While you were sleeping: Wall Street recovers

Wednesday 8th July 2015

Wall Street gained, recovering from earlier losses, amid optimism the outlook for Greece and China might be less dour than thought.

In late afternoon trading in New York, the Dow Jones Industrial Average rose 0.35 percent, the Standard & Poor’s 500 Index advanced 0.66 percent, while the Nasdaq Composite Index added 0.12 percent.

Gains in shares of Coca-Cola and those of Procter & Gamble, last trading 2.3 percent and 2.1 percent higher respectively, propelled the Dow higher.

“Week by week, we’re seeing markets enter corrections as Greece steps closer to the edge,” Alessandro Bee, a strategist at Bank J Safra Sarasin, told Bloomberg. “We have moments of panic and then take a few days to digest things. I think that will continue as long as the Greek issue drags on.”

In Brussels, Greek Prime Minister Alexis Tsipras and new Finance Minister Euclid Tsakalotos were trying to kickstart a new round of negotiations to secure fresh aid from eurozone leaders.

“We welcomed our new Greek colleague and listened to his assessment of the situation after the "No" vote in Greece,” Eurogroup President Jeroen Dijsselbloem said in a statement. “The first step will be that the Greek government will send the Eurogroup a new request; a new request letter for ESM support and as soon as this comes in -- hopefully already tomorrow morning -- we will have another Eurogroup conference call to formally start the process of dealing with this request.”

“All this has to be done in a matter of days,” Dijsselbloem noted. “We have very little time.”

Europe’s Stoxx 600 Index ended the day with a 1.6 percent slide from the previous close. The UK’s FTSE 100 Index dropped 1.6 percent, Germany’s DAX shed 2 percent, while France’s CAC 40 Index sank 2.3 percent.

Greece’s stock market remained closed on Tuesday as it will be on Wednesday after a bank holiday was extended.

Meanwhile, as Chinese stocks dropped again, Goldman Sachs remains bullish on China. Kinger Lau, the bank’s China strategist in Hong Kong, predicts the large-cap CSI 300 Index will rally 27 percent over the next 12 months, Bloomberg reported.

Not everyone is convinced.

"Investors are concerned about China because that is a long term issue," Michael Joyce, president of JoycePayne Partners, told Reuters. "A slowdown in that economy has a much bigger and longer lasting impact.”

The US is on firmer footing. A Commerce Department report showed the US trade gap grew less than expected, increasing US$1.2 billion to $41.9 billion.

As the US earnings season gets underway, shares of Advanced Micro Devised sank, last down 15.2 percent, after the chipmaker slashed its second-quarter revenue and margin forecast amid weaker than expected PC demand.

BusinessDesk.co.nz

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