Markets Mixed in Post Holiday Trading
Despite a lackluster report on holiday retail sales growth and the festering fiscal cliff impasse on Capitol Hill, the US equity markets are moving slightly to the upside in early action, aided by a report showing domestic home prices continued to rise. Treasuries are flat despite the US home price report, ahead of a read on regional manufacturing activity.
In equity news, Netflix Inc reported yesterday that its streaming video service was restored for all customers following an outage on Christmas Eve that denied users to stream videos on computers and other devices. Overseas, action was much lighter than usual, with European stocks closed for the Boxing Day holiday, while Japanese stocks paced an advance in Asia as the yen continued to sell off, while markets in Australia and Hong Kong were closed for holidays.
Company and Earnings News
Netflix Inc. (NFLX $90) reported yesterday that its streaming video service was restored for all customers following an outage on Christmas Eve that denied users to stream videos on computers and other devices. NFLX said the outage was due to technical problems at Amazon.com Inc’s (AMZN $259) Web Services unit. Per the Wall Street Journal, a Netflix spokesman said, “We are investigating the cause and will do what we can to prevent reoccurrence.” AMZN has not commented on the issue.
Meanwhile, the retail sector is in focus as the year nears the finish line, and MasterCard Advisors Spending Pulse reported that sales in the two months before Christmas rose 0.7% year-over-year (y/y), the slowest pace since 2008. According to CNBC, analysts had been expecting growth of 3-4%.
Market Update
Home Prices Continue To Rise
Just before the opening bell, the 20-city composite S&P/Case-Shiller Home Price Index showed a gain in home prices of 4.31% y/y in October, compared to the 4.00% increase that economists surveyed by Bloomberg had expected. Moreover, month-over-month (m/m), home prices were higher by 0.66% on a seasonally adjusted basis for October, compared to forecasts of a 0.48% increase.
Treasuries are nearly unchanged in morning action, with the yields on the 2-year note and the 30-year bond flat at 0.27% and 2.94%, respectively, while the yield on the 10-year note is dipping 1 basis point to 1.77%.
Later this morning, the US economic calendar will yield the release of the Richmond Fed Manufacturing Index, expected to decline slightly to 8 in December from 9 in November, with a reading above zero denoting expansion.
Japanese Stocks Continue to Rally With Most International Markets Remaining Closed
Stocks in Asia closed mostly higher, in light action with markets in Hong Kong and Australia closed for holidays. However, Japanese stocks led to the upside, as the Nikkei 225 Index posted a solid 1.5% increase, with the yen continuing to sell off, reaching the lowest level versus the US dollar since April 2011, helping to lift demand for the nation’s export issues. The yen came under further pressure as both houses of Japan’s parliament confirmed Shinzo Abe as the nation’s seventh Prime Minister in six years, per Bloomberg.
Moreover, Abe, which is expected to implement more aggressive monetary policy easing to try to spark economic growth and inflation, agreed to implement a 2% inflation target, while the Bank of Japan’s minutes from its November meeting suggested members discussed the possibility of open-ended asset purchases. Elsewhere in Asia, China’s Shanghai Composite Index gained 0.3% and India’s BSE Sensex 30 Index rose 0.8%, while South Korea’s Kospi Index finished flat. Finally, European markets remained closed for the Boxing Day holiday.