3rd Mar 2014 14:21
WASHINGTON (Alliance News) - The major US index futures are pointing to a lower opening on Monday, with sentiment reflecting weakness that stems mainly from geopolitical concerns. The situation in Ukraine is threatening to bring back the era of cold war between the U.S and Russia, which could have deleterious impact on the global economy struggling with a fits-and-starts recovery. Among economic data due for the day, a government report showed that consumer spending and personal income rose more than expected in January.
The markets may also focus on the results of the Institute for Supply Management's manufacturing survey due to be released shortly after the markets open to gauge the strength of the domestic recovery. Commodities are rallying due to supply concerns even as the movement in the financial markets have been into safe havens in the wake of the development in Ukraine.
US stocks advanced in the week ended February 28th, thanks to some solid earnings reports, especially from retailers, mostly positive economic data and monetary policy optimism.
Last Monday, the major averages advanced moderately on deal optimism, with the S&P 500 Index inching close to a record high. However, stocks succumbed to some degree of profit taking on Tuesday amid mixed economic data and earnings and ended modestly lower.
The averages went about in a directionless manner before ending Wednesday's session modestly higher, as traders reacted to positive retail earnings and new home sales data. Helped by the positive sentiment generated by Fed Chair Janet Yellen's testimony before the Senate Banking Committee, the averages ended moderately higher on Thursday. After trading above the unchanged line for the bulk of Friday's session, the averages diverged in late trading to close mixed.
For the week ended February 28th, the Dow Industrials and the S&P 500 Index added 1.36% and 1.26%, respectively, while the Nasdaq Composite moved up 1.05%.
Among the sector indexes, the NYSE Arca Airline Index, the Philadelphia Oil Service Index, the Philadelphia Housing Sector Index and the NYSE Arca Biotechnology Index all gained over 2% each and the KBW Bank Index climbed 1.71%, while the NYSE Arca Gold Bugs Index slipped 3.20%.
Commodity, Currency Markets
Crude oil futures are trading up USD2.09 to USD104.68 a barrel after advancing USD0.39 or 0.38% to USD102.59 a barrel in the week ended February 28th.
Last Monday, oil rebounded moderately amid the equity market rally. However, oil reversed course, dropping close to 1% on Tuesday, hurt by the release of mixed economic data
The commodity rose moderately on Wednesday amid the release of positive new home sales data. Oil fell modestly on Thursday, pressured by mixed domestic economic data, but it rose modestly on Friday to end the week higher.
Gold futures, which fell USD2 or 0.15% to USD1,321.60 an ounce in the previous week, are currently adding USD26.20 to USD1,347.80 an ounce.
Among currencies, the dollar weakened against the euro in the week ended February 28th, slipping 0.41% against the common currency before ending the week at USD1.3802. The dollar's weakness of the past week stemmed from the easy monetary policy promise by Yellen and the euro received a boost from eurozone final inflation data, which was held unchanged and flat with the previous month's level. At the same time, the greenback firmed up 0.69% against the yen during the week to 101.80 yen.
The US dollar is trading at 101.36 yen and is valued at USD1.3775 versus the euro.
Asia
The major Asian markets closed mostly lower amid worries over slowing growth in China even as the Chinese market advanced on hopes of stimulatory support from the government. The Japanese market retreated due to the strength in the yen, which pushed export stocks lower.
Japan's Nikkei 225 average opened lower and languished below the unchanged line throughout the session before closing down 188.84 points or 1.27% at 14,652. A majority of stocks declined, with the exception of some defensive stocks.
Australia's All Ordinaries also traded below the unchanged line throughout the session, ending the day down 18 points or 0.33% at 5,397. Material stocks fell sharply in the session and financial stocks also lost ground, while energy stocks found buying interest.
Hong Kong's Hang Seng Index closed at 22,501, down 336.29 points or 1.47%, while China's Shanghai Composite Index ended 18.93 points or 0.92% higher at 2,075.
On the economic front, a report released by Markit and HSBC showed that their index of manufacturing activity in China weakened further in February, although the contraction was less than initially estimated. The manufacturing purchasing managers' index slipped 1 point to 48.5 in February, upwardly revised from the flash estimate of 48.3. Meanwhile, official data released by the China Federation of Logistics and Planning and the National Statistical Office showed that their non-manufacturing index rose 1.6 points to 55 in February.
