While you were sleeping: Momentum takes a seat

Wednesday 27th October 2010

Shares on Wall Street fluctuated as investors welcomed IBM’s US$10 billion boost to its buyback plan but were less impressed with results from US Steel Corp and its peers.

In mid afternoon trading, the Dow Jones industrial average edged 0.04% higher, the Standard & Poor's 500 Index was up 0.03% and the Nasdaq Composite Index gained 0.42 %.

IBM boosted its stock-buyback plan to $US12.3 billion, saying it wanted to return cash to investors and help increase its per-share earnings.

Shares in US Steel, AK Steel Holdings and ArcelorMittal dropped after reporting results. US Steel and ArcelorMittal both forecast a soft patch extending to the end of the year.

So far this earnings season, "there haven't been many misses or drastic news to the downside, except for US Steel," Jay Suskind, senior vice president at Duncan-Williams in Jersey City, New Jersey, told Reuters.

"If economies continue to grow slowly while commodity prices rise, material companies like that could have some problems."

US consumer confidence rose more than expected, though it remained near historic lows as economists point to the extended weakness in the labour market.

The Conference Board’s consumer sentiment index rose to 50.2 in October, which surpassed the median forecast in a Bloomberg News survey, from a revised 48.6 in September.

In Europe, the Stoxx 600 fell 0.2% to 266.92 at the 4.30pm close in London, as more than two companies fell for every one that rose.

Disappointing investors was UBS AG as Switzerland’s biggest bank posted an unexpected investment-banking loss. The bank reported reduced flows from cash equities and a quarter-on-quarter decline in revenue from fixed income, currencies and commodities.

The greenback rose. The Dollar Index, which measures its value against a basket of currencies, advanced 0.62% to 77.69.

The US currency gained against the yen after Japan's finance minister Yoshihiko Noda said the government would "act decisively" in currency markets if needed.

The dollar was up 0.6% at 81.24 yen, after dropping to a 15-year low of 80.41 yen on Monday on electronic trading platform EBS,

The euro slid 0.7% to US$1.3860. The euro has support at US$1.3860, its low on Friday, and its 21-day simple moving average at US$1.3866.

Euro/dollar "has struggled to break sustainably above US$1.40," Camilla Sutton, chief currency strategist at Scotia Capital in Toronto, told Reuters.

"We still expect this will be the next move, however if it is unable to do so soon, we might see some temporary weakness before markets have enough conviction to push it above this level."

US crude for December rose 20 cents at US$82.72 a barrel by 12.02pm EDT, extending gains from two previous sessions.

ICE Brent advanced 13 cents to US$83.67.

Businesswire.co.nz

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