December 3, 2023

Global Markets Rise on Central Bank Comments

World stocks shrugged off worries over political turmoil in Egypt and rallied strongly Thursday on optimism that easy monetary policy from central banks in Europe is set to continue for some time to come.

The biggest gains were in Britain, where the Bank of England surprised markets after its first monetary policy meeting held under its new governor, Mark J. Carney. It said afterward that expectations it would raise rates in coming months were unwarranted, despite the improving economic backdrop.

Meanwhile, the European Central Bank kept rates at record low rates. Its president, Mario Draghi, said for the first time that the central bank would keep rates there “for an extended period of time.”

Stocks surged after each statement.

Britain’s FTSE 100 index jumped 3.1 percent to close at 6,421.67 points while Germany’s DAX rose 2.1 percent to 7,994.31. France’s CAC 40 gained 2.9 percent to 3,809.31.

United States markets were closed for Independence Day.

The central bank statements contributed to strong declines in the euro and British pound against the dollar. Looser monetary policies tend to weaken a currency as low interest rates mean lower returns on investments and more attractive opportunities can be found elsewhere. The euro fell 0.7 percent to $1.2916, while the British pound fell 1.4 percent to $1.5066.

Financial shares were among the strongest gainers, with Royal Bank of Scotland stock rising 5.1 percent, Barclays up 4.7 percent and HSBC up 4.6 percent.

Earlier in Asia, Hong Kong’s Hang Seng Index was the strongest gainer, rising 1.6 percent to 20,468.67 points. China’s Shanghai Composite rose 0.6 percent to 2,006.10.

Tokyo’s Nikkei 225 bucked the trend, slipping 0.3 percent to 14,018.93, despite remarks from the Bank of Japan governor, Haruhiko Kuroda, that the country’s economy is headed for recovery.

The dollar gained fractionally against the yen, just passing the 100-yen mark to 100.01 yen.

Mike McCudden, head of derivatives at Interactive Investor, noted that while physical exchanges are closed on Wall Street, futures are still trading, and they indicated Wednesday’s rally on the back of economic data has continued, with Dow Jones industrial index futures now trading above 15,000. The index closed at 14,988.50 Wednesday.

“Whether this can be sustained will clearly be reflected by what’s happening on a global basis,” he said in a note on markets. “The situation in Egypt remains hugely sensitive, whilst resurgent euro zone woes could knock sentiment.”

Investors around the world were also keeping a close watch on the price of oil, which has passed $100 a barrel for the first time since May 2012 because of Wednesday’s events in the Middle East: Egypt’s military overthrew Mr. Morsi, the country’s first democratically elected president, after he defied calls to resign despite the demands of millions of protesters.

Egypt is not an oil producer but its control of the Suez Canal — one of the world’s busiest shipping lanes, which links the Mediterranean with the Red Sea — gives it a crucial role in maintaining global energy supplies. Oil has eased somewhat from its Wednesday highs and was down 41 cents to $100.83.

Over the last few weeks, markets have sputtered amid speculation that the Federal Reserve might taper off its policy of buying $85 billion in bonds every month to keep interest rates low and encourage spending.

But on Wednesday, unemployment and jobs data out of the United States were just right for stocks, analysts said: good enough to restore confidence that the American economic recovery is continuing, but not so good that the Fed is likely to pull back on stimulus.

“We have had a period of extreme volatility, and now we have some settling going on,” said Lorraine Tan, director at Standard Poor’s equity research in Singapore. “I think there’s a realization that the reaction may have been overdone.”

Article source:

Stocks and Bonds: Stocks Finish Flat as Investors Await a Greek Debt Deal

Markets ended flat on Monday as few developments affected stocks except investor hopes that Greece would eventually reach a deal with private creditors on lowering its debt.

Greece’s private creditors are being asked to accept longer maturities and lower interest rates on new bonds swapped for their existing ones.

