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MARKET ANALYSIS: Sentiment Guarded Amid Risks
[September 12, 2014]

MARKET ANALYSIS: Sentiment Guarded Amid Risks


(Alliance News Via Acquire Media NewsEdge) WASHINGTON (Alliance News) - The major US index futures are pointing to a lower opening on Friday, with sentiment remaining fragile as geopolitical risks and economic uncertainty abounds. The economic risks posed by aggravation of the crises in the Middle east and Ukraine is too huge for the markets to ignore. Meanwhile, offering little clarity to the monetary policy outlook, a report released a short while ago showed that retail sales rose in line with estimates. Although a consumer sentiment data due after the markets open may have some impact on the markets, traders may hesitate to build on their positions.



US stocks ended Tuesday's session narrowly mixed after seeing modest weakness for much of the session. The major averages opened lower and fell further in late morning trading amid the looming threat of strife in Iraq and Syria, as the US stepped up its rhetoric against ISIS. However, the averages staged a recovery in late-day trading to end the day mixed.

The Dow Industrials ended down 19.71 points or 0.12% at 17,049, while the S&P 500 Index closed 1.76 points or 0.09% hiher at 1,998 and the Nasaq Composite ended up 5.28 points or 0.12% at 4,592.


The breadth among the Dow components was even, with 15 stocks ending lower, while the remaining 15 stocks declined. Visa (V) fell the most among the Dow components, while Cisco Systems (CSCO) and JP Morgan Chase (JPM) gained ground.

Biotechnology stocks were among the worst performers of the session, while utilities, brokerage and gold stocks moved to the upside.

On the economic front, the Labor Department reported that jobless claims rose to 315,000 in the week ended September 6th from 304,000 in the previous week. The four-week average climbed to 304,000 from 303,250, Continuing claims calculated with a week's lag also rose to 2.487 million in the week ended August 30th from a 7-year low of 2.478 million in the previous week.

Commodity, Currency Markets Crude oil futures are edging down USD0.08 to USD92.75 a barrel after jumping USD1.16 to USD92.83 a barrel on Thursday. Meanwhile, gold futures are slipping USD2.30 to USD1,236.70 an ounce. In the previous session, gold fell USD6.30 to USD1,239 an ounce.

Among currencies, the US dollar is trading at 107.13 yen compared to the 107.11 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at USD1.2954 compared to yesterday's USD1.2925.

Asia The major Asian markets went about in a listless manner, with the lackluster performance on Wall Street hurting sentiment. Geopolitical concerns following the imposition of EU sanctions on Russia and the US pledge to take on ISIS militants in Iraq and Syria also served to dampen the mood.

The Japanese market stayed afloat for the fifth straight day, as the dollar strengthened against the yen. The Nikkei 225 opened lower but recovered in late morning trading. After advancing steadily for the rest of the morning, the index gave back some ground in the afternoon yet closed up 39.09 points or 0.25% at 15,948.

Australia's All Ordinaries languished below the unchanged line for much of the session before ending down 14.60 points or 0.26% at 5,532. A majority of stocks declined, led lower by telecom and IT stocks, while material and real estate stocks gained ground.

Hong Kong's Hang Seng Index closed at 24,595, down 67.32 points or 0.27%, while China's Shanghai Composite Index ended at 2,332, up 20.27 points or 0.88%.

On the economic front, a reported released by the People's Bank of China showed that bank lending in China rose to 702.5 billion yuan in August from 385.2 billion yuan in July.

A separate report showed that China's M2 money supply rose 12.8% year-over-year in August, while economists expected a 13.5% increase.

Revised estimates released by Japan's Ministry of Economy, Trade and Industry showed that industrial output rose 0.4% month-over-month, faster than the 0.2% growth initially estimated. Annually, production was down a less than initially estimated 0.7%.

Europe European stocks opened higher but turned mixed immediately after in the wake of geopolitical threats and a lack of major directional cues.

On the economic front, Germany's Federal Statistical Office reported that wholesale prices in Germany fell 0.6% year-over-year in August following a 0.7% drop in July. The drop was the smallest since July 2013. On a monthly basis, prices fell 0.2%, reversing some of the 0.1% increase in July.

A report released by the UK Office for National Statistics showed that construction sector output unexpectedly stagnated in July following a 1.2% increase in June. Economists expected construction output to have risen 0.6%.

Meanwhile, a leading economic index that measures economic performance in the UK in the future rose at a slower rate of 0.1% in July, according to a separate report released by the Conference Board.

Eurostat reported that eurozone industrial output grew 1% month-over-month in July, reversing the 0.3% fall in June. Economists had forecast 0.7% growth. Annually, industrial production growth accelerated to 2.2%.

A separate report showed that the number of employed people in the eurozone rose 0.2% sequentially in the second quarter, faster than the 0.1% increase in the first quarter.

US Economic Reports With auto sales showing a significant increase, the Commerce Department released a report on Friday showing that US retail sales increased in line with economist estimates in the month of August. The report said retail sales climbed by 0.6% in August following an upwardly revised 0.3% increase in July.

Economists had expected retail sales to increase by 0.6% after sales in the previous month were originally reported as virtually unchanged. Excluding a jump in auto sales, retail sales still rose by 0.3% n August, matching economist estimates as well as the upwardly revised increase in the previous month.

Reflecting a steep drop in prices for imported fuel, the Labor Department released a report on Friday showing a notable decrease in US import prices in the month of August. The report said import prices fell by 0.9% in August following a revised 0.3% drop in July. Economists had expected import prices to decrease by about 1.0%.

Additionally, the Labor Department said export prices slid by 0.5% in August after inching up by a revised 0.1% in the previous month. Export prices were expected to dip by 0.2%.

Reuters and the University of Michigan are scheduled to release the results of their preliminary consumer sentiment survey at 9:55 am ET. The consumer sentiment index is expected to increase to 83.4 in September from 82.5 in August.

The Commerce Department will also release its business inventories report for July at 10 am ET. Economists expect a 0.4% month-over-month increase in business inventories.

Business inventories rose 0.4% month-over-month and 5.8% year-over-year in June. At the same time, business sales rose 0.3% compared to the previous month and were 4.7% higher than a year ago. The business inventories to sales ratio was at 1.29 compared to 1.28 in June 2013.

Stocks in Focus Hewlett-Packard (HPQ) announced a deal to buy cloud software maker Eucalyptus.

Alliance Data (ADS) said it has agreed to buy Conversant (CNVR), a digital marketing company, for USD2.3 billion or USD35 per share in cash and stock.

Equifax (EFX) said its board has approved a USD400 million stock buyback program.

Copyright RTT News/dpa-AFX

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