Fed Action Expectations, Earnings in Focus; Oil Down

Devan Biswas
27 Oct, 2010
New York City

U.S. stocks declined and European markets fell after investors dialed back expectations on the Fed

[R]4:00 PM New York – U.S. stocks declined and European markets fell after investors dialed back expectations on the Fed’s bond buying program. U.S. durable goods orders fell short of expectations. Crude oil declined and the dollar closed higher.[/R]

U.S. stocks declined ahead of the Federal Reserve meeting next meeting as investors recalibrate the Fed’s ability to buy more bonds. The dollar edged higher and crude oil declined as the weekly inventory report showed higher than expected levels. Energy complex stocks declined.

U.S. durable goods orders increased in September and mortgage demand rose as interest rates dropped. New home sales in September increased 6.6% from the lows to annual rate of 307,000. Pacific Biosciences priced its public offering at $16.00 a share.

The European indexes fell after mixed earnings reports. Euro-zone private sector lending rose in September and French consumer spending increased. German CPI remained flat at 1.3% in October. Norway and Poland left key rate unchanged. Deutsche Bank reported a loss on Postbank charge. SAP AG earnings rose.

The UK indexes edged lower after commodities stocks fell. GlaxoSmithKline finalized $750 million settlement with the U.S. Shell agreed to sell downstream businesses in Finland and Sweden. Interserve won contracts worth £42 million.

Stocks in Tokyo closed marginally higher after trading down in the afternoon session led by banks and brokerages. Canon Inc lifted its full year net income outlook by 2.1% on higher third quarter earnings. Personal computer shipment soared 31% and laptop shipments surged 19% in the fiscal first half.

Stocks in Shanghai drop after several companies reported losses. Luxury home prices in Hong Kong the previous peak in 1997. Chalco reports quarterly loss while CRCC expects to declare losses. Net profit at BYD drops by 99%.

Mumbai stocks dropped more than 1% weighed in by the expiry of monthly derivatives contracts and a weakness in financials. India and Malaysia finalize a free trade deal to lift trade between two nations. Tata Steel’s output at Jamshedpur will reach 10 million tons by second quarter of 2011.

Stocks in Mumbai declined. Asian Paints Limited fell nearly 3% on weak earnings. HT Media Limited fell after net jumped 44%. NTPC Limited slumped 3% and profit declined 2%. Thermax Ltd quarterly net surged 65%.

Shares in Sydney lost ground after softer than expected inflation data changed investor sentiment. Consumer price index rose 0.7% in the third quarter and core price inflation rose 0.6% only. Australia turned net importer of food and groceries.

Commodities, Currencies and Yields

Dollar edged up against euro to $1.378 and gained against the Japanese yen to 81.70. One UK pound fetched $1.572.

Crude oil decreased $0.65 to $81.90 a barrel for a front month contract, natural gas edged lower 0.014 cent to $3.34 per mBtu and gasoline increased 0.45 cents to 209.85 cents.

Gold decreased $12.60 in New York trading to close at $1,326.80 per ounce, silver fell $0.24 to $23.59 per ounce and copper for the front month delivery decreased 9.20 cents to $3.77 per pound.

Yield on 10-year U.S. bond increased to 2.71% and on 30-year U.S. bond yield increased to 4.05%.