While you were sleeping: Investors in holding pattern

Wednesday 10th March 2010

Shares were little changed for a second session as investors await fresh signs that the global economic recovery would renew itself and provide new impetus for higher stock prices.

In early afternoon trading, the Dow Jones Industrial Average was 0.43% higher and the Standard & Poor’s 500 gained 0.48%. The Nasdaq Composite was up 0.76%.

The S&P 500 is up 68% since hitting a 12-year low of 676.53 one year ago today, the biggest rally for the index since the Great Depression.

And the run may not yet be over.

The S&P 500 may surpass this year’s January high because market momentum picked up without turning investors overly bullish, according to Robert W. Baird & Co.’s chief investment strategist Bruce Bittles.

The American Association of Individual Investors’ latest weekly survey of stock-market sentiment showed bulls outnumbered bears by 1.37 times, far from a reading of 2 that would trigger a sell signal, Bittles said in a note, according to Bloomberg.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ fell 0.96% to 17.62.

Among the pace setters overnight were UAL Corp, United Technologies Corp, Kroger Co and Cisco Systems Inc.

“We’re poised for risk assets to do well for a few quarters,” David Darst, the New-York based chief investment strategist at Morgan Stanley Smith Barney, told Bloomberg.

“The interest rate is low, inflation is low and liquidity is enormous. The final positive is global growth. At the end of this year, we’ll be looking at 2011 earnings, when the market can earn US$85. If you put a 14 times multiple on that, it gives you a 1233 price for the S&P 500.”

In Europe overnight, the Dow Jones Stoxx 600 declined less than 0.1% to 256.73, though it has advanced 8.1% since early February.

Among national benchmarks, the UK ’s FTSE 100 slipped 0.08%, Germany’s DAX 30 added 0.17% and France’s CAC 40 edged up 0.17%.

Shares in EADS, Banco Commercial Portugues SA and Nestle were among the most active. GlaxoSmithKline Plc and Liberty International Plc also were active.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.24% to 80.62.

At midday in New York the US dollar slid 0.5% to 89.81 yen.

The yen was up 0.5% against the Canadian dollar, 0.9% against the Swiss franc, 1% against the euro and 1.1% against the pound.

The Bank of Japan has returned to the fore after the Nikkei newspaper reported on Friday that the central bank was examining easing again and might decide on such a move when it meets on March 16-17.

The euro was down around 0.4% against the US dollar at US$1.3579.

Fitch Ratings said on Tuesday it retained a negative outlook on Portugal's AA ratings and was studying the details of the country's new austerity measures announced a day earlier.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.54% to 275.23.

Spot gold was bid at US$1115.75 an ounce at 1539 GMT, against US$1122.85 late in New York on Monday. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange slipped US$7.50 to US$1116.50 an ounce.

"With the euro below US$1.37, gold will be struggling, because it is not going to get the support from the currencies," Saxo Bank senior manager Ole Hansen told Reuters.

Yi Gang, head of the State Administration of Foreign Exchange, said that while gold was "not a bad asset," it would never become a big part of China's overall investment portfolio.

"The international gold market is very limited. If I purchase gold on a massive scale, it will definitely push up global gold prices," Yi said at a news conference on the sidelines of China's annual parliament, according to a Reuters report.

"So, as for suggestions from many friends that we should increase gold holdings, we will give prudent consideration to this, according to market conditions."

Crude oil futures fell more than US$1 per barrel on both sides of the Atlantic, with benchmark US futures for April dropping to a low of US$80.16, down US$1.71, before recovering slightly to trade around US$80.95 by 1450 GMT.

North Sea Brent crude oil futures slipped to a low of US$78.70, down US$1.77, before paring losses to stand at US$79.52.

Businesswire.co.nz

Comments from our readers

No comments yet