Asia Stocks Drop as Fed Refrains From Stimulus (Source: Bloomberg)
Asian stocks (MXAP) dropped for a second day as the Federal Reserve refrained from taking new measures to spur growth and U.S. retail sales rose at the slowest pace in five months, clouding the earnings outlook for Asian exporters. Sony Corp. (6758), which generates 20 percent of its sales in the U.S., fell 1.5 percent in Tokyo. Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, declined 1.9 percent in Seoul. BHP Billiton Ltd. (BHP), the world’s biggest mining company, dropped 1.3 percent in Sydney after metal prices fell. “Nothing came out of the Fed meeting,” said Shintaro Takeuchi, portfolio investment group manager at Tokio Marine & Nichido Fire Insurance Co. that manages $111 billion in assets. “That’s negative for stocks.”
Japanese Stocks Decline For Second Day as Fed Doesn’t Offer New Stimulus (Source: Bloomberg)
Dec. 14 (Bloomberg) -- Japanese stocks fell for a second day after the Federal Reserve offered no new measures to spur growth and U.S. retail sales rose at the slowest pace in five months, clouding the earnings outlook for Asia’s exporters. Sony Corp. (6758), which generates 20 percent of its sales in the U.S., fell 1.5 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender by market value, lost 1.2 percent. Inpex Corp. (1662), Japan’s No. 1 energy explorer, dropped 0.6 percent even after oil prices rose. The Nikkei 225 Stock Average (NKY) fell 0.7 percent to 8,495.02 as of 9:12 a.m. in Tokyo. The broader Topix index lost 0.6 percent to 736.45.
U.S. Stocks Decline as Fed Refrains New Actions (Source: Bloomberg)
U.S. stocks retreated, reversing an earlier advance for the Standard & Poor’s 500 Index, after Federal Reserve policy makers refrained from taking new actions to bolster growth at the world’s largest economy. Nine out of 10 groups in the S&P 500 (SPXL1) declined, led by companies most-dependent on economic growth. Sears Holdings Corp. (SHLD), Alcoa (AA) Inc. and Bank of America Corp. (BAC) slumped at least 2.3 percent. Best Buy Co. (BBY), the largest consumer-electronics retailer, tumbled 15 percent as discounts hurt gross margin. Amazon.com Inc. (AMZN) dropped 4.8 percent as Goldman Sachs Group Inc. said estimates for the biggest Internet retailer need to fall. The S&P 500 slid 0.9 percent to 1,225.73 at 4 p.m. New York time, reversing a gain of 1.1 percent and falling to the lowest level since Nov. 29. The Dow Jones Industrial Average retreated 66.45 points, or 0.6 percent, to 11,954.94. The Russell 2000 Index of small companies lost 2.1 percent to 718.06.
European Stocks Advance on German Investor Confidence, Spanish Debt Sale (Source: Bloomberg)
European stocks climbed, rebounding from their biggest slide in three weeks, as Spain sold more securities than it had planned at a debt auction and a report showed that investor confidence in Germany improved. Royal Dutch Shell Plc and BP Plc (BP/) gained more than 1.5 percent, dragging a gauge of oil producers higher. Banks and insurers limited gains on the Stoxx 600 with Banco Santander SA (SAN) and BNP Paribas (BNP) SA, the largest lenders in Spain and France, respectively, dropping at least 1.5 percent. The Stoxx Europe 600 Index rose 0.5 percent to 237.30 at the close. The gauge pared an advance of as much as 1.2 percent as Reuters reported that German Chancellor Angela Merkel has rejected increasing the upper limit for the funds held by Europe’s planned permanent rescue facility, citing sources in Merkel’s ruling coalition. The gauge has still declined 14 percent this year amid concern the euro area’s sovereign-debt debt crisis will derail the global economic recovery.
Fed: U.S. Economy ‘Expanding Moderately’ (Source: Bloomberg)
Federal Reserve policy makers said the U.S. economy is maintaining its expansion even as the global economy slows, while refraining from taking new actions to lower borrowing costs. “The economy has been expanding moderately, notwithstanding some apparent slowing in global growth,” the Federal Open Market Committee said in a statement at the conclusion of its meeting today in Washington. “While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated.” Signs of an improving U.S. economy are giving officials led by Chairman Ben S. Bernanke leeway to keep policy unchanged as they discuss ways to improve how they communicate the likely future path of interest rates to the public. At the same time, unemployment at 8.6 percent and risks to global growth from the European debt crisis may prompt more easing in coming months.
