Indian stocks edged lower in choppy trade after US Federal Reserve on Wednesday, 29 January 2014, announced further reduction in its monthly bond purchases and signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market. Nevertheless, the key benchmark trimmed intraday losses on the back of a Finance Ministry statement that India's economy is better prepared for the consequences, if any, of reduction in bond purchases by the US Federal Reserve and that the Government of India and the Reserve Bank of India will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in the financial markets. The market breadth was weak. In emerging markets, the reduction in bond purchases by the Fed has triggered worries of slowdown in capital inflows and fears of capital outflows. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets in recent years. Investors pulled out more than $7 billion from exchange-traded funds (ETFs) investing in developing-nation assets this month, according to reports.
The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, settled at their lowest closing levels in more than nine weeks. The market was volatile as traders rolled over positions in the futures & options (F&O) segment from the January 2014 series to February 2014 series. The January 2014 F&O contracts expired today, 30 January 2014. The Sensex lost 149.05 points or 0.72%, up 154.47 points from the day's low and off 30.16 points from the day's high. The BSE Small-Cap and Mid-Cap indices dropped more than 1% each.
Indian stocks fell for the fifth day in a row today, 30 January 2014. From a recent high of 21,373.66 on 23 January 2014, the Sensex has declined 875.41 points or 4.09% in five trading sessions. The Sensex has lost 672.43 points or 3.17% in this month so far (till 30 January 2014). From a record high of 21,483.74 on 9 December 2013, the Sensex has declined 985.49 points or 4.58%. From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 3,049.54 points or 17.47%.
Coming back to today's trade, index heavyweight and cigarette major ITC recouped entire losses in late trade. Index heavyweight Reliance Industries fell in volatile trade. Crompton Greaves jumped after the company reported turnaround Q3 earnings after market hours on Wednesday, 29 January 2014. Realty stocks dropped. Titan Company shrugged off weak Q3 results.
Key benchmark indices edged lower in early trade on weak Asian stocks. Key benchmark indices extended initial losses and to hit fresh intraday low in morning trade. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than nine weeks. Key benchmark indices extended losses and hit fresh intraday low in mid-morning trade. Key benchmark indices trimmed losses in early afternoon trade after the Finance Ministry said in a statement that India's economy is better prepared for the consequences, if any, of reduction in bond purchases by the US Federal Reserve and that the Government of India and the Reserve Bank of India will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in the financial markets. Weakness continued on the bourses in afternoon trade Key benchmark indices extended losses and hit fresh intraday low in mid-afternoon trade. Volatility ruled the roost during the last one hour of trade as the key benchmark indices trimmed losses soon after extending intraday losses. The barometer index, the S&P BSE Sensex, trimmed losses after hitting its lowest level in more than nine weeks and the 50-unit CNX Nifty trimmed losses after hitting its lowest level in almost 10 weeks.
After a monetary policy review, the Federal Open Market Committee (FOMC) on Wednesday, 29 January 2014, announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market.
The S&P BSE Sensex lost 149.05 points or 0.72% to settle at 20,498.25, its lowest closing level since 27 November 2013. The index lost 303.52 points at the day's low of 20,343.78 in late trade, its lowest level since 25 November 2013. The index fell 118.89 points at the day's high of 20,528.41 in late trade.
The CNX Nifty shed 46.55 points or 0.76% to settle at 6,073.70, its lowest closing level since 27 November 2013. The index hit a low of 6,027.25 in intraday trade, its lowest level since 22 November 2013. The index hit a high of 6,082.85 in intraday trade.
The BSE Small-Cap index shed 92.15 points or 1.47% at 6,181.80. The BSE Mid-Cap index was off 71.13 points or 1.13% at 6,211.37. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,750 shares declined and 836 shares rose. A total of 128 shares were unchanged.
The total turnover on BSE amounted to Rs 1963 crore, higher than Rs 1779 crore on Wednesday, 29 January 2014.
Among the 30 Sensex shares, 18 fell, 11 rose and one remained unchanged.
Index heavyweight and cigarette major ITC was unchanged at Rs 325, with the stock recovering sharply in late trade. The stock hit a high of Rs 325.60 and low of Rs 318.35.
Index heavyweight Reliance Industries fell 1.26% to Rs 826.20 in volatile trade. The stock hit a high of Rs 834.20 and low of Rs 823.
