S&P 500 Up 0.8% on China Stimulus and Morgan Stanley Earnings

Nichole Harper
20 Apr, 2015
New York City

Market indexes on Wall Street soared and crude continued to gain after People

[R]1:15 PM – Market indexes on Wall Street soared and crude continued to gain after People’s Bank of China joined the ECB and the U.S. Fed in stimulating the economy. European markets rebounded but markets in China, India and Japan eased.[/R]

U.S. stocks traded higher and market indexes shot up in early trading after the central bank in China lowered reserve requirement and Morgan Stanley reported adjusted earnings ahead of expectations.

Chinese government in conjunction with the People’s Bank of China is engaged in engineering an economic slowdown and slowdown the overheated construction sector.

But the speculative flow in the last nine months have accelerated in the stock market forcing the Chinese regulator to curbing margin trading on Friday.

The central bank on Sunday was forced to react after stock market took a sudden dive in Friday’s trading.

Central bank trimmed the reserve requirement ratio by 100 basis-point to 18.5% following a sharp decline in market indexes on Friday after the China Securities Regulatory Commissioned made more share available for short selling and tightened margin lending rules.

Benchmark index in China rose 1.2% in the morning session but reversed market direction in the afternoon and closed down 1.6% for the day after regulators cracked down to curb speculative flow.

People’s Bank of China is the latest central bank to offer monetary stimulus as the developed world’s economies rely on the supply of newly printed cash.

U.S. led the way in offering multi-trillion dollar of stimulus followed by similar actions from the European Central Bank, the Bank of England and the Bank of Japan.

On Wall Street, Tollbooth Strategy Index jumped 1% or 102.94 to 10,618.05.

S&P 500 index climbed 21.18 or 1% to 2,102.34 and the Nasdaq Composite Index increased 59.57 or 1.2% to 4,991.54.

Crude oil in New York gained 80 cents to $56.54 a barrel and gold declined $9.20 to $1,193.90 an ounce.

U.S. Movers

Morgan Stanley ((MS)) gained 1.2% or 44 cents to $37.19 after the financial and brokerage services provider reported net revenues in the first-quarter ending in March climbed 10% to $9.9 billion from a year ago period.

Net income in the quarter surged 60% to $2.31 billion or $1.18 per diluted share compared to $1.45 billion or 74 cents from the same quarter last year.

The company said institutional securities net revenues soared 17% to $5.5 billion and revenues from wealth management net revenues climbed 6% to $3.8 billion. Revenues from investment management tumbled 11% to $669 million.

Prologis Inc ((PLD)) rose 38 cents to $43.26 after the industrial real estate developer agreed to acquire industrial-property owner KTR Capital Partners and its affiliates for $5.9 billion.

Raytheon Company ((RTN)) fell 29 cents to $107.43 after the aerospace and defense products maker agreed to acquire network security provider Websense Inc from private equity firm Vista Equity Partners LLC for about $1.9 billion including debt.

European Markets

European markets traded higher in the shadow of Greek debt standoff and an unexpected stimulus in China.

Market indexes in Europe rebounded after a week of losses and benchmark index in Germany led the gainers in the region.

In London trading, FTSE 100 index gained 0.8% or 52.85 to 7,047.48 and in Frankfurt the DAX index climbed 1.7% or 201.48 to 11,890.18.

In Paris, CAC 40 index jumped 0.7% or 36.43 to 5,179.69.

Liberty Global Plc, the U.K.-based privately held cable TV network operator said its Belgium-based subsidiary Telenet Group Holding NV agreed to acquire Base Co NV from KPN Group for about €1.33 billion in cash.

Liberty said Telenet will invest €240 million to upgrade Base''''s network and estimated annual savings of about €150 million.

Telenet intends to finance the acquisition of BASE through a combination of €1 billion of new debt facilities and existing liquidity.

Nomad Holdings Ltd gained 1.4% to $12.05 after the U.K.-based company agreed to acquire frozen food maker, Iglo Foods Holdings Limited, backed by Permira funds for approximately €2.6 billion.

The transaction is expected to close by June-end.

Asian Markets

Stocks in Tokyo eased. China offered a large and unexpected stimulus as Chinese regulators crack down on speculative lending supporting a surge of more than 80% in benchmark indexes.

Stocks in Tokyo eased after China offered an unexpected stimulus and lowered bank reserve ratio.

The Nikkei 225 Stock Average fell 18.39 to 19,634.49 and the broader Topix index slid 6.01 to 1,582.68.

The yen closed at 119.05 against a dollar.

In Tokyo trading, Itochu plunged 11% despite the annual sales surged 22% and net income soared 49%.

Market indexes on Dalal Street in Mumbai dropped sharply following an Asia-wide sell-off after markets in Europe and New York closed down on Friday.

Market indexes in India plunged 1.9% on the mounting earnings jitters compounded by the recent surge in oil price and the strength in the U.S. dollar.

Rupee decreased 55 paisa to 62.91 against one dollar on the worries that the rising dollar will accelerate the outflow of capital.

The Sensex Index tumbled 555.89 or 1.9% to close at 27,886.21. The CNX Nifty slipped 157.90 or 1.8% to 8,448.10.

Stocks in Mumbai traded lower and market indexes dropped 1.9% on earnings jitters and strengthening dollar. JSW said steel production in March jumped 11%. LIC Housing Finance net rose 2%. Titagarh Wagons net surged.

Crompton Greaves Limited fell 0.5% to ₹172.50 after Reuters said consortium led by the U.S.-based private equity firm Advent International plans to buy consumer products division of the company.

Glenmark Pharmaceuticals Ltd climbed 4.3% to ₹901.60 after the company said Singapore-based Temasek plans to invest about $151 million in the company.