Ride the global wave

All that spirits desire, spirits attain. - Kahlil Gibran.

Markets seem to be getting ready for Christmas with the bulls staging a spirited comeback. This week has been a pretty good one after a turbulent November. It looks like the market will close out the week on a positive note with global markets holding firm.



The start today will be higher after the US stocks extended rally and the ECB extended liquidity support measures. Asian markets are mostly up. All eyes are on the monthly US jobs data that will be released before the opening bell.

December has historically been a good month for Wall Street and it appears that the pattern will not be any different this year as well. Americans are getting into the festival groove already. There are signs of a pick-up in consumer confidence in the US.

US retailers posted robust November sales and pending home sales jumped 10% in October. The Dow notched up its second straight triple-digit advance. European stocks gained despite the ECB refraining from boosting the bond purchase program. Instead, the central bank said it will continue stimulus measures. A well received Spanish bond auction also lent support.

With the Nifty closing above the psychological barrier of 6000 has accentuated the buying momentum. Hence, the previous session's gap at 5970 should act as a crucial support in the near term while the rally will continue towards 6100.

There is bound to be some selling pressure at higher levels after a steep rally. But, if the global cues remain supportive, there is a chance that the Nifty will gradually keep pushing northwards. It would be premature to talk about a new all-time high for the Indian markets anytime soon.

FIIs were net buyers of Rs 3.86bn in the cash segment on Thursday while the domestic institutional institutions were net sellers of Rs 2.25bn, according to the NSE Web site. FIIs were net buyers at Rs 14.39bn in the F&O segment on Thursday. The foreign funds were net buyers of Rs 4.46bn in the cash segment on Wednesday, as per the SEBI data.

Asian Markets on Friday:

Most Asian stock benchmarks were trading higher in early morning trade on Friday after the US retail sales exceeded forecasts and pending home sales jumped by more than 10%.

Also, assurance of liquidity support by the European Central Bank (ECB) and encouraging demand at a Spanish bond auction boosted the sentiment further for risky asset classes.

The MSCI Asia Pacific Index climbed 1.7% at 131.979 in Tokyo. The index is on course for its first weekly gain since declining for three straight weeks. North Korea’s artillery bombardment of South Korea caused the measure to lose 2.1% last week.

The Asia Pacific gauge fell 0.6% last month, the first decline in three months, amid concern that China will intensify efforts to curb inflation, speculation Europe will fail to contain the region’s sovereign-debt crisis from spreading and as tensions in the Korean peninsula escalated.

The MSCI Asia Pacific gauge surged 1.7% yesterday after reports showed that US payrolls and manufacturing climbed. A report this week also showed that China’s manufacturing activity grew at the fastest pace in seven months in November.

The Nikkei in Tokyo was up 0.1% at 10,182 while the S&P/ASX 200 index in Sydney rose 0.3% at 4,689. The Hang Seng in Hong Kong was up 0.4% at 23,545. The Shanghai SE Composite index in China was down 0.2% at 2,838 after being as high as 2,853.

South Korea’s Kospi Index was up ~0.1% at 1,953. The Taiex in Taiwan advanced 0.5% at 8,629 while the Straits Times index in Singapore rose 0.4% at 3,211.

Pending sales of US existing houses jumped by a record 10.4% in October, the National Association of Realtors said yesterday. That compares with a median estimate by economists for a 1% drop.

Separate reports showed claims for jobless benefits over the past month on average dropped to a two-year low, and that November chain-store sales exceeded estimates.

European Central Bank policy makers meeting in Frankfurt yesterday delayed the bank’s exit from emergency liquidity measures as a sovereign-debt crisis threatens to engulf Portugal and Spain.

Crude oil for January delivery jumped 1.4% in New York yesterday to $88 a barrel, the highest settlement since Oct. 8, 2008.

The London Metal Exchange Index of prices for six industrial metals, including copper and aluminum rose 1.6% yesterday, a third consecutive advance.

US Markets on Thursday:

US stocks rallied on Thursday with the Dow Jones Industrial Average posting its second straight triple-digit gain after reports on retail sales and pending home sales came in ahead of estimates.

Also, the European Central Bank (ECB) extended its liquidity support measures for the European banks while refraining from adding to the bond buying programme.

Posting its first back-to-back sessions of triple-digit gains since late July, the Dow Jones Industrial Average gained 106.63 points, or 1%, to 11,362.41, with 27 of its 30 components rising.

The S&P 500 index rose 15.46 points, or 1.3%, to 1,221.53, with financial companies pacing gains among its 10 industry groups.

The Nasdaq Composite Index added 29.92 points, or 1.2%, to 2,579.35.

For every stock that was declining, nearly three stocks gained on the New York Stock Exchange, where volume topped 1.1 billion shares.

