Global Optimism Carrying Equities Higher
The US equity markets are higher in early action following a solid gain in Asia, as China rebounded and geopolitical concerns toward Korea eased. Moreover, Europe is moving higher to help sentiment, with lingering debt concerns in the region being soothed by reports of support from China. Treasuries are higher despite the advance in the equity markets and as there are no major economic reports scheduled for release today. In equity news, Adobe Systems Inc posted better-than-expected earnings, Darden Restaurants Inc
matched the Street's expectations, while Toronto-Dominion Bank reached an agreement to acquire auto lender Chrysler Financial from private-equity firm Cerberus Capital Management for $6.3 billion in cash.
As of 8:45 a.m. ET, the March S&P 500 Index Globex future is 5 points above fair value, the Nasdaq 100 Index is 7 points above fair value, while the DJIA is 36 points above fair value. Crude oil is $0.44 higher at $89.81 per barrel, and the Bloomberg gold spot price is up $5.58 at $1,390.83 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is down 0.4% at 80.31.
Adobe Systems Inc. (ADBE $29) reported fiscal 4Q EPS ex-items of $0.56, four cents above the consensus estimate of analysts surveyed by Reuters, with revenues growing 33% year-over-year (y/y) to $1.0 billion, topping the $984 million that the Street had forecasted. The software firm said it had "outstanding performance" across all of its major businesses. ADBEissued 1Q 2011 guidance that exceeded analysts' forecasts.
Darden Restaurants Inc. (DRI $50) announced fiscal 2Q EPS of $0.54, matching the Street's expectation, as revenues rose 5.2% y/y to $1.7 billion, also inline with analysts' forecasts. The parent of Olive Garden and Red Lobster said its same-restaurant sales-sales at restaurants open at least a year-increased 1.4% y/y. DRI reaffirmed its full-year 2011 guidance.
In M&A news, Toronto-Dominion Bank (TD $70) reached an agreement to acquire auto lender Chrysler Financial from private-equity firm Cerberus Capital Management for $6.3 billion in cash. TD said the move will help it gain a North American organic growth platform, and allows it to expand in a large market with "significant potential upside."
Treasuries gain ground but economic calendar is short on data
Treasuries are higher in morning action as there are no major releases on today's US economic calendar, with yields paring some of their recent run-up, which Schwab's Chief Investment Strategist Liz Ann Sonders
attributes in large part in her latest article, Fed Decision: Stick to the Status Quo, to the traction the economy seems to be gaining. Liz Ann also points out that the rise in yields is also probably about a reallocation by
investors from bonds to stocks. A vast amount of investment flows have been guided by the assumption of a status quo of low Treasury yields, rising commodity prices and a falling US dollar. The status quo may be no longer. However, Liz Ann warns that Treasuries may be oversold in the short-run and we could see a reversal, if only from a contrarian sentiment perspective.
Europe gains as China offers support for tackling debt crisis
Stocks in Europe are higher in afternoon action as comments from a Chinese official that the nation supports the European Union (EU) and International Monetary Fund (IMF) efforts to battle the debt crisis and that it has provided "concrete actions" to help the cause, is boosting optimism about the euro-area's ability to thwart the contagion in the region. Financials are posting an advance amid the improved sentiment, which is overshadowing Moody's Investors Service placing Portugal's credit rating under review for possible downgrade due to concerns about the nation's ability to raise capital at a "sustainable price," per Reuters. Also, the UK's release of data showing a record high in public sector borrowing in November is being taken in stride as the markets are broadly higher. Materials issues are the leading the advance across the pond, aided by strength in commodity prices on improving optimism about the global economy amid the recent string of favorable economic data, and as tensions in Korea have eased.
In other economic news, UK consumer confidence failed to deteriorate as economists surveyed by Bloomberg had expected, but a separate read on consumer sentiment in Germany-Europe's largest economy-unexpectedly declined. Elsewhere, Italy's 3Q unemployment rate moved lower to match
expectations.
The UK FTSE 100 Index is 0.8% higher, France's CAC-40 Index and Germany's DAX Index are advancing 0.6%, Italy's FTSE MIB Index is up 1.0%, and Portugal's PSI 20 Index is gaining 0.4%.
China rebounds to lead Asia higher
The equity markets in Asia were broadly higher as stocks in China rebounded nicely and geopolitical tensions in Korea eased to help lift sentiment, but volume continues to be thin as the year nears a close, which may have amplified today's moves. China's Shanghai Composite Index rose 1.8% and Hong Kong's Hang Seng Index advanced 1.6%, as coal issues led the way amid increased expectations for demand as the winter season matures. Also, China's Vice Premier Qishan weighed in on the euro-area crisis, saying
that, "China supports the slew of measures by EU and IMF to stabilize financial markets, and China has taken concrete actions to help some European countries deal with their sovereign debt crisis." The comments help ease some of the lingering concerns toward that crisis facing Europe.
Meanwhile, Japanese stocks were also among the best performers as the Chinese markets rebounded, with the Nikkei 225 Index rising 1.5%, while the Bank of Japan kept its benchmark interest rate unchanged at 0.10% as expected and maintained its asset purchase program at 5 trillion yen ($59.8 billion). Elsewhere, South Korea's Kospi Index gained 0.8% on eased concerns toward the tensions between North and South Korea, after South Korea's military exercise yesterday went without retaliation from the North, and as North Korea agreed to allow inspectors into its uranium enrichment facilities, per Bloomberg, which cited New Mexico Governor Bill Richardson. Rounding out the day, Australia's S&P/ASX 200 Index rose 0.8% on the improved sentiment in the region and amid a slew of M&A news down under. Also, a report showed Australia's Leading Index increased in October after declining in September.
