Budget Talks Optimism Boosts U.S. Stocks

Bikram Pandey
17 Dec, 2012
New York City

Stocks on Wall Street gained on the progress in budget negotiations however lawmakers cautioned that a deal may be sealed next month. Commodities gained and the dollar eased. Liberal Democratic Party returned to power after five years lifting hopes for policy actions.

[R]5:00 PM, New York – Stocks on Wall Street gained on the progress in budget negotiations however lawmakers cautioned that a deal may be sealed next month. Commodities gained and the dollar eased. Liberal Democratic Party returned to power after five years lifting hopes for policy actions.[/R]

The U.S. indexes advanced on the renewed optimism on fiscal cliff talks and lawmakers sent signals that a compromise can be reached but not before the end of the year. Investors bid up stocks on the expectations of improving economic conditions and corporate earnings.

In corporate news, Sun Life Financial agreed to sell its U.S. annuity business for $1.35 billion. Laclede agreed to acquire two Southern Union utilities in $1.035 billion deal.

AIG initiated the process to sell $6.5 Billion of its Asian unit AIA in Hong Kong. Cisco completed acquisition of privately held Cariden Technologies for $141 million. Sprint Nextel wins bid for Clearwire at $2.97 per share.

The European indexes edged lower on disappointing economic data. GDF Suez agreed to sell 60% equity interest in its Canadian renewable generation portfolio for €1.5 billion.

Zurich Insurance estimated aggregate claims net of reinsurance of about $700 million relating to storm Sandy. H & M November group total sales increased 7%. Linde agreed to acquire Calea France.

The UK indexes dropped after home prices fell in December. BP plc agreed to sell its interest in the Sean gas field to SSE for $288 million. AVEVA acquired Global Majic’s simulation software suite. Aggreko plunged 20% despite upbeat fiscal year outlook.

The opposition Liberal Democratic Party was voted with super majority in a general election in Japan. Nikkei index gained 0.9% and reached a new 8-month high and electric utilities surged. Tepco soared 33%. The yen declined to 20-month low.

Australian stocks traded mixed and the benchmark index declined on a weakness in bank stocks. Uranium mining linked stocks traded higher after the opposition party was returned to power in Japan that favors restarting of nuclear power plants.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond increased to 1.77% and on 30-year bond rose to 2.94%.

The U.S. dollar inched lower to $1.316 to a euro and increased against the Japanese yen to 83.86 yen.

Immediate delivery futures of Texas crude oil increased 70 cents to $87.43 a barrel and Brent crude fell 18 cents to $108, futures of natural gas increased 3 cent to $3.35 per mbtu and gasoline traded up 10 cents to 266.31 cents a gallon.

In metals trading, gold increased $1.90 to $1,699 per ounce and silver eased 1 cent to $32.29 and copper closed down 1.20 cents to $3.67 a pound.