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While you were sleeping: Stocks flat, euro slips

Friday 5th March 2010

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Stocks were little changed overnight as Europe’s central bank held firm on interest rates, Greece found buyers for some bonds and reports on the strength of the U.S. economic recovery were mixed.

At midday, the Dow Jones Industrial Average was 0.14% higher and the Standard & Poor’s 500 gained 0.02%. The Nasdaq Composite was unchanged.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ rose 1.59% to 19.13.

While jobless claims fell in February, pointing to an improving labour market in the world’s biggest economy, far fewer contracts were signed to buy a home. Pending home sales fell 7.6% in January, signalling that tough times remained for the housing sector.

Among the active stocks were Walt Disney Co, Coca-Cola Co. and Abercrombie & Fitch Co. Lennar Corp led homebuilder shares lower.

In Europe overnight, the Dow Jones Stoxx 600 rose 0.1% to 252.93, extending its advance for a fifth consecutive day.

Among national benchmarks, the UK ’s FTSE 100 shed 0.11%, Germany’s DAX 30 edged 0.39% lower and France’s CAC 40 slid 0.37%.

Among the active issuers were Vinci SA, Royal Ahold NV, GDF Suez and Maersk.

European Central Bank President Jean-Claude Trichet indicated that investors need not worry about higher euro-zone interest rates.

“Based on its regular economic and monetary analyses, the Governing Council decided to leave the key ECB interest rates unchanged (overnight). The current rates remain appropriate.

“Taking into account all the information and analyses that have become available since our meeting on 4 February 2010, price developments are expected to remain subdued over the policy-relevant horizon.”

Trichet said there was no inflation threat. “Inflation expectations remain firmly anchored in line with the Governing Council’s aim of keeping inflation rates below, but close to, 2% over the medium term.”

While not citing any particular country, Trichet said euro-zone members needed to meet their commitments.

“In all euro area countries, the key challenge in order to reinforce sustainable growth and job creation is to accelerate structural reforms. Policies should be adopted which open up market access and increase competition. Overall, it is essential to set the stage for long-term investment in innovation so as to create new business opportunities.”

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.74% to 80.58.

In midday trading in New York, the euro was 1% lower at US$1.3559, after trading as high as US$1.3712, according to Reuters data.

The dollar was last 0.7% higher at 89.04 yen.

Sterling edged higher against the greenback after the Bank of England, as expected, left its key rate unchanged at 0.5% and held steady its quantitative easing program.

Greece began the sale of 10-year bonds overnight and Bloomberg reported investors were being offered an interest premium of 0.32 percentage point over existing debt.

The government is selling the new notes at a spread of 300 basis points more than the mid-swap rate, or a yield of 6.37 percent. That compares with the 6.05 percent interest on Greece’s existing benchmark issue due July 2019, according to data compiled by Bloomberg.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 1.09% to 274.66.

Benchmark U.S. crude oil futures for April fell 30 cents to US$80.57 per barrel by 1436 GMT. The contract reached a peak of US$81.23 on Wednesday, its highest intraday point since January 12. London ICE Brent for April was down 30 cents at US$78.95.

China Investment Corp, the country's sovereign wealth fund, believes commodity prices were outpacing the global economic recovery, fuelled by loose monetary policies, a top official told Reuters on Thursday.

"Personally, I think the prices are a bit too high, relative to the strength of real economic recovery," Jesse Wang, CIC executive vice president and chief risk officer, said on the sidelines of a conference in Beijing.

Spot gold was bid at US$1128.50 an ounce at 1551 GMT against US$1139.35 late in New York on Wednesday, having earlier slipped as low as US$1125.70.

U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell US$14.00 to US$1129.30 an ounce.

 

 

 

Businesswire.co.nz



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