Home' Trinidad and Tobago Guardian : December 6th 2015 Contents DECEMBER 6 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG9
The stock market surged to its
biggest gain since early Sep-
tember Friday after another
strong month of hiring by US
The solid news on the economy opened the
way for the Federal Reserve to begin raising
interest rates back toward normal levels later
this month. Energy stocks and the price of
crude oil fell after OPEC said it won t cut pro-
Stocks started the day higher after the Labor
Department said employers added 211,000 jobs
in November. That was more than investors
expected, and a sign that consumers are still
spending and keeping the economy afloat even
as manufacturing and energy companies are
The rally gained more power after European
Central Bank President Mario Draghi said the
ECB is ready to expand its stimulus program
if necessary. That was a relief: stocks and bonds
tumbled Thursday after the ECB announced
some new stimulus measures, but didn t do
as much as investors expected.
"His clarification of comments he made ear-
lier in the week gives investors confidence that
ECB will continue its whatever is necessary
course," said Erik Davidson, chief investment
officer at Wells Fargo Private Bank.
The Dow Jones industrial average rose 369.96
points, or 2.1 per cent, to 17,847.63. The Stan-
dard & Poor s 500 index had its best day since
Sept. 8, rising 42.07 points, or 2.1 per cent, to
2,091.69. The Nasdaq composite increased
104.74 points, or 2.1 per cent, to 5,142.27 points.
When the Federal Reserve decided not to
raise interest rates in September, investors grad-
ually concluded that the Fed would act in
December unless it received some big warning
signs about the health of the economy.
Those signs never came. The September
jobs report was disappointing, but hiring
climbed in October, and November hiring was
solid. The government also said the economy
gained more jobs in September and October
than it initially reported.
The Fed slashed its key short-term interest
rate to near zero during the financial crisis and
it kept it low throughout the Great Recession
to encourage lending and hiring. It hasn t raised
interest rates in nine years.
Davidson said the jobs data was as good as
investors expected, which gives them more
confidence in the state of the economy and
the Fed s plans.
"The markets love predictability and this is
about as predictable as you can get," he said.
In addition to the jobs growth, Davidson said
more people are looking for work and wages
Luke Bartholomew, investment manager
Aberdeen Capital Management, said it was
almost a foregone conclusion that the Fed will
raise interest rates, but what isn t clear is what
will happen after that.
"It would have taken a really catastrophically
bad number to put the Fed off today," he said.
"It s a question of what the path looks like
Consumer discretionary stocks were the best
performers in the S&P 500. Discount retailer
Dollar Tree, toy maker Mattel and homebuilder
DR Horton climbed, and Apple rose US$3.83,
or 3.3 per cent, to US$119.03, a large move for
the world s most valuable company.
Energy stocks, however, took a beating, and
almost all of the largest losses in the S&P 500
went to energy companies. Oil cartel OPEC
said it won t cut oil production even though
global stockpiles keep growing. The price of
oil is trading near six-year lows.
The price of US crude fell US$1.11, or 2.7
per cent, to US$39.97 a barrel in New York.
Brent crude, a benchmark for international
oils, slid 84 cents, or 1.9 per cent, to US$43.
Meanwhile warm weather in the US is hurt-
ing demand for heating fuels like natural gas
and heating oil. Natural gas drillers, pipeline
companies and oil and gas service companies
were all pummeled.
Stephen Schork, an independent analyst and
trader, said that s because weather throughout
much of the US remains warm, meaning Amer-
icans aren t using as much energy to heat their
"The market is giving up on winter," he said.
"Here in the East... there s just no demand."
Murphy Oil lost 85 cents, or 3.2 per cent,
to US$25.46. Helmerich & Payne fell 2.23, or
4 per cent, to US$53.38. Southwestern Energy
shed 45 cents, or 5.5 per cent, to US$7.74.
Chesapeake Energy declined 32 cents, or 6.6
per cent, to US$4.55.