The major Wall Street stock indexes wavered little all day. The Standard Poor’s 500-stock index ended up 0.05 percent, or 0.62 points, to 1,316. The Dow Jones industrial average fell 0.09 percent, or 11.66 points, to 12,708.82. The Nasdaq composite index also lost 0.09 percent, or 2.53 points, to close at 2,784.17.

Greece, which is negotiating alongside fellow members of the euro zone and the International Monetary Fund, wants interest rates as low as 3 percent on the new bonds. But the private creditors believe that is too low, and are aiming for about 4.5 percent.

Both sides said a deal was nevertheless close, heartening investors. The euro was the main beneficiary, climbing 1.3 percent to $1.3033.

Greek officials say negotiations on the private debt write-down are continuing by phone, with no appointment yet for new face-to-face talks.

Greece was to be the main topic of discussion at Monday’s meeting in Brussels of the finance ministers for the 17 European Union members that use the euro.

In Europe, the FTSE 100 index of leading British shares closed up 0.9 percent, while the DAX in Germany rose 0.5 percent. The CAC 40 in France was also 0.5 percent higher.

Optimism that Greece would clinch a deal has brightened market sentiment this year, along with a run of successful European bond auctions and solid economic and corporate news, not least from the United States and China. Many stock indexes have risen to five-month highs, while the euro has headed back toward the $1.30 mark.

Though the Federal Reserve is expected to keep its loose monetary policy unchanged, there will be great interest in the outcome of this week’s rate-setting meeting. It will be the first time the Fed will publish its interest rate forecasts out to 2016, part of a strategy to enhance communication with financial markets.

Investors will be particularly interested to see how long policy makers expect interest rates to remain low. Previously, the Fed said it expected to keep them low until the middle of 2013.

“Most, ourselves included, expect the projections to suggest the Fed sees rates on hold well into 2014,” said Adam Cole, an analyst at RBC Capital Markets.

In the oil markets, traders were watching developments in the Persian Gulf. Iran has threatened to close the Strait of Hormuz if the United States and other countries impose more sanctions on it because of its nuclear program. Many analysts doubt that Iran could set up a blockade for long, but any supply shortages would cause supplies to tighten. Benchmark crude was up $1.25 to $99.58 a barrel on the New York Mercantile Exchange.

The Treasury’s 10-year note fell 9/32, to 99 16/32. The yield was 2.06 percent, up from 2.03 percent late Friday.

Article source:

Markets Cautious as Greece Meets Creditors Again

LONDON (AP) — Financial markets were cautious Friday ahead of another round of debt-reduction talks between Greece and its private creditors that could determine whether Europe’s debt crisis flares up again.

While meeting with debt inspectors from the European Union, the European Central Bank and the International Monetary Fund, the Greek government is also holding a third day of talks with creditors over a deal to get them to reduce the value of their Greek bond holdings. Greece is seeking to get creditors to agree a euro100 billion ($129 billion) writedown.

Heads of the inspection team are meeting with Finance Minister Evangelos Venizelos ahead of the next round of discussions with the creditors. A deal is necessary if Greece is to get the next batch of bailout cash that would prevent a devastating debt default — Greece does not have enough money to cover a euro14.5 billion bond repayment in March.

Last October, Greece’s partners in the eurozone sanctioned a deal whereby private creditors would take a cut in the value of their bond holdings to help lighten the country’s debt burden.

Hopes for such a deal as well as a run of successful European bond auctions and solid economic and corporate news, not least from the U.S. and China, have helped shore up market sentiment in recent days. Many stock indexes have risen to five-month highs, while the euro has clambered off 17-month dollar lows.

Having booked such gains, investors were more cautious on Friday.

“Optimism of a deal beginning to fade as the weekend approaches,” said Michael Hewson, markets analyst at CMC Markets.

In Europe, the FTSE 100 index of leading British shares was flat at 5,741 while Germany’s DAX fell 0.5 percent to 6,385. The CAC-40 in France was down 0.5 percent too at 3,312.

The euro gave up some recent gains, and was trading 0.5 percent lower at $1.2898.

