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E.L. & C. Baillieu Morning Wrap; European stocks climb as Spanish yields fall sharply

Wednesday, April 18, 2012

Stocks rallied overnight as worries eased about Spain's rising borrowing costs and investors cheered a series of strong quarterly earnings reports from U.S. companies. Stocks shrugged off mixed U.S. economic data and coasted higher on Tuesday.

Stocks rallied overnight as worries eased about Spain's rising borrowing costs and investors cheered a series of strong quarterly earnings reports from U.S. companies. Stocks shrugged off mixed U.S. economic data and coasted higher on Tuesday.

Author: E.L. & C. Baillieu Stockbroking - by Andrew Thain

 

HEADLINES

- Stocks rallied as worries eased about Spain's rising borrowing costs and investors cheered a series of strong quarterly earnings reports from U.S. companies. Stocks shrugged off mixed U.S. economic data and coasted higher on Tuesday.

- European stocks climbed and Spanish yields fell sharply, to below 6%, after Madrid sold more treasury bills than originally planned at its latest auction.

- Crude futures settled up 1.2% as investors looked to a coming pipeline reversal that is expected to bring U.S. oil in line with global prices.

- Gold futures advanced from a one- week low as the dollar declined, increasing demand for the metal as an alternative investment.


US MARKETS

Stocks rallied as worries eased about Spain's rising borrowing costs and investors cheered a series of strong quarterly earnings reports from U.S. companies. Stocks shrugged off mixed U.S. economic data and coasted higher on Tuesday.

The Dow Jones Industrial Average climbed 194.13 points, or 1.5%, to 13115.54. The Standard Poor's 500-stock index gained 21.21 points, or 1.6%, to 1390.78. The Nasdaq soared jumped 54.42 points, or 1.8%, to 3042.82 and notched its biggest daily rise in a month.

All 30 of the Dow's components pushed higher. Coca-Cola Co. reached a nearly 14-year high, after the beverage giant reported first-quarter earnings and revenue that exceeded expectations, as both volumes and price gains bolstered results.

Johnson & Johnson was the Dow's biggest laggard, but still rose after the health-care conglomerate reported first-quarter earnings that beat forecasts. Technology-sector stocks led all 10 of the S&P 500's groups higher. Apple snapped a five-session streak of declines that saw the world's largest company shed more than $50 billion in market capitalization.

Goldman Sachs fell after beating profit expectations in its first-quarter report. The investment bank's revenue fell less than feared from a year ago, but its results demonstrate the toll choppy markets have taken on the firm's operations. Goldman also raised its quarterly dividend 31% to 46 cents a share.


EUROPEAN MARKETS

European stocks climbed and Spanish yields fell sharply, to below 6%, after Madrid sold more treasury bills than originally planned at its latest auction.

The Stoxx Europe 600 index rose 2% to 259.45, marking its best day since Nov. 30, and Spain's benchmark IBEX 35 snapped a three-session losing streak as it gained 1.3% to 7373.30.

Spain sold €3.18 billion ($4.18 billion) in Treasury bills, more than the maximum of €3 billion that it had targeted, a positive development for a government whose borrowing costs almost doubled from a sale a month ago and is trying to restore investor confidence through tough austerity measures.


ASIAN MARKETS

Asian stocks skidded on Tuesday amid lingering worries about Spain's debt troubles, with mainland Chinese and Hong Kong stocks dropping after data showing foreign direct investment in the mainland continued to decline.

Hong Kong's Hang Seng Index lost 0.2% to 20,562.31 and China's Shanghai Composite index contracted 0.9% to 2,334.98. Taiwan's Taiex fell the most in the region, dropping 1.9% to 7,585.87, as technology stocks there took a beating after an overnight decline on Nasdaq.

South Korea's Kospi fell 0.4% to 1,985.30 and Japan's Nikkei Stock Average slipped 0.1% to 9,464.71.


AUSTRALIAN MARKETS

Renewed concerns about the pace of Chinese economic growth are adding to broader uncertainty in global markets with many investors choosing to sit on the sidelines.

Mining companies such as Rio Tinto and BHP Billiton sank in afternoon trading yesterday after China’s Ministry of Commerce said that foreign direct investment fell for a fifth month in a row.

National Australia Bank was the only one of the big four banks to gain yesterday. NAB rose 20¢ to $24.85, Commonwealth Bank of Australia was steady, ANZ Banking Group fell 12¢ to $23 and Westpac Banking Corp was 10¢ lower at $21.98.

The benchmark S&P/AX 200 Index fell 14 points, or 0.32 per cent, to 4288, while the broader All Ordinaries Index lost 13 points, or 0.32 per cent, to 4368.6.


OIL

Crude futures settled up 1.2% as investors looked to a coming pipeline reversal that is expected to bring U.S. oil in line with global prices.

The Seaway pipeline reversal, designed to help ease a supply glut in Cushing, Okla., that has been depressing U.S. prices, will begin delivering crude to the Gulf Coast refinery belt in a month, or two weeks earlier than expected.

Traders said the move will unlock the value of the landlocked U.S. benchmark, by making the crude available to Gulf Coast refineries. At the same time, the move cuts the value of the European benchmark, Brent crude, as competitive crudes become more plentiful in the region.

Light, sweet crude for May delivery on the New York Mercantile Exchange settled up $1.27 at $104.20 a barrel, the highest price since April 2.


METALS

Gold futures advanced from a one- week low as the dollar declined, increasing demand for the metal as an alternative investment.

The greenback fell for the second straight day against a basket of currencies as European debt concerns eased and the International Monetary Fund increased its forecasts for economic growth. The Standard & Poor’s GSCI Spot Index of 24 commodities rose as much as 0.9 percent.

Gold futures for June delivery rose 0.1 percent to settle at $1,651.10 an ounce at 2:11 p.m. on the Comex in New York. Earlier, the price dropped to $1,635.20, the lowest since April 10. The precious metal has advanced 5.4 percent this year.

Silver futures for May delivery jumped 1 percent to $31.674 an ounce on the Comex. Prices have climbed 13 percent this year.

 

Andrew Thain can be contacted by email; CLICK HERE.

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