While you were sleeping: Greece rattles the cage

Thursday 8th April 2010

Renewed concerns about Greece’s fiscal outlook rattled investors in both Europe and US who, perhaps, were looking for an opportunity to rethink some holdings in the wake of recent gains.

In late trading, the Dow Jones Industrial Average was down 0.93%, the Standard & Poor’s 500 Index was down 0.74% and the Nasdaq Composite edged 0.42% lower.

Financial stocks also got a lift when Goldman Sachs raised its view on a host of regional banks, including KeyCorp, which was upgraded to buy from neutral.

Other active stocks included Massey Energy, Monsanto Co, Apple Inc and Palm Inc, which surged on takeover speculation. A slide in some commodities, including oil, dragged down shares in some natural resource companies.

More than three-quarters of stocks in the S&P 500 are “overbought” as of the April 5 close, according to Bespoke Investment Group LLC, which identified shares that are at least one standard deviation above their average price over the past 50 days, Bloomberg News reported.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ fell 3.76% to 16.38.

S&P 500 companies will post first-quarter profit growth of 30%, according to estimates compiled by a Bloomberg survey. Alcoa Inc will mark the unofficial start of the first-quarter earnings season when it reports results on April 12.

The Dow Jones STOXX 600 slid 0.3 to 268.61 as worries about Greece’s fiscal outlook lingered.

The UK’s FTSE 100 fell 0.32%, Germany’s DAX shed 0.48% and France’s CAC dropped 0.67%.

Among the most actives were BHP Billiton, National Bank of Greece SA, Man Group Plc, Next Plc, Inditex SA and Allied Irish Banks Plc.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.05% to 81.43.

The euro renewed its skid amid concerns about Greece’s fiscal woes, the Canadian dollar extended its rise against the greenback and sterling fell on weak service sector data.

In midday New York trading, the euro was down 0.4% at US$1.3348 after falling as low as US$1.3327, according to Reuters data. It lost 0.5% to 124.98 yen.

Traders told Reuters the next key euro/dollar downside support level is around US$1.3270 and a break below that could see it fall toward US$1.30.

Sterling fell 0.3% to US$1.5229. Britain's services purchasing managers index fell to 56.5 in March from 58.4 in February. Economists had forecast it to slip to 58.0.

Credit-default swaps linked to Greece sovereign debt rose higher than those tied to Iceland for the first time, helping propel a benchmark indicator of U.S. corporate credit risk to its biggest jump in two weeks, Bloomberg News reported.

The Markit CDX North America Investment Grade Index Series 14 rose 2.4 basis points to a mid-price of 86.4 basis points as of 2.14pm in New York, according to Markit Group Ltd. The index typically increases as investor confidence deteriorates and falls as it improves.

High yields drew investors to the sale of 10-year U.S. Treasury notes overnight. The yield on the 10-year note fell six basis points to 3.89% at 2.41pm in New York, according to BGCantor Market Data.

The notes sold overnight drew a yield of 3.90%, compared with the average forecast of 3.948% in a Bloomberg News survey of six of the Fed’s 18 primary dealers.

The bid-to-cover ratio at today’s auction, which gauges demand by comparing total bids with the amount of securities offered, was 3.72, the highest since at least 1994.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.33% to 277.59.

Both copper and oil faded overnight after some investors questioned whether their recent rallies had gone too far too fast, while gold

Copper for three months delivery on the London Metal Exchange ended the day at US$7945 a tonne, from US$7990 on Tuesday, when the metal used in power and construction touched US$8010, its highest since August 2008.

U.S. light crude futures for May were 20 cents lower at US$86.64 by 1737 GMT, but up from the intraday low of US$85.75. On Tuesday, U.S. crude reached an intraday peak of US$87.09, its highest since October 2008.

London ICE Brent had bounced and was up 12 cents to US$86.27.

U.S. crude oil inventories rose for a 10th straight week, lifting stocks to the highest level since mid-June 2009, the U.S. Energy Information Administration said overnight.

Spot gold was at US$1136.85 an ounce by 0528 GMT, up US$3.65 from New York's notional close on Tuesday, when it hit a 1-month high of US$1138.40 an ounce despite a rising U.S. dollar against the euro.

U.S. gold futures for June delivery added US$1.9 to US$1137.9 an ounce, holding near Tuesday's 1-month high. Gold in euro terms held near a record.

Businesswire.co.nz

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