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While you were sleeping: Quarter end pause

Thursday 1st April 2010

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Weaker than expected US economic data and rating cuts on some Greek banks led investors to end the quarter on the sidelines ahead of the Easter trading break.

In afternoon trading, the Dow Jones Industrial Average fell 0.39% and the Standard & Poor’s 500  declined 0.22%. The Nasdaq Composite dipped 0.2%.

With about two hours of trading to go, the first-quarter gains for the major indexes were: Dow, up 4.5%; S&P 500, up 5.2%, and Nasdaq, up 6.3%.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ rose 2.1% to 17.49.

Among the most active were Cisco Systems Inc and Home Depot Inc.

Oil companies got a boost from President Barack Obama’s decision to permit some oil and natural gas drilling off the U.S. East Coast. Gold miners got a boost from a rise in the price of the precious metal.

On the economic front, the big news was that private employers in the U.S. cut 23,000 jobs in March - against expectations of an increase of 40,000. That has taken a bit of a shine off of what’s expected when the U.S. government releases its monthly jobs report on Good Friday.

In other economic news, the government said factory orders edged 0.6% higher in February and the ISM’s latest survey found that manufacturers and service providers were somewhat less optimistic in March than the previous month.

In Europe overnight, the Dow Jones Stoxx 600 edged 0.1% lower to 263.57. The index recorded a 3.8% gain for the first quarter.

The UK’s FTSE 100 added 0.13%,  and Germany’s DAX ended up 0.18%. In contrast, France’s CAC 40 slid 0.34%.

Some of the biggest movers included EFG Eurobank Ergasias SA, National Bank of Greece SA, FirstGroup, British Sky Broadcasting Plc, Bank of Ireland Plc and Unilever.

The Dollar Index, which measures the greenback against a basket of six major currencies, shed 0.63% to 80.97.

The euro rose 0.9% to US$1.3532, boosted partly by quarter-end demand. The U.S. dollar was last up 0.7% at 93.42 yen, near a session peak, after dipping to 92.76 yen after the ADP report.

Futures on the CME Group Inc. exchange showed a 56% chance the Fed will raise its target rate for overnight lending between banks by at least a quarter-percentage point by its November meeting, compared with 48% odds a month ago.

The US Labor Department’s nonfarm jobs report on Good Friday is forecast to show employers added 184,000 positions, the most in three years, a Bloomberg survey of 81 economists shows.

The US dollar’s share of global currency reserves rose to 62.1% in the fourth quarter of 2009, and the euro’s share dropped to 27.4%, the International Monetary Fund said today in a quarterly report.

The yen’s share dropped to 3% from 3.2% and the British pound held at 4.3% in the period ended December 31, the Washington-based fund said, according to Bloomberg.

Oil took its lead from the euro and rose. Front-month crude futures on the New York Mercantile Exchange traded up US$1.15 at US$83.52 a barrel. Brent crude for May rose US$1.12 to US$82.40.

For the first quarter, oil traded from a US$83.95 peak in January to a low of US$69.50 a barrel in February.

Overnight the US Energy Information Administration oil inventory report showed crude oil stocks rose by 2.9 million barrels to 354.2 million barrels last week, according to Reuters. That was more than the 2.4 million barrels forecast, while gasoline inventories logged a modest albeit surprise gain.

The EIA report contrasted with industry group the American Petroleum Institute's report from Tuesday showing crude oil stocks rose only 421,000 barrels.

Gold, platinum and palladium also rose on the final day of the quarter. Spot gold was at US$1115.20 a troy ounce at 1500 GMT from US$1102.50 an ounce late in New York on Tuesday, having earlier hit US$1117.90, its highest since March 19.

Palladium hit a two-year high of US$483.50 an ounce, while platinum jumped to US$1648.50 an ounce, its highest since January 20.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, slipped 0.11% to 273.42.

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