 450 million Direct Line shares, representing 30% of the business, with a 15% over-allotment option.
There had been concerns that investor appetite for the initial public offering would be damaged by British competition regulators investigating the car insurance market, due to suggestions that consumers were being overcharged.
However, UK analysts said the price for Direct Line stock was a "reasonable outcome".
The sale benefited from strong demand from British retail investors, who have had few opportunities to participate in large-scale IPOs in recent years.
On a conference call with reporters, Direct Line chief executive Paul Geddis said retail investors had purchased between £5,000-6,000 worth of shares on average and had taken up 15% of the shares sold.
RBS is selling Direct Line in return for winning approval from European Union regulators for a bailout during the 2008 financial crisis that left it 82% state-owned. The price was near the mid-point of the 160 to 195 pence range set by the British bank when it launched the IPO on September 28.
RBS has been under pressure to secure a good price for the business, with taxpayers sitting on a loss of £21.5 billion after Britain pumped in £45 billion to rescue the bank.
"This is another important milestone in RBS Group's restructuring plan," said RBS Finance Director Bruce Van Saun.
RBS said it would hold a 65.3% stake in Direct Line, assuming the overallotment option was taken up. Under the EU directive, RBS must sell more than 50% of Direct Line by the end of 2013 and the rest of its holding a year later.

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Markets get lift from US jobs figures

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  • Specialist Fabian Caceres works at his post on the floor of the New York Stock Exchange Tuesday, Oct. 9, 2012. Another dire prediction about global economic growth is sending stocks lower on Wall Street in early trading. Photo: Richard Drew / AP

    LONDON (AP) — A surprisingly big drop in weekly U.S. jobless claims helped shore up financial markets Thursday despite a downgrade of Spain's sovereign credit rating.The Labor Department reported that claims last week fell by 30,000 to 339,000, the lowest level since February 2008. The figures were another indication that the world's largest economy is over its summer soft patch and may be gaining traction.
    "Are things that much better all of a sudden? Perhaps. But we're going to wait for some corroborating data points before making a judgment one way or the other," said Dan Greenhaus, chief global strategist at BTIG.
    Following the figures' release, so-called riskier assets — such as stocks, the euro and oil, which investors tend to buy when more optimistic — posted solid gains.
    In Europe, Germany's DAX was up 1.2 percent at 7,286 while the CAC-40 in France rose 1.3 percent to 3,409. The FTSE 100 index of leading British shares was up 1 percent at 5,835.
    In the U.S., the Dow Jones industrial average was 0.4 percent higher at 13,392 while the broader S&P 500 index rose 0.6 percent to 1,441.
    The euro was up 0.7 percent at $1.2938, while the price of a barrel of benchmark oil rose $1.09 to $92.34 a barrel.
    The optimism generated by the jobless claims data helped investors brush aside Wednesday's downgrade of Spanish government debt by the Standard & Poor's agency.
    S&P reduced its rating on Spain from BBB+ to BBB-, the lowest investment grade level. A non-investment grade would make it more expensive for the Spanish government to borrow money as some investors, like pension funds, would have to sell the bonds from their portfolios.
    That concern weighed on Spanish stocks, which were underperforming their European counterparts. Madrid's main IBEX index was up only 0.5 percent
    S&P warned of the impact of the deepening economic recession in Spain and rising levels of social discontent, adding that the government's hesitation in requesting help was "potentially raising the risks to Spain's rating."
    The Spanish government has so far refused to tap a new European Central Bank bond-buying facility that has been largely designed to keep a lid on the country's borrowing rates.
    Some analysts think the downgrade will help push the government to finally request the help, despite the political humiliation that would represent.
    "Investors appear to be drawing the conclusion that this coupled with increasing yields in recent sessions leaves Spain no option but to formally request a bailout," said Mike McCudden, head of derivatives at Interactive Investor.
    The downgrade prompted a retreat across much of Asian financial markets before the mood improved during the European trading session.
    Though the crisis in the eurozone remains a key focus of attention in the markets, investors are also looking for direction from the third quarter U.S. corporate earnings results season. JPMorgan Chase & Co. takes center stage Friday when it will be the first major bank to report.
    Earlier this week, aluminum company Alcoa Inc. kicked off the earnings season with upbeat figures but warned that its outlook was being hurt by waning demand, particularly in Asia.
    Earlier in Asia, Japan's Nikkei 225 index fell 0.6 percent to finish at 8,546.78. South Korea's Kospi shed 0.8 percent to 1,933.09 but Hong Kong's Hang Seng, however, rose 0.4 percent to 20,999.05.
    Mainland Chinese shares lost ground, with the Shanghai Composite Index shedding 0.8 percent to 2,102.87 while the Shenzhen Composite Index lost 1.5 percent to 867.21.