A report released by the Housing Industry Association showed that new home sales in Australia were up 0.5% month-over-month in January following a 0.4% drop in December. The Australian Bureau of Statistics reported that company operating profits rose a seasonally adjusted 1.7% sequentially in the fourth quarter, below estimates for a 2% increase.
Capital spending in Japan climbed 2.8% quarter-over-quarter in the fourth quarter, according to data released by the Ministry of Finance. Economists had estimated a steeper 4.9% increase for the quarter. At the same time, operating profits of Japanese firms rose at a faster rate of 26.6%.
Europe
European stocks opened lower and are seen languishing at low levels, as traders digest weak manufacturing data out of China, the geopolitical concerns surrounding Ukraine and some domestic economic data.
Markit released its revised estimates of its manufacturing index for the eurozone, with the manufacturing purchasing managers' index falling a less than initially estimated 0.8 points to 53.2 in February.
The results of a survey by Markit and CIPS showed that manufacturing activity expanded at a faster rate and in line with estimates in February. The manufacturing purchasing managers' index edged up 0.3 points to 56.9 in February.
The average asking price for a house in the UK was up 0.7% month-over-month in February, according to a report released by property tracking website Hometrack. This follows the 0.3% increase in January. On a yearly basis, house prices climbed 5.4%, accelerating from the 4.8% increase in the previous month.
US Economic Reports
Manufacturing, consumer and jobs data are likely to dominate proceedings on Main Street in the unfolding week, as the uncertainty surrounding how the Fed will deal with the fledgling recovery intensifies. Traders are likely to focus on the results of the Institute for Supply Management's manufacturing and non-manufacturing surveys, the Commerce Department's personal income and spending report for February, the jobless claims report, the results of ADP's private sector employment survey for February and the Labor Department's monthly non-farm payrolls report.
The Federal Reserve's Beige Book, monthly auto sales for February, Fed speeches and the Commerce Department's trade balance report for January may also be on the radar. The Commerce Department's construction spending and factory orders reports, both for January, the Federal Reserve's consumer credit report for January and final fourth quarter productivity and costs report round up the economic data of the week.
Personal income and spending in the US both rose by more than expected in the month of January, according to a report released by the Commerce Department. The report said personal income rose by 0.3% in January after edging down by less than a tenth of a percent in December. Economists had expected income to increase by about 0.2%.
Additionally, the Commerce Department said personal spending increased by 0.4% in January following a downwardly revised 0.1% increase in December. Spending had been expected to inch up by 0.1% compared to the 0.4% increase originally reported for the previous month
Markit is due to release the final results of its US manufacturing survey for February at 8:58 am ET.
At 10 am ET, the Commerce Department is scheduled to release its construction spending report for January. The consensus estimate calls for a 0.2% month-over-month drop in construction spending for the month following a 0.1% increase in December.
Construction spending edged up 0.1% month-over-month in December. Private residential construction spending climbed 2.6%, while private non-residential construction spending was down 0.7%. Public construction spending fell 2.3%.
Around the same time, the Institute for Supply Management will release the results of its national manufacturing survey for February. Economists expect the purchasing managers' index based on the survey to rise to 51.9 from 51.3 in January.
Growth in manufacturing sector slowed notably in January. The manufacturing purchasing managers' index fell 5.3 points to 56.5, the weakest performance since May 2013. The weakness was blamed primarily on the weather. The employment index fell 3.5 points to 52.3, the order backlogs index slipped 2 points to 48, suggesting contraction, and the new orders index slumped 13.2 points to 51.2. Of the 18 industries surveyed, 11 sectors saw growth, while 7 sectors experienced contraction.
Stocks in Focus
Tyco International (TYC) agreed to sell its South Korean home security unit or ADT Korea, to private equity giant Carlyle Group (CG) in an all-cash deal valued at about USD1.93 billion.
AstraZeneca (AZN) announced that the FDA has approved its diabetes treatment Bydureon Pen 2mg as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes.
Barrick Gold (ABX) announced that it has completed the divestiture of its interest in the Kanowna Belle and Kundana mine operations in Western Australia to Northern Star Resources for AUD75 million. The action is in line with its portfolio optimization program initiated since mid-2013.
CTS Corp. (CTS) announced that it intends to consolidate its Canadian operation in Streetsville, Ontario into other existing CTS facilities. The consolidation is expected to be completed in the first half of 2015.
Copyright RTT News/dpa-AFX