MARKETS AT A GLANCE
LAST CHANGE % CHG
DJIA 17907.9 323.35 1.84%
Nasdaq 4736.19 85.72 1.84%
S&P 500 2062.14 36.24 1.79%
Japan: Nikkei 225 17167.1 281.77 1.67%
Hang Seng 23835.5 154.27 0.65%
Shanghai Composite 3293.46 -80.5 -2.39%
S&P BSE Sensex 27274.7 365.89 1.36%
Australia: S&P/ASX 5381.5 27.9 0.52%
UK: FTSE 100 6569.96 150.13 2.34%
PRICE CHG YIELD%
U.S. 2 Year 0/32 0.609
U.S. 5 Year -2/32 1.493
U.S. 10 Year -14/32 2.02
Australia 10 Year -1/32 2.742
China 10 Year -29/32 3.69
India 10 Year -3/32 7.862
Japan 10 Year -1 26/32 0.289
German 10 Year -7/32 0.512
LAST(MID) CHANGE
Australia $ (AUD/USD) 0.8122 0
Yen (USD/JPY) 119.69 0.02
S. Korean Won (USD/KRW) 1095.56 0.05
Chinese Yuan (USD/CNY) 6.2116 0.0002
Euro (EUR/USD) 1.1795 0.0002
WSJ Dollar Index 84.17 0.04
LAST CHANGE % CHG
Crude Oil 49.02 0.37 0.76%
Brent Crude 52.2 0.03 0.06%
Gold 1208.9 -1.8 -0.15%
(Data as of approximately 5 p.m. ET)
SNAPSHOT:
U.S. stocks surged, joining a global stock rally, amid hopes for more accommodative policies from central banks in Europe and the U.S. Treasury bonds pulled back. The U.S. dollar continued to rise against the euro and the yen. Brent oil prices slipped, while U.S. oil futures edged higher. Gold prices declined.
OPENING CALL:
Asian investors will have a raft of economic data to digest on Friday. China reports its December inflation data, which is expected to rise 1.5% after edging 1.4% higher in November, the third consecutive month that inflation remained below 2%. Producer prices, which fell 2.7% in November, are expected to show a 3.2% decline in December. Elsewhere, Taiwan is due out with December trade numbers.
EQUITIES:
Global stock markets rallied, pushing major U.S. stock benchmarks into positive territory for the year.
Hopes for more accommodative monetary policy from central banks in Europe and the U.S. drove the rally, traders and investors said. A rally in European stocks set a positive tone for the U.S. session, with the Stoxx Europe 600 surging 2.7% on hopes of fresh stimulus from the European Central Bank.
In the U.S., much of the buying came from large institutions that didn't jump in during the early-year decline, traders said. After many money managers trailed their benchmarks in 2014, large institutional investors are worried about missing out on more gains in U.S. stocks, said David Seaburg, head of sales trading at Cowen and Co.
During 2014, only 12% of actively managed, large-company stock funds beat the 15.3% return posted by the S&P 500 including dividends, according to Morningstar Inc. Hedge funds have struggled as well. The HFRI Equity Hedge Index, which tracks the performance of hedge funds investing in U.S. stocks, posted returns of 2.3% during the year, their worst relative performance since 2011.
Comments from Charles Evans, president of the Federal Reserve Bank of Chicago, helped spark the gains. He said late Wednesday the U.S. might not hit the Fed's target inflation rate until 2018, and he doesn't advise raising interest rates until 2016. The first interest-rate increase is widely expected this year. Mr. Evans is known as a proponent of accommodative policies and will hold a voting spot on the Fed's policy-setting committee this year.
"If inflation remains low.. that would mean we could have interest rates that are low a bit longer than expected," said Alan Gayle, director of asset allocation at RidgeWorth Investments, which manages about $45 billion. "That would be favorable for U.S. stocks."
He is bullish on U.S. stocks, but is considering moving some of the $64 million he manages in the Ridgeworth Growth Allocation Strategy into European stocks, since they are trading at lower valuations. He is waiting for signs of an initial recovery in eurozone growth, however.
Other investments didn't reflect expectations for lower U.S. interest rates. The U.S. dollar continued to rise against the euro and the yen, extending a long-term rally pinned on expectations for higher rates. Demand fell for U.S. government bonds, pushing the yield on the 10-year Treasury note up to 2.016%.
Commodity-sensitive sectors rallied, as crude-oil prices looked more stable after a monthslong slump.
Among individual stocks, Infinity Pharmaceuticals Inc. plunged 12% after it said it won't continue to develop its rheumatoid-arthritis drug, which missed its goal in a clinical trial.