GAIL (India) rose 1.54% to Rs 351.65, with the stock reversing initial decline in volatile trade. The stock hit a high of Rs 355 and low of Rs 340.10. The company after trading hours on Wednesday, 29 January 2014, said that a meeting of the Board of Directors of the company will be held on 6 February 2014, inter alia, to consider proposal of interim dividend for the year ending 31 March 2014 (FY 2014). The company has fixed 11 February 2014 as the record date for the purpose of payment of interim dividend, if so approved by the board.
PSU OMCs dropped in choppy trade as higher crude oil prices and weakness in rupee against the dollar spared worries of higher cost of crude imports. PSU OMCs import majority of their crude oil requirements. BPCL (down 0.38%), HPCL (down 2.98%) declined. Indian Oil Corporation (IOC) rose 0.96%.
The three public sector oil marketing companies (PSU OMCs) -- BPCL, HPCL and IOC -- suffer revenue loss or under recoveries on domestic sale of diesel, LPG (cooking gas) and kerosene at a controlled price. The government decontrolled pricing of petrol in 2010.
Meanwhile, the government today, 30 January 2014, raised the cap on number of subsidised domestic LPG cylinders from 9 to 12 per year effective from 1 February 2014. The government agreed to demand from 9 to 12 after Congress Vice President Rahul Gandhi told Prime Minister Manmohan Singh the present allocation wasn't enough.
The hike will cost the government between Rs 3300 crore and Rs 4400 crore in additional subsidies it will have to pay state-run fuel retailers, according to estimates by the oil ministry. The government already pays about Rs 46000 crore every year to subsidize cooking gas.
Hero MotoCorp fell 3.49%. Hero MotoCorp (HMCL) after market hours today reported 7.53% rise in net profit to Rs 524.66 crore on 11.13% rise in total turnover (net sales and other operating income) to Rs 6876.78 crore in Q3 December 2013 over Q3 December 2012. Sales volume rose 6.85% to 16.80 lakh two-wheelers in Q3 December 2013 over Q3 December 2012.
EBITDA margin (Earnings before interest, taxation, depreciation and amortization) stood at 13.06% in Q3 December 2013.
Commenting on the company's financial performance for Q3 December 2013, Mr. Pawan Munjal, Managing Director & Chief Executive Officer, Hero MotoCorp said: "We have been able to post solid sales in the quarter in a relatively dull market, and our PAT and total turnover figures are up from the corresponding quarter last year. However, our EBITDA has been affected due to partial recovery of rising metal costs and currency fluctuation. We continue to sustain our market-leadership quarter after quarter with a strong focus on performance and profitability, and going forward, we plan to further strengthen our leadership and demonstrate our prowess in innovation and technology. While the industry overall is under constant pressure due to a number of reasons, we are confident of and committed to deliver value to our stakeholders. For this, we will continue to challenge the existing benchmarks and innovate constantly to pave way for improved performance. We are excited about the upcoming Auto Expo where we will be showcasing our vision for the future of two-wheelers. Only yesterday, we gave you a glimpse of the range of products that we are developing. But there's more to come -- several more products, including new concepts which you will get to see at the Delhi Motor Show in February".
Delivering on its commitment to bring revolutionary products in the two-wheeler market, Hero MotoCorp (HMCL) on Wednesday, 29 January 2014, unveiled a slew of game-changing two-wheelers across-the-spectrum. The next-generation range of two-wheelers includes the new 250-cc sports bike 'HX250R', the break-through Liquid-cooled Turbo Charged Diesel Concept Bike 'RNT', India's first series hybrid scooter 'LEAP' and 110cc scooter 'Dash'.
TVS Motor Company rose 3.95%, with the stock extending Wednesday's 4.57% gains triggered by the company reporting strong Q3 earnings.
TVS Motor Company during trading hours on Wednesday, 29 January 2014 reported 31.2% surge in net profit to Rs 68.80 crore on 12.9% growth in net sales to Rs 2034.71 crore in Q3 December 2013 over Q3 December 2012.
TVS Motor's total two-wheeler sales rose 1.78% to 5.12 lakh units in Q3 December 2013 over Q3 December 2012. Motorcycle sales grew 5.07% to 2.07 lakh units in Q3 December 2013 over Q3 December 2012. Scooter sales grew from 1.12 lakh units in Q3 December 2012 to 1.23 lakh units in Q3 December 2013.
Two wheeler exports registered 22% growth with sales increasing from 0.50 lakh units in Q3 December 2012 to 0.61 lakh units in Q3 December 2013.
