World Markets Stall Near 2-Year High, U.S. Trade Deficit Jumps

Bikram Pandey
11 Jan, 2013
New York City

U.S. and world markets hovered near 22-month high and U.S. trade deficit in November widened on global economic recovery. Banks were in focus ahead of earnings next week. The euro traded at a 2-month high. Japan embarked on the largest stimulus since 2008 and inflation in China gained momentum.

[R]4:40 PM, New York – U.S. and world markets hovered near 22-month high and U.S. trade deficit in November widened on global economic recovery. Banks were in focus ahead of earnings and Wells Fargo reported 24% rise in latest quarterly net. The euro traded at a 2-month high. Japan embarked on the largest stimulus since 2008 and inflation in China picked up pace.[/R]

U.S. indexes rebounded from the low in the first hour of trading and banks struggled. Wells Fargo reported 24% increase in earnings supported mortgage loans business but net interest margin suffered. Boeing declined after two more flights in Japan report problems.

U.S. trade deficit unexpectedly widened in November on higher than expected demand for automobiles and retailers stocking up ahead of holiday sales.

Trade deficit increased 15.8% to $48.7 billion, the largest since the deficit in April and fro $42.1 billion in October.

Banks were under pressure after Wells Fargo reported 24% jump in the latest quarterly earnings but said net interest margins were under pressure. Other large banks are scheduled to report earnings in the next week.

The Boeing Company ((BA)) declined 2.4% or $1.92 to $75.17 after two separate flights in Japan reported oil leak and cracked cockpit window adding to the safety concerns for its new 787 Dreamliner. The U.S. Department Transportation said that the new jumbo jet would be subject to a review.

Best Buy ((BBY)) gained 12% or $1.55 to $13.75 after the latest quarterly results were ahead of expectations and same store sales in the quarter were flat.

In other corporate news, Hurco fourth quarter net climbed 52%. KBR lowered its fiscal 2012 earnings guidance. Synnex third quarter net declined 13% to $43.6 million. Voxx third quarter net soared 48% and Wells Fargo fourth quarter net surged 24% to $5.1 billion.

European markets closed mixed and Italy completed the sale of €3.5 billion bonds of 3-year maturity at a lower average yield of 1.85%. European authorities recommended changes in how Euribor rates are submitted and calculated.

Nokia extended gains for the second day on the hopes that the new smartphone will lift last quarterly results. Resource sector stocks eased after China reported higher than expected inflation. SAP AG released new business software to automate processes.

Stocks in Tokyo closed higher and closed the ninth weekly advance in a row, the longest weekly increases since 1988. Prime Minister Shinzo Abe proposed $115 billion of stimulus plan and demanded central bank to put maximizing employment on top of its agenda.

Bajaj Corp third quarter net profit soared 46% and CMC net profit jumped 24%. Infosys third quarter net profit was nearly flat at $434 million. Power Grid raised $500 million in its first foreign currency public offering.

Australian stocks closed lower and the dollar traded near its three months high. Mining companies fell after a storm approached near Western Australian ports threatening mine closures and iron ore shipment disruptions.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond closed up to 1.89% and on 30-year bond rose to 3.07%.

The U.S. dollar inched lower to $1.334 to a euro and increased against the Japanese yen to 89.12 yen.

Immediate delivery futures of Texas crude oil decreased 49 cents to $93.33 a barrel and Brent crude fell $1.48 to $110.41, futures of natural gas increased 10 cents to $3.30 per mbtu and gasoline traded down 5.50 to 273.83 cents a gallon.

In metals trading, gold increased $19.50 to $1,658.60 per ounce and silver fell 56 cents to $30.37 and copper closed up 5.10 cents to $3.65 a pound.