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Broadgate: Market News 28/8

28 August 2012

Shares of Apple climbed to another record on Monday, keeping the Nasdaq index afloat in the lowest trading volume of the year, with investors looking ahead to a key speech by Federal Reserve Chairman Ben Bernanke on Friday.

Apple Inc hit an all-time high of $680.87 during the day after the iPad maker won a $1 billion judgment in a patent lawsuit against Samsung Electronics. The Korean company said it would contest the verdict. Apple, the world’s most valuable company, ended up 1.9 percent at $676.68.

The verdict on Friday jolted shares of Google Inc, as the case could change the dynamics of the mobile device market. Companies using Google’s Android system may have to consider design changes. Google shares declined 1.4 percent to $669.22.

Beyond the notable moves of those tech giants, investors mostly cooled their heels before Bernanke’s remarks to central bankers at Jackson Hole, Wyoming, on Friday.

Data showed volume was 4.46 billion shares traded on the New York Stock Exchange, the Nasdaq and the Amex. The year-to-date average is about 6.6 billion.

Expectations are for Fed action of some kind next month, but Bernanke is likely to keep markets guessing about the timing of another round of bond purchases.

“The big upswing in the equity market that we’ve seen is based on the belief the Fed is going to do something and that Bernanke is going to say sooner rather than later that he’s willing to commit to further easing,” said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.

“But I don’t think he’s got the policy support within the Fed to do that, so the markets are set for some more correction here.”

The Dow Jones industrial average was down 33.30 points, or 0.25 percent, at 13,124.67. The Standard & Poor’s 500 Index was down 0.69 points, or 0.05 percent, at 1,410.44. The Nasdaq Composite Index was up 3.40 points, or 0.11 percent, at 3,073.19.

Stocks have rallied in recent weeks on growing expectations for a third round of quantitative easing from the Fed, as well as possible action from the European Central Bank. News from Jackson Hole could determine whether the rally that took the S&P index to four-year highs will be sustained.

The S&P 500 has been unable to stay above the April high of 1,422.38, which is seen as a key resistance point, the index finds support at the 1,400 level.

Investors will be faced with other potentially market-moving events in the next few weeks.

The European Central Bank will meet on September 6 and is expected to take some action to support the region’s sputtering economy and tackle the debt crisis.

Germany’s constitutional court is expected to rule on the legality of the euro zone bailout fund on September 12.

The Dow was led down by shares of IBM Corp, which agreed to buy Kenexa Corp for $1.3 billion. IBM shares were off 1.1 percent at $195.69. Shares of Kenexa were up 41.4 percent at $45.79.

In other deal news, car rental firm Hertz Global Holdings said it would buy smaller rival Dollar Thrifty Automotive Group for about $2.3 billion, ending years of an on-off takeover battle.

Shares of Hertz climbed 8.1 percent to $14.21 while Dollar Thrifty gained 7.5 percent to $87.08.

Hudson City Bancorp Inc’s stock jumped 15.7 percent to $7.45 after the company agreed to be acquired by M&T Bank Corp for $3.7 billion in cash and stock. M&T shares advanced 4.6 percent to $89.82.

Decliners outpaced advancers on the NYSE by about 15 to 14 while on the Nasdaq declining stocks were about even with advancing ones.

Commodities

Brent oil futures were steady above $112 a barrel on Tuesday, supported by supply concerns after U.S. companies slashed crude production in the Gulf of Mexico as Tropical Storm Isaac threatened to strengthen into a hurricane.

Brent crude added 3 cents to $112.29 per barrel by 0429 GMT, while U.S. crude gained 5 cents to $95.52.

Brent rose to as high as $115.50 on Monday, gaining nearly $2 as U.S. refiners shut facilities on the Gulf Coast ahead of Isaac, while U.S. oil had touched a session-peak of $97.72.

Gold edged lower on Tuesday after rising to its highest in over four months in the previous session, as caution prevailed ahead of a central bankers’ meeting this week.

Spot gold fell 0.3 percent to $1,658.84 an ounce by 0318 GMT, after rising to $1,676.45 on Monday, its highest level since mid-April.

U.S. gold fell 0.8 percent to $1,661.80.

Currencies

The euro sagged against the dollar while the yen gained broadly as market players trimmed their long positions in risk currencies ahead of a central bankers’ meeting later in the week.

The euro fell 0.2 percent against the dollar to $1.2474, down more than a full cent from its seven-week high of $1.2590 hit last Thursday.

Against the yen, the euro fell 0.5 percent to 97.96 yen as some market players are forced to cut losses on the pair, while Japanese investors were also said to be selling the euro against the yen.

The yen was also helped by Japanese exporters’ buying against the dollar as well as loss-cut buying in other cross/yen pairs. The U.S. dollar fell 0.3 percent to 78.52 yen.

The Aussie hit a one-month low of 81.22 yen, and a seven-week low of A$1.2068 per euro.

Source:  Reuters.com

The information set out herein has been obtained from various public sources and is by way of information only. Broadgate Financial can accept no liability of any sort in relation thereto and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.

Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments.

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