The US equity markets are higher in early action following a solid gain in Asia, as China rebounded and geopolitical concerns toward Korea eased. Moreover, Europe is moving higher to help sentiment, with lingering debt concerns in the region being soothed by reports of support from China. Treasuries are higher despite the advance in the equity markets and as there are no major economic reports scheduled for release today. In equity news, Adobe Systems Inc posted better-than-expected earnings, Darden Restaurants Inc
matched the Street's expectations, while Toronto-Dominion Bank reached an agreement to acquire auto lender Chrysler Financial from private-equity firm Cerberus Capital Management for $6.3 billion in cash.
As of 8:45 a.m. ET, the March S&P 500 Index Globex future is 5 points above fair value, the Nasdaq 100 Index is 7 points above fair value, while the DJIA is 36 points above fair value. Crude oil is $0.44 higher at $89.81 per barrel, and the Bloomberg gold spot price is up $5.58 at $1,390.83 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is down 0.4% at 80.31.
Adobe Systems Inc. (ADBE $29) reported fiscal 4Q EPS ex-items of $0.56, four cents above the consensus estimate of analysts surveyed by Reuters, with revenues growing 33% year-over-year (y/y) to $1.0 billion, topping the $984 million that the Street had forecasted. The software firm said it had "outstanding performance" across all of its major businesses. ADBEissued 1Q 2011 guidance that exceeded analysts' forecasts.
Darden Restaurants Inc. (DRI $50) announced fiscal 2Q EPS of $0.54, matching the Street's expectation, as revenues rose 5.2% y/y to $1.7 billion, also inline with analysts' forecasts. The parent of Olive Garden and Red Lobster said its same-restaurant sales-sales at restaurants open at least a year-increased 1.4% y/y. DRI reaffirmed its full-year 2011 guidance.
In M&A news, Toronto-Dominion Bank (TD $70) reached an agreement to acquire auto lender Chrysler Financial from private-equity firm Cerberus Capital Management for $6.3 billion in cash. TD said the move will help it gain a North American organic growth platform, and allows it to expand in a large market with "significant potential upside."
Treasuries gain ground but economic calendar is short on data
Treasuries are higher in morning action as there are no major releases on today's US economic calendar, with yields paring some of their recent run-up, which Schwab's Chief Investment Strategist Liz Ann Sonders
attributes in large part in her latest article, Fed Decision: Stick to the Status Quo, to the traction the economy seems to be gaining. Liz Ann also points out that the rise in yields is also probably about a reallocation by
investors from bonds to stocks. A vast amount of investment flows have been guided by the assumption of a status quo of low Treasury yields, rising commodity prices and a falling US dollar. The status quo may be no longer. However, Liz Ann warns that Treasuries may be oversold in the short-run and we could see a reversal, if only from a contrarian sentiment perspective.
Europe gains as China offers support for tackling debt crisis
Stocks in Europe are higher in afternoon action as comments from a Chinese official that the nation supports the European Union (EU) and International Monetary Fund (IMF) efforts to battle the debt crisis and that it has provided "concrete actions" to help the cause, is boosting optimism about the euro-area's ability to thwart the contagion in the region. Financials are posting an advance amid the improved sentiment, which is overshadowing Moody's Investors Service placing Portugal's credit rating under review for possible downgrade due to concerns about the nation's ability to raise capital at a "sustainable price," per Reuters. Also, the UK's release of data showing a record high in public sector borrowing in November is being taken in stride as the markets are broadly higher. Materials issues are the leading the advance across the pond, aided by strength in commodity prices on improving optimism about the global economy amid the recent string of favorable economic data, and as tensions in Korea have eased.
In other economic news, UK consumer confidence failed to deteriorate as economists surveyed by Bloomberg had expected, but a separate read on consumer sentiment in Germany-Europe's largest economy-unexpectedly declined. Elsewhere, Italy's 3Q unemployment rate moved lower to match
expectations.
The UK FTSE 100 Index is 0.8% higher, France's CAC-40 Index and Germany's DAX Index are advancing 0.6%, Italy's FTSE MIB Index is up 1.0%, and Portugal's PSI 20 Index is gaining 0.4%.
China rebounds to lead Asia higher
The equity markets in Asia were broadly higher as stocks in China rebounded nicely and geopolitical tensions in Korea eased to help lift sentiment, but volume continues to be thin as the year nears a close, which may have amplified today's moves. China's Shanghai Composite Index rose 1.8% and Hong Kong's Hang Seng Index advanced 1.6%, as coal issues led the way amid increased expectations for demand as the winter season matures. Also, China's Vice Premier Qishan weighed in on the euro-area crisis, saying
that, "China supports the slew of measures by EU and IMF to stabilize financial markets, and China has taken concrete actions to help some European countries deal with their sovereign debt crisis." The comments help ease some of the lingering concerns toward that crisis facing Europe.
Meanwhile, Japanese stocks were also among the best performers as the Chinese markets rebounded, with the Nikkei 225 Index rising 1.5%, while the Bank of Japan kept its benchmark interest rate unchanged at 0.10% as expected and maintained its asset purchase program at 5 trillion yen ($59.8 billion). Elsewhere, South Korea's Kospi Index gained 0.8% on eased concerns toward the tensions between North and South Korea, after South Korea's military exercise yesterday went without retaliation from the North, and as North Korea agreed to allow inspectors into its uranium enrichment facilities, per Bloomberg, which cited New Mexico Governor Bill Richardson. Rounding out the day, Australia's S&P/ASX 200 Index rose 0.8% on the improved sentiment in the region and amid a slew of M&A news down under. Also, a report showed Australia's Leading Index increased in October after declining in September.
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