The dollar rose against the euro and the British pound, but slipped versus the Japanese yen.

Oil for January delivery rose $1.25 to settle at $88 a barrel.

Gold futures for February delivery gained $1 to settle at $1,389.30 an ounce.

The yield on the benchmark 10-year US Treasury rose to 3% from 2.96% on Wednesday. The 10-year yield hasn't been at 3% since late July.

Home Depot, Alcoa and Bank of America led the advances.

Retailers helped prop up stocks as strong chain-store sales started trickling in, signaling that American consumers are loosening their purse strings. Shares of Abercrombie, Dillards and JC Penney all jumped.

On Wednesday all the three major US stock indexes had surged more than 2% on the back of encouraging reports on the consumer confidence and manufacturing PMI. The blue-chip Dow index added 249 points, its biggest one-day gain since early September.

The ECB announced that it will continue its stimulus measures and will keep buying government bonds.

ECB President Jean-Claude Trichet said that the central bank would keep offering banks access to emergency loans through the first quarter, helping to assuage some of the concerns over the sovereign debt troubles.

The comments, and word that the ECB was in the market buying peripheral euro-zone debt, helped lift the euro against the dollar. There is a bit of relief in the markets that the ECB is not going to withdraw liquidity.

An encouraging report on the housing market helped US stocks extend an early rally.

After the start of trading, the National Association of Realtors said its pending home sales index surged 10.4% in October after slipping 1.8% in September. The index, which measures sales contracts for existing homes, was expected to be unchanged.

Separately, the US government reported that the number of Americans filing for first-time unemployment rose to 436,000 last week, while economists had expected 422,000 new claims.

The government will release the widely followed monthly jobs report on Friday before the opening bell. American employers are expected to have added 130,000 jobs in November after adding 151,000 jobs in October. The unemployment rate is expected to remain unchanged at 9.6%.

Discount food shopping giant Costco announced that its sales were up 9% year over year. Clothing brand Abercrombie & Fitch reported sales were up 22%, and Macy's showed an increase of 6.1%. Same-store sales measure sales at stores open at least a year.

Food and beverage giant PepsiCo said that it would buy Russian food and beverage company Wimm-Bill-Dann Foods for nearly $5.8 billion. The purchase will establish PepsiCo as the largest food and beverage business in Russia.

Shares of PepsiCo dipped slightly.

Johnson & Johnson announced that it is recalling 12 million bottles of over-the-counter Mylanta and almost 85,000 bottles of its AlternaGel liquid antacid. Shares of Johnson & Johnson edged up modestly.

European Markets on Thursday:

European stock benchmarks advanced for a second straight session on Thursday as the European Central Bank (ECB) said that it would delay the withdrawal of emergency liquidity, though it stopped short of announcing an expansion of its bond purchase programme.

The data out of the US and China has been good throughout the week and that has provided the underlying support for the world equity markets.

The Stoxx Europe 600 index, which gained 2% in the previous session, closed up 1.7% to 271.61.

The European benchmark was a little choppy while ECB President Jean-Claude Trichet spoke but the gains accelerated after the press conference ended. Strong retail sales and real-estate data out of the US also helped.

France’s CAC 40 index rose 2.1% to 3,747.04, while the UK’s FTSE 100 surged 2.2% to 5,767.56 and Germany’s DAX 30 index advanced 1.3% to 6,957.61.

Among peripheral indices, Spain’s IBEX 35 index rose 2.8%, extending Wednesday’s 4.4% gain.

The Stoxx 600 index snapped a three-session losing streak on Wednesday on speculation that European policy makers may intervene more aggressively to halt the sovereign-debt crisis that has engulfed Greece and Ireland and is increasingly threatening Portugal and Spain.

The ECB left its benchmark interest rate unchanged at 1%, as widely predicted, and Trichet declined to comment on speculation that the central bank may boost its bond purchase program. The ECB’s only move was to delay plans to withdraw emergency liquidity measures in order to combat the market strain.

The announcement of a large expansion in the bond purchase program the markets had been hoping for didn’t happen.

Still, there were reports that the ECB was a large buyer in peripheral euro-zone bond markets, helping to further narrow spreads between peripheral and German bonds. The ECB began buying bonds on open markets in May to halt a run on Greek debt. Purchases slowed after July but they have recently risen again.

Also, a successful Spanish bond auction propped up the mood. The Spanish government sold around 2.5 billion euros ($3.24 billion) in three-year bonds at a maximum yield of around 3.8%. The yield rose sharply from a previous sale.

The Spanish auction helped take pressure off from Portugal and Italy.

Portugal’s PSI 20 gained 1.9% to 7,684.11 and Italy’s FTSE MIB rose 2.5% to 20,054.

The European rally was led by mining stocks while oil-related stocks also provided support and the financial space was also in the green.