Tensions In Ukraine Counterbalance Markets
The US stock market was boosted on Thursday by a surge in the share price of Apple following the release of its quarterly earnings last night.
Thursday, April 24, 2014 - 00:00
But overall the leading stock index benchmarks were little changed, as tensions surrounding the Ukrainian situation acted as a counterbalance. Shares in Apple were up by more than 7% by late morning in New York, after the iPhone maker reported quarterly earnings that smashed expectations, a dividend increase, additional authorization to its stock buy-back scheme and upped its forward guidance. That’s helped the NASDAQ 100 achieve some significant gains, with the index advancing 1% in morning trading on Wall Street. That performance was not matched by the other leading stock indices, though, with the S&P 500 climbing just 0.28% to 1880.7 and the Dow Jones Industrial Average (which does not contain Apple as a component) down 0.6% or 10 points at 16,491.
Dow components Caterpillar, 3M and Verizon all reported today, with the results being a varied hit and miss selection, with Caterpillar exceeding expectations, 3M in line with estimates and Verizon missing forecasts. Thursday’s macroeconomic data proved to be a bit of a mixed bag also, as durable goods orders surprised to the upside, but jobless claims disappointed. New orders for durable goods rose 2.6% in March, adding to signs of manufacturing improvement seen recently from the Richmond and Philly Fed’s respective manufacturing surveys. Because durable goods (defined as being goods that are expected to last three years or longer) tend to be expensive, they are infrequently and irregularly purchased items, meaning the durable goods report itself is subject to unpredictability and volatile fluctuations. We have seen two successive months of notable gains here though, and stripping out the particularly volatile component of transportation goods can help to smooth out some of the noise. Doing so for March, we are still left with a healthy 2.0% gain, with advances in all major constituents, which may help to improve expectations for next week’s advance estimate of Q1 GDP.
We have seen some nice improvements in jobless claims over the last couple of weeks, but today’s report was a setback, with the number of claimants for first-time unemployment insurance climbing sharply to 329,000, an increase of 24,000 from the week prior. This means the four-week moving average worsens to 316,750 from the previous week’s value of 312,000, and is now at similar levels to those we were seeing a month ago. The highly important official monthly employment report is released Friday of next week, and today’s result may spark some concerns about how those numbers are going to pan out, with the Easter break possibly having clouded the results of the weekly jobless data.
The euro advanced against the US dollar today, despite European Central Bank (ECB) President Mario Draghi once again talking up the chances of further monetary stimulus as a weapon against low inflation in a speech today in Amsterdam. ‘The objective here would not be to defend the current stance, but rather to increase meaningfully the degree of monetary accommodation,’ said Mr Draghi. ‘ The Governing Council is committed —unanimously— to using both unconventional and conventional instruments to deal effectively with the risks of a too-prolonged period of low inflation.’ Eurozone inflation cooled to 0.5% last month; the next report is due in the middle of next week, while the next monetary policy meeting for the ECB’s governing council is May 8. Price action in the forex market suggests some scepticism about the weight behind Mr Draghi’s words, though, with EUR/USD rising 0.07% close to midday in New York.
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