Modest Gains as Conviction Continues to Wane
The US equity markets are modestly higher in morning action but sentiment among traders remains half-hearted as many remain on holiday break ahead of the New Year and data continues to lack a spark to stoke any meaningful conviction. Treasuries remain lower following a decline in a read on US home prices, and ahead of releases on consumer confidence and regional manufacturing. In equity news, early data on the holiday shopping season is suggesting the best gains for retailers in five years. Overseas, Asia was mostly lower as China concerns continue to dampen sentiment, while Europe is gaining modest ground despite an unfavorable revision to France's 3Q GDP.
As of 8:44 a.m. ET, the March S&P 500 Index Globex future is 3 points above fair value, the Nasdaq 100 Index is 5 points above fair value, while the DJIA is 28 points above fair value. Crude oil is $0.48 higher at $91.48 per barrel, and the Bloomberg gold spot price is up $19.45 at $1,403.20 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is down 0.5% at 79.88.
Retailers remain in focus as the holiday season winds down and the New Year approaches, with MasterCard Spending Pulse reporting that US retail sales rose 5.5% year-over-year (y/y) to approximately $584.3 billion over the period between November 5 and December 24. This was the largest increase since 2005 and the rise was above the 3.3% increase that the National Retail Federation was expecting and the 4% gain that ShopperTrak had expected.
Home prices decline, consumer confidence and regional manufacturing after the opening bell
Just before the opening bell, the S&P/Case-Shiller Home Price Index was released showing a drop in home prices of 0.8% y/y in October, compared to the decline of 0.20% that economists surveyed by Bloomberg had expected. Month-over-month (m/m), home prices were 1.0% lower, compared to forecasts, which called for a decline of 0.60%. Treasuries remain lower following the home price data. The yield on the two-year note is 2 bps higher to 0.69% and the yield on the 10-year note is up 1 bp to 3.34%, and the 30-year bond yield is gaining 2 bps to 4.42%.
The US equity markets are modestly higher in morning action but sentiment among traders remains half-hearted as many remain on holiday break ahead of the New Year and data continues to lack a spark to stoke any meaningful conviction. Treasuries remain lower following a decline in a read on US home prices, and ahead of releases on consumer confidence and regional manufacturing. In equity news, early data on the holiday shopping season is suggesting the best gains for retailers in five years. Overseas, Asia was mostly lower as China concerns continue to dampen sentiment, while Europe is gaining modest ground despite an unfavorable revision to France's 3Q GDP.
As of 8:44 a.m. ET, the March S&P 500 Index Globex future is 3 points above fair value, the Nasdaq 100 Index is 5 points above fair value, while the DJIA is 28 points above fair value. Crude oil is $0.48 higher at $91.48 per barrel, and the Bloomberg gold spot price is up $19.45 at $1,403.20 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is down 0.5% at 79.88.
Retailers remain in focus as the holiday season winds down and the New Year approaches, with MasterCard Spending Pulse reporting that US retail sales rose 5.5% year-over-year (y/y) to approximately $584.3 billion over the period between November 5 and December 24. This was the largest increase since 2005 and the rise was above the 3.3% increase that the National Retail Federation was expecting and the 4% gain that ShopperTrak had expected.
Home prices decline, consumer confidence and regional manufacturing after the opening bell
Just before the opening bell, the S&P/Case-Shiller Home Price Index was released showing a drop in home prices of 0.8% y/y in October, compared to the decline of 0.20% that economists surveyed by Bloomberg had expected. Month-over-month (m/m), home prices were 1.0% lower, compared to forecasts, which called for a decline of 0.60%. Treasuries remain lower following the home price data. The yield on the two-year note is 2 bps higher to 0.69% and the yield on the 10-year note is up 1 bp to 3.34%, and the 30-year bond yield is gaining 2 bps to 4.42%.
Later this morning, the economic calendar will yield the releases of the Consumer Confidence Index, forecasted to improve from 54.1 in November to 56.4 in December, and the Richmond Fed Manufacturing Index, which is anticipated to increase from 9 in November to 11 for December.
Technology shares helping keep Europe above water
European equity markets are modestly higher in afternoon trading, with volume remaining light as the year-end nears and the UK markets remaining closed for a holiday. Technology shares are leading the advance, aided by a respectable gain in shares of Alcatel-Lucent (ALU $3) after the French telecom firm announced that it agreed to pay $137 million to settle US bribery charges. ALU's advance is helping overshadow a report that showed France's 3Q GDP was unexpectedly revised lower to a 0.3% quarter-over-quarter (q/q) rate of output, compared to economists' forecasts calling for the rate to remain at 0.4%.
France's CAC-40 Index is advancing 0.3% and Germany's DAX Index is gaining 0.1%.
Asia lower again as China concerns remain
Stocks in Asia finished mostly lower in another quiet, light volume trading session. Concerns about the weekend interest rate hikes in China over the Christmas holiday weekend lingered and Chinese equity markets led the decline in the region, with the Shanghai Composite Index falling 1.7% and the Hong Kong Hang Seng Index declining 0.9%. Meanwhile, Japan's Nikkei 225 Index decreased 0.6% as some profit taking pressured equities. However, losses were limited by a report that showed the nation's industrial production rose more than economists had anticipated and a solid gain in shares of Mizuho Financial Group Inc. (MFG $4) after the company said it will not need to raise capital to conform to the Basel global capital requirements. Traders also digested reports that showed Japanese retail sales exceeded expectations, consumer prices matched forecasts, and the nation's jobless rate remained at 5.1%.
Elsewhere, South Korea's Kospi Index rose 0.6%, led by construction issues after the government unveiled a plan to provide more housing for the nation's middle class in 2011, per Reuters. In other economic news in Asia, Hong Kong's exports and imports both rose solidly, topping estimates, leading to a slightly higher-than-expected widening of the country's trade deficit. Markets in Australia and New Zealand remained closed for holidays.
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