JULEX MARKET WEEKLY 01-13-2013 | US Stocks Rose Slightly Last Week

Top Stories Last Week

  • US Stocks Rose Slightly Last Week

U.S. stocks advanced on the week, buoyed by data, decent earnings, and enduring positive sentiment from the resolution of the fiscal cliff debate. Standard & Poor’s 500 Index jumped 0.5%, MSCI EAFE index gained 1.0% while MSCI emerging market index lost 1.0%.  Gold gained 0.4% and the GSCI commodity index was up slightly 0.7%.  In the bond markets, Barclays US Treasury index gained 0.4% and US high yield bonds were higher by 0.6%.

  • Alcoa Kicked Off the Q4 Earning Season with a Positive Tone

The largest Aluminum producer in the US,  Alcoa, kicked earnings season off with a positive outlook. The company reported a profit of $0.21 per share in Q4 fueled by stabilizing aluminum prices, higher sales in its aerospace unit, and aggressive expense reduction. In the same quarter of 2011, Alcoa lost $0.18 per share. According to CEO Klaus Kleinfeld, “We enter 2013 in a strong position to maximize profitable growth.”

  • Spanish Sold More Debt than Planned in Bond Auction

Spain’s borrowing costs sank to a 10-month low after a robust Spanish bond auction. The 10-year government bond yield fell below the 5% mark for the first time since March 2012. The Spanish Treasury sold more debt than its planned amount at lower yields against previous auctions. The Spanish auction suggests that market appetite for euro-zone periphery’s debt remains solid despite uncertainties regarding the request for a bailout and eventual activation of the European Central Bank’s Outright Monetary Transactions.

  • European Central Bank Kept Interest Rates Unchanged

The European Central Bank left its key interest rates unchanged, though the euro area is mired in recession and unemployment in the euro zone continued to climb, reaching 11.8% on figures out this week, up from 10.6% a year earlier. ECB president Mario Draghi said in the press conference, “Economic activity should gradually recover … The risks surrounding the outlook for the euro remain on the downside”.  The council believes that the economy is lagging behind the improvement in financial conditions brought about largely by its own policies.

  • Japan Launched New Measures to Stimulate Its Economy

Japan launched new measures to stimulate its economy, battered by weak exports and recession with a $117 billion emerging stimulus package. The measure will increase spending on public works, disaster recovery and provide aid to smaller businesses. The plan is part of Prime Minister Shinzo Abe’s effort to get the country’s economy back on track with a combination of increased government spending and monetary easing.

Top Stories to Watch This Week    

  • Earnings Reports

Goldman Sachs, JP Morgan Chase, Bank of America, Citigroup, BlackRock and Intel will post quarterly results.

  • Retail Sales

Economists expect the retail sales excluding auto and gas to rise 0.5% in December. Consumer spending remains solid as housing and equity markets recover.

  • Chinese GDP Growth

China’s GDP growth is expected to rebound to 7.8% in the fourth quarter.