Global Payments Inc. gained 6.9% after it beat Wall Street's forecasts for its latest quarterly earnings and sales and said it would consider making acquisitions and expanding into Asia.
Stocks were mostly higher in Asia Thursday after a bounce in crude oil prices eased pressure on markets from Japan to Australia.
FOREX:
The dollar rose against the yen and the euro as market fears over global growth and deflation eased.
Tailwinds carried investors into the Americas session as global equity markets rose while oil prices recovered from 5 1/2 -year lows, reducing appetites for haven assets, such as the yen and U.S. Treasurys. In addition, expectations continue to grow for the European Central Bank to launch a large-scale bond-buying program, also known as quantitative easing, which would go some ways to calming markets' deflationary fears as well as weaken the single currency further.
But profit-taking kicked in after U.S. jobless claims data were released, showing the labor market is gaining momentum as the number of people seeking unemployment benefits steadied around a 14-year low. Claims for unemployment benefits fell by 4,000 to a seasonally adjusted 294,000 in the week ended Jan. 3, the Labor Department said Thursday, while economists had predicted 290,000 new claims.
The dollar gave back some of its early gains but remained higher against the yen and the euro.
"Investors may be trying to lighten up a bit on the dollar ahead of the payrolls number" on Friday, said Omer Esiner, chief market analyst at the currency brokerage Commonwealth Foreign Exchange, Inc. Economists predict the U.S. created 240,000 jobs in December.
"The dollar's not topping out at these levels, though; all of the factors that have driven the dollar higher in the second half of last year are still in place," Mr. Esiner said.
BONDS:
Investors stepped out of the bunker of ultrasafe U.S. government bonds, sending bond prices lower for the first time in nine days.
A broad rally in global stocks encouraged investors to cash in some chips from the haven bond market.
Traders and analysts don't expect bond yields, which move inversely to their prices, to rise significantly given the still uncertain global growth outlook.
"The risk on tone with global equity markets rallying hurts demand for Treasury bonds," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York. "The question is have we found a bottom in oil, equities and Treasury yields. I am not ready to call that just yet."
Investors had piled into highly-liquid Treasury bonds over the past week, driven by global growth concerns and the threat of deflation amid a multimonth selloff in the oil market.
The 10-year yield fell below the 2% mark on Tuesday for the first time since October and on Wednesday, it closed at the lowest level since May 2013.
Boosting investors' risk appetites was the prospect of more monetary stimulus from the European Central Bank in coming months.
Investors also welcomed the latest comments from Federal Reserve Bank of Chicago President Charles Evans, who said the central bank should be patient in raising interest rates.
Mr. Evans votes on interest-rate decisions this year and has long been one of the most pronounced Fed officials advocating for monetary stimulus to support the economy following the financial crisis.
A key labor market report due Friday will influence the timing for the Fed's first interest-rate increase.
Economists expected the U.S. economy including both the public and private sectors to have added 240,000 new jobs last month, following 321,000 new jobs added in November. The unemployment rate was forecast to have fallen to 5.7% in December from 5.8% in November.
Traders said if the report beats economists forecast, it would spark more selling in Treasury bonds. On the other hand, a disappointing report would boost demand for haven bonds again and push down bond yields, they said.
COMMODITIES:
The global oil benchmark fell to a fresh nearly-six-year low on continued worries about ample global supplies.
The U.S. benchmark settled slightly higher for the second straight day, but market watchers said any rally was unlikely to be sustainable, given record-high inventory levels.
Prices plunged nearly 50% in 2014 and have continued to drop sharply this year. Global supplies are growing, despite an already amply supplied market and tepid demand.
"We've got a really big supply to slog through," said Andy Lebow, senior vice president for energy at Jefferies LLC. "The upside may be somewhat limited until we work through some of this inventory."
Some investors are eager to bet that oil prices are near a bottom.
"Some high-net-worth clients of ours have started to take the contrary position when it comes to the rout in oil prices," said Naeem Aslam, chief analyst at broker Avatrade. His clients are adding to their positions in dividend-paying oil companies such as Chevron Corp. and Exxon Mobil Corp., he said.
(MORE TO FOLLOW) Dow Jones Newswires
"Every time we had a drop in the oil price of 50%, in the following six months oil companies have gained nearly 53% in value," Mr. Aslam said. "Now is a good time to buy in."
BNP Paribas cut its 2015 oil-price forecasts to $60 a barrel for Brent and $55 a barrel for the U.S. benchmark, down from its late November estimates of $77 and $70 a barrel, respectively.
