While you were sleeping: Stocks flat on mixed data

Thursday 24th December 2009

Shares in Europe and in the U.S. were little changed on the last full day of trading this week as a mix of economic reports had investors rethinking where best to place their bets on what lies ahead early in the new year.

While investors have been buoyed by a series of reports pointing to a strengthening U.S. economic recovery, two reports cast cold water on the reality of the situation.

The U.S. Commerce Department today reported that purchases of new homes fell last month and that the median sales price slid too. Sales fell 11% to an annual pace of 355,000, compared with a forecast increase to a 438,000 annual pace, according to a Bloomberg News survey.

In addition to the housing market check, the Commerce Department also reported that consumers were more prudent with their spending last month than expected. Consumer spending rose 0.5%, compared with a 0.6% forecast in a survey by Reuters.

In an interview with ABC's "Good Morning America" on Wednesday, Treasury Secretary Timothy Geithner said the economy was recovering, but it might be some months yet before job losses ended.

"The economy's growing, it's getting better, getting stronger and I think most people would say the economy is strengthening going into the end of the year ... but the key thing is when do we get job growth back," Geithner said.

Energy and financial-services companies may lead a rebound in takeovers in 2010 after the value of acquisitions worldwide dropped 34% this year, according to a Bloomberg survey.

Ninety-two percent of those surveyed expect mergers and acquisitions to increase next year, the Global M&A Outlook found. Bloomberg’s survey of about 250 investment bankers, lawyers and investors was released today. About 21% of those surveyed expected energy companies to lead in M&A next year, while 17% chose financial firms.

At midday, the Dow Jones Industrial Average was 0.04% lower, the S&P500 Index was 0.11% higher and the Nasdaq Composite Index was up 0.5% higher. The Chicago Board Options Exchange Volatility Index, or VIX, rose 1.2% to 19.77.

The Dow Jones Stoxx 600 Index added 0.2% to 251.52 at 4:06 p.m. in London, heading for the highest close in 14 months. Basic-resources and bank shares, the best two performers in the Stoxx 600 this year, were the biggest gainers among the index’s 19 industry groups.

National benchmark indexes rose in 11 of the 18 western European markets today. The U.K.’s FTSE 100 added 0.6%. France’s CAC 40 gained less than 0.2%, while Germany’s DAX gained less than 0.1%.

Among the active stocks, higher metal prices helped Kazakhmys and Antofagasta advance more than 2%. Rio Tinto gained 2.3% National Bank of Greece, HSBC Holdings Plc led gains among financial companies.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, rose 1.06% to 277.79.

Gold futures for February delivery rose US$2.10, or 0.2%, to US$1088.80 an ounce at 9:45 a.m. on the New York Mercantile Exchange’s Comex unit, after dropping for two straight days. Gold for immediate delivery in London was up 0.4% to US$1088.10 an ounce.

Silver for March delivery in New York rose 0.6% to US$17.14 an ounce. Platinum for April delivery added 0.5% to US$1409.40 an ounce, and palladium for March delivery was 1.5% higher at $US359.65 an ounce.

Speculation intensified that Swiss commodities trader Glencore was poised to proceed with an initial public offering after it sold US$2.2 billion of bonds.

Glencore said on Wednesday it had sold convertible bonds to a group of investors, including energy-focused private equity firm First Reserve. Other buyers included Singaporean sovereign wealth fund GIC, U.S. fund manager BlackRock and Zijin Mining Group, China's largest listed gold company.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.56% to 77.87.

The dollar slid as much as 0.7% to US$1.4349 per euro in the biggest intraday decline since November 25 before trading at US$1.4348 at 12:18 p.m. in New York. It advanced yesterday to US$1.4218, the strongest since September 4.

The benchmark 10-year note yield fell three basis points to 3.73% at 12:44 p.m. in New York, according to BGCantor Market Data. The yield increased 25 basis points this week.

The U.S. will sell US$44 billion in two-year notes on December 28, US$42 billion in five-year debt the next day and US$32 billion in seven-year securities the day after that.

Businesswire.co.nz

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