Tuesday, November 13, 2012

U.S. Equities Rise on Obama Reelection

US equities picked up last Friday following the release of the highest consumer confidence reading in five years.

The positive news provided for a respite from the recent ongoing worries on the impending fiscal cliff, though gains were tempered after newly re-elected President Obama affirmed that higher taxes for wealthy citizens would be needed to solve the problem.

The Dow Jones Industrial Average index increased 4.07 points to 12,815.39 while the S&P500 index tacked on 2.34 points to 1,379.85.

Last September, US wholesalers’ inventories climbed at the fastest pace for the year. Inventories climbed 1.1% month-on-month, beating market estimates of a 0.4% increase, to a seasonally adjusted US$494.15 billion. The gain was attributed to increasing stockpiles of durable goods and oil. On the other hand, sales for wholesalers soared at an even faster pace, gaining 2.0% to US$413.97 billion.

Last week, consumer sentiment in the US rose to more than a five-year high. The index of consumer sentiment from Thomson Reuters / University of Michigan rose to 84.9, higher than market estimates of 82.9 amidst an optimistic view of the economy and jobs market. This was the highest level since July 2007, and is now consistent with a 2.5% gain in consumer spending next year, according to the report.

US Treasury prices moved sideways as an early rally driven by global growth outlook concerns was extinguished by the release of upbeat consumer sentiment data. Profit-taking was also observed after the 10-year benchmark yield hit the lowest level in more than two months. The two-year note yield ended flat at 0.258% while the 10-year bond yield slipped 0.6 basis points to 1.606%.

European equities closed barely changed as positive economic data releases from China and the US muted the Euro-zone’s debt worries. The FTSEurofirst300 index slipped back 0.53 of a point to close at 1,097.18.

The euro continued its downward trend last Friday following weak economic releases from the Euro-zone. The shared currency lost 0.1 cents to close at US$1.274.