Without any clear cause or catalyst, the stock market has turned upward to come in touch with the session high. Although natural resource plays like energy (+1.6%) and materials (+1.6%) continue to provide the most leadership, tech stocks (+0.6%) are chipping in.
As a group, tech stocks have been lagging resource-plays this session. However, since the group makes up the largest sector by market weight, their gains come with added influence. Among the strongest movers in the space, Apple (AAPL 337.09, +4.90) is up about 1.5% after a favorable analyst report was released this morning. In contrast, Cisco (CSCO 16.13, -0.14) continues to encounter selling pressure following its tempered guidance.
The Swiss franc climbed against all of its 16 most-traded peers, reaching a record versus the euro, on concern Greece’s debt crisis threatens the region’s economic recovery as European leaders struggle to resolve it.
The euro erased losses against the dollar as stocks rallied. The pound advanced after the U.K.’s gross domestic product rose in the first quarter. The franc climbed versus Europe’s shared currency for a fourth day, the longest winning streak in a month.
The franc also strengthened as investors speculated the record exchange rate against the euro won’t prevent Switzerland’s central bank from raising interest rates as the economy expands. Jan-Egbert Sturm, head of the KOF Swiss Economic Institute, told state television the central bank may increase borrowing costs from near zero as soon as next month.
The Organization for Economic Cooperation and Development said in a report today the Swiss central bank should start raising borrowing costs this year to counter emerging inflationary pressures.
“Equities have turned positive, and the euro is benefiting from it,” said Brian Taylor, chief currency trader at Manufacturers & Traders Trust in Buffalo, New York. “The equity market is moving up a little bit despite the numbers that came out with durable goods.”
U.S. durable goods orders decreased 3.6 percent following a 4.1 percent jump in March, dropping the most in six months, Commerce Department data showed today.
The euro fell against the franc as European officials disagreed over how to resolve the debt crisis.
European Union Economic and Monetary Affairs Commissioner Olli Rehn told the French newspaper Les Echos in an interview Greek debt maturities could be extended on a voluntary basis.
European Central Bank Executive Board Member Juergen Stark said Greece, Ireland and Portugal need a “drastic change” in economic policy. Restructuring Greece’s debt “cannot, must not be the solution,” Stark said in a speech in Berlin. Euro-area leaders should “please consider the consequences” of a debt restructuring, Stark said.
The dollar index is showing modest strength this morning, but this isn't doing much to weaken the commodity complex.
However, crude oil has been in the red all morning and was lower ahead of inventory data. Following the data, which showed a build of 616K versus consensus of a draw of 1700K, crude oil sold off to $99.00 and is now down 0.4% at $99.16/barrel.
Natural gas was trending higher this morning until its recent pullback. However, it's pulled back a few cents, but remains in positive territory at $4.41, up +0.4%.
Precious metals have been higher all morning with notable strength in silver, which began posting strong gains in the overnight session. About 40 minutes ago, silver hit session highs of $37.49/oz. and remains near those session highs of $37.34/oz. Gold is up 0.3% at $1527.30/oz.
Deutche Bank has changed its BoE rate call following today's UK Q1 GDP data release and pushed back its view of the first hike until November and assuming 25bps per quarter thereafter. "Our new forecast is therefore for rates at 0.75% by end-2011 and 1.75% by end-2012 (down from our original forecast of 1.00% and 2.50%)", wrote George Buckley at DB.
Despite an early effort to quickly climb back to the flat line, stocks have failed to generate enough momentum to extend the move into higher ground. The market's inability to generate a gain has left it to trade mixed at the neutral line.
Meanwhile, the dollar has slowly reclaimed some of its overnight gain. It now leads a basket of major foreign currencies by 0.2%. Most of that is because the euro has fallen 0.4% to $1.403, which puts it back near the two-month low that it set this past Monday.
Struggles to hold onto extended gains, the pullback off leveraged driven highs of $1.6260 extending to $1.6235. Bids remain to $1.6210, stops on break of $1.6205. Resistance remains into $1.6260/70, a break to expose $1.6300/10.
U.S. stocks were set to open little changed Wednesday, as investors remain cautious amid a host of economic uncertainties.
Economy: New orders for long-lasting goods fell more than expected in April, the Commerce Department said. Durable goods orders fell 3.6% last month, versus a forecasted 2% decline.
Companies: Shares of AIG (AIG, Fortune 500) fell 2%, after the insurance giant's long-awaited stock sale late Tuesday raised $8.7 billion, leaving the U.S. government with a tiny profit on the offering.
Applied Materials (AMAT, Fortune 500) reported strong quarterly results late Tuesday, but the semiconductor company issued a profit outlook for the current quarter that fell short of analysts' expectations. Shares were down 5% in premarket trading.
Shares of Russian search engine Yandex (YNDX) surged 52% to about $38 in premarket trading, a day after the company went public at $25 a share.
California Pizza Kitchen is being bought by Golden Gate Capital for $470 million, or $18.50 per share in cash. Shares of CPK (CPKI) rose 12% ahead of the opening bell.
Oil for July delivery slipped 90 cents to $98.69 a barrel.
Gold futures for June delivery rose $2 to $1,525.40 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury eased, pushing the yield up to 3.13% from 3.12% late Tuesday.
Offers: $1.4100, $1.4130/35, $1.4145/50, $1.4160/65, $1.4195/200
Bids: $1.4040, $1.4000, $1.3970/68
Offers: Y82.25/30, Y82.75
Bids: Y81.75/70, Y81.45/30
Retains a firm tone into early NY, holds toward its earlier posted highs at $1.6239. Next resistance seen at $1.6250/60 ($1.6258
1.618% swing projection of the pullback from $1.6210/1.6132), a break to open a move toward $1.6280 ahead of stronger interest at $1.6300/10. Support seen back at $1.6210/00.
Model sales of the cross drives cable through reports stops above Tuesday's highs of $1.6210, the rate extending move to $1.6226. Next resistance noted between $1.6300. Focus on key support in euro-sterling at stg0.8665/60, a break here to open a deeper move in the cross. If holds above could place a counter weight to the cable rally
Hang Seng + 0.07% 22,747.28
Shanghai Composite -0.91% 2741.74
Nikkei -0.57% 9,422.88
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