Markets US markets continued to rise yesterday buoyed by the prospect of lower interest rates as investors looked towards the upcoming Fed meeting on Wednesday. Wall Street widely expects a quarter percentage cut in rates, preventing falling house prices and tighter credit from nudging the economy into recession. Heavily weighted energy stocks also drove the market higher after oil topped $93 for the first time.
The Dow Jones added 63.6 points to close at 13,870.3, the S&P 500 gained 5.7 points to end at 1,541. The Nasdaq climbed 13.25 points to finish at 2,817.44.
Merrill Lynch continued to rise ahead of CEO Stanley O'Neal's widely anticipated resignation, shares in the biggest US brokerage rose 2% to $67.42. The $8 billion quarterly loss announced last week was the biggest in the firm's 93 year history!
In earnings news, Verizon Communications reported earnings that fell from a year ago, but topped estimates. Shares advanced 0.9% to $45.99. RadioShack reported higher quarterly earnings, making a profit compared to a loss this time last year. The consumer electronics chain jumped 4.1% to finish at $20.42.
Boeing shares went 1% higher to $96.99 after the board announced a new $7 billion repurchase plan and a dividend of $0.35 a share.
US light crude oil for December delivery gained $1.67 to $93.53 a barrel, having hit a record high of $93.80 earlier in the session. Exxon Mobil benefited, rising 1.5% to $93.61.
COMEX gold for December delivery added $5.10 to settle at $792.60 an ounce.
Treasury prices went slightly higher, leaving the yield on the 10 year note almost where it started around 4.38%.
The Nikkei closed 47.1 points lower this morning at 16,651. Takeda Pharmaceuticals led the market lower after US drug regulators recommended patient studies on one of its most promising experimental medicines be suspended. Japan's largest drug maker fell by the most in two decades, helped further by three brokerage downgrades. Toshiba Corp led declines by companies whose earnings disappointed investors, prompting two brokerages to lower their ratings on the shares.
The Hang Seng is currently 153.7 points higher at 31,740.6. China Construction Bank led mainland lenders higher on speculation the nation's economic boom will spur borrowing. China Eastern Airlines Corp, the nation's third largest carrier, climbed after profit almost doubled in the last quarter.
The FTSE 100 rose 44.7 points to 6706 yesterday, closing higher for the fourth day in the last five and standing just short of its 2007 record intraday level of 6754.1, hit on July 13. Mining led paced the advance as gold touched a new record and Xstrata's move for Jubilee in Australia triggered further M&A chatter. House builders make up bulk of fallers on speculation that slowing economic growth could eat into demand.
Xstrata's £1.4bn deal for Jubilee provided a lift to sector peers, with investors eyeing further consolidation possibilities. Vedanta Resources led the risers, up 74p to 2230p, followed by Rio Tinto, up 60p to 4477p. An upgrade from JP Morgan also lent support to miners, which littered the risers board. Anglo American cheered 113p to 3348p, while Xstrata was ahead 48p to 3576p.
Elsewhere, oil prices above $93 a barrel made a modest impact on the oil majors. BP gained 5p to 634p, while Royal Dutch Shell stood 13p higher at 2134p as the cost of crude soared on supply concerns and, among other factors, a weak US dollar as expectations grew of a cut in US interest rates later this week.
But house builders suffered as Bank of England figures showed that mortgage approvals fell to their lowest level in more than two years during September. Taylor Wimpey slipped 8.5p to 230.5p and Barratt Developments was down 20p at 631p, while in the FTSE 250 Bovis Homes was 21.5p off at 634p.
Back in the top flight, the leading Footsie faller was supermarket Sainsbury's, 13p lower at 552.5p, extending losses seen in the previous session after Qatari-backed suitor Delta Two said it was attempting to find an extra £500m in funding for its proposed offer. Troubled mortgage lender Northern Rock, meanwhile, fell 0.5p to 190p. The latest blow to the shares comes amid reports that the firm may have to cut up to 2,000 jobs following lower levels of new business.
Economics
US Consumer confidence (Oct) 14.00 gmt
The Conference board measure of consumer confidence has fallen for the past two months down 5.8 points to 99.8 in September after dropping 6.4 points in August. The cut off data for this months survey was 23 October, suggesting that the recent pullback in equity markets will have an impact. The Weekly ABC/Washington Post Survey has declined since the end of September, falling from -13 to -17 last week. Both the University of Michigan and IBD/TIPP surveys edged lower in October. Meanwhile, payroll growth in September was reasonably solid. On balance, consumer confidence is expected to fall to 99.
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