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Wednesday, 10 October 2012

Asian stock markets fall after gloomy global forecasts, Spain worries, earnings jitters

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Lucia Cuttone works with fellow traders on the floor of the New York Stock Exchange Tuesday, Oct. 9, 2012. Another dire prediction about global economic growth is sending stocks lower on Wall Street in early trading. (AP Photo/Richard Drew)
 
BANGKOK - Worries about Europe's debt crisis, signs of weak global growth and expectations of lower U.S. corporate earnings sent Asian stocks down on Wednesday.
Japan's Nikkei 225 index tumbled 1.7 per cent to 8,625.26. Hong Kong's Hang Seng index fell 0.4 per cent to 20,850.25. South Korea's Kospi lost 1 per cent at 1,958.41. Australia's S&P/ASX 200 shed 0.4 per cent to 4,488.30.International Monetary Fund said Tuesday that Spain's economy — already in double-dip recession — will contract by 1.3 per cent next year — more than double its previous prediction.
Spain, with near 25 per cent unemployment, has introduced a series of austerity and labour measures in a desperate bid to bring down its deficit and convince investors it can manage its finances without outside help.
Madrid is now pushing for the European Central Bank to intervene in the secondary market and bring down its borrowing costs, but the ECB insists the country must formally apply for aid first.
"Spain remains the major focal point and in this regard there is no progress in the country moving forward with a bailout request," analysts at Credit Agricole CIB in Hong Kong said in a market commentary. "The market tone will continue to remain cautious but we don't expect a major relapse in risk appetite."
The IMF also cut its estimates for global economic growth, warning that mature economies are at risk of recession.
Investors on Wall Street were discouraged by the IMF report as well as expectations of lower corporate earnings. Analysts expect earnings for Standard & Poor's 500 companies to be lower than a year ago — the first time that has happened in almost three years.
The Dow Jones industrial average fell 0.8 per cent to 13,473.53. The Standard & Poor's 500 index fell 1 per cent to 1,441.48. The Nasdaq composite index fell 1.5 per cent to 3,065.02.
Benchmark oil fell 31 cents to $92.08 per barrel in electronic trading on the New York Mercantile Exchange.
The price of oil rose more than 3 per cent Tuesday on concerns about supplies from the Middle East and the North Sea. The contract rose $3.06 to finish at $92.39 per barrel.
In currencies, the euro fell to $1.2861 from $1.2880 late Tuesday in New York. The dollar rose to 78.25 yen from 78.22 yen.

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Toronto stock market loses ground amid disappointing Alcoa outlook

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TORONTO - Deteriorating global economic prospects continued to weigh on the Toronto stock market Wednesday as a weak outlook from resource giant Alcoa Inc. added to a pessimistic assessment from the International Monetary Fund.
The S&P/TSX composite index fell for a third session, down 23.63 points to 12,249.93 while the TSX Venture Exchange dropped 13.62 points to 1,314.19.
The Canadian dollar was off 0.01 of a cent to 102.18 cents US.
New York indexes were also negative after Alcoa predicted aluminum demand would grow six per cent this year, down from seven per cent in the previous quarter, primarily because of slower growth in China.
The aluminum producer is viewed as a broad economic bellwether as its products are used in a wide variety of industries, from vehicles to appliances.
Alcoa shares were down 3.6 per cent as the company kicked off the start of the third-quarter reporting season by posting a loss of US$143 million, largely on one-time charges, while adjusted results beat estimates. Revenue of $5.83 billion also beat expectations.
The Dow Jones industrials was 54.23 points lower at 13,419.3.
The Nasdaq shed 1.57 points at 3,063.45, and the S&P 500 index edged down 2.21 points to 1,439.27.
The International Monetary Fund on Tuesday reduced its growth forecast for the world economy to 3.3 per cent this year from its previous estimate of 3.5 per cent. The IMF forecast for growth in 2013 is 3.6 per cent, down from 3.9 per cent three months ago and 4.1 per cent in April. The IMF also reiterated its concerns over the crisis in the eurozone and warned that the recession in Spain was worse than it thought.
Expectations for third-quarter earnings have been ratcheted lower because of global growth concerns. Analysts expect earnings for Standard & Poor’s 500 companies to be lower than a year ago, the first time that has happened in almost three years.
"However, when you look at it from a glass half-full standpoint, the bar has been set really low," said Allan Small, senior adviser at DWM Securities Inc.
"And that could lend itself to some beating of expectations."
Small added that he’s looking ahead to Friday when the big banks start to report in order to get more clarity on earnings.
"Corporate earnings really don’t start until Friday when JPMorgan Chase and Wells Fargo report and that’s going to be the first indicator of the health of the U.S. banking sector, which is a huge factor in the stock market and the emotions of investors in the U.S. and that gets carried around the world," he said.
On the Canadian earnings front, pharmacy chain franchisor Jean Coutu Group (TSX:PJC.A) said Wednesday that its quarterly net profit was $51.2 million or 23 cents per share. That compared with $66.4 million or 20 cents per share in the comparable year-earlier period when it recorded an unusual gain on the sale of U.S. assets. Revenue for its fiscal 2013 second quarter rose to $658.7 million from $635.2 million in the same fiscal 2012 period and the Quebec-based company's shares were up five cents to $14.58.
The financials sector led decliners, down 0.45 per cent as Scotiabank (TSX:BNS) shed 41 cents to $53.37.
The base metals was also down 0.45 per cent as the IMF also downgraded growth prospects for China while December copper was unchanged at US$3.72 a pound. Taseko Mines (TSX:TKO) gave back seven cents to C$3.05.
The energy sector also declined, down 0.37 per cent in the face of prices that continued to find support from worries that the fighting in Syria could impact Mideast oil supplies.
The November crude contract on the New York Mercantile Exchange gained $1.16 to US$93.55 a barrel, adding to a gain of more than $3 Tuesday, even as the Organization of the Petroleum Exporting Countries lowered its forecast for global oil demand in 2012. OPEC said that world oil demand will grow by 800,000 barrels a day in 2012, down 100,000 barrels from its previous forecast. Cenovus Energy (TSX:CVE) fell 30 cents to C$33.90.
Tech stocks also weighed on the TSX with Research In Motion Ltd. (TSX:RIM) down another seven cents to $7.55. RIM stock fell 5.5 per cent Tuesday after Jeffries and Co. analyst Peter Misek published a note saying he believes it is "more likely" that RIM won’t roll out its new phones until the end of the calendar first quarter. Investors had been hoping for a January launch.
The gold sector limited TSX losses, rising 0.9 per cent as December gold declined 60 cents to US$1,764.40 an ounce. Kinross Gold Corp. (TSX:K) gained 13 cents to C$10.31.
European bourses were lower with London's FTSE 100 index off 0.34 per cent, Frankfurt's DAX down 0.26 per cent and the Paris CAC 40 down 0.39 per cent.
Traders also took in news that Britain’s BAE Systems PLC is abandoning a proposed merger with European counterpart EADS NV that would have created a global defence and aerospace giant. The deal had faced political objections from the governments of the U.K., France and Germany.
In other corporate news, Bauer Performance Sports Ltd. (TSX:BAU) is buying team uniform maker Inaria International for $7 million. The hockey and lacrosse equipment company said the deal will help expand its business to include uniforms and its shares were down 24 cents to $10.71.

