Emerging markets rally as Fed forgoes taper. Emerging market stocks (NYSEARCA:EEM) posted big gains overseas on the back of the U.S. Federal Reserve's decision to keep the size of its asset purchase program unchanged for the time being. Indonesian shares (IDX, EIDO) jumped as much as 7.4% early before retreating a bit to trade around 4% higher. Stocks likewise rallied sharply in India (NYSEARCA:EPI), Thailand (NYSEARCA:THD), the Philippines (NYSEARCA:EPHE), Malaysia (NYSEARCA:EWM), and Turkey (NYSEARCA:TUR).
JPMorgan faces $900M in fines, will admit wrongdoing in Whale case: NYTimes. JPMorgan (NYSE:JPM) will pay in excess of $900M in fines and admit to wrongdoing in an effort to settle multiple investigations into the whale-sized blunder that took place in Q1 2012 at the firm's London CIO office, the NY Times' Jessica Silver-Greenberg and Ben Protess reported. The government authorities across the settlement table reportedly are the SEC, the OCC, the Fed, and the Financial Conduct Authority in London. Although it looks likely the blame will not be placed with any of the higher-ups, the bank will apparently "acknowledge that it had lax controls and should have caught the problem faster."
Top Stock News
Oracle turns in mixed quarter. Oracle (NYSE:ORCL) reported FQ1 earnings that beat Street estimates Wednesday evening, but revenue growth of 2% left the top line shy of consensus. Software license and cloud subscription revenue rose 5% (GAAP), which was a "a bit of a relief," according to an FBR Capital analyst quoted by WSJ. The growth rate is better than FQ4's disappointing 1%, and hit a guidance range of -1% to +7%. Nevertheless, hardware product sales fell 13% Y/Y to $669M, missing a guidance range of -6% to +2%. The company's FQ2 EPS guidance came in light at $0.64-$0.69, versus consensus of $0.69. Larry Ellison missed the conference call for an "important" America's Cup race.
Take-Two scores record with Grand Theft Auto V. Take-Two Interactive (NASDAQ:TTWO) said global Grand Theft Auto V retail sales likely topped $800M in the game's first 24 hours of availability, smashing the previous record set last year by Activision Blizzard's (NASDAQ:ATVI) Call of Duty: Black Ops 2. A Piper Jaffray analyst quoted by Bloomberg said the game may generate more revenue (after vendors take their cut) in two weeks than the Street was expecting the company to make in three months.
Apple garners upbeat reviews for new iPhones, iOS. Reviewers found much to like about Apple's (NASDAQ:AAPL) iPhone 5S and the 5C's hardware, and generally gave a thumbs-up to iOS 7 along the way. The NYT's David Pogue praised the performance of the 5S' A7 CPU, the improved color balance yielded by its dual-LED flash, and the convenience of its fingerprint sensor. Pogue also lauded iOS 7's revamped UI and plethora of new features. As for the 5C, Engadget's Myriam Joire said the performance and battery are good and believes "most buyers will pick the phone for the price and color choices alone."
Sony sets high bar for PS4 sales. Sony (NYSE:SNE) said it plans to sell 5M PlayStation 4s globally by March. If the company can hit the ambitious target, it would mark a 41% improvement from the numbers PlayStation 3 put up from November of 2006 to March of 2007. Speaking at the Tokyo Game show, the company's president of Worldwide Studios for Sony Computer Entertainment Shuhei Yoshida also teased an iOS and Android PlayStation app which, according to WSJ, "lets players use the camera on the smartphone to interact with the gaming environment."
Petrobras plans big data security investment: FT. Unnerved by suggestions of U.S. spying, Petrobras (NYSE:PBR) plans to invest around $9.6B in data security over the next five years, FT reported. PBR president Maria das Graças Foster said the move was "personally approved by the board of directors." This year's investment will total some $1.8B and will apparently include measures designed to keep the transfer of information related to seismic studies off the internet.
Top Economic & Other News
Japan exports jump in August. Japanese exports rose 14.7% in August, data showed. That's good for a sixth consecutive gain and is the largest increase in three years. This is welcome news analysts said, as "a recovery in exports will help cushion the impact" from Prime Minister Shinzo Abe's planned sales tax hike, which some fear has the potential to stifle the country's economic momentum.
SNB says franc cap is critical, keeps rates low. The Swiss National Bank reiterated Thursday that its franc (NYSEARCA:FXF) ceiling is "essential" and kept the cap at 1.20 per euro. "There’s absolutely no reason to give [it up],” SNB President Thomas Jordan said earlier this month in an interview. With the economic situation in the eurozone still tenuous (at best), "safe haven positions have [remained] far stickier than most investors thought possible," a UBS currency strategist told Bloomberg. As expected, the SNB also kept the band for its benchmark rate unchanged at 0-0.25%.
Home builders rise on Fed, upbeat data. Investors will likely be keeping a close eye on the homebuilders (NYSEARCA:XHB) after the sector got a big lift Wednesday from the Fed's decision to postpone the dreaded taper and from data which showed single-family housing starts rose 7% M/M to 628K in August. It's now a question of sustainability, as some wonder how well demand for housing will hold up in the face of tepid jobs growth once the FOMC finally takes the plunge and begins to scale back its asset purchases.
Oil prices get support from Fed, inventories data. "News of Fed refraining from tapering comes at the same time as relatively low spare capacity and relatively low crude [and product] stocks," Barclays oil analyst Miswin Mahesh said Thursday. Mahesh believes emerging market demand is now set up for an upside surprise, as the prospect of rising import costs appears likely to "fade." MarketWatch notes that the 4.4M barrel decline in petroleum inventories reported by the EIA on Wednesday "far exceeded [Platts'] expectations for a fall of 1.5M barrels." The outlook: Barclays sees oil (USO, OIL) prices staying put with "an upward bias" for the balance of the year.
U.K. retail sales disappoint. U.K. consumers pulled back on spending in August, data showed Thursday. Retail sales volumes fell 0.9% last month, defying analysts' expectation of a 0.4% gain. One BNP Paribas economist quoted by BBC called the figure "one of the weakest prints on the economy for some time" and suggested expectations for the country's recovery may have gotten ahead of themselves, although the outlook remains broadly positive.
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In Asia, Japan +1.8% to 14766. Hong Kong +1.7% to 23502. China, Closed. India +3.2% to 20607.
In Europe, London +1.5%. Paris +1%. Frankfurt +1.2%.
Futures at 6:20: Dow +0.33%. S&P +0.44%. Nasdaq +0.43%. Crude +0.7% to $108.74. Gold +4.1% to $1361.80.
Ten-year Treasury Yield +1 bps to 2.71%
Today's economic calendar:
8:30 Initial Jobless Claims
8:30 Current Account
9:45 Bloomberg Consumer Comfort Index
10:00 Existing Home Sales
10:00 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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