US GDP Improves, by Falls Short of Forecasts

Asian markets traded mostly higher on Friday. The Kospi advanced .4% to 1965, a 6-month high, boosted by Samsung’s record profits. Similarly, the ASX 200 gained .4%, as a rebound in metal prices lifted miners. The Nikkei eased a mere .1% to 8841, despite steep losses from NEC, Nintendo, and Elpida Memory. The Hang Seng closed flat, while China’s Shanghai Composite remained closed for the Lunar New Year.

Disappointing GDP data from the US weighed on European shares in the afternoon. The CAC40 fell 1.3%, the FTSE lose 1.1%, and the DAX slipped .4%.

US GDP grew at 2.8% in the fourth quarter, the fastest pace in nearly 2 years. The data was slightly below the 3% expected by analysts, but far better than last quarter’s 1.8% growth.

US indexes settled mixed, as the Dow lost 74 points to 12660, and the S&P 500 slipped .2%, while the Nasdaq gained .4%. Several disappointing earnings reports weighed on stocks. Dow-component, Chevron, fell 2.5% after reporting earnings that fell short of forecasts. Ford sank 4.2% on weak earnings, and Juniper Networks dropped 3% after issuing a weak outlook.



Dow Sinks 74 Points

A report in the Wall Street Journal said Facebook may file for an IPO as soon as next week.

Currencies

The Dollar sank against global currencies, as the disappointing GDP data pressured the greenback. The Euro and Swiss Franc advanced .9% to 1.3220 and 1.0958 respectively. The Yen jumped 1% to 76.68, reversing its losses from earlier in the week. The Pound and Australian Dollar both edged up .3%.

Economic Outlook

Consumer Sentiment rose to 75 from last month’s 74, more than expected.

Greece Debt Deal Remains Elusive, Consumer Spending Disappoints

Equities

The week opened on a soft note as Asian markets declined. The Nikkei sagged .5% to 8793, as Mitsubishi Electric tumbled 15% after the government suspended dealings with the machinery-maker, due to accusations of overcharging. The Kospi and Hang Seng skidded 1.2%, and the Shanghai Composite dropped 1.5% as trading resumed after the week-long Lunar New Year. Australia’s ASX 200 posted a modest .4% loss.

Greece failed to reach a deal with private debt holders, pressuring European indexes. Banking shares fell 3.1%. The CAC40 slumped 1.6%, the FTSE fell 1.1%, and the DAX lost 1%. French Banks bore the brunt of the selling, as BNP Paribas, Societe Generale, and Credit Agricole each fell at least 6.5%. Yields on Portuguese debt continued to climb, amid mounting concerns that the country may need another bailout.

US stocks opened sharply lower, but they recovered most of their losses by the close. The Dow eased a mere 7 points to 12654, after falling as much as 130 points in the first hour of trading. The S&P 500 fell .3% to 1313, and the Nasdaq declined .2%.



Dow Pares Losses in Afternoon Advance

Bank of America dropped 3% after Goldman Sachs downgraded the stock to “neutral” from “buy”. Goldman Sachs upgraded Morgan Stanley,
but the stock still fell 1.9%. US Airways surged 4.2% on rumors Delta may make an offer to buy the company.

Currencies

The Yen soared 1.4% to 76.34, a 3-month high, while the Dollar traded modestly lower against most other currencies. The Euro ticked up .2% to 1.3130, the Swiss Franc advanced .3% to 1.0896, and the Pound edged up 8 pips to 1.5701. The Australian Dollar eased .3% to 1.0596, as a drop in commodity prices weighed on the currency.

Economic Outlook

Personal income rose by .5% last month, slightly more than expected, but personal spending, which is considered more important, remained flat, falling short of forecasts for a .2% increase.

January Closes Quietly as Stocks Post Large Monthly Gains

Equities

Asian markets advanced moderately on Tuesday. The Kospi climbed .8% to 1956, the Hang Seng rallied 1.1%, and the Shanghai Composite added .3% to 2293. Lagging behind, the Nikkei inched up .1% to 8803, while the ASX 200 slipped .2%.

