May 19, 2024

Shares Close at Five-Year High

Stocks advanced on Wall Street on Friday, with the Standard Poor’s 500-stock index eclipsing its five-year closing high, after a jobs report showed American employers kept the pace of hiring steady in December.

The S.P. 500 ended up 0.5 percent at 1,466.47, the Dow Jones industrial average gained 0.3 percent, and the Nasdaq composite index added a point. For the week, the S.P. 500 added 4.6 percent, the Dow rose 3.8 percent and the Nasdaq jumped 4.8 percent, their largest weekly percentage gains in more than a year.

The Labor Department said payrolls outside the farming sector grew by 155,000 jobs last month, slightly below November’s level. Gains in employment were distributed broadly throughout the economy, from manufacturing and construction to health care.

Though the jobs data showed that lackluster economic growth was unable to make a dent in the still-high unemployment rate in the United States, it appeared to calm fears about the possibility of the Federal Reserve ending its highly stimulative monetary policy.

“When it comes to Fed policy, this report should keep policy steady,” said Tom Porcelli, chief United States economist at RBC Capital Markets in New York.

Minutes from the Fed’s December policy meeting, released Thursday, showed Fed officials were increasingly worried about the risks of asset purchases on financial markets, though they looked set to continue with the open-ended stimulus program for now.

The Fed’s policy of easy credit helped push the S.P. 500 to a 13.4 percent gain in 2012. Ending that policy would remove an incentive for investors to purchase riskier assets like stocks.

Eli Lilly said it expected 2013 earnings to increase to $3.75 to $3.90 a share excluding items, from $3.30 to $3.40 per share in 2012. The stock rose 2.5 percent.

Japan’s Nikkei share average climbed nearly 3 percent to a 22-month high on its first trading day of 2013 on Friday, as a deal in Washington to avert fiscal disaster buoyed investors’ appetite for risk, and the weaker yen lifted exporters such as Toyota. Japan’s markets were closed Thursday for a holiday.

European stock markets ended the day higher.

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Yen Falls as Japan Forms New Government

Asian shares and other assets were capped in thin holiday trade, with investors focusing on the fate of U.S. negotiations to avert a budget crunch looming at the end of the year.

Markets in Singapore, Malaysia, Indonesia, the Philippines and South Korea were closed on Tuesday for the Christmas holiday, reopening on Wednesday.

Hong Kong and Australia remain closed on Wednesday. Europe also will not trade but, U.S. markets reopen later in the day.

MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.1 percent, after rising 0.3 percent the previous day on the back of a surge in Shanghai shares to five-month highs and a jump in Taiwan shares.

Shinzo Abe, whose party won a landslide victory in an election earlier this month, will be sworn in as Japan’s premier on Wednesday, when he is also expected to appoint his cabinet. He is prescribing a mix of aggressive monetary policy easing and big fiscal spending to beat deflation and rein in the strong yen.

He has kept up pressure on the Bank of Japan to deliver much stronger monetary easing policies and called for a 2 percent inflation target to beat deep-rooted deflation, pushing the yen to a 20-month low of 85.38 yen on trading platform EBS on Wednesday. Traders eyed the dollar’s 2011 high of 85.53 yen as the next target.

The euro rose as high as 112.47 yen on EBS, approaching its 16-month high of 112.59 yen hit on December 19.

The weaker yen has bolstered hopes for better earnings from Japanese companies and underpinned the Nikkei, which has gained some 17 percent since mid-November when the election was scheduled, fuelling expectations for Abe’s party to win. The yen has lost nearly 8 percent against the dollar in the same period.

The Nikkei was up 0.4 percent, holding above the key 10,000 mark.

“Most foreign funds have added Japanese shares and there are fewer participants today, but there still is a reason for the Nikkei to rise,” said Hideyuki Okoshi, general manager at Chibagin Securities. “Not only exporters but investors are buying other stocks which could benefit under the new government.”

Japanese government debt prices fell, with the 10-year bond futures falling to a three-month low of 143.65 in active trade. The 10-year JGB yield rose 1.5 basis points to 0.780 percent, matching a six-week high hit on December 19.

“We continue to see equities going high, so the pressure is on the long end of the JGB curve. For the short end of the curve, we continue to see the BOJ ease aggressively, so there is no change in that,” said Tadashi Matsukawa, head of Japan fixed income at PineBridge Investments.

Minutes of the BOJ’s policy-setting meeting in November showed on Wednesday that some board members said the central bank must act decisively, without ruling out any policy options, if the outlook for the economy and prices worsens further.

The dollar was also expected to stay firm this week as investors repatriate dollars, and as the U.S. fiscal impasse is likely to continue to sap investor appetite for risky assets and raise the dollar’s safe-haven appeal.

President Barack Obama may return to Washington from his Hawaiian holiday as early as Wednesday evening to address the unfinished “fiscal cliff” negotiations with Congress, an administration official said on Tuesday.

House of Representatives Speaker John Boehner failed to gain support for a tax plan at the end of last week, raising fears that the United States may face the fiscal cliff of some $600 billion in automatic spending cuts and tax increases set to start on January 1.

“The main index is rebounding after treading water on Monday and dropping on Friday, as investors eye the progress of U.S. fiscal negotiations,” Kim Soo-young, an analyst at KB Securities, said of South Korean shares which turned 0.7 percent higher in low holiday volume.

Activity is likely to remain subdued, with volume low and without major economic news.

Later in the session, Thailand will release trade data, which is expected to show exports in November posting very high annual growth compared with low levels last year that reflected the damage from the flooding.

South Korea’s key consumer sentiment index held steady in December from November and stood below the neutral point for a fifth consecutive month, the central bank said on Wednesday, diminishing hopes of a quick economic rebound.

Gold edged lower on Wednesday on uncertainty over whether the fiscal cliff, but a weaker yen sparked a rally in bullion futures on the Tokyo Commodity Exchange (TOCOM).

(Additional reporting by Ayai Tomisawa and Dominic Lau in Tokyo and Joyce Lee in Seoul; Editing by Daniel Magnowski and Chris Gallagher)

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Asia stocks mixed on Fed tightening worries; Nikkei sheds 0.32%

Asia stocks mixed on Fed tightening worries; Nikkei sheds 0.32%
Forex Pros – Asian stock markets were mixed on Wednesday, amid concerns over monetary tightening by the Federal Reserve, while shares in metal producers performed strongly after gold prices rose