Retail Sales Climb Less Than Forecast (Source: Bloomberg)
Retail sales rose in November at the slowest pace in five months, indicating American consumers were trying to live within their means heading into the holiday shopping season as wages dropped. The 0.2 percent gain in purchases fell short of the 0.6 percent median forecast of economists surveyed by Bloomberg News and followed increases in the prior two months that were larger than previously estimated, according to data from the Commerce Department today in Washington. Other reports showed inventories climbed in October and job openings fell. Demand for autos, the latest fashions and electronics propelled the increase in spending last month, while households cut back on groceries and restaurant meals, showing how limited job and income gains are holding consumers back. Retailers like J.C. Penney Co. are pushing discounts to drum up business, a sign of a lack of inflation that allowed the Federal Reserve today to hold interest rates near zero.
Treasuries Climb on 10-Year Auction Demand, Fed Refraining From New Action (Source: Bloomberg)
Treasuries rose after the Federal Reserve refrained from taking new actions to boost growth and the refuge appeal of U.S. debt boosted demand to the highest since April 2010 at today’s $21 billion 10-year note auction. Yields on current 10-year notes reached a two-week low after the sale’s bid-to-cover ratio, which gauges demand by comparing total bids with the amount offered, reached 3.53, the strongest level in 20 months. Concern than Europe’s sovereign- debt crisis is far from a resolution damped risk appetite. “There is no Fed activity being priced in until 2013,” said Bret Barker, a portfolio manager at Los Angeles-based TCW Group Inc., which manages about $115 billion in assets. “The strength of the 10-year auction has been the driver of price action today.”
U.S. Stocks Fall as Dollar, Treasuries Gain Following Fed Policy Statement (Source: Bloomberg)
U.S. stocks fell, while the dollar and Treasuries rallied, as the Federal Reserve refrained from taking more steps to stimulate the economy and concern grew that European leaders won’t agree on ways to expand the region’s bailout capacities. Gold slumped to a seven-week low. The Standard & Poor’s 500 Index lost 0.9 percent to 1,225.73 at 4 p.m. in New York, wiping out a gain of as much as 1.1 percent. The Dollar Index rose 1 percent, topping 80 (DXY) for the first time since January, as the euro fell on reports that German Chancellor Angela Merkel rejected boosting Europe’s permanent bailout fund. Ten-year Treasury yields slipped five basis points to 1.97 percent following stronger-than-average demand at an auction. The S&P GSCI Index of commodities rose 1.5 percent after surging as much as 2.3 percent.
Stocks headed lower as Fed policy makers said the U.S. is maintaining growth even as the global economy slows and defied speculation from some investors that the central bank would signal plans for a third round of large-scale asset purchases known as quantitative easing, or QE3. The Fed said it would continue its exchange of $400 billion of short-term debt with long-term securities to lengthen the average maturity of its holdings, a move dubbed Operation Twist.
U.S. Business Inventories Rose 0.8% in October (Source: Bloomberg)
Inventories in the U.S. rose in October by the most in five months as companies moved to bring stockpiles in line with demand. The 0.8 percent gain followed little change in stockpiles a month earlier, the Commerce Department said today in Washington. The October increase matched the median projection in a Bloomberg News survey. Sales climbed 0.7 percent during the month. Businesses kept enough goods on hand to last 1.27 months at the current sales pace in October, close to its lowest level of the year. Retail sales also rose in November as Americans bought more Apple Inc. (AAPL) iPhones and demand for cars improved, another report showed today. “We think inventories will add modestly to growth in the fourth quarter after subtracting in the third,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said before the report. “The economic outlook appears to be improving, so there is reason for businesses to expand their inventories.”
South Korea’s Unemployment Rate Held at 3.1% in November From Month Ago (Source: Bloomberg)
South Korea’s unemployment rate held at a three-year low last month as service industries hired more workers to meet growing demand. The jobless rate stood at 3.1 percent in November, unchanged from October, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of 10 economists was for a rate of 3.2 percent. South Korea’s job market is showing resilience even as the deepening debt crisis in Europe and slowing global growth threaten to cool an economy that has grown for 11 straight quarters. Industrial production unexpectedly fell in October while department store sales also dropped. “Labor market conditions will likely worsen due to rising uncertainties in Europe,” Lee Sung Kwon, an economist at Shinhan Investment Corp. in Seoul, said before the release. “The central bank and government may try to support growth with lower interest rates and more fiscal spending.”
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