Download Stocks Gain on Stimulus Optimism

15July
Sep 2011
12
19 Sep 2013
2011
Stocks Gain on Stimulus Optimism
Stocks rallied globally after the Federal Reserve said it would keep its stimulus package in
place for some time to come.
Performance of major US stock market indices
Index
1-day Performance
Standard and Poor's 500
+1.36%
Dow Jones Industrial Average
+1.11%
NASDAQ Composite
+1.63%
Source: Bloomberg
Index close
1,675
15,461
3,578
US markets
Stocks responded to the Federal Reserve’s minutes of its last FOMC meeting and chairman Ben
Bernanke’s comments late Wednesday and soared. His remarks energised investors across the
globe and sent US stock indexes to all-time highs. Bernanke said that the economy still needs
"highly accommodative monetary policy for the foreseeable future." The chairman allayed investor
concerns by affirming that accommodative monetary policies would remain in place even if the Fed
begins to draw down its bond buying. In short, investors finally realised that tapering is not
tightening. The Dow Jones industrials were up 1.1%, the S&P gained 1.4% and the Nasdaq was
1.6% higher.
Costco gained after it reported same store sales rose, beating estimates. Rockwell Medical was up
after a drug used for treating kidney disease performed well in a study. Yum Brands declined after
the company reported that second quarter adjusted earnings were down from a year ago, though
they still beat analysts' estimates. Advanced Micro Devices jumped on a broker upgrade. Celgene
was up after the company said a late stage trial of a cancer drug met the main goal of improving
survival in newly diagnosed blood cancer patients.
Microsoft advanced after the company announced a reorganisation designed to streamline the
software company's operations. RadioShack plunged after trade publication Debtwire reported the
electronics chain is considering hiring a financial adviser to help fix its balance sheet. Earnings
reports are expected on Friday from JPMorgan and Wells Fargo. Housing stocks including DR
Horton and Lennar advanced. Mechel also advanced. Among the other stocks that rallied were
biotechnology, networking, commercial real estate and software.
1
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15 Sep 2011
19 Sep 2011
Gold at the afternoon London fixing was up US$29.00 to US$1,285.00. Copper futures were up
2.9% to US$3.18. WTI spot crude was down US$1.90 to US$104.62. Dated Brent spot crude was
down US$1.00 to US$107.51. The US dollar fell against all of its major counterparts including the
euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was
down 0.5%. The yield on US Treasury 30-year bond was down 7 basis points to 3.62% while the
yield on the 10-year note declined 10 basis points to 2.57%.
Performance of major European stock market indices
Index
1-day Performance
Stoxx 600 Index
+0.58%
FTSE 100
+0.59%
DAX
+1.14%
CAC 40
+0.74%
Source: Bloomberg
Index close
297
6,543
8,159
3,869
European markets
Shares rebounded from Wednesday’s losses and finished solidly in positive territory. Optimism
was sparked by Fed Chairman Ben Bernanke’s comments late Wednesday. He eased investor
concerns over tapering of Fed stimulus by reiterating his stance to maintain monetary policy. The
FTSE was up 0.6%, the CAC gained 0.7%, the DAX advanced 1.4% and the SMI was 0.2% higher.
European Central Bank Governing Council member and Germany’s Bundesbank’s President, Jens
Weidmann said Thursday that the ECB’s forward guidance on low interest rates will not deter it
from increasing interest rates if inflationary pressures emerge. The ECB's introduction of the
forward guidance last week was justified by the current inflation outlook, Weidmann said in a
speech in Munich. In economic news, the unemployment rate in Greece rose to a new record high
in April of 26.9% from 26.8% in March and 26.6% in February.
Commerzbank and Deutsche Bank advanced. Hugo Boss was up on a broker upgrade as was
Gagfa. Suedzucker declined after reporting lower profit for the first quarter. Renault was down on a
broker downgrade. In London, Fresnillo, Vedanta Resources and Randgold Resources gained
along with Anglo American, Rio Tinto and BHP Billiton. Associated British Foods advanced after
reporting higher third quarter revenues. G4S dropped after the Serious Fraud Office was asked to
investigate the company for overcharging the British government. Serco Group also sank due to
suspected overcharging. Balfour Beatty gained after the company said it expects full year results to
remain in line with management's expectations.
2
To know more, visit www.fidelity.com.hk
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide Investment.
