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U.S News

U.S. stocks rose, giving the Standard & Poor’s 500 Index its biggest gain in more than a year, as Law makers passed a bill averting spending cuts and tax increases threatening a recovery in the world’s biggest economy.

Shares of Hewlett-Packard Co ranked as the top gainer in the Dow Jones Industrial Average surging 5.4%. Caterpillar and AT&T were also among big blue-chip gainers, rising by 4.3% and 3.8%, respectively. The technology, telecommunications and financial sectors led the S&P 500 index SPX +2.54% higher. Insurance companies drove the rally in the financial sector, with MetLife Inc. trading up nearly 7%, Lincoln National Corp. adding 5.8% and Hartford Financial Services Group Inc. moving 5.7% higher.

For every stock that fell more than 10 gained on the New York Stock Exchange, where 859 million shares traded. The S&P 500 index closed at its day’s high with volume up 25% on its 100 day average. The VIX fell 18.53% to 14.68.

Asian News

Asian stocks rose, pushing a regional equities index to its highest level in 17 months, after an expansion of U.S. manufacturing and China’s services industries fuelled optimism in the global economic recovery.

Rio Tinto Group climbed 2.4 percent in Sydney as metals prices rose. China Communications Services Corp., a Beijing-based telecommunications support firm, gained 1.7 percent in Hong Kong. Australian miner Aquarius Platinum Ltd. (AQP) soared 13 percent, the most since May, amid speculation that South African supply of the metal will be lower during the first quarter.

The Asia Pacific gauge traded at 15 times average estimated earnings, compared with 14.1 for the Standard & Poor’s 500 Index and 12.9 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

European News

European (SXXP) stock futures slipped, after the Stoxx Europe 600 Index yesterday rallied to its highest in 22 months, amid concern a U.S. budget deal will fail to reduce the government deficit at a sufficient speed. U.S. index futures fell, while Asian stocks advanced.

Alcatel-Lucent SA (ALU) – Credit Suisse Group AG raised its recommendation on the stock. Evotec AG (EVT) said it will buy Cell Culture Service GmbH. K+S AG (SDF) –Exane BNP Paribas cut its share-price forecast.

European stocks rallied to a 19-month high as U.S. lawmakers passed a budget bill that avoided most scheduled tax increases threatening a recovery in the world’s largest economy. Asian shares advance

Currencies

The yen and dollar rose versus the euro as investors turned their focus to whether U.S. policy makers can reach an agreement to raise the nation’s debt limit. While the Japanese currency dropped 11 percent last year versus the dollar, the biggest annual slide since 2005, it is still about 16 percent stronger than the 10-year average of 101 per greenback.

The yen climbed 0.3 percent to 114.81 per euro as of 6:44 a.m. in London after losing 0.6 percent yesterday. It was little changed at 87.32 per dollar. The greenback jumped 0.3 percent to $1.3148 per euro.

Bonds

Treasuries snapped a two-day decline on speculation the U.S. budget plan, while averting a recession, will still slow the pace of expansion as taxes increase.

The Federal Reserve plans to buy today as much as $5.25 billion of Treasuries due from January 2017 to September 2017, according to the Fed Bank of New York website. The central bank said in December it will purchase $45 billion of Treasuries a month to spur the economy.

The Treasury Department is scheduled to announce today the sizes of 3-, 10- and 30-year auctions scheduled for next week. The U.S. will sell $32 billion of 3-year notes, $21 billion of 10-year securities and $13 billion of 30-year bonds over three days starting Jan. 8, according to Wrightson ICAP LLC, an economic advisory company in Jersey City, New Jersey.

Commodities

Oil slid for the first time in three days in New York on speculation that its surge to the highest level in three months yesterday may have been excessive. Futures lost as much as 0.7 percent after rallying 2.6 percent in the past two days

Gold traded near a two-week high as expectations that policy makers around the world will continue to support their economies increased demand for a store of value.  Spot gold was at $1,686.65 an ounce at 3:12 p.m. in Singapore after swinging between gains and losses. The metal reached $1,694.81 yesterday, the most expensive since Dec. 18, rallying with stocks, copper and oil after U.S. lawmakers passed a bill averting automatic spending cuts and tax rises, heading off the so-called fiscal cliff that had threatened the recovery.

 

 

Sayyed Hussain