News Column

Wall Street Persists With Winning Optimism

June 2, 2014

WASHINGTON (Alliance News) - Early indications suggest that Wall Street stocks may open slightly higher after last week's record close by the Dow Industrials and the S&P 500 Index. Global cues are mixed, with Asian stocks closing mostly higher, while the European markets are showing some nervousness amid the release of lukewarm manufacturing data. The domestic markets turn their attention to the results of a couple of manufacturing surveys in a data heavy week.

At 6:15 am ET, the Dow futures are rising 21 points, the S&P 500 futures are moving up 1.10 points and the Nasdaq 100 futures are adding 1.50 points.

US stocks advanced in the week ended May 30th, with the momentum, supported by mostly positive economic numbers, helping the averages build on their previous week's gains.

On the economic front, the unfolding week's economic calendar is heavy, with several first-tier economic reports due for the week. Notable among them are the Labor Department's non-farm payrolls report for May, the ADP's private sector payrolls report for May, the results of the Institute for Supply Management's manufacturing and non-manufacturing surveys for May, Markit's final manufacturing and non-manufacturing readings for May, the weekly jobless claims report and the Federal Reserve's Beige Book report.

The Commerce Department's construction spending, trade balance and factory orders reports for April, auto sales for May, revised first quarter productivity and costs report, the Federal Reserve's consumer credit report for April and some Fed speeches round up the economic events of the week.

Markit is scheduled to release the final reading of its manufacturing purchasing managers' index for May at 9:45 am ET. Economists expect the index to be upwardly revised to 56.2 in May from 55.4 in April.

The Institute for Supply Management is due to release the results of its manufacturing survey at 10 am ET. The consensus estimate calls for an increase in the index to 55.5 in May from 54.9 in April. Also at 10 am ET, the Commerce Department will release its construction spending report for April. Economists expect construction spending to have risen by 0.7% month-over-month following a 0.2% increase in April.

In corporate news, Marathon Oil (MRO) announced that it has entered into an agreement to sell its wholly owned subsidiary Marathon Oil Norge to Det norske for USD2.7 billion. The company expects net proceeds of USD2.1 billion from the transaction, while it noted that the effective date of the transaction was January 1st, 2014.

The Asian markets that remained open for trading closed Monday's session higher, tracking the resilience shown by Wall Street stocks last Friday and positive Chinese manufacturing data. The Chinese, Hong Kong and Taiwanese markets were closed for public holidays.

Japan'sNikkei 225 average ended up 303.54 points or 2.07% at 14,936, its highest level in a little over a month. A majority of stocks advanced, with real estate and resource stocks leading the gains. Australia's All Ordinaries added 25.40 points or 0.46% before ending higher at 5,499.

On the economic front, the results of a survey by Markit and HSBC showed that manufacturing purchasing managers' index for May rose to 50.8 from 50.4 in April, exceeding the consensus estimate of 50.6 and signaling the fastest rate of expansion in five months.

Meanwhile, the Australian Industry Group reported that its manufacturing purchasing managers' index rose to 49.2 in May from 44.8 in April. Notwithstanding the notable improvement suggested by the index, the sector continues to remain in contraction territory. A report released by the Australian Bureau of Statistics showed that number of building approvals in Australia declined 5.6% month-over-month, belying expectations for a 2% increase.

Capital spending in Japan jumped 7.1% quarter-over-quarter in the first quarter, according to a report released by Japan'sMinistry of Finance. This represents a pick-up in pace from the 4% increase in the previous month. Excluding software, capital spending was up a better than expected 8.3%.

European stocks had a muted start to the day, with the French CAC 40 Index currently trading flat amid some volatility, while the German DAX Index and the UK'sFTSE 100 Index are up about 0.2% each.

In corporate news, Swiss pharma giant Roche announced a deal to buy Genia Technologies, a developer of DNA-sequencing technology, for USD125 million in upfront payment and an additional USD225 million milestones-based payment. Bayer said it has struck a deal with Finland-based Orion to develop and commercialize prostate cancer drug.

On the economic front, revised estimates released by Markit Economics showed that its manufacturing purchasing managers' index declined to 52.5 in May, down from the flash estimate of 52.5 and the April reading of 53.4. The results of a survey by Markit and CIPS showed that UK manufacturing activity grew at a slower pace in May, with the corresponding purchasing managers' index slipping 0.3 points to 57 in May. The slowdown was in line with estimates.

Data released by the Bank of England showed that mortgage approvals in the UK fell to a 9-month low of 62,918 in April from 66,563 in March. Economists expected a reading of 64,500. Meanwhile, the M4 money supply fell at a faster year-over-year rate of 0.6%.

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Source: Alliance News

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