Three wheeler sales rose 52% to 20,701 units in Q3 December 2013 over Q3 December 2012.
Tata Motors rose 3.24% after a media report suggested that the company is close to winning a Rs 1000 crore defence contract. According to a media report, Tata Motors is in the final stages of concluding a Rs 1000 crore contract with the Ministry of Defence for the supply of 1,239 heavy duty trucks. The deal for the so-called six-wheel-drive high mobility vehicles (HMV), fitted with material handling cranes, has the option of a follow-on order for 600 more units, the report added.
Metal stocks declined after weak Chinese manufacturing data. China is the world's largest consumer of copper and aluminum.
National Aluminium Company (Nalco) lost 3.56%. The company's net profit rose 10.16% to Rs 131.03 crore on 2.26% decline in total income to Rs 1764.64 crore in Q3 December 2013 over Q3 December 2012. The result hit the market after trading hours on Wednesday, 29 January 2014.
Sesa Sterlite lost 3.38%, with the stock extending Tuesday's 3.05% fall. On a consolidated basis, Sesa Sterlite reported a net profit Rs 1868.29 crore on total income of Rs 19912.90 crore in Q3 December 2013. The result was announced after market hours on Tuesday, 28 January 2014. The Q3 December 2013 figures are non comparable with Q3 December 2012 as the merger of copper producer Sterlite Industries (India) and iron-ore miner Sesa Goa, to form Sesa Sterlite took effect in August 2013.
JSW Steel lost 3.98%. The company reported a consolidated net profit of Rs 466.49 crore in Q3 December 2013 as against net loss of Rs 73.70 crore in Q3 December 2012. The Q3 result was announced during trading hours on Tuesday, 28 January 2014.
JSW Steel's consolidated total income rose 53.29% to Rs 13637.21 crore in Q3 December 2013 over Q3 December 2012.
JSW Steel said that the Q3 December 2013 results are after giving effect to the scheme of amalgamation and arrangement (scheme) between the company and JSW ISPAT Steel and others, which became effective 1 June 2013 with appointed date of 1 July 2012. Hence, the current quarter figures are not strictly comparable with that of Q3 December 2012 as the effect of implementation of the scheme is included in the current quarter figures, JSW Steel said in a statement.
Jindal Steel & Power (JSPL) fell 1.57%, with the stock extending Tuesday's 1.8% fall. The company's consolidated net profit jumped 23% to Rs 559.21 crore 8% growth in turnover to Rs 5377.37 crore in Q3 December 2013 over Q2 September 2013. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 17% to Rs 1700.69 crore in Q3 December 2013 over Q2 September 2013. The company announced the results during trading hours Tuesday, 28 January 2014.
Bank stocks edged lower. Among PSU bank stocks, State Bank of India (SBI) (down 3.56%), Punjab National Bank (down 4.14%), Bank of Baroda (down 4.08%) and Union Bank of India (down 3.98%) dropped.
Bank of India lost 10.47% after net profit declined 27.08% to Rs 585.82 crore on 21.27% growth in total income to Rs 10866.29 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced during trading hours today, 30 January 2014.
Bank of India (BoI)'s ratio of gross non-performing assets (NPAs) to gross advances stood at 2.81% as on 31 December 2013 as against 2.93% as on 30 September 2013 and 3.08% as on 31 December 2012. The ratio of net NPAs to net advances stood at 1.75% as on 31 December 2013 as against 1.85% as on 30 September 2013 and 1.97% as on 31 December 2012.
The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 10.84% as on 31 December 2013 as against 10.77% as on 30 September 2013.
BoI's provisions and contingencies jumped 53.28% to Rs 1403.74 crore in Q3 December 2013 over Q3 December 2012. The bank's provision coverage ratio as on 31 December 2013 works out to 63.77%.
Among private bank stocks, HDFC Bank (down 2.04%), Kotak Mahindra Bank (down 2.14%), Axis Bank (down 2.61%), Yes Bank (down 4.43%) declined.
ICICI Bank extended Wednesday's fall triggered by the bank reporting rise in ratio of net non-performing asset to 0.81% as on 31 December 2013 from 0.73% as on 30 September 2013. The stock lost 2.2%. ICICI Bank's net profit rose 12.53% to Rs 2532.21 crore on 15.4% increase in total income to Rs 14255.96 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours on Wednesday, 29 January 2014.
