With ECB in Focus Stocks Trade Higher in New York and Europe

Nichole Harper
21 Jan, 2015
New York City

Stocks on Wall Street advanced and oil rebounded. Bank of Japan reaffirmed its plan to increase monetary based while European policy makers debate the size, timing and nature of bond buying program as the euro volatile euro traded in tight range.

[R]1:05 PM New York – Stocks on Wall Street advanced and oil rebounded. Bank of Japan reaffirmed its plan to increase monetary based while European policy makers debate the size, timing and nature of bond buying program as the euro volatile euro traded in tight range.[/R]

U.S. stocks trimmed early losses and advanced for the third day after oil rebounded ahead of European Central Bank meeting tomorrow and Bank of Japan estimated economic growth to accelerate.

European Central Bank policy makers are scheduled to meet tomorrow and expectations ran high that the bank is set to announce new liquidity measures and bond purchase plan to stimulate economies across the euro zone.

Investors are expecting the central bank to announce bond purchase program of at least 50 billion a month over the next two years.

Several ECB officials downplayed the expectations for the announcement tomorrow and German Chancellor Angela Merkel said today that the central bank has not made its decision yet on the bond purchase program.

Housing starts in December climbed 4.4% to 1,089,000 annual rate from the revised November estimate and housing permits in December fell 1.9% from the revised November rate and increased 1% from a year ago month to 1,032,000.

The data released by the U.S. Department of Commerce showed critically watched single family home starts surged 7.2% annual rate from November, the most monthly increase since March 2008 as job market improves and mortgage rate remain low.

On Wall Street trading, Tollbooth Strategy Index gained 0.5% or 49.32 to 9,898.94.

S&P 500 index increased 11.41 or 0.6% to 2,033.90 and the Nasdaq Composite Index rose 24.73 or 0.5% to 4,679.66.

U.S. Movers

International Business Machines Corp ((IBM)) declined 3.1% or $4.86 to $152.09 after the information technology provider reported total revenues in the fourth-quarter ending in December plunged 11.9% to $24.11 billion from a year ago period.

Net income in the quarter tumbled 11.3% to $5.48 billion or $5.51 a diluted share compared to $6.19 billion or $5.73 from the same quarter last year.

Netflix, Inc ((NFLX)) surged 17.9% or $62.39 to $411.19 after the online video service provider said revenues in the fourth-quarter ending in December soared 26% to $1.49 billion from a year ago period.

Net income in the quarter climbed 72% to $83.4 million or $1.39 a diluted share compared to $48.4 million or 79 cents from the same quarter last year.

The company added 4.3 million worldwide net subscribers in the quarter to TV and movie streaming service and added 2.43 million net subscribers in international markets and 1.9 million in the United States.

UnitedHealth Group Inc ((UNH)) gained 2.9% or $3.02 to $108.64 after the diversified healthcare service provider said total revenues in the fourth-quarter ending in December advanced 7.4% to $33.4 billion from a year ago period.

Net income in the quarter jumped 5.6% to $1.51 billion or $1.55 a diluted share compared to $1.43 billion or $1.41 from the same quarter last year.

European Markets

European markets advanced for the fourth day in a row ahead of European Central Bank meeting later this week.

Investors are factoring the announcement of bond buying program of at least €500 billion and provide higher liquidity and ward off anchoring deflationary trends in the euro zone.

In London trading, FTSE 100 index increased 0.8% or 55.45 to 6,675.55 and in Frankfurt the DAX index fell 0.3% or 27.07 to 10,230.06.

In Paris, CAC 40 index edged down 0.01% or 0.44 to 4,445.58.

ASML Holding NV gained 0.8% to €90.20 after the semiconductor equipment provider said total net sales in the fourth-quarter ending in December declined 19.5% to €1.49 billion from €1.85 billion a year ago period.

Net income in the quarter tumbled 36.6% from a year ago to €304.8 million compared to €481.1 million and diluted earnings per share dropped to €0.70 from €1.08.

The company intends to share buyback up to 3.3 million shares worth about €1 billion that will start from tomorrow.

Alstom SA climbed 3.7% to €28.43 after the France-based transport and energy infrastructure provider reported sales in the third-quarter ending in December soared 10% to €1.50 billion from a year ago period.

In the quarter, Alstom booked orders worth €1.62 billion compared to €2.54 billion compared to same period last year.

The company said as of December order backlog was about €27 billion, representing 4-year sales.

Asian Markets

Bank of Japan reaffirmed its commitment to increase monetary base by annual 80 billion yen but lowered its inflation target on the recent plunge in oil price. Governor Haruhiko Kuroda said growth is expected to accelerate in the next fiscal year to 2.1%.

After sharp rebound for three days, the Nikkei average slipped as the yen rebounded after the Bank of Japan left its monetary policy unchanged.

The Bank of Japan after a two-day policy meeting reaffirmed its commitment to increase monetary base by 80 billion yen or $674 billion and lowered its core inflation estimate to 1% from the previous estimate of 1.7% in the fiscal year starting from April.

The central bank also said the drop in oil price my delay reaching its inflation target to 2% but the latest decline in oil prices are expected to benefit the economy in the long term.

The Bank of Japan revised higher its growth estimate to 2.1% for the next fiscal year and held out for the oil to rebound towards the end of fiscal year ending in March to $70 a barrel price for Dubai crude.

The central bank also said core rate of inflation is expected to increase to 2.2% in the fiscal year 2017 but the economy is expected to slow down to 1.6%.

The Nikkei 225 Stock Average slipped 85.82 or 0.5% to 17,280.48 and the broader Topix index fell 7.02 to 1,390.61.

The yen strengthened to close at 117.50 against one dollar.

In Mumbai trading, Sensex Index jumped 104.19 or 0.4% to close at 28,888.86. The CNX Nifty rose 33.90 or 0.4% to 8,729.50.

Market indexes in Mumbai extended two-day surge and rupee gained after foreign investors continued to add exposure to stocks and bonds in India.

Global investors added $2.2 billion of corporate and government bonds issued in rupees in addition to the record $26 billion purchase in 2014.

Global investors have turned positive on India’s economic prospects and stocks and bonds after international price of crude oil collapsed 50% in the last seven months. India imports 80% crude oil to meet its domestic demand.

Indian rupee closed at 61.64 against one dollar.

ITC Limited declined 5% to Rs 352.60 after the diversified conglomerate reported net in the third-quarter advanced 10.46% to Rs 2,635 crore.

Total revenues rose 4.46% to Rs 9,524.58 crore.

Zee Entertainment Enterprises Limited declined 2.4% to Rs 381.60 and the most profitable media network said net in the third-quarter surged 44.48% to Rs 308.61 crore.

Net revenues soared 17.73% to Rs 1,443.90 crore but total subscription revenues slid 2.3% to Rs 446.10 crore.