Fidelity only gives information about its products and services. Any person considering an investment
should seek independent advice on the suitability or otherwise of the particular investment. Fidelity,
Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and the F symbol are trademarks
of FIL Limited.
15 Sep 2011
19 Sep 2011
Performance of major Asia Pacific stock markets
Index
1-day
Performance
Index close
Asia
MSCI AC Asia Pacific ex Japan
+2.56%
440
Japan
Nikkei 225
+0.39%
14,473
Hong Kong
Hang Seng
+2.55%
21,437
China
Shanghai SE
+3.23%
2,073
Taiwan
Taiwan TAIEX
+2.10%
8,180
Korea
KOSPI
+2.93%
1,878
Australia
S&P/ASX200
+1.31%
4,966
India
SENSEX 30
+1.98%
19,676
Singapore
Straits Times
+1.91%
3,249
Malaysia
Kuala Lumpur Comp
+0.70%
1,781
Thailand
Stock Exchange Index
+4.22%
1,447
Indonesia
Jakarta Comp
+2.80%
4,604
Philippines
Philippine SE
+1.57%
6,407
Source: Bloomberg
Asia Pacific Markets
Stocks here advanced with a weaker US dollar and higher metal prices supporting sentiment after
Federal Reserve Chairman Ben Bernanke ended weeks of speculation by saying the Fed will
maintain its current pace of bond buying for the foreseeable future because of weak job growth and
low inflation.
The Nikkei was up 0.4% with a strong yen capping gains after the Bank of Japan upgraded its
assessment of the economy, saying the economy is "starting to recover moderately." The BoJ left
its policy unchanged and affirmed its optimistic outlook, citing rising exports and improvement in
consumer sentiment. Exporters were mixed with Fanuc and Daikin Industries advancing while
Canon and Nikon retreated. Olympus advanced 3.2% on a brokerage upgrade. SoftBank declined
after US wireless carrier Sprint Nextel wrapped up its US$21.6 billion deal with the Japanese
mobile carrier.
The Shanghai Composite rallied 3.2% led by financials on continued speculation that the
government may ease policy to help stabilise growth. Property developers and construction firms
also gained sharply following reports that financing rules may be relaxed for real estate firms,
subject to certain conditions. The Hang Seng jumped 2.6%. The Kospi jumped 2.9% to a three
week high. The Bank of Korea kept its key interest rate unchanged at 2.5% for a second month.
The BoK raised its economic growth forecast for this year by 0.2 percentage points to 2.8%.
Both the S&P/ASX and All Ordinaries were up 1.3% with miners and banks leading the way after
Bernanke reiterated the need for monetary policy accommodation to foster a lasting recovery.
Employment defied forecasts and was up 10,300 in contrast to unchanged expectations. However,
the unemployment rate climbed to 5.7% — its highest level since 2009 amid a marked increase in
the number of people looking for full time jobs.
3
To know more, visit www.fidelity.com.hk
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide Investment.
Fidelity only gives information about its products and services. Any person considering an investment
should seek independent advice on the suitability or otherwise of the particular investment. Fidelity,
Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and the F symbol are trademarks
of FIL Limited.
15 Sep 2011
19 Sep 2011
Today in Business and Finance
May home loans in Australia will be released. India releases May industrial production and June
consumer price index. The Eurozone posts May industrial production. The US releases June
producer prices and July preliminary consumer sentiment.
Bond markets
10-year Government Bond Futures
US
UK
Germany
Japan
Australia
Source: Bloomberg
Closing Yield
+2.57%
+2.38%
+1.62%
+0.83%
+3.74%
Change
-0.05%
-0.04%
-0.04%
-0.03%
-0.10%
Commodity
Crude oil 1-month futures
Spot Gold
Thompson-Reuters/Jeffries Commodity Index
Source: Bloomberg
Close
$104.91
$1,286.20
286.17
Change
-1.51%
+2.10%
+0.18%
Currency
Japanese yen
Australian dollar
Euro
British pound
Canadian dollar
Source: Bloomberg
Close
98.96
0.9188
1.3097
1.5184
0.9647
Change
+0.73%
+0.17%
+0.92%
+1.13%
-0.94%
Commodities and currencies
4
To know more, visit www.fidelity.com.hk
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide Investment.
Fidelity only gives information about its products and services. Any person considering an investment
should seek independent advice on the suitability or otherwise of the particular investment. Fidelity,
Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and the F symbol are trademarks
of FIL Limited.