Wall Street was poised for a subdued opening, too — Dow futures were down 0.1 percent at 12,571 while the broader Standard Poor’s 500 futures fell 0.3 percent to 1,307.

Analysts warned that the recent optimism in the markets could disappear if Greece fails to successfully conclude its debt-reduction negotiations with the Institute of International Finance, which represents private sector bondholders.

A deal is unlikely to bring an end to Greece’s debt problems, which is the heart of Europe’s debt crisis.

Investors may conclude that a restructuring in Greece is not a one-off, but may be repeated in other debt-hobbled countries across the troubled 17-nation eurozone.

Ireland and Portugal have both been bailed out too. Portugal is widely-considered to be more at risk of needing further help than Ireland because of a lack of economic growth.

“There remains the danger for bondholders that at some stage Portuguese politicians decide to follow the Greek example,” said Gary Jenkins, director of Swordfish Research.

Earlier in Asia in the last trading day before Chinese New Year holidays begin Monday, the Shanghai Composite Index climbed 1 percent to 2,319.12. Japan’s Nikkei 225 index rose 1.5 percent to close at 8,766.36. Hong Kong’s Hang Seng added 0.8 percent to 20,110.37 and South Korea’s Kospi jumped 1.8 percent to 1,949.89.

Oil prices tracked equities lower — benchmark oil for February delivery was up 84 cents to $99.55 per barrel in electronic trading on the New York Mercantile Exchange.


Pamela Sampson in Bangkok contributed to this story.

Article source:

World Stocks Mixed Ahead of Key Meetings in Greece

LONDON (AP) — Stock markets retreated slightly Wednesday after a surprisingly buoyant start to the new year triggered by a run of encouraging U.S. economic data.

The U.S. economy, the world’s largest, is likely to remain the focal point this week up through Friday’s key jobs report for December, though ongoing worries over Europe’s debt crisis will likely keep a lid on the enthusiasm.

So far this week, investors have been able to focus on the outlook for the U.S. economy, helping stocks to post sizable gains. Germany’s DAX is up around 5 percent already, while the Dow Jones index in the U.S. closed Tuesday at its highest point in five months.

Unsurprisingly there’s been a bit of a retreat following these sizable gains.

In Europe, the DAX was down 0.5 percent Wednesday at 6,135 while the CAC-40 in France was down 0.6 percent at 3,225. The FTSE 100 index of leading British shares was unchanged at 5,701. The euro was also down slightly after solid gains Tuesday — down 0.3 percent at $1.3015, still markedly up from last week’s 15-month low of $1.2857.

Wall Street was poised for a subdued opening — Dow futures were down 0.1 percent at 12,323 while the broader Standard Poor’s 500 futures fell 0.1 percent to 1,271.

Bar any surprising developments in Europe’s debt crisis, the focus is likely to continue to center on the U.S. and a raft of economic data that culminates Friday with the closely watched U.S. non-farm payroll figures for December.

A strong U.S. manufacturing survey, which showed the sector growing at its fastest rate in six months, fueled hopes that the figures, which often set market tone for a week or two, will be strong.

The consensus in the markets is that the U.S. economy generated another 150,000 or so jobs during the month — a solid, if unspectacular, jobs creation.

“Markets have put to one side concerns about Europe so far this week,” said Michael Hewson, markets analyst at CMC Markets.

Germany successfully auctioned euro4.06 billion ($5.28 billion) in 10-year bonds despite concerns over the debt crisis that’s afflicting the 17-nation eurozone. Demand for the bonds outstripped supply as investors placed bids for euro5.14 billion of the debt securities. The average interest yield was a low 1.93 percent, down from 1.98 percent in November.

Greece remains a key point of concern as it tries to negotiate a second massive financial bailout that involves private creditors being asked to forgive 50 percent of their Greek holdings. Many in the markets think that’s not enough.

Greek Prime Minister Lucas Papademos was holding talks Wednesday with labor unions and trade federations ahead of a crucial visit by international debt inspectors. The meetings come a day after government spokesman Pantelis Kapsis warned that Greece could have to leave the eurozone if it fails to finalize the details of its second euro130 billion ($169 billion) bailout. He also said even more austerity measures may be needed.

