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While you were sleeping Investors await Fed

Wednesday 31st July 2013

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Disappointing earnings hurt shares of companies including Occidental Petroleum, last down 3.3 percent, and Coach, last 8.3 percent weaker.

There were positive earnings surprises too such as for Pfizer, helping lift its shares 0.68 percent.

Overall Wall Street was mixed as Federal Reserve policy makers began a two-day meeting today, and investors are keen for fresh clues about the outlook for the central bank's US$85 billion-a-month bond-buying program that may be provided on Wednesday.

None of the 54 economists surveyed by Bloomberg July 18-22 expected the FOMC to begin paring asset purchases this month. Half forecast an easing of the program to US$65 billion per month in September.

In late afternoon trading in New York, the Dow Jones Industrial Average edged up 0.11 percent, the Standard & Poor's 500 Index added 0.11 percent and the Nasdaq Composite Index gained 0.55 percent.

"We're waiting again to hear what the Fed has to say because everybody's on tenterhooks," Sarah Hunt, an associate fund manager and analyst who helps oversee US$4.5 billion at Purchase, New York-based Alpine Woods Capital Investors, told Bloomberg News.

The latest economic clues provided further signs of strength in the US housing market but a decline in consumer confidence.

The S&P/Case-Shiller index of property values in 20 cities jumped 12.2 percent from May 2012, following a 12.1 percent gain the prior month.

Separately, the Conference Board's index fell to 80.3 in July, from a revised 82.1 the prior month. Even so, it was still the second-highest level since January 2008.

In other news, shares of potash producers tumbled after Russia's Uralkali exited a venture with its partner in Belarus, a move that is expected to send global potash prices tumbling.

Shares of Mosaic plunged, last down 18 percent, while shares of Potash Corp of Saskatchewan dropped 17 percent.

"It is as if Saudi Arabia decided to leave OPEC-oil prices would fall immediately," Dmitry Ryzhkov, equity sales trader at Renaissance Capital, told Reuters.

In Europe, the Stoxx 600 Index closed with a gain of 0.1 percent. The UK's FTSE 100 and Germany's DAX both rose 0.2 percent. France's CAC 40 increased 0.5 percent.

Shares in Barclays dropped 7 percent after the bank detailed plans to bolster its capital by selling new equity and debt and also by cutting its loan book. Shares in Deutsche Bank fell 3.9 percent after it said it would sell another 250 billion euros worth of assets to meet new banking rules.

An Italian debt auction drew solid demand.

Italy sold 3.75 billion euros of a new 10-year bond at 4.46 percent. The country is due to pay about 44 billion euros of coupons and redemptions next month, according to data compiled by Bloomberg.

BusinessDesk.co.nz

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