Net non-performing assets at 31 December 2013 were Rs 3121 crore (US$ 505 million) compared to Rs 2707 crore (US$ 438 million) at 30 September 2013. The net non-performing asset ratio was 0.81% at 31 December 2013 compared to 0.73% at 30 September 2013. The bank's provision coverage ratio, computed in accordance with the RBI guidelines, was 70.0% at 31 December 2013. Net loans to companies whose facilities have been restructured were Rs 8602 crore (US$ 1.4 billion) at 30 December 2013 compared to Rs 6826 crore (US$ 1.1 billion) at 30 September 2013.
On a consolidated basis, ICICI Bank's net profit rose 8.6% to Rs 2872.30 crore on 9.76% increase in total income to Rs 20543.46 crore in Q3 December 2013 over Q3 December 2012.
NTPC rose 0.2%. The company after market hours on Wednesday, 29 January 2014, said that the 10 megawatt (MW) Solar PV Power Station Phase-I at Ramagundam has been declared on commercial operation with effect from Wednesday, 29 January 2014. With this the total capacity of non-conventional energy projects of NTPC has become 20 MW and the total commercial capacity of NTPC group becomes 40,304 MW.
Titan Company jumped 3.68%, with the stock reversing initial decline. The company's net profit declined 18.8% to Rs 165.57 crore on 11.12% decline in total income to Rs 2701.84 crore in Q3 December 2013 over Q3 December 2012. The result hit the market after trading hours on Wednesday, 29 January 2014.
The overall trend in sales over the last 3 quarters has been similar across all brands and channels with Q3 December 2013 registering the lowest growth this year due to a poor festive season, Titan Company said in a statement. Titan's income from jewellery business fell 15.4% to Rs 2126.67 crore in Q3 December 2013 over Q3 December 2012. The company said the decline in sales was primarily due to lower demand for gold Jewellery. The jewellery industry was adversely impacted by the regulatory measures implemented to restrict gold imports. The first quarter had seen a surge in demand for gold jewellery due to lower gold prices.
Titan's income from watches business rose 7.5% to Rs 455.48 crore in Q3 December 2013 over Q3 December 2012. Titan said that the combined total income of Precision Engineering, a B2B business, the eyewear business and accessories business, jumped 18.6% to Rs 116.52 crore in Q3 December 2013 over Q3 December 2012.
The Titan Company retail chain is 1,039 stores strong (as on 31st December 2013), with the retail area crossing 14 lac sq.ft. nationally for all its brands.
Commenting on the financial performance, Mr. Bhaskar Bhat, Managing Director, Titan Company, said: "The sentiments in the market continue to be weak and the company witnessed an extremely poor retail-sales quarter for both its watches and jewellery businesses. The impact of festive season this quarter was much below our expectations. Although the stock market has picked up, the high inflation levels have resulted in lower disposable income in the hands of consumers. In the last quarter of this financial year we have planned aggressive sales promotions for both watches and jewellery to stimulate demand and generate consumer interest in these categories. We will continue to make adequate investments in mass communication and build our brands".
Crompton Greaves jumped 9.57%. The company after market hours on Wednesday, 29 January 2014 reported consolidated net profit of Rs 62.02 crore in Q3 December 2013 as compared to net loss of Rs 189.36 crore in Q3 December 2012. Total income rose 12.99% to Rs 3392.35 crore in Q3 December 2013 over Q3 December 2012.
Tata Global Beverages fell 1.06% to Rs 140.60 in volatile trade. The stock hit a high of Rs 144.85 and low of Rs 140. On a consolidated basis, Tata Global Beverages' net profit jumped 49% to Rs 120 crore on 9% increase in income from operations to Rs 2081 crore in Q3 December 2013 over Q3 December 2012. The result hit the market after trading hours on Wednesday, 29 January 2014.
The company said that the sharp increase in bottom line mainly reflects the impact of lower tax liability as well as improved performance of some key countries and associate companies. Tata Global Beverages said revenue rose on the back of good performance in some key markets coupled with favourable foreign exchange translation impact.
During the quarter, the holding company's overseas subsidiaries sold their stake in a US-based functional beverage company, which investment had been fully impaired in the previous quarter. The consideration for this sale is largely contingent on future performance and restructuring of the business, the company said.
Tata Starbucks - a joint venture between Tata Global Beverages and Starbucks- now has 34 Starbucks stores across the cities of Mumbai, Delhi, Bangalore and Pune. The stores continue to see excellent consumer response. The quarter also witnessed the successful launch of a fabulous new flagship store in Bangalore, the company added.