Earlier, Asian stocks ended the day with gains, following a strong session on Wall Street.

Japan’s Nikkei 225 showed renewed life as it posted a 1.2 percent gain to 8,560.11. The battered benchmark lost nearly 20 percent of its value in 2011 — a year marred by a tsunami and nuclear plant disaster, made all the more difficult by record-high levels for the yen.

Hong Kong’s Hang Seng Index and South Korea’s Kospi slipped after strong gains a day earlier. The Hang Seng fell 0.8 percent to 18,727.31, while the Kospi was down 0.5 percent at 1,866.22.

Oil prices gave up some of Tuesday’s gains when they surged through the $100-a-barrel mark as equities advanced and tensions over the Persian Gulf between the U.S. and Iran escalated. Benchmark crude for February delivery fell 27 cents to $102.69 per barrel in electronic trading on the New York Mercantile Exchange.


Pamela Sampson in Bangkok contributed to this report.

Article source:

World Stocks Rise on Positive US, German Data

BEIJING (AP) — Global stock markets rose Wednesday as positive economic data from the United States and Germany offset Asian jitters over the death of North Korean leader Kim Jong Il.

Tokyo’s main index gained 1.5 percent to 8,459.98 points and Seoul jumped 3.1 percent to 1,848.41. Shanghai, Taipei and Singapore also rose. In early European trading, Germany’s Dax rose 0.9 percent to 2,603.73 and France’s CAC 40 gained 0.8 percent to 3,080.5. Britain’s FTSE 100 added 0.8 percent to 5,459.76.

Positive signs from key Western export markets helped shore up sentiment that was jolted by Kim’s death and fears of a possible power struggle in a country pursuing nuclear weapons. Seoul’s main index plunged 5 percent on Monday before recovering.

“We’re being driven by what happened in Europe and the U.S. last night,” said Ric Spooner, chief market analyst for Australia’s CMC Markets. “We got some reasonably good news in the form of the well-bid Spanish bond auction and better-than-expected U.S. housing starts.”

Investors took heart after Spain’s government borrowing costs fell Tuesday in a weekly debt auction. The U.S. Commerce Department reported unexpectedly strong November home starts at their highest level since April 2010 and up 9.3 percent from October.

In Germany, a research group reported business confidence rose unexpectedly this month while consumers were resilient.

Wall Street was set to open higher with Dow futures up 0.6 percent at 12,097 and broader SP 500 futures ahead by 0.5 percent at 1,242.

Kong’s Hang Seng added 1.6 percent to 18,368.6. Singapore’s benchmark added 2.2 percent to 2,673.32 while Sydney’s SP/ASX 200 gained 2.1 percent to 4,137.7. Taiwan’s Taiex soared 4.6 percent to 6,966.48.

China’s benchmark Shanghai Composite Index rose in morning trading but fell to end down 1.1 percent at 2,181.15. Nonferrous metals, financial and real estate stocks weakened.

“Investors were hoping for an easier monetary policy but that hasn’t happened, so worries over the economic outlook mean the correction may persist since there are no positive factors,” said analyst Zhang Jiuhui at Great Wall Securities in Beijing.

China Vanke, the country’s biggest developer, declined 2.7 percent on expectations major cities will maintain curbs imposed on home purchases to restrain price rises. Ping An Insurance Co. of China Ltd lost 5.2 percent after saying it plans to sell up to 26 billion yuan ($4.1 billion) of bonds.

Analysts expect North Korea’s Kim to be succeeded by his third son, Kim Jong Un. State media have stepped up lavish praise of the younger Kim, indicating an effort to strengthen a cult of personality around him similar to that of his father.

Spooner said the strong European and U.S. data were prompting investors to move back into stocks due to concern they might be caught on the sidelines if potential problems in the West fail to materialize and markets rebound.