European markets gained as well, despite weaker than expected data from the US. The CAC40 posted a solid 1% gain, while the DAX and FTSE rose a modest .2%. Hopes lingered on for a Greek debt deal, while pressure mounted on the heavily-indebted country to undertake steep spending cuts.

US stocks closed little changed, overcoming earlier losses. The Dow slipped 21 points to 12634, the S&P 500 closed flat at 1312, and the Nasdaq gained 2 points to 2814. Nonetheless, January was an extremely strong month for stocks, as the Dow climbed 3.4%, the S&P 500 advanced 4.4%, and the Nasdaq soared 8%.

Currencies

The Dollar was mixed as US growth concerns weighed against European debt troubles. The Euro ticked down .4% to 1.3080, and the Swiss Franc shed .3% to 1.0864. The Pound and Australian Dollar both gained .3% to 1.5760 and 1.0617 respectively, and the Yen rose .2% to 76.22.

Economic Outlook

Tuesday’s sobering economic data reawakened doubts over the pace of the US economic recovery. The Case Shiller home price index fell by 3.7%, significantly worse than last month’s 3.4% drop. Chicago PMI dropped to 60.2 from 62.5. Consumer confidence slumped to 61.1 from 64.8, whereas analysts had expected an increase to 68.2.



DAX Rallies 2.4% on Strong German Manufacturing Data

US stocks climbed as well. The Nasdaq outperformed, closing up 1.2%, followed by the S&P 500, which rose .9% to 1324. The Dow rose 84 points to 12716, ending its 4-day slide.

Amazon shares tumbled 7.7% after the company reported a sharp drop in revenue, and lowered its outlook. Whirlpool shares surged 13.5% after issuing a strong outlook, and Broadcom jumped 8.1% after beating analyst profit forecasts.

Currencies

The Dollar settled modestly lower against global currencies. The Euro rose .5% to 1.3156, recovering from an earlier drop down to 1.3028. The Australian Dollar settled up .7% to 1.0698, while the Pound and Swiss Franc advanced .4%. The Canadian Dollar broke through the parity level, gaining .3% to .9988, and the Yen inched up .1% to 76.22.

Economic Outlook

Wednesday’s ADP Employment report showed the economy gained 170K jobs last month, falling short of expectations of 189K, but still a very respectable figure. The official government non-farm payroll report will be released on Friday.

Asia and Europe Rally, US Ends Mixed

Equities

Following the West’s lead on Wednesday, Asian markets rallied on Thursday. The Nikkei gained .8% to 8877, as financial stocks led the gains. Sharp tumbled 16% to a 31-year low after warning of a record loss for the upcoming year. The Kospi climbed 1.3%, as LG Electronics advanced 7.4%, posing its 9th straight gain. In China, the Hang Seng and the Shanghai Composite both soared 2%, while Australia’s ASX 200 advanced 1%.

European markets posted modest gains, led by materials stocks, which posted a gain of 2.7%. The DAX rose .6%, the CAC40 edged up .3%, and the FTSE ticked up .1%

Mining group, Xstrata, soared 9.9% after confirming it was involved in merger talks with commodity trader, Glencore. Glencore shares surged 6.9%.

US stocks ended mixed as traders prepared for Friday’s job report. The Dow slipped 11 points to 12705, the Nasdaq advanced .4%, and the S&P 500 edged up .1%.

Mastercard shares jumped 6.7% after profits exceeded analyst estimates for the 7th quarter in a row.  Abercrombie and Fitch tumbled 13.7% after releasing weak sales data for the holiday season, and slashed their outlook for the coming year.

Currencies

Currencies traded in narrow ranges, with the Dollar moving up slightly. The Euro and Swiss Franc both slipped .2% to 1.3149 and 1.0912 respectively, and the Pound lost .3% to 1.5807. The Yen and Australian Dollar closed flat.

Economic Outlook

Weekly jobless claims fell to 367K, 6K better than forecast. Labor costs rose more than expected, while productivity increased less than expected, both positive developments for the employment situation.