Markets Edge Higher on IMF Hopes, World Bank Cautious

Bikram Pandey
18 Jan, 2012
New York City

U.S. stocks traded higher on the hopes that earnings from industrial and financial services companies will exceed expectations. The World Bank lowered its assessment of global economic outlook and the IMF plans to ask between $500 billion and $1 trillion to combat debt contagion in Europe.

[R]4:00 PM New York – U.S. stocks traded higher on the hopes that earnings from industrial and financial services companies will exceed expectations. The World Bank lowered its assessment of global economic outlook and the IMF plans to ask between $500 billion and $1 trillion to combat debt contagion in Europe.[/R]

The U.S. indexes gained after home builders confidence in January improved to a 4-year high according to an industry estimate and Goldman Sachs reported a decline in profit less than expected. U.S. mortgage applications soared 23% last week and producer prices declined 0.1% in December.

In corporate U.S. earnings, Fastenal fourth quarter net soared 34.2% to $87.5 million. Goldman Sachs fourth quarter net declined 56% to $978 million but was ahead of estimates and U.S. Bancorp fourth quarter net soared 38.6% to $1.3 billion. Charles Schwab fourth quarter net soared 30% to $163 million.

Jerry Yang, co-founder of Yahoo! Inc resigned from its board that may accelerate the sale of its stake in Asia based businesses Alibaba Group Holding Ltd and Yahoo Japan Corp.

The World Bank lowered its economic growth outlook and said world economy may face another financial crisis that may be deeper and protracted compared to the last crisis in 2008.

The U.S. controlled global banking institution estimated world growth in 2012 to decline to 2.5% from 3.6% and the euro area to shrink by 0.3%. The bank lowered its growth estimate for the U.S. to 2.2% from 2.9%, for China to 8.4% from 9.2% and for India to 6.5% from 8.4%.

European markets edged higher and Greece is set to demand cuts from private lenders. Germany sold €3.44 billion of two-year notes and Portugal raised €2.5 billion in an auction today.

Construction in the euro area recovered and Italian trade deficit narrowed in November. Germany lowered its 2012 growth outlook and Swiss sentiment improved to a seven-month high in January.

The UK indexes climbed. The UK jobless rate surged to a record high since 1995. Irish surplus increased in November. BHP Billiton reported record quarterly iron ore output.

Stocks in Tokyo gained after factory equipment orders increased 15% in November. Tokyo Electric Power said it will increase rates for business customers by 17%.

Australian stocks extended gains and traded at a 5-week high for the second day in a row. BHP Billiton said iron ore production in the half year to December increased 23% to 80.6 million tons.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond increased to 1.89% and 30-year bond closed up at 2.95%.

The U.S. dollar edged down 0.8% to $1.282 to one euro and traded lower against the Japanese yen to 76.78. The euro fell to a 16-month low against the yen.

Immediate delivery futures of Texas crude oil decreased $0.03 to $100.68 a barrel and futures of natural gas fell 1 cent to $2.47 per mbtu and gasoline price increased 5.2 cents to 282.39 cents a gallon.

In metals trading, copper increased 2.6 cent to $3.76 per pound, gold increased $2.40 to $1,658.20 per ounce and silver increased $0.32 to $30.46.