On Tuesday, major European exchanges all gained after the reports on business and consumer confidence by research institute GfK.

European Union leaders are trying to raise 200 billion euros ($261 billion) to provide the International Monetary Fund with resources to help indebted nations avoid default.

Makets shrugged off news after trading closed Monday that EU finance ministers raised only three-quarters of the target agreed to at a summit last week. At the summit, the 17 countries that use the euro agreed to set up a new treaty to create tighter fiscal rules for the currency union, which has been rocked by a debt crisis for the past two years.

On Wall Street, the Dow Jones Industrial Averages gained 2.3 percent on Tuesday while the SP 500 jumped 2.4 percent.

In currencies, the euro strengthened to $1.312 from $1.3071 late Tuesday. The dollar rose to 77.8 yen from 77.7.

Benchmark oil for February delivery edged up $1.16 to $98.38 per barrel in electronic trading on the New York Mercantile Exchange.

Article source:

Stocks Trade Higher in Early Going

A two-day rally driven by hopes that Europe had a plan to contain Greece’s debt crisis and shore up the Continent’s other struggling countries appeared to be flagging Wednesday on European and Asian markets amid reports of divisions among leaders.

In New York, however, the Standard Poor’s 500-stock index managed a gain of 0.6 percent at the opening of trading, after a two-day increase of 3.4 percent. The Dow Jones industrial average rose 0.9 percent, and the Nasdaq composite index gained 0.7 percent.

The past few weeks have seen remarkable volatility, particularly in European shares, with investors responding to every twitch from European leaders on whether Greece would get its next loan installment, whether national parliaments would agree to a stronger pan-European bailout fund and whether there was a credible plan to save Italy and Spain from needing rescue loans themselves.

A pushback against a call to slash the amount Athens owes creditors renewed uncertainty about Greece’s path on Wednesday.

In France, the CAC 40 fell 0.3 percent, while the DAX in Germany rose 0.1 percent. The FTSE index of leading British shares was down 0.7 percent. The euro, however, held its own against the dollar, rising 0.2 percent to $1.3617.

The relatively small moves in markets may be a sign they are waiting to see how the coming events unfold. Finland approved the proposals to strengthen the euro zone bailout package on Wednesday, and Germany was to vote on Thursday.

“The markets are readying themselves for concrete news now but the slow progress of politics could mean the markets are setting themselves up for a fall,” said Jane Foley of Rabobank.

Meanwhile, whatever happens with Europe, the larger global economy still looks fairly weak, and the price of oil fell again Wednesday on expectations that slow growth would weaken demand for raw materials.

Benchmark oil in New York fell 79 cents to $83.66 a barrel.

Earlier, shares in Asia lost steam after spending the morning in positive territory.

Japan’s Nikkei 225 index eked out a gain of less than 0.1 percent to close up just 5.70 points at 8,615.65. Australia’s S. P./ASX 200 was 0.9 percent higher at 4,039.50. But South Korea’s Kospi gave up earlier gains and closed down 0.7 percent to 1,723.09.

Hong Kong’s Hang Seng sank 0.7 percent to 18,011.06, while benchmarks in Singapore and Thailand also fell.

Article source:

Wall Street Rally Quickly Fizzles

While markets were lower, by midday it was not the terrible day that some had expected after a global dive the day earlier.

United States employment growth accelerated more than expected in July as private employers stepped up hiring.  The key nonfarm payrolls number rose by 117,000, the Labor Department said, above market expectations for a gain of  85,000. And the unemployment rate dipped to 9.1 percent from 9.2 percent in June.  

“There’s still a recovery but it’s teetering on the edge,” said Robin Marshall, director of investment management at Smith Williamson in London. More than two years into a recovery, he said, much stronger labor data should be expected.

Though the major indexes on Wall Street were 1 percent higher in at the start of trading, all quickly turned negative. A day after a 512-point plunge, the Dow Jones industrial average was down a further 94.87 points, or 0.83 percent, to 11,288.81 in morning trading. The broader Standard Poor’s 500-stock index was down 1.07 percent and the Nasdaq composite was down 1.54 percent.

