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Lower Jobless Claims Lift Wall Street

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Financial and Economic News Update

European equity markets down; lower jobless claims lifts Wall Street: Most stock markets in European lost in trade today amidst weakness in oil and gas stocks. U.S. index futures were pointing to a higher open on Thursday on lower than expected jobless claims. Data showed that 265,000 Americans filed for jobless claims last week, better than analysts’ projections of 301,000. Before the opening bell, auto giant Ford Motor Company (NYSE:F) posted stronger than expected quarterly earnings, and reiterated 2015 profit outlook. After the close of trading, Google Inc (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN) will report their quarterly numbers.

Oil rebounds from lows: Oil recovered from losses suffered yesterday after data showed that U.S. crude stocks were at an 80-year high. The U.S. Energy Information Administration said on Wednesday that domestic crude oil stockpiles had increased week-on-week by almost 9 million barrels to about 407 million barrels. Today’s bounce is largely due to profit taking after WTI crude hit a new low overnight. Industry watchers expect stockpiles to continue rising as U.S. producers show no signs of slowing.

Gold prices tumble: Gold prices slipped more than a percent to trade at a one-week low after the U.S. Federal Reserve raised its assessment of the domestic economy, and said it was well on track to raise interest rates later this year. The likelihood of any rate hike could lure investors out of the metal, which could result in further downside. Bullion is likely to find support around the current levels, while any relief rally could test resistance at the $1290 an ounce mark.

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U.S. Dollar firm in trade: The dollar inched higher against the Japanese yen and the British pound after the U.S. Federal Reserve pledged to be “patient” on raising rates. Amid a slew of surprise monetary policy easing from diverse central banks, analysts expect the Fed to be the only one to tighten this year. The dollar has jumped 9.1 percent in the past three months, the most by any major currency, after the Swiss franc.

Bond Market News

Treasuries rally halted: The two day gain in U.S. Treasuries was halted in trade today as investors preferred to reduce their holdings. On the back of a global economic slowdown, and a massive drop in oil prices, U.S. government debt have logged their biggest advance since 2011, returning 2.6 percent this month, according to the Bloomberg World Bond Indexes. In related news, the United States will sell $35 billion of 5-year notes and $29 billion of 7-year debt later in the day.

U.K. bonds rise on negative inflation outlook: U.K. government bonds gained, with the 10-year yield dropping to record lows, after Bank of England Governor Mark Carney said inflation could turn negative for a while. Speaking in Dublin late Wednesday, Governor Carney said that U.K. inflation, primarily due to the big drop in oil prices, would likely fall in the next few months, and could even turn “slightly negative”. 30-year yields also fell as traders and investors increased their bets on the first BOE interest-rate hike in 7 years.

S&P close to settling on inflated mortgage bond ratings: Standard & Poor’s is close to a $1.38 billion deal to settle claims that it inflated subprime mortgage-bond ratings before the 2008 financial crisis, according to a Bloomberg report. The U.S. Justice Department had accused S&P of conflict of interest for trying to secure business from Wall Street banks by giving top ratings to their bad mortgage debt.

Sino Ocean first Chinese developer to issue dollar bonds post Kaisa troubles: Sino-Ocean Land Holdings Limited (HKG:3377) became the first Chinese real estate company to raise funds from the international bond markets this year. The sector has been a source of concern for international investors after rival property developer Kaisa Group Holdings Ltd (HKG:1638) missed a coupon payment, and had its assets frozen by domestic creditors. However, sentiment has improved over the past few days on speculation of a government-backed takeover of Kaisa.

Brazil’s largest bio-fuel company calls-off bond deal: Cosan Limited (BVMF:CZLT33) announced the end of a proposed deal to repurchase perpetual debt, citing tough market conditions, Reuters reported today. The company has also postponed an intended spin-off of its fuel distribution division, according to a stock market filing. Cosan is majority owned by billionaire Rubens Ometto and his family.

Market Levels

  • US: Dow Futures: 17160.00 (0.35%), S&P 500 Futures: 1997.50 (0.30%), NASDAQ Futures: 4129.50 (0.13%)
  • Europe: CAC: 4603.56 (-0.16%), DAX: 10695.42 (-0.19%), FTSE: 6785.69 (-0.60%).
  • Metals: Gold: 1272.70 (-1.02%), Silver: 17.501 (-3.25%), Copper: 2.4412 (-1.55%)
  • Energy: U.S. Crude: 44.65 (0.45%), Brent Crude: 48.97 (1.09%), Natural Gas: 2.863 (0.70%)
  • Commodities: Corn: 3.702 (-0.80%), Soya Bean: 9.692 (-0.10%), Wheat: 5.017 (-0.69%)
  • Currency: EUR/USD: 1.1312 (0.19%), GBP/USD: 1.5123 (-0.21%), USD/JPY: 117.9240 (0.39%)
  • 10-year US Treasury: 1.7478% (0.021), German 10-Year Yield: 0.354% (-0.002), Japanese 10-Year Yield: 0.292% (-0.002)

Economic Calendar for Thursday, January 29, 2015:

08:30 A.M. ET: Initial Jobless Claims (January 23)
08:30 A.M. ET: Continuing Jobless Claims (January 16)
10:00 A.M. ET: Pending Home Sales (YoY) (December)
10:30 A.M. ET: EIA Natural Gas Storage Change (January 23)
11:30 A.M. ET: 5-Year Note Auction
01:00 P.M. ET: Federal Reserve Governor Jerome Powell speaks.
01:00 P.M. ET: 7-Year Note Auction
04:30 P.M. ET: Fed Balance Sheet
04:30 P.M. ET: Money Supply

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Abhijit Sen

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