Dow kicks week off strongly
Wall Street recovered much of last week’s losses Monday on the back of bullish broker notes and M&A talks. Gains were broad based with tech stocks particularly strong for the second successive session.
The market awaits several reports due for release this week, including the government’s final report on third-quarter GDP. Forecasts for the economy to expanded by an annualized rate of almost 3%.
The Dow Jones gained 85.25 points, or 0.83%, to 10,414.14, the S&P’s 500 put on 11.58 points, or 1.05%, to 1,114.05 and the NASDAQ rallied 25.97 points, or 1.17%, to 2,237.66.
Financials made ground. JPMorgan and Wells Fargo advanced 2.3% and 2.1%, while Bank of America added 1.7%.
Goldman Sachs gained 1.4%.
Alcoa surged 7.9% after Morgan Stanley upgraded its rating in the aluminium producer following the announcement of a US$10.8 billion joint venture with Saudi Arabian company Ma’aden to develop a mining operation. Alcoa will receive 40% of profits to split with partners.
AK Steel and United States Steel rallied 6.8% and 6.3%.
Intel climbed 2.3% after Barclays Capital upgraded its rating on the semiconductor maker’s stock to “overweight”.
Research in Motion weakened 0.6% as a second Chinese mobile operator signed a deal with the BlackBerry maker. The company’s shares jumped 10.4% the previous session after delivering a better than expected earning result and upgrading its outlook.
Apple gained 1.4%, while all of the other major players in the sector were within 1% above the gain line.
Healthcare stocks were boosted by the news the Senate voted to end debate on revisions to a major health-care-reform bill. Pfizer and Merck & Co added 1.7% and 0.8%.
Chattem spiked 33.1% after French pharmaceutical Sanofi-Aventis offered to acquire the company. Sanofi-Aventis is looking to expand its presence in the US.
Aetna and Cigna rose 4.7% and 3.9%.
Bucyrus jumped 9.8% after the mining equipment manufacturer offered to buy rival Terex. The latter’s shares closed 9% in the black.
Energy majors Exxon Mobil, Chevron and ConocoPhillips gained 0.4%, 0.8% and 1.6% respectively despite the price of crude weakening.
NYMEX light crude oil for January delivery fell US89c to settle at US$72.47 a barrel.
COMEX gold for February delivery fell US$15.50 to settle at US$1,096.00 an ounce.
European Markets
European stocks closed higher on optimism regarding a strengthening economic recovery. Commodity stocks led the rally, while financials regained some of their recent losses.
The UK benchmark FTSE 100 gained 97.18 points, or 1.87% to 5,293.99. The French CAC40 rallied 77.62 points, or 2.05% to 3,872.06, while the German DAX advanced 99.32 points, or 1.69% to 5,930.53.
Energy stocks Royal Dutch Shell, BP and BG Group added 2.6%, 2.5% and 1.7% respectively.
Total jumped 3.1%, while explorer Cairn Energy climbed 4.7% after the commencement of its drilling program offshore Greenland was brought forward.
A rise in base metals prices saw miners close higher. Xstrata and Anglo American put on 3.4% and 2.1%, while Aussie peers Rio Tinto and BHP Billiton gained 2.3% and 1.4%.
Financials bounced after falling in recent sessions. Barclays and HSBC rose 3.3% each, while Deutsche Bank added 1.8% as the German bank said stricter regulations would see the banking sector underperform next year.
Societe Generale and BNP Paribas advanced 2.8% and 2.7%.
Insurer also had a good day with Prudential, Aviva and Allianz gaining 4.5%, 4.1% and 2.7% respectively.
Safran jumped 4.5% after its joint venture with General Electric signed a US$5 billion contract to supply engines to the Commercial Aircraft Corp. of China.
Japanese Markets
Japan’s Nikkei closed at an eight-week high on the back of gains in tech and discretionary stocks. However, banks weakened as capital raising concerns remain.
The Nikkei 225 added 41.42, or 0.41% to be at 10,183.47.
Mizuho Financial Group and Shinsei Bank dropped 2.2% and 2.7%, while Mitsubishi UFJ Financial Group rose 2.4% after raising US$11.4 billion.
Tech shares Advantest Corp and Tokyo Electron gained 2.1% and 2.6%, while Sony closed 1.2% dearer.
Children's apparel retailer Nishimatsuya Chain Co surged 8.5% after saying it would buy back shares. Fast Retailing advanced 2.6%.
Takashimaya Co gained 2.1% after the department store operator received a broker upgrade.
Automakers Honda and Toyota lost 1.3% and 0.5%.
Hong Kong Markets
The Hang Seng closed down for the fifth straight session Monday. The lows hit by the Hang Seng, not seen since October, come on the back of proposed tighter regulations on banks and property stocks.
The Hang Seng shed 227.78, or 1.08% to 20,948.10.
Bank of China made 0.5%, though was easily swamped by a 1.1% loss from heavyweight HSBC.
Ping An Insurance lost 1.1% after reports it would take a US$11.7 billion charge against its guaranteed return policies.
ICBC lost 0.9%.
Among the property stocks, KWG plunged 6.9%. Poly (Hong Kong) Investment, a mainland developer, lost 6.1%.
State controlled developer China Resources Land, sank 4.9%.
Geely Automobile lost nearly 10%, though investors won’t be too worried, with the stock having risen over 450% this year.
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