Mr. Harish Bhat, Managing Director and CEO of Tata Global Beverages, said - "This has been an exciting quarter for us at Tata Global Beverages. We have relaunched some of our key tea and coffee brands with new products and powerful marketing programs during the quarter, which have entailed significant marketing investments. In a few global markets, we have also faced and responded appropriately to some challenging marketplace conditions, particularly on account of commodity price trends in coffee and significant competitor activity. In our newest category, water, we continue to witness very good growth of our offerings such as Himalayan and Tata Water Plus, through Nourishco, our joint venture with Pepsico."
In a separate announcement before trading hours today, 30 January 2014, Tata Global Beverages said its board has decided that Ajoy Misra, presently the Executive Director of Tata Global Beverages (TGBL) be elevated and appointed as the Managing Director of TGBL effective 1 April 2014, in place of Mr. Harish Bhat, who will step down at close of business on 31 March 2014 and move into a senior advisory position in the Tata Group.
The appointment of Mr. Misra as the Managing Director will be subject to all statutory approvals as required and the approval of the members of the company.
Mr. Ajoy Misra will, with immediate effect, function as "Managing Director Designate", until he formally takes over as Managing Director on 1 April 2014. The board has also decided that Mr. Harish Bhat will be appointed as a non-Executive Director on the board of TGBL with effect from 1 April 2014, the company said.
Realty stocks dropped. DLF (down 4.22%), Indiabulls Real Estate (down 5.41%), HDIL (down 6.67%), D B Realty (down 1.94%) and Unitech (down 0.8%) declined.
Mahindra Holidays & Resorts India lost 3.97% after net profit declined 32.5% to Rs 20.31 crore on 5.5% growth in net sales to Rs 181.95 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Wednesday, 29 January 2014.
Commenting on the company's financial performance, Mr. Arun K Nanda, Chairman, Mahindra Holidays & Resorts India said, "The company has maintained its momentum of enhancing levels of service by increased investment in new properties that would allow members their choice of vacation destinations. The Club Mahindra brand, re-launched in October 2013, has been designed to reflect the company's credo and values and reflects our promise to Make every Moment Magical for our customers".
Mr. Rajiv Sawhney, MD & CEO, Mahindra Holidays & Resorts India said, "Our continued focus on inventory creation coupled with our investments in technology has sustained the improvement in our member engagement process. This has resulted in higher member satisfaction scores that we remain committed to".
Balaji Amines tumbled 19.79% after net profit declined 41.6% to Rs 4.20 crore on 27.6% growth in net sales to Rs 137.51 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Wednesday, 29 January 2014.
Usha Martin lost 4.69% after consolidated net profit declined 49.3% to Rs 15.43 crore on 8.6% growth in net sales to Rs 965.38 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Wednesday, 29 January 2014.
Usha Martin's consolidated EBITDA (earnings before interest, taxation, depreciation and amortization) rose 18.16% to Rs 230.82 crore in Q3 December 2013 over Q3 December 2012.
Mr. Prashant Jhawar, Chairman, Usha Martin said, "The commissioning of the 1.2 million tones beneficiation and pellet plants is a significant step of Usha Martin and would enable the company to get full benefit of mineral integration going forward".
Mr. Rajeev Jhawar, MD, Usha Martin said, "The pellet plant should stabilize in the next 4-5 months as prevalent in such plants and the quality of the pellet produced is good and meets the specification".
VIP Industries rose 0.85% after net profit jumped 188.6% to Rs 10.10 crore on 15.3% growth in net sales to Rs 235.10 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Wednesday, 29 January 2014.
Meanwhile, VIP Industries' board of directors will meet on 10 February 2014, to consider interim dividend for the year ending 31 March 2014. The record date for the purpose of payment of interim dividend is fixed as 17 February 2014.
In the foreign exchange market, the rupee edged lower against the dollar, tracking weakness in emerging markets after the Federal Reserve further pruned its monetary stimulus. The partially convertible rupee was hovering at 62.57, compared with its close of 62.41/42 on Wednesday, 29 January 2014.
India has no target for the rupee's exchange rate and the currency will remain rangebound, the economic affairs secretary said, despite recent global market volatility. "We are vigilant...we believe that we are capable of withstanding (the impact of the Fed tapering)," Arvind Mayaram said.