The Euro Stoxx 50 index zigzagged: In afternoon trading, it was down 0.67 percent, after reversing early losses and shooting up 1.6 percent. The DAX in Frankfurt moved briefly into positive territory then fell again, down 2.2 percent. The French CAC 40 was off 0.55 percent.

“It’s an encouraging figure but it’s hardly booming,” said Ryan Sweet, an economist at Moody’s, about the number of new jobs created. “Right now, the recovery is lacking vigor.”

“The only good thing you can say about the July payroll employment report is that it is not as bad as the Street had feared,” said Steven Ricchiuto, chief economist of Mizuho Securities, said in a research note.

In addition, slowing manufacturing and service activity and the prospect of spending cuts to reduce debt loads and balance budgets are raising questions about where future growth will come from.

Investment banks have been cutting their forecast for United States growth. ING lowered its to 1.8 percent this year from 2.3 percent and to 2.6 percent next year from 2.8 percent.

Luc Van Heden, chief strategist at KBC Asset Management in Brussels, said the prospect of a “double dip” recession in the United States was becoming even more of a concern than the sovereign debt crisis in Europe.

“We’ve known about the euro’s debt crisis for months,” he said. “Fears of a double dip in the U.S. are making the market very, very nervous at the moment.”

Chancellor Angela Merkel of Germany and President Nicholas Sarkozy of France were interrupting their vacations Friday to hold a telephone conference on the euro zone debt crisis. Mr. Sarkozy’s office also confirmed that he would speak by telephone with Prime Minister José Luis Rodríguez Zapatero of Spain to discuss market turmoil. There were no immediate details about the discussion.

The Nikkei 225 in Tokyo and the Kospi in Seoul both closed 3.7 percent lower. The Taiex in Taipei slumped 5.6 percent, and the Australian market shed 4 percent. The Hang Seng in Hong Kong closed down 4.3 percent.

Neither the Japanese central bank’s efforts to dampen the rise of the yen, nor the European Central Bank’s move to buy bonds of some European countries served to reassure the markets on Thursday.

The E.C.B. bought bonds of some smaller euro area countries, but not those of Italy and Spain, whose mounting troubles have been a focus for investors. This was taken as a sign that the recent rescue packages by Europe could soon be overwhelmed by the huge debt burdens in those two countries.

“One assumes the E.C.B. doesn’t want to give governments a free pass and wants them to make appropriate structural reforms first,” analysts at Deutsche Bank said in a research note. “The longer they leave it to intervene aggressively, the more they may actually have to do as more and more investors flee the euro government bond arena.”

This week, Germany, the biggest economy in Europe, saw its 10-year bond yields drop below the inflation rate of 2.5 percent for first time since the 1960s.

This suggests that investors were willing to sacrifice a return on their investment to hold the least risky bonds in Europe.

Matthew Saltmarsh reported from London and Bettina Wassener reported from Hong Kong.

Article source:

Debt Worries Push European Markets Down

A warning that the United States may lose its cherished triple-A credit rating and concerns over Europe’s debt problems weighed on stock markets Thursday, though an indication that the Federal Reserve could provide more monetary stimulus limited losses overseas and pushed Wall Street stocks positive.

Moody’s Investors Service warned late Wednesday that it may downgrade its view on Treasuries because of the failure of the White House and Congress to agree on a deal to raise the $14.3 trillion borrowing limit and avoid a default.

“The review of the U.S. government’s bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes,” Moody’s said. “As such, there is a small but rising risk of a short-lived default.”

The Dow Jones industrial average opened slightly higher, adding 2.35 points to 12,493.96.

In Europe, the FTSE 100 index of leading British shares was down 0.51 percent at 5,876.03 points, while Germany’s DAX fell 0.43 percent to 7,236.53 points. The CAC 40 in France was 0.76 percent lower at 3,764.63.

