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While you were sleeping: Greece, US jobs looking up

Friday 11th May 2012

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The prospects for a new Greek government were looking up, as did the latest US jobs data, helping stocks on both sides of the Atlantic advance. Even the beleaguered euro eked out a gain against the greenback.

Europe's Stoxx 600 Index finished the day with a 0.6 percent increase for the session, while the euro bounced from the lowest level in three months.

"There’s an attempt to patch things together in Greece,” Michael Strauss, chief investment strategist at Commonfund in Wilton, Connecticut, told Bloomberg News. “They will try to stay in the euro, though I’m not sure they can. Greece is a failed chemistry experiment even if they put something together.”

The euro rose 0.2 percent to US$1.2959 at 2.35pm New York time, while strengthening 0.6 percent to 103.60 yen.

"Greece is not likely to depart from the euro and they will eventually form a government that will heed the requests with some minor changes in terms of growth," Peter Cardillo, chief market economist at Rockwell Global Capital, told Reuters.

There was reason for domestic optimism on Wall Street too as the latest jobless claims numbers were slightly better than expected. New claims for state unemployment benefits slipped 1,000 last week to a seasonally adjusted 367,000, the Labor Department said.

"The slowdown we have seen in economic activity and employment growth during in the past two months may be in the rear view mirror," Millan Mulraine, senior macro strategist at TD Securities in New York, told Reuters.

In afternoon trading in New York, the Dow Jones Industrial Average gained 0.38 percent, the Standard & Poor's 500 Index rose 0.58 percent and the Nasdaq Composite Index advanced 0.24 percent.

Other reports today showed that the US trade gap widened 14.1 percent to US$51.8 billion in March, as an increase in imports outpaced a gain in exports.

Meanwhile, the US government posted a budget surplus in April, the first in more than three years. The US$59.1 billion surplus last month compared with a shortfall of US$40.4 billion in April 2011, according to the Treasury Department. Economists surveyed by Bloomberg had predicted a US$35 billion surplus.

Earnings also have brightened a little. Shares of News Corp rose more than 5 percent as it posted profit that surpassed expectations and bolstered its share buyback program.

Even so, shares of Cisco dropped 10 percent on disappointing sales and profit forecasts.

About 70 percent of S&P 500 companies that reported results since the start of the earnings season have surpassed forecasts, according to Bloomberg.

BusinessDesk.co.nz

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