Indian government bond prices dropped after the Federal Reserve further pruned its monetary stimulus. The yield on 10-year benchmark federal paper, 8.83% GS 2023, was hovering at 8.8208%, higher than its close of 8.7743% on Wednesday, 29 January 2014. Bond yield and bond price move in opposite direction. The sentiments are also cautious ahead of bond auction of Rs 14000 crore dated securities scheduled for tomorrow, 31 January 2014.
The Reserve Bank of India (RBI) on Wednesday, 29 January 2014, raised with immediate effect the existing sub-limit of $5 billion available to long term investors registered with Securities & Exchange Board of India (Sebi) viz. Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/Insurance/Endowment Funds and Foreign Central Banks for investment in Government dated securities to $10 billion, within the total limit of $30 billion available for foreign investments in Government securities.
India's economy is better prepared for the consequences, if any, of reduction in bond purchases by the US Federal Reserve, India's Finance Ministry said in a statement issued today, 30 January 2014. "We have added to our foreign exchange reserves which stand at $295 billion. FDI and FII inflows continue to be robust, liquidity is comfortable, stronger regulations have been put in place in the capital markets, the investment cycle appears to have turned positive, credit demand from key sectors is strong, and WPI inflation has moderated. The Current Account Deficit which was earlier estimated at $70 billion is now expected to be below $50 billion in 2013-14. Therefore, there should be no undue concern over external factors", the Finance Ministry said.
Fed's decision on Wednesday, 29 January 2014, to reduce bond purchases by $10 billion a month to $65 billion was expected and should not in any way surprise or affect the Indian markets, the Finance Ministry said. "However, both the Government of India and the Reserve Bank of India will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in the financial markets", the Finance Ministry said in a statement.
European stocks edged lower on Thursday, 30 January 2014, after data showed the Chinese manufacturing sector contracted in January and the US Federal Reserve tapered its asset-purchase program further. Key benchmark indices in UK, France and Germany were off 0.31% to 0.45%.
Spain's economic recovery picked up the pace in the fourth quarter, as expected, posting its second quarterly positive reading after a two-year recession, the country's statistics institute INE said Thursday. Spain's gross domestic product rose 0.3% in the fourth quarter from the third, INE said, in its preliminary GDP estimate for the quarter. This is in line with a previous estimate by the country's central bank, and statements made by Finance Minister Luis de Guindos.
GDP contracted 0.1% in the fourth quarter from the same period of 2012, INE said, with a better contribution from internal demand offset by a smaller contribution from the export sector. For the whole of 2013, the Spanish economy--the euro zone's fourth-largest--contracted 1.2%, INE added.
The quarterly reading compares with meager 0.1% growth in the third quarter from the second, and a 1.1% contraction in the third quarter from the same quarter of 2012.
Asian stocks dropped on Thursday, 30 January 2014, after the US Federal Reserve pressed on with cuts to US economic stimulus and as a report showed China's manufacturing industry contracted. Key benchmark indices in Hong Kong, China, Singapore, Japan and Indonesia fell by 0.48% to 2.45%. Stock markets in South Korea and Taiwan are closed today, 30 January 2014. Stock markets in Taiwan are closed until 4 February 2014 for the Lunar New Year holiday.
The final reading on HSBC Holdings Plc and Markit Economics Ltd.'s January purchasing managers' index for Chinese manufacturing was 49.5, the first contraction in six months, from 50.5 in December. Readings above 50 indicate expansion.
China's markets close from tomorrow until 7 February 2014 for the Lunar New Year holiday, while Hong Kong is shut until 4 February 2014.
Trading in US index futures indicated that the Dow could advance 13 points at the opening bell on Thursday, 30 January 2014. US stocks sank on Wednesday, 29 January 2014, as earnings forecasts from Yahoo! Inc. and AT&T Inc. disappointed investors. The Federal Reserve on Wednesday, 29 January 2014, took another gradual step toward exiting its controversial bond-buying program, remaining stoic in the face of market turmoil. As expected, the Fed decided to reduce the pace of monthly asset purchases to $65 billion, from January's $75 billion. The Fed will purchase mortgage-backed securities at a pace of $30 billion per month and add to its holdings of Treasurys at a pace of $35 billion per month beginning in February.
The Fed also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market.
In addition to proceeding with plans to scale back its bond buying, the Fed made no changes to its other main policy plank: its pledge to keep interest rates low for some time to come. It has pledged to hold rates steady "well past" the point that the unemployment rate falls below 6.5% as long as inflation remains low.
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