Market Review By TraderXP:
Australia's dollar declined against most of its major peers amid speculation the nation's central bank will lower interest rates next week to shield the economy from a slowdown in mining.
The so-called Aussie was near a three-week low versus ist New Zealand counterpart as traders added to bets the Reserve Bank of Australia will reduce interest rates after a report yesterday showed a lower mining investment projection.
"It wouldn't be overly surprising if the RBA cuts rates next week, given yesterday's capital expenditure data, which was downgraded," said Peter Dragicevich, a currency economist in Sydney at Commonwealth Bank of Australia. "We don't think an actual cut next week will put too much downward pressure on Aussie - a lot of the cuts are already factored into the market."
Market News
Wall Street ends higher after swings on 'fiscal cliff'
Stocks finished higher on Thursday as investors bought on sporadic dips in a market roiled by conflicting comments from Washington about negotiations on an agreement to avoid the "fiscal cliff."
Tech shares, including Research In Motion and Advanced Micro Devices, helped the Nasdaq outperform the broader market. Telecommunications and health-care stocks were the day's best-performing sectors.
Reflecting the uncertainty surrounding US budget talks, trading was choppy. Wall Street reversed early gains and fell shortly after House Speaker John Boehner, the top Republican in Congress, dashed hopes that lawmakers were getting closer to a budget deal that would avert automatic tax increases and spending cuts set for early 2013 - the fiscal cliff - that could push the US economy into a recession next year. But the market rebounded by afternoon and the three major US stock indexes rebounded to near their session highs.
"There is an emotional part in buying on the small dips here. Investors are more worried about missing the rally than losing money as they believe that the 'fiscal cliff' will be solved eventually," said James Dailey, portfolio manager at TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
"Until the fiscal cliff is solved, the madness of the crowd will not subside."
Discussions on Capitol Hill are aimed at avoiding big automatic spending cuts and tax hikes, known as the fiscal cliff, that will start taking effect beginning in January.
Boehner's comment about a lack of progress in talks with the White House was one of aseries of contrary pronouncements by lawmakers and the Obama administrationover whether Washington will finally cut a deal.
There have been some signs that leaders are moving closer to a fiscal agreement. The S & P 500 has gained about 5 percent recently after a sell-off that took it down almost 8 percent following the US election on November 6. But investors remain wary that politicians' ad hoc statements can spark quick reversals in the market.
US-listedshares of BlackBerry maker Research In Motion rose 4 percent to $ 11.54 after Goldman Sachs upgraded the stock to "buy" from "neutral" on optimism ahead of the launch of the BlackBerry 10 smartphone.
Advanced Micro Devices Inc shares gained 4.1 percent to $ 2.04 on plans to sell and lease back its campus in Austin, Texas. The sale and lease-back will raise cash and fund its chipmaking business as Advanced Micro Devices diversifies beyond the struggling PC industry into new markets.
The Dow Jones industrial average rose 36.71 points, or 0.28 percent, to 13,021.82 at the close. The Standard & Poor's 500 Index gained 6.02 points, or 0.43 percent, to 1,415.95. The Nasdaq Composite Index advanced 20.25 points, or 0.68 percent, to close at 3,012.03.
So far thisweek, the Dow is up 0.1 percent, the S & P 500 is up 0.5 percent and the Nasdaq is up 1.5 percent.
But shares of top retailers retreated in the wake of data showing a weak start to November sales after Superstorm Sandy. Kohl's Corp fell 12 percent to $ 45.02.
Tiffany shares dropped 6.2 percent to $ 59.80 after the upscale jeweler reported quarterly results and cut its full-year sales and profit forecasts.
Supervalu shares sank 18.6 percent to $ 2.28 after a report that Cerberus Capital Management was having difficulty obtaining financing to buy out the troubled grocery chain.
Data showed the US economy grew faster than initially thought in the third quarter as businesses restocked, but consumer and business spending were revised lower in a sobering reminder of the economic recovery's underlying weakness.
Contracts to buy previously owned US homes rose more than expected in October, a sign the housing market recovery advanced into the fourth quarter despite a mammoth storm and concerns over looming tax hikes. Homebuilders' shares rose. The PHLX housing index. HGX rose 0.8 percent.
About 6.15 billion shares changed hands on the New York Stock Exchange, the Nasdaq andNYSE MKT, below the daily average so far this year of about 6.48 billion shares.
On both theNYSE and the Nasdaq, roughly three stocks rose for every one that fell. Reuters.com
Currencies
Yen eases on month-end flows but off 7-1/2-mth low
The yen dropped on Friday after month-end selling from Japanese firms triggered more stop-loss selling, but concerns about the deadlock over the US "fiscal cliff" helped to keep it above last week's 7-1/2-month low versus the dollar .
The euro stayed near a one-month high against the dollar and hit a seven-month high against the yen, helped by falling Italian and Spanish bonds yields.
The dollar rose 0.3 percent to 82.36 yen, edging closer to last week's peak of 82.84 yen.
The dollar was up more than 3 percent this month due to speculation that the Bank of Japan will come under intense political pressure to ease monetary policy aggressively if the opposition Liberal Democratic Party (LDP) wins an election for the lower house on Dec. 16.
The euro also rose to seven-month high of 107.29 yen and last stood at 107.13 yen, about 0.6 percent above the late US levels.
The market showed little reaction to comments from LDP leader Shinzo Abe that some traders regarded as a softening of his earlier calls on the BOJ to take radical steps to ease policy.
"Abe seems to be toning down a bit. For now it's hard to expect him to say something that would further boost speculation of more easing," said Barclay's Yamamoto.
The yen's fall on Friday, according to Tokyo-based traders, was due to month-end selling by Japanese companies that triggered some stop-loss selling.
While many market players see the yen beginning a long-term downtrend due to the country's trade deficit and chances of more BOJ easing, in the near term the trend could be slowed by concerns over the political impasse between Democrats and Republicans in Washington over how to avert the "fiscal cliff".
"If there is no progress in the US debt talks, the dollar is likely to fall below 82 yen next week," said Masafumi Yamamoto, chief FX strategist at Barclays in Tokyo, noting recent US economic data had not been as solid as before.
US economic growth in July-Sept was revised up to 2.7 percent on Thursday from the initial reading of 2.0 percent growth, but the revision was boosted by restocking by businesses, while consumer and business spending, more direct gauges of the economy, were revised lower .
JAPAN ELECTION
While opinion polls show Abe is likely to emerge as Japan's next prime minister, some of his ideas for radical easing did not appear in the LDP party manifesto, having already drawn criticism from other policymakers and some business leaders.
"I think the Abe story has gone a bit too far," said Yunosuke Ikeda, senior currency analyst at Nomura Securities. "Support for Abe may not grow much. And if he does not have a sweeping victory, investors will have to review their scenario."
The euro stood near one-month high of $ 1.3015 hit on Thursday, changing hands at $ 1.2995, up slightly from late New York levels.
The euro has also been helped by fall in Spanish and Italian bond yields in recent weeks, as well as relief after Greece's international lenders agreed on an aid deal for Athens earlier this week.
The 10-yearItalian bond yield hit a two-year low on Thursday, while its Spanish peer fell to its lowest level since March.
An unexpected improvement in the euro zone's business mood published on Thursday also bolstered the euro, though market players think the euro zone economy, already in recession, will continue to struggle. Reuters.com