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Tuesday, 9 October 2012

U.S. Stock Futures Down with China, QE3 in Focus

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U.S. stock market futures tracked global equities and commodities south on Monday after the World Bank cut its China growth view, while last week's strong jobs data raised questions about Federal Reserve stimulus.
Investors were awaiting a meeting of euro-zone finance ministers.
Futures for the Dow Jones Industrial Average fell 43 points, or 0.3%, to 13,493, while those for the Standard & Poor's 500 index fell 5.1 points, or 0.4%, to 1,450.40.
Futures for the Nasdaq-100 index fell 12.75 points, or 0.5%, to 2,791.50.
"The week isn't looking to get off to a pretty start on Wall Street as those upbeat nonfarm payroll figures already seem to have been forgotten and a lower growth forecast from the World Bank for China is now very much front of mind," said Fawad Razaqzada, market strategist at GFT Markets, in a note.
Asia stocks fell, led by resource companies, after the World Bank on Monday cut its forecasts for East Asia growth, saying the Europe crisis is posing a major threat to the region. It cut China's growth forecast to 7.7% in 2012 from an estimate of 8.2% in May.
Downbeat sentiment fed through to Europe, where the Stoxx Europe 600 index fell close to 1%. Commodities fell as investors headed for the perceived safe-haven of the dollar with crude for November delivery down $1.06, or 1.2%, to $88.85 a barrel and gold for December delivery off $8.40, or 0.5%, to $1,772.40.
Along with China worries, investors were also questioning Monday how long the Federal Reserve will extend its quantitative-easing program in the wake of Friday's unexpected drop in the U.S. jobless rate to 7.8%, the lowest level since January 2009.
"It's all adding up to be something of a perfect storm for investors who have seemingly become hooked on round after round of central bank stimulus, but with the ammunition now seemingly depleted from the Fed, ECB [European Central Bank] and BoE [Bank of England] to a case of "more of the same," perhaps the key question is whether the World Bank's verdict will now fire Beijing back into action," said Razaqzada.
Wall Street stocks finished mixed on Friday as enthusiasm over jobs data gave way to caution ahead of the start of quarterly earnings. Alcoa Inc. (AA) will kick off the third-quarter reporting season on Tuesday after the closing bell.
The S&P 500 index finished down 0.47 point to 1,460.93, while the Dow industrials rose 34.79 points, or 0.3%, to end at 13,610.15, the highest closing value since December 2007.
Europe was also in focus again with a meeting of euro-zone finance ministers set for Monday in Luxembourg amid rising concerns over Greece's next aid payment and continuing questions over when, and if, Spain will ask for a bailout. As well, Japan will host meetings of the Group of Seven leading industrialized nations in Tokyo this week.
The dollar benefited ahead of that euro-zone meeting as investors backed away from perceived riskier assets. The ICE dollar index, which measures the U.S. currency against a basket of six rivals, jumped to 79.587 from 79.350 in late North American trading on Friday.
There are no U.S. data on the calendar for Monday as state and federal offices will close for Columbus Day.
Among stocks in focus on Monday, Zynga Inc. (ZNGA) could come under pressure after dropping 14% in late trading on Friday on continuing fallout from a cut in its full-year forecast.

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