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While you were sleeping: Waiting for a sign

Tuesday 17th August 2010

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Stocks in Europe and the US were mixed as investors remained concerned about the global economic outlook after reports showing Japan’s economy grew at the slowest pace in three quarters and that manufacturing in the New York region expanded less than forecast in August.

In late trading, the Dow Jones Industrial Average declined 0.22% and the Standard & Poor's 500 Index fell 0.12%. The Nasdaq Composite Index rose 0.29%.

Among the active stocks on Wall Street were eBay, Freeport-McMoRan Copper & Gold, Washington Post and Corinthian Colleges.

Orders and sales at New York manufacturers decreased in August for the first time in more than a year and US homebuilders turned more pessimistic. The National Association of Home Builders/Wells Fargo confidence index unexpectedly declined to a 17-month low.

“People are wary because of weak global economic numbers,” Peter Jankovskis, who helps manage about US$2.2 billion as co-chief investment officer at Oakbrook Investments in Lisle, Illinois, told Bloomberg News.

“We’ll have a fair amount of economic data this week and investors will be waiting to see what those numbers will show.”

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’, fell 0.23% to 26.18 in New York. The index measures the cost of using options as insurance against declines in the Standard & Poor’s 500 Index.

The Stoxx Europe 600 Index was barely changed at the close of trading, ending the day at 255.61.

The UK’s FTSE 100 was little changed, rising 0.01%. Germany’s DAX closed unchanged in percentage terms. France’s CAC 40 declined 0.37%.

Among the most active stocks in Europe were BP, Hennes & Mauritz, Cairn Energy, Allied Irish Banks and Bank of Ireland.

US Treasuries rose as investors sought the relative safety of fixed-income securities.

Benchmark 10-year note yields fell 6 basis points to 2.61% at 1.32pm in New York, according to BGCantor Market Data.

The 30-year yield slid as low as 3.74%, the lowest level since April 2009, while two-year yields touched 0.4882%.

Worldwide demand for long-term US financial assets rose in June as investors abroad bought US Treasuries and agency debt and sold stocks.

The European debt crisis led investors to buy American government securities as a safe haven, while shying away from equities and corporate bonds. A US Treasury Department report today showed net sales of US stocks in June and the most net sales of corporate bonds since January.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.46% to 82.54.

The euro rose 0.7% to US$1.2839 in midday New York trading. The euro gave up early gains against the yen, falling 0.3% to 109.54 yen.

The greenback was down 1.1% at 85.35 yen.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.25% to 268.11.

US crude for September delivery fell 19 cents to US$75.20 a barrel at 1607 GMT.

Front-month ICE Brent crude fell 27 cents to US$74.84 a barrel.

"Economic woes and weaker equities are weighing on the price," Christopher Bellew, a broker at Bache Commodities, told Reuters.

"Rather than completely collapsing, oil is probably likely to trade in a sideways pattern between around US$74 and US$78 basis Brent."

Spot gold rose to US$1,223.50 an ounce by 1400 GMT from US$1,214.50 late in New York on Friday.

"You can consider this to be safe-haven buying. It is also supported by the overall low interest rate environment that makes gold additionally attractive to investors," Alexander Zumpfe of Heraeus Metals, told Reuters.

Leading economies' maintaining low interest rates is a favourable environment for non-interest bearing assets such as gold.

"The market is looking technically well supported after it broke through US$1,220 per ounce," he added.

Three-month copper on the London Metal Exchange rose US$75.50 to US$7,231.50 a tonne by 0701 GMT, after last week suffering its first weekly drop in four weeks.

Businesswire.co.nz

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