Economy in China Rebounds, Lawmakers Struggle to Lift U.S. Debt Ceiling

Bikram Pandey
18 Jan, 2013
New York City

Markets in New York and Europe traded sideways and in Asia jumped. The latest batch of mixed earnings report failed to lift sentiment and lawmakers struggled to patch differences on debt ceiling negotiation. China rebounded after a two-year slowdown.

[R]2:45 PM, New York – Markets in New York and Europe traded sideways and in Asia jumped. The latest batch of mixed earnings report failed to lift sentiment and lawmakers struggled to patch differences on debt ceiling negotiation. China rebounded after a two-year slowdown.[/R]

Stocks traded sideways after a mixed batch of earnings and jitters related to debt ceiling resurfaced. Congressional Republican lawmakers proposed a plan to extend the debt ceiling for the next three months.

U.S. Treasury Secretary Timothy Geithner said government is expected to run out of money by early March.

Capital One plunged after it reported a sharp jump in loan loss provisions and revenues and earnings trailed expectations. Morgan Stanley stock gained after the company swung to a quarterly profit. General Electric reported stronger than expected sales in emerging markets. Intel declined 7% after the company guided second year of sales decline and rising capital investment.

Boeing was in focus for the second week after the U.S. Federal Aviation Administration ordered the grounding of the entire fleet of 787 Dreamliner planes after a second battery overheating incident with a flight operated by All Nippon Airways Co.

European markets generally closed higher as the earnings season kicks in next week. Earnings at the largest 500 companies in Europe are expected to decline 1% to flat and expectations are low. UK retail sales declined in December.

Renault SA increased 2% after the French automaker reported sales outlook. Mediaset SpA, Italian broadcaster soared 6% and extended two-day gain to 17% on a broker recommendation. Spectris Plc soared 7% after comparable sales rose 4% in the December quarter. Telenet declined 3%.

Economic growth accelerated for the first time in China in the quarter to December in two years after government offered stimulus to sustain the economic growth. Gross domestic product increased 7.9% in the fourth quarter from a year ago and industrial production increased 10.3% and fixed-asset investment soared 20.6%.

For the full year 2012, the economy expanded at the slowest pace in 13 years with a rise of 7.8%

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond closed down to 1.84% and on 30-year bond edged down to 3.03%.

The U.S. dollar inched lower to $1.332 to a euro and increased against the Japanese yen to 89.91 yen.

Immediate delivery futures of Texas crude oil decreased 8 cents to $95.41 a barrel and Brent crude gained 58 cents to $11 .68, futures of natural gas increased 8 cents to $3.57 per mbtu and gasoline traded up 1.63 to 278.40 cents a gallon.

In metals trading, gold decreased $4.30 to $1,686.60 per ounce and silver gained 6 cents to $31.87 and copper closed up 1.65 cents to $3.68 a pound.