Home' Trinidad and Tobago Guardian : February 1st 2015 Contents FEBRUARY 1 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG9
The US stock market
capped a rough month
Friday, delivering its third
loss in five days and
extending its declines for
the year. All told, the
Standard & Poor s 500
index fell three per cent
in January, its worse monthly performance in
a year. While the US economy continued to
show signs of strength, energy companies suf-
fered from a sharp drop in oil prices and some
big multinational companies saw their earnings
dinged by a stronger dollar.
On Friday, investors also weighed the con-
sequences of a slowdown in US economic
growth and how further strength in the dollar
could dent corporate profits.
"The real issue still is the confusion, the
uncertainty around the speed of decline in oil
prices and what that means, and the rise in
the dollar and what that means for earnings,"
said Bob Doll, chief equity strategist at Nuveen
The concerns about a surging dollar inten-
sified after Russia s central bank unexpectedly
cut interest rates to 15 per cent from 17 per
cent to help the weakening economy. That
sent the ruble down against the dollar.
Before the US market opened, the govern-
ment said that the economy grew 2.6 per cent
in the last quarter of 2014, as weaker govern-
ment and business spending held growth back.
The decline was unexpected and down from
a gain of 4.6 per cent in the second quarter
and five per cent in the third quarter.
But others news signaled the steady health
of the US economy. Consumer spending surged
in the final three months of 2014. The Labor
Department reported that wages and benefits
rose last year by 2.2 per cent, the biggest cal-
endar-year increase since 2008
Investors also sifted through the latest batch
of corporate earnings news, and the results
Amazon.com and Visa reported strong
results late Thursday. Amazon jumped 13.7
per cent, while Visa rose 2.8 per cent.
Several companies didn t fare as well, includ-
ing Ugg footwear maker Deckers Outdoor and
the parent of Hawaiian Airlines, which offered
discouraging outlooks. Deckers slumped 19.7
per cent, while Hawaiian Holdings slid 27 per
The Dow Jones industrial average dropped
251.90 points, or 1.5 per cent, to close at
17,164.95. The S&P 500 index lost 26.26 points,
or 1.3 per cent, to 1,994.99. The Nasdaq com-
posite fell 48.17 points, or 1.0 per cent, to
Nine of the 10 sectors in the S&P 500 fell,
and utilities declined the most.
The one sector that rose was energy. Bench-
mark US crude jumped US$3.71 to close at
US$48.24 a barrel in New York on expectations
of lower supplies. The number of working
drilling rigs continued to fall, according to a
closely-watched industry count. Concerns
over an attack on oil-rich Kirkuk, Iraq, by
Islamic insurgents also spurred oil buying and
While oil had a strong day, it remains in a
deep slump. US crude has fallen to US$48 a
barrel from US$107 last June.
Demand for ultra-safe bonds rose Friday.
The yield on the 10-year Treasury note fell to
1.66 per cent Friday, the lowest since May 2013.
Yields fall as bond prices rise.
"I think that the bond market is starting to
scare equity investors: What do they know
that I don t? " said Jim Paulsen, chief investment
strategist at Wells Capital Management. "The
bond market is telling us that things are getting
The stock of Shake Shack, a burger chain
that started as a New York City hot dog cart,
more than doubled in their first day of trading.
Shake Shack jumped US$24.90, or 119 per cent,
to close at US$45.90, putting the market value
of the small chain at more than US$1.6 billion.
The dollar strengthened against the euro,
which slipped to US$1.1291 from US$1.1327.
Gold rose US$23.90, or 2.0 per cent, to
US$1,278.50 an ounce. Silver gained 44 cents,
or 3.0 per cent, to US$17.21 an ounce. Copper
climbed 4 cents, or 2.0 per cent, to US$2.49
In other energy futures trading:
• Brent crude rose US$3.86 to close at
US$52.99 in London.
• Wholesale gasoline rose 6.1 cents to close
at US$1.415 a gallon.
• Heating oil rose 6.8 cents to close at
US$1.686 a gallon.
• Natural gas fell 2.8 cents to close at US$2.691
per 1,000 cubic feet. AP
European stocks dipped on Friday but
posted their best monthly perform-
ance in over three years, lifted by
hopes the European Central Bank s
quantitative easing programme will
revive the region s economic growth
and corporate earnings will bounce.
The FTSEurofirst 300 (.FTEU3) index of top
European shares recorded a gain of 7.1 per cent for
January, its biggest since October 2011. It has strongly
outpaced Wall Street, where the S&P 500 (.SPX)
has lost 2.2 percent since the start of the year.
Morgan Stanley strategists upgraded their forecast
for European earnings for the first time in three
years, seeing an improvement in the region s eco-
nomic momentum this year.
"After four years of persistent growth disappoint-
ment, we believe that Europe is on the verge of an
upgrade cycle. This will be one of the dominant
factors influencing investment returns in Europe
this year," they said in a note.
"European net earnings revisions have been in
negative territory since March 2011. Over the next
1-2 months we believe this series is likely to move
into positive territory as analysts adjust their fore-
casts for the significant moves we ve seen in FX,
rates and the oil price."
Global asset managers have started to increase
their exposure to European stocks, betting on a
QE-driven rally and an improvement in corporate
margins from the weakened currency and lower
During the past week, European equities have
enjoyed US$5.1 billion of investment inflows, the
biggest weekly amount since December 2013,
according to data from BofA Merrill Lynch Global
Research. European stocks have attracted US$7.2
billion in fresh money so far this year.
The FTSEurofirst 300 index ended the day down
0.6 percent, at 1,465.04 points, marking a pause
in its recent sharp rally and mirroring a dip on Wall
Street on Friday.
"It s a little pause ahead of the weekend, but
there s no real selling pressure and, technically,
charts show that indexes are still in a bullish trend,"
Saxo Bank trader Andrea Tueni said.
"People are just cautious, with a couple of poten-
tial negative catalysts like Russia and Greece in
mind, so it s tempting to book profits."
Banca Monte dei Paschi di Siena (BMPS.MI) fea-
tured among the top losers, losing 7.8 per cent after
banking sources said a planned capital increase at
the lender might be bigger than expected.
The troubled Italian bank is considering raising
the size of its capital hike to around 3.5 billion euros
(US$4 billion), one billion euros more than initially
planned, the sources said.
Danny Meyer, left, Founder & CEO of Union Square Hospitality Group, and Shake Shack CEO
Randy Garutti, wait for their company's IPO to begin trading, on the floor of the New York Stock
Exchange, Friday, January 30, 2015. Shares of Shake Shack Inc have more than doubled minutes
after they debuted on the stock market Friday.(AP Photo/Richard Drew)
European shares enjoy best month in over three years
Traders are pictured at their desks in front of the DAX board at the Frankfurt
stock exchange January 29, 2015. Reuters
Stocks sag at
on weak note
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