In other trading of energy futures, wholesale
gasoline fell 2.6 cents, or 2 per cent, to US$1.27
a gallon. Heating oil declined 1.6 cents to
US$1.342 a gallon. Natural gas inched up 0.5
cents to US$2.816 per 1,000 cubic feet.
The dollar regained some strength against
the euro. The euro slipped to US$1.0871 from
US$1.0975, and the dollar rose to 123.22 yen
from 122.31 yen Thursday. Bond prices also
bounced back, and the yield on the 10-year
Treasury note fell to 2.27 per cent from 2.32
Avon Products rose as multiple media reports
said the beauty products company is consid-
ering selling its North American business to
private equity firm Cerberus Capital Manage-
ment. Avon jumped 23 cents, or 5.8 per cent,
Gold gained US$22.90, or 2.2 per cent, to
US$1,084.10. Silver added 45 cents, or 3.2 per
cent, to US$14.53 an ounce. Copper inched up
1.8 cents to US$2.079 a pound. AP
Asian stocks sank Friday, extending
a sell-off in world markets after
Europe s central bank unveiled plans
to stimulate the continent s ailing
economy that fell short of investor
KEEPING SCORE: Japan s Nikkei 225 dropped
1.9 per cent to 19,556.50 and South Korea s Kospi
lost 0.9 per cent to 1,975.27. Hong Kong s Hang Seng
shed 1.1 per cent to 22,179.64 and the Shanghai Com-
posite Index in mainland China dropped 0.8 per cent
to 3,557.71. Australia s S&P/ASX 200 retreated 1.8 per
cent to 5,133.20. Benchmarks in Taiwan and Southeast
Asia also lost ground.
ECB EXPECTATIONS: Markets had been antic-
ipating strong action from the European Central Bank
in the run-up to its policy announcement Thursday.
Expectations were high after ECB chief Mario Draghi
signaled the bank would act decisively to keep the
19 countries that use the euro from falling into defla-
tion or an economic contraction. However, the ECB
disappointed investors by cutting a key interest rate
less than expected and not stepping up monthly bond
purchases as expected, in a program known as quan-
titative easing, or QE.
MARKET INSIGHT: "Mr Draghi took out his
bazooka yesterday and fired it into his own foot," said
Michael Every, head of Asia-Pacific financial market
research at Rabobank. Following the ECB s decision
to hold off raising bond purchases, "the severe market
reaction underlines that in the new normal , no good
deed goes unpunished. By trying to avoid exacerbating
currency wars with more QE, the ECB has merely
become a victim rather than a victor."
CURRENCIES: The dollar edged up to 122.58
from 122.53 in the previous day s trading. The euro
eased to US$1.0921 from US$1.0939 after jumping
three per cent on yesterday s news. AP
A man walks past an electronic stock board of a securities firm in Tokyo Friday,
December 4, 2015. Asian stocks sank Friday, extending a sell-off in world markets
after Europe's central bank unveiled plans to stimulate the continent's ailing
economy that fell short of investor expectations. AP
Trader George Ettinger works on the floor of the New York Stock Exchange, Friday, December
4, 2015. Stocks are posting solid gains Friday morning after the US government reported
another month of strong job gains. AP
Asia extends global stock sell-off after ECB underwhelms
gains send US
How the Dow Jones industrial
average fared on Friday
The Dow Jones industrial average jumped
369.96 points, or 2.1 per cent, to 17,847.63.
The Standard & Poor's 500 index gained 42.07
points, or 2.1 per cent, to 2,091.69.
The Nasdaq composite climbed 104.74 points,
or 2.1 per cent, to 5,142.27 points.
For the week:
The Dow added 49.14 points, or 0.3 per cent.
The S&P 500 picked up 1.58 points, or 0.1 per
The Nasdaq composite rose 14.75 points, or
0.3 per cent.
For the year:
The Dow is up 24.56 points, or 0.1 per cent.
The S&P is up 32.79 points, or 1.6 per cent.
The Nasdaq is up 406.22 points, or 8.6 per
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