E.L. & C. Baillieu Morning Wrap; Gold up the most in two weeks on Fed stimulus speculationReported by Proactive Investors on Thursday, 26 April 2012 (on April 26, 2012)
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*Author: E.L. & C. Baillieu Stockbroking - by Andrew Thain*
*HEADLINES*
- Investors shrugged off disappointing readings on the job market and euro-zone economic confidence, sending the Dow Jones Industrial Average more than 100 points higher for the third time this month.
- European shares ended mostly higher, as well-received earnings from Royal Dutch Shell and Volkswagen helped counter a steeper-than expected drop in euro-zone economic sentiment and weak earnings from other companies.
- Oil rose to a three-week high after pending U.S. home sales gained more than forecast in March and the dollar decreased against most major currencies, bolstering the appeal of commodities to investors.
- Gold rose the most in two weeks on speculation that the Federal Reserve may increase stimulus measures to bolster the U.S. economy after more Americans than forecast filed applications for unemployment benefits last week.
*US MARKETS*
Investors shrugged off disappointing readings on the job market and euro-zone economic confidence, sending the Dow Jones Industrial Average more than 100 points higher for the third time this month.
The benchmark rose 113.90, or 0.9%, to 13204.62, gaining ground after better-than expected housing data Thursday morning and rising further in the afternoon for its third straight increase.
The Standard Poor's 500-stock index jumped 9.29 points, or 0.7%, to 1399.98, after touching 1400 in intraday trading for the first time in nearly three weeks.
Telecommunications and consumer discretionary led gains in eight of the S&P 500's 10 sectors. The Nasdaq Composite added 20.98, or 0.7%, to 3050.61.
Meanwhile, Exxon Mobil slid 0.9% and United Parcel Service, considered a barometer of global trade because of the breadth of its air and truck delivery operations, retreated 1.8% after both reported profits that missed analysts' expectations.
Initial jobless claims decreased by 1,000 to a seasonally adjusted 388,000, the Labor Department said. Economists expected a decline to 376,000, according to a Dow Jones Newswires poll. The department also revised the prior week's reading slightly higher.
*EUROPEAN MARKETS*
European shares ended mostly higher, as well-received earnings from Royal Dutch Shell and Volkswagen helped counter a steeper-than-expected drop in euro-zone economic sentiment and weak earnings from other companies.
The Stoxx Europe 600 index edged up 0.1% to 257.20, its third consecutive gain. U.S. markets were slightly firmer as European markets closed.
The U.K.'s FTSE 100 gained 0.5% to 5748.72, Germany's DAX added 0.5% to 6739.90 and France's CAC-40 slipped 0.1% to 3229.32. Among stocks, Volkswagen surged 8.7% after the auto maker beat analyst expectations for first-quarter earnings.
But Alcatel-Lucent plunged 17%. The company reported a 12% drop in first-quarter revenue and warned that the outlook for Europe and North America remains uncertain. Deutsche Bank shed 2.8% after reporting a 33% drop in first-quarter profit.
Banco Santander dropped 3.4% after reporting a 24% drop in first-quarter profit as its provisions for bad loans jumped.
*ASIAN MARKETS*
Strong first-quarter results from China Unicom helped boost Hong Kong shares, though many bourses retreated from session highs as investors digested a mixed bag of earnings reports.
Hong Kong's Hang Seng Index rose 163.42 points, or 0.8%, to 20809.71. China Unicom was the best-performing blue chip, rising 4% after it said Wednesday its first quarter net profit surged nearly seven times from the prior year period because of the rapid growth in its mobile business.
Among other indexes in Asia, Japan's Nikkei Stock Average rose around 0.01% at 9561.83, and the Shanghai Composite Index slipped 0.1% to 2404.70. India's Sensitive Index declined 0.1% to close at 17130.67.
*AUSTRALIAN MARKETS*
On the domestic front, the RBA is tipped to cut rates by at least 0.25 of a percentage point from 4.25 per cent next Tuesday and the market is pricing in a cut of 1.025 percentage points by the end of calendar 2012.
Australian shares ran with the lift in positive sentiment and the benchmark S&P/ASX 200 closed up14 points or 0.34 per cent, to 4375, while the broader All Ordinaries finished 11 points or 0.25 per cent higher at 4445.
*OIL*
Oil rose to a three-week high after pending U.S. home sales gained more than forecast in March and the dollar decreased against most major currencies, bolstering the appeal of commodities to investors.
Crude oil for June delivery rose 43 cents to $104.55 a barrel on the New York Mercantile Exchange, the highest settlement since April 2. Prices are up 5.8 percent this year.
Brent oil for June settlement increased 80 cents, or 0.7 percent, to $119.92 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate crude traded in New York was $15.37, up from $15 yesterday.
*METALS*
Gold rose the most in two weeks on speculation that the Federal Reserve may increase stimulus measures to bolster the U.S. economy after more Americans than forecast filed applications for unemployment benefits last week.
Gold futures for June delivery rose 1.1 percent to settle at $1,660.50 an ounce at 1:48 p.m. on the Comex in New York, the biggest gain for a most-active contract since April 12. The precious metal has gained 6 percent this year.
Andrew Thain can be contacted by email; CLICK HERE.
Baillieu HOME PAGE
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