Though most analysts think the American politicians will agree to raise the threshold by the early August deadline, the warning from Moody’s reminded investors that high debt is not just a European problem and knocked confidence in the markets. China, too, urged the leaders in Washington to “guarantee the interests of investors.” China is the United States’ biggest creditor, holding more than $1 trillion in Treasuries.

“Further talks (between the White House and Congress) are scheduled today and investors will continue to watch the situation, which is likely to keep both the dollar and stock market somewhat sensitive,” said Joshua Raymond, chief market strategist at City Index.

Despite the warning from Moody’s, investors were heartened by comments by the Fed chairman, Ben S. Bernanke, that the central bank was prepared to pump more money into the economy if the current economic lull persists.

Before trading began, JPMorgan Chase reported that its second-quarter profit rose 13 percent, to $5.4 billion, from the period a year earlier.

Earnings from Google, to be released after Wall Street closes, could well be a key factor in how stocks end the week.

Investors were also keeping a close watch on developments in the euro zone, especially in Italy. Earlier this week, there appeared to be a growing sign that Italy and Spain would be dragged into the debt crisis that has already seen Greece, Ireland and Portugal bailed out.

However, an acceleration in the Italian government’s budget proposals has helped calm tensions somewhat, despite news that the government had to pay a far higher interest rate in a five-year bond auction.

The easing in tensions over Europe’s debt crisis has been evident in the currency markets. The euro has recovered since Tuesday, when it slid to below $1.39. On Thursday it was trading slightly higher on the day, at $1.4187.

Earlier in Asia, Japan’s Nikkei 225 stock average finished down 0.3 percent at 9,936.12, while Hong Kong’s Hang Seng index inched up 0.1 percent to 21,940.20. The Shanghai Composite Index climbed 0.5 percent to 2,810.40.

Oil prices hovered near $98 a barrel as traders mulled a possible new round of American monetary stimulus.

Benchmark crude for August delivery was up 29 cents at $98.34 a barrel in electronic trading on the New York Mercantile Exchange.

Article source:

Markets Jump on Word of a Manufacturing Rebound

A report that United States factories rebounded in June prolonged a weeklong rally in the stock market Friday. The Dow Jones industrial average is on track to have its best week in a year.

The Institute for Supply Management’s manufacturing index rose to 55.3 points in June from 53.5 the previous month. The June increase, the first upturn in four months, surprised economists who had been expecting, on average, a further decline to 52, according to a survey by FactSet.

On an otherwise quiet Friday before a long Fourth of July holiday weekend, the report was just enough to spur a flurry of buying.

The Dow Jones industrial average was up 127.14 points, or 1 percent, to 12,541.48. The Standard Poor’s 500-stock index rose 10.97 points, or 0.8 percent, to 1,331.61 points, while the Nasdaq was up 23.05, or 0.8 percent, to 2,796.57.

In Europe, markets also reacted to the manufacturing report. In afternoon trading the FTSE 100 index of leading British shares rose 0.8 percent to 5,991.02, and Germany’s DAX was up 0.8 percent, to 7,432 points. The CAC 40 in France gained 0.8 percent, to 4,015.48 points.

Stock indexes are on pace for their best week since July of last year. The Dow Jones industrial average gained nearly 480 points over the last four days.

Stocks have posted sizeable gains this week as investors first anticipated and then cheered the passage of austerity measures in the Greek Parliament. The planned measures to cut spending and raise taxes by 28 billion euros ($40 billion) over the coming five years were required for the European Union and the International Monetary Fund to release the next 12 billion euro installment of bailout loans that are keeping Greece afloat.

Euro zone finance ministers are expected to authorize their share of the next installment on Saturday night with the IMF following suit some time next week — the finance ministers were initially planning to meet up in Brussels on Sunday but in a surprise development have opted to discuss the disbursement by video conference a day earlier.

The funds will see Greece through September, but the country is going to need another rescue in order to service its mountain of debt. A deal on another bailout is in the works, too, though an agreement is not expected imminently.

The euro has also been a big gainer as Greece bought more time, although on Friday was trading down 0.1 percent at $1.4478.

