China’s Shanghai Composite tumbled 3.3% due to growing concerns the country’s growth with slow, and the Hang Seng fell 1.5% to 17989. China’s central bank cut reserve requirements for the first time in nearly 3 years in an effort to keep the economy on track. In Japan, the Nikkei slipped .5% to 8435, while Olympus shares recovered from a sharp 10% loss at the open after the company affirmed it would release its December earnings report on time. Korea’s Kospi declined .5%, but Australia’s ASX managed to buck the trend, closing up .3%.
A coordinated move by global central banks to increase liquidity sent Western markets sharply higher. The DAX spiked 5%, the CAC40 soared 4.2% and the FTSE climbed 3.2%. Miners jumped 6% amid hopes the easing efforts will boost demand for raw materials.
In the US, a similar scene played out, as the Dow soared 485 points to 12041, the Nasdaq climbed 4.2%, and the S&P 500 rallied 4.3%. Caterpillar shares surged 8.1%.
Dow Soars Nearly 500 Points
Netflix shares slumped 4.5% after the company was downgraded to sell from neutral by Wedbush Securities.
Currencies
The Australian Dollar surged 2.4% to 1.0284 as the recent rally accelerated. The Canadian Dollar jumped 1% to 1.0198, and the Euro gained .8% to 1.3436. The Pound rose .5% to 1.5695, while the Yen declined .5% to 77.55.
Economic Outlook
Wednesday’s reports were exceedingly upbeat. Data from the ADP employment report blew past forecasts, with the economy adding 206K jobs last month, up from 130K in the previous report. Chicago PMI rose to 62.6 from 58.4, well above estimates, and the Challenger job-cut report showed planned layoffs declined by 12.8%.
US Stocks Consolidate after Wednesday’s Rally
Equities
Asian markets opened sharply higher on Thursday in response to the announced cooperative central bank liquidity effort. The Hang Seng soared 5.6%, climbing 1013 point to 19002, leading the region. The Shanghai Composite rose 2.3%, the ASX 200 gained 2.6%, and the Nikkei advanced 1.9%. In Korea, the Kospi rallied 3.7% as Samsung Electronics surged 7% to a new record closing high.
Hong Kong's Hang Seng Index Surges 5.6%
In Europe, the major indexes closed lower after Wednesday’s sharp rise. The DAX fell .9%, the CAC40 dropped .8%, and the FTSE slipped .3%, as investors locked in gains from the previous session.
US stocks closed mixed after a choppy session, with the Nasdaq gaining .2%, while the Dow and S&P 500 declined .2%.
Currencies
The currency market ended mixed after Wednesday’s steep dollar selloff. The Euro edged up .2% to 1.3459, and the Canadian Dollar advanced .5% to 1.0142. The Australian Dollar slipped .4% to 1.0226, and the Swiss Franc and Japanese Yen both declined by .2%.
Economic Outlook
Weekly unemployment claims unexpectedly rose to 402K from last week’s 396K reading. ISM manufacturing PMI was slightly better than expected at 52.7 vs. 51.6, and monthly auto sales rose to 13.6M from 13.3M last month.
US Unemployment Rate Drops to 8.6%
Equities
Asian markets closed mixed as investors awaited key US payroll data later in the day. The Nikkei rose .5% to 8644, gaining 5.9% for the week, its largest jump in 2 years. Australia’s ASX 200 climbed 1.4%, soaring 7.6% for the week. In China, the Shanghai Composite fell 1.1%, while the Hang Seng ticked up .2%.
European markets advanced, as the banking sector surged 4.2% amid hopes for the upcoming EU summit. The FTSE gained 1.2%, the CAC40 rose 1.1%, and the DAX closed up .7%.
US markets closed little changed, surrendering earlier gains, despite an upbeat jobs report. The Dow had risen more than 125 points earlier in the session, but settled at 12019, down 1 point.
Dow Forfeits Early Gains to Close Flat
Blackberry-maker Research in Motion plunged 9.7% after warning it would fall short of forecasts due to struggling sales of its Playbook tablet.
Currencies
The US Dollar advanced against global currencies. The Euro, Pound, and Swiss Franc each fell .6%, while the Yen eased .3% to 77.98. The Australian Dollar edged lower .1% to 1.0216, reversing a morning spike up to 1.0304.
Economic Outlook
Non-farm payrolls rose by 120K last month, slightly less than the 126K forecast, but stronger than last month’s 100K reading. The unemployment rate unexpectedly dropped to 8.6%, from 9.0% previously. The recent data suggests the US recovery is picking up steam.
Equities Gain, Italy Announces Austerity Measures
Equities
Over the weekend, Italy announced a $30 billion austerity package which helped lift Asian markets The Nikkei rose .8% to 8696, the Kospi edged up .4%, and the ASX advanced by .8%. Tha Hang Seng climbed .7%, while China’s Shanghai Composite lagged the region, dropping 1.2% on weak economic data which dragged down small-cap stocks.
An agreement between French and German leaders concerning the spiraling debt crisis was cheered by European markets. The CAC40 rallied 1.2%, the DAX gained .4% and the FTSE rose .3%. Italy’s MIB index surged 2.9% in response to the new austerity measures.
US markets opened sharply higher, but trimmed their gains later in the day. S&P announced it is placing all 17 Euro zone nations on credit review, due to the spreading debt crisis. The Dow gained 78 points to 12098, the S&P 500 climbed 1%, and the Nasdaq closed up 1.1%.
Stocks Gain, but well off Highs
SAP announced it will acquire SuccessFactors for $3.4 billion. SuccessFactors’ stock soared 51%, while SAP shares slipped 2%.
Currencies
The US dollar eased modestly on Monday. The Euro inched up 9 pips to 1.3398, the Pound rose .3% to 1.5649, and the Yen gained .3% to 77.71. The Australian Dollar posted an outsized gain of .6% to 1.0279, while the Canadian Dollar edged up .2% to 1.0173.
Economic Outlook
Monday’s economic data came in slightly below expectations. The ISM non-manufacturing PMI unexpectedly fell to 52 from last month’s 52.9 reading, and factory orders dropped by .4%, more than forecast.
Equities Close Mostly Lower on Debt Jitters
Equities
Asian markets slumped in response to a warning by S&P that it was placing 15 euro zone nations on credit watch for a possible downgrade. The Nikkei declined 1.4% to 8575, but Olympus shares jumped more than 9% amid expectations the stock will recover from its scandal induced losses. In Australia, the ASX 200 shed 1.5%., despite a .25% rate cut by the Reserve Bank of Australia. The Kospi fell 1%, the Hang Seng dropped 1.2%, and the Shanghai Composite eased .3%.
European markets traded mostly lower, as the DAX sank 1.3%, the CAC40 lost .7%, and the FTSE closed flat. German retail chain, Metro, plunged 14% on a weak outlook, pulling down the retail sector by 2.1%.
Germany's DAX Sinks 1.3%
US stocks ended mixed, as the Dow climbed 52 points to 12150, the S&P 500 inched up .1%, and the Nasdaq fell .2%.
Currencies
The Canadian Dollar rose .7% to 1.0098, lifted by solid Ivey PMI data, while the Dollar was firm against other currencies. The Euro ended flat at 1.3398, the Pound slipped .3% to 1.5595, and the Australian Dollar declined .2%. The Swiss Franc dropped .6% to 1.0794, while the Yen inched up .1% to 77.74.
Economic Outlook
The news continues to be dominated by the Euro debt crisis, and the focus is now on the proposed stability fund changes, due to be discussed at the EU summit later this week. It remains to be seen if the officials have the will to tackle the enormity of the debt problem.