Published On: Tue, Oct 23rd, 2012

US Stocks Barely Rise

During the last hour of trading on Monday, stock markets in the United States rose enough for the day to end slightly ahead. The earlier fall in share prices was attributed to corporate earnings reports. Companies like Caterpillar reported lower profit forecasts for the next quarter and reduced earnings for the third-quarter. Overall, the Dow Jones Industrial Average advanced 2.38 points or 0.1 percent to 13,345.89. After losses of 205-points on Friday, blue-chip benchmarks began to rebound. The Nasdaq Composite Index gained by 0.4 percent, or 11.34 points, to reach 3,016.96.

Gains on the Standard & Poor’s 500 index were led by the coal mining group, Peabody Energy. Peabody Energy gained 11.82 percent during the day after it reported a forecast higher than predicted. The Standard & Poor’s 500 index gained a total of 0.63 points or less than 0.1 percent. It ended the day on Monday at 1,433.82. The gain was primarily led by technology stocks.

VF Corporation and SunTrust Banks posted lower share prices after slowing revenue reports. As the maker of Wrangler jeans and North Face jackets, VF Corporation has been hit hard by weakened revenue in Europe. For the day, it fell 4.38 percent. SunTrust Banks also posted lower share prices after its third-quarter revenue report came out. Amid falling revenue, share prices in SunTrust Banks fell 3.35 percent.

The largest drop among S&P 500 components came on Monday after a report by the Food and Drug Administration. The FDA is presently investigating five deaths that could be linked to consumption of the popular Monster energy drink. After this news hit the marketplace, Monster Beverage fell 14.23 percent. Monster reported that it was not aware of four of the five deaths attributed to drinking its beverage.

The digital, video and audio technology company, Avid Technology, reported that it was expecting a third-quarter loss. Amid this news, share prices for Avid Technology dropped 18.12 percent. Another stock, (ACOM) rose 7.78 percent. The rally was led by news that the genealogy website would be acquired by a European private equity firm. is expected to be purchased for a sum of $1.6 billion.

European Markets Fall, Asia Holds Steady

The Stoxx Europe 600 dropped 0.4 percent as a result of lowered earnings reports in the United States and a uneventful summit of European Union leaders. Last week, policy makers in the EU met in Brussels to discuss potential solutions to the debt crisis. Despite two days of talks, European Union leaders failed to come up with a bailout package for Spain or a stronger plan for economic integration.

A weak economy in the United States contributed to a minimal rise in share prices in Asia. After disappointing trade data in Japan, the Nikkei Stock Average barely managed to rise 0.1 percent. A weakened yen has helped to fuel the continued rise of Japanese stocks over the last week. Monday marked the sixth day of gains in a row for the Nikkei Stock Average. In Australia, the S&P/ASX 200 dropped 0.7 percent while the Shanghai Composite in China advanced 0.2 percent. The Hang Seng in Hong Kong rose by 0.68 percent to 21,697.55.

By Tuesday morning, the S&P/ASX200 was up by 13.5 points to 4,554.5. Earnings reports are expected to be released next week. An attempt by investors to buy up banking stocks has lead share prices in this sector to rise. Shares of ANZ rose by 6.5 cents to reach $25.72 while Commonwealth Bank shares gained by 27 cents to $56.94. At the same time, NAB’s shares increased by 3.5 cents to reach $26.05.

Not all news was good out of Australia, however. Energy stocks faced a mixed session on early Tuesday morning as AGL Energy dropped 36 cents to $14.60. The chief executive of AGL Energy, Michael Fraser, reportedly said that the company would make a maximum of $640 million during the current fiscal year.

The guidance for Oz Minerals is expected to be 130,000 to 150,000ounces of gold and a total of 100,000 to 110,000 tons of copper. This full-year guidance was set for Prominent Hill mine and is expected to be met in full by the company. Shares of Oz Minerals had originally fallen amid lower production reports in September. The positive announcement today caused shares of Oz Minerals to rise 24 cents to $8.53.


The declining sales outlook of Caterpillar has hurt the demand for oil over the last day. As the world’s largest producer of mining and construction equipment, declining revenue by Caterpillar shows underlying signs of a weakened economy overall. Light sweet crude oil for November fell $1.32 since Friday to end at &88.73. It had previously lost $2 during Friday’s trading session. December deliveries of Brent North Sea crude oil in London fell by US$0.70 to US$109.44 a barrel as well.

Gold futures managed to rise during the trading session as some foreign investors enjoyed having a weakened United States dollar. December deliveries rose by 0.1 percent or US$2.30 to reach US$1,726.30. The trading session saw the euro rise by 0.2 percent to settle at US$1.3045. This rise in Europe’s currency caused some investors to enter the gold market as purchasers.

Other base metals did not enjoy the same growth in prices. LMY three-month copper dropped 0.8 percent on Friday to US$7,952 per metric ton. Tin retreated the most of any base metal and is presently trading 3.8 percent lower at US$20,465 per ton.

European Bonds Mixed

Some investors have speculated that the recent victory by Prime Minister Mariano Rajoy in regional elections have given more leverage room to delay a bailout package. As a result, ten-year bonds in Spain increased by 11 basis points to 5.48 percent. German bonds gained three basis points to 1.62 percent while Italian ten-year bonds decreased one basis point to settle at 4.76 percent. In the United States, ten-year bonds increased by three basis points to end at 1.79 percent. Investors are increasingly reluctant to speculate on United States bonds since the presidential race is currently forecasted to be a tie. Until the presidential elections are over, many investors will hold off on investing in US Treasuries.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.