Earlier in the day, markets had weighed data showing that China’s manufacturing sector grew at its slowest pace in more than two years in June, further evidence that the world’s second largest economy is coming off the boil. Further downbeat news emerged in an equivalent survey in Britain.

Earlier in Asia, Japan’s Nikkei 225 index rose 0.5 percent to close at 9,868, while South Korea’s Kospi index climbing 1.2 percent to 2,126. Markets in Hong Kong were closed for a public holiday.

Mainland Chinese shares were cool to the June manufacturing report, though some investors were apparently relieved to see the economy slowing since that will alleviate concerns over new monetary tightening measures to combat inflation that has dampened market sentiment for months.

The benchmark Shanghai Composite Index saw profit-taking erase earlier gains, edging 0.1 percent lower to 2,759.36, while the Shenzhen Composite Index added 0.5 percent to 1,162.07.

In the oil markets, prices were down with news that growth remains sluggish throughout the global economy. The main New York contract for crude was down $1.46 to $93.96 a barrel.

Article source:

Shares Rise on Developments in Greece

Financial markets have been unsettled amid concerns about political stability in Greece and the fate of a second bailout for the country, sending investors into less risky assets. On Friday, Germany agreed under pressure from France not to force private investors to take on some of the burden of a new bailout package for Greece. The announcement in Berlin meant Germany was backing away from a sticking point with the European Central Bank on the issue.

While the stock market was higher for most of the day after the announcement, the market pared gains less than an hour from the close after Moody’s Investors Service said it put Italy’s government bond ratings on review for possible downgrade. It cited growth challenges, a likely rise in interest rates and risks posed by changing funding conditions in Europe as among the reasons for the review.

The Dow Jones industrial average was up 42.84 points, or 0.36 percent, to 12,004.36. The Standard Poor’s 500-stock index was up 3.86 points, or 0.30 percent, to 1,271.50. After early gains, the Nasdaq composite index fell 7.22 points, or 0.28 percent, to 2,616.48, recording its fifth consecutive weekly loss.

The euro was buffeted by developments, starting with the announcement by Chancellor Angela Merkel about Greece on Friday.

“That is when the euro popped” to $1.4240 within about 15 minutes, said Brian Dolan, the chief currency strategist for By the time of the Moody’s announcement about Italy, the euro was at $1.4310, and it then dipped to $1.4280.

“It highlights the sovereign debt overhang that continues to plague the euro zone,” Mr. Dolan said. “You get a short-term rebound in the euro but the long-term issues are still there, and that is going to prevent the euro from a sustained recovery.”

In European stocks, the CAC-40 was up 31.43 points, or 0.83 percent, at 3,823.74. The DAX in Germany was up 53.85 points, or 0.76 percent, at 7,164.05 and the FTSE in Britain rose 16.13 points or 0.28 percent, to 5,714.94.

Bruce McCain, chief investment strategist of Key Private Bank, said the market had become oversold because of concerns related to the euro zone debt problems. As a result, investors have taken down some of their exposure to equities.

Now, Mr. McCain said, “it has the opportunity to rally a bit.”

“We priced in a lot of negatives over a short time period,” he said. “We have moderated the risk. We may well moderate more risk.”

United States government bonds, which traded higher in price on Thursday as European debt concerns engulfed the markets, were trading only slightly lower on Friday on the hopes of another bailout. The Treasury’s 10-year note yield was up 3 basis points to 2.96 in early trading on Friday.

But analysts said there were still unresolved variables that kept risk lingering on the margins, including how the Greek people will accept any new austerity demands and whether there will be contagion to Ireland, Italy, Spain and Portugal.

“The problems in the euro zone don’t begin and end with Greece,” said Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan Company, in an early analysis of the bond trade. “Back in the U.S., things of an economic nature are still ‘spotty’ at best.”

Mr. McCain noted that recent economic reports in the United States have been mixed, although on Thursday the latest statistics on housing starts and permits and weekly jobless claims suggested a bit