News Column

Wall Street Stays Cautious

August 6, 2014

WASHINGTON (Alliance News) - Early indications suggest that Wall Street stocks may see a lower opening, as traders still contend with uncertainties against the backdrop of rising geopolitical risks and monetary policy uncertainties. Asian stocks ended lower across the board earlier in the global trading and the European markets are also seeing weakness, stung by a couple of weak domestic economic data on German factory orders and UK industrial production. With the absence of any major economic catalysts, the domestic markets could go about a consolidation mode unless bargain hunting triggers some buying.

At 6:15 am ET, the Dow futures are declining 34 points, the S&P 500 futures are down 2.75 points and the Nasdaq 100 futures are moving down 6.50 points.

Downward momentum in the markets resumed on Tuesday, as US stocks declined amid renewed tensions in Ukraine and the release of fairly strong service sector readings that triggered expectations for an early rate hike.

On the economic front, the Commerce Department is scheduled to release its trade balance report for June at 8:30 am ET. Economists expect the trade deficit to widen to USD45 billion from USD44.4 billion in May.

The Treasury is due to make announcements concerning the treasury auctions of 3-year and 10-year notes and 30-year bonds at 8:30 am ET. The Energy Information Administration will release its petroleum status report for the week ended August 1 at 10:30 am ET.

In corporate news, Disney (DIS) reported better than expected fourth quarter results, helped by broad based strength across all its business units. Among the video game publishers, Take-two Interactive (TTWO) reported first quarter results that exceeded estimates. The company also maintained its full year guidance. Activision Blizzard's (ATVI) second quarter results also bettered expectations. The company raised its full year guidance, which however was slightly below estimates.

Liberty Global (LBTYA) reported a wider loss for its second quarter, while its revenues rose year-over-year and also exceeded estimates. Scientific Games' (SGMS) second quarter results came in below estimates.

Cerner (CERN) said it has signed a definitive agreement to buy the assets of Siemens Health Services for USD1.3 billion in cash. The company expects the deal to be more than 15 cents accretive to its non-GAAP earnings per share in 2015 and more than 25 cents accretive in 2016.

AIG (AIG) announced a deal to buy Ageas Protect Limited from Belgian insurer Ageas for USD305 million. The deal is expected to close in the fourth quarter of 2014.

Charles River (CRL), Dynegy (DYN), Jack In the Box (JACK), MBIA (MBI), Novatel Wireless (NVTL), Prudential (PRU), Symantec (SYMC), Transocean (RIG), ViaSat and (VSAT) are among the companies due to release their quarterly results after the close of trading.

The major Asian markets fell across the board, with the negative close on Wall Street and simmering tensions in Ukraine and the Middle East sapping the risk appetite of traders. The Taiwanese market bucked the downtrend with a marginal gain.

The yen's strength and the general risk aversion hurt Japanese stocks, as the Nikkei 225 average opening lower and declining steadily in the morning and moving sideways thereafter. The index ended down 160.52 points or 1.05% at 15,160. Australia's All Ordinaries fell 7.50 points or 0.14% before closing at 5,504. Hong Kong'sHang Seng Index ended at 24,573, down 75.77 points or 0.31% and China's Shanghai Composite Index ended 2.48 points or 0.11% lower at 2,218.

On the economic front, preliminary estimates released by Japan'sCabinet Office showed that its leading economic indicators index for Japan rose to 105.5 in June from 104.8 in May. Economists had expected a more modest improvement to 105.4. However, the coincident index slipped 1.8 points to 109.4 and the lagging index eased 0.9 points to 116.9.

European stocks are tumbling after ending Tuesday's session firmer. Traders digested some domestic earnings and weak German factory orders data released earlier in the day.

In corporate news, Reinsurers Swiss Re and Hannover Re reported higher profits for their second quarter and also stated that they remain on track to meet the financial targets for the year. UK investment firm Legal & General also reported higher profits for its first half. Dutch financial services firm ING Group reported a strong increase in its second quarter profits. Standard Chartered first half pre-tax profits came in line with expectations.

On the economic front, German Federal Statistical Office reported that factory orders fell 3.2% month-over-month in June, steeper than the 1.6% drop in May. The performance also confounded economists, who estimated a 0.9% increase.

The UK Office for National Statistics released a report showing a less than expected increase in industrial and manufacturing output. Industrial output rose 0.3% month-over-month and was 1.5% higher compared to last year.

The British Retail Consortium reported that UK shop prices fell 1.9% year-over-year in July following the 1.8% drop in June. Economists expected a 1.6% drop for the month.

The Italian economy entered a technical recession in the second quarter, preliminary estimates from the statistical office Istat showed.

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Source: Alliance News

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