Gold futures edged down as the market awaited major data releases from China and the U.S.
TODAY'S HEADLINES:
Hunt for Suspects in Paris Attack Intensifies
French police intensified their manhunt for two heavily armed brothers who allegedly killed 12 people in an attack on satirical weekly Charlie Hebdo, as anxious Parisians stopped for a moment of silence to honor the dead.
U.S. Jobless Claims Fall to 294,000
The number of Americans filing new claims for jobless benefits held around a 14-year low last week. Initial jobless claims fell by 4,000 to a seasonally adjusted 294,000 in week ended Jan. 3. Economists expected 290,000 new claims.
Honda Fined $70M for Failing to Report Safety Issues
The National Highway Traffic Safety Administration fined Honda Motor $70 million for failing for more than a decade to report deaths, injuries and certain warranty claims, the highest penalties ever levied against an auto maker by the agency.
Credit Card Balances Decline in November
Total revolving credit, mainly reflecting credit-card balances, declined at a 1.3% seasonally adjusted annual pace in November, the Federal Reserve said. That was the biggest decrease in outstanding revolving balances in a year.
Pimco Plans Push Into Stocks
Long known as a bond powerhouse, Pacific Investment Management is once again attempting an expansion into stock mutual funds and is launching seven new equity strategies in partnership with the asset manager Research Affiliates.
Santander to Raise $8.88 Billion in Capital
Banco Santander said it would raise as much as $8.88 billion in a capital increase, a bid by its new executive chairman, Ana BotÃn, to address long-standing concerns among investors and analysts that its financial cushion is thinner than those of other large European banks.
GM Chief: U.S. Auto Industry Could Grow 3% in 2015
General Motors Chief Executive Mary Barra sees U.S. light vehicle sales growing as much as 3% this year, bolstered by younger buyers, strong economic conditions and lower fuel prices.
Coca-Cola to Cut 1,600-1,800 Jobs Globally
Coca-Cola said it will eliminate at least 1,600 to 1,800 jobs globally as part of its earlier announced $3 billion cost-cutting drive. The cuts will be carried out over the coming months.
Ford Boosts Quarterly Dividend by 20%
Ford Motor raised its quarterly dividend by 20% for Class B and common shares outstanding, a move it said reflects its capital strategy. Quarterly payout to shareholders was raised to 15c a share, an increase of 2.5c a share. Shares up 1%.
Keystone XL Moves Closer to U.S. Congressional Approval
Congress moved closer to a likely approval of the Keystone XL pipeline, as a Senate panel advanced the legislation and the House prepared for a vote on Friday. Both chambers are expected to pass the bill, and the White House has threatened a veto.
RECENT DJ DOMINANTS:
Chinese Developer Appears to Default
In Low Gasoline Prices, an Opening Emerges for Higher Taxes
Santander's New Capital Leaves Little Room for Deals
Bombardier Chief Commercial-Aircraft Salesman Exits
Indonesia Taps Global Bond Market
TODAY'S CALENDAR:
(All times GMT, followed by country and event)
2145 NZ Nov Building Consents Issued
2230 AUS Dec Australian PCI
2350 JPN Dec International Reserves / Foreign Currency
0001 UK Dec REC & KPMG Report on Jobs
0030 AUS Nov Retail Trade
0100 PHI Nov Merchandise Export Performance
0130 CHN Dec CPI
0130 CHN Dec PPI
0401 MAL Nov Industrial Production Index
0401 MAL Nov Manufacturing sales
0500 JPN Nov Indexes of Business Conditions - Preliminary Release
0730 THA Weekly International Reserves
0700 GER Nov Foreign Trade
0700 GER Nov Industrial Production Index
0745 FRA Nov Foreign trade
0745 FRA Nov Industrial production index
0800 TAI Dec Merchandise trade
0900 ITA Q3 General Govt Quarterly Accounts
0930 UK Nov UK trade
0930 UK Nov UK monthly industrial production figures
1130 IND Weekly foreign exchange reserves
1315 CAN Dec Housing Starts
1330 US Dec U.S. Employment Report
1330 CAN Dec Labor Force Survey
1330 CAN Nov Building permits
1500 US Nov Monthly Wholesale Trade
1500 UK Dec NIESR Monthly GDP Estimates
1820 US FRB Richmond President Jeffrey Lacker speaks at Financial Forecast Event
1900 CAN Bank of Canada Weekly Financial Statistics
(END) Dow Jones Newswires
January 08, 2015 17:30 ET (22:30 GMT)
January 08, 2015 17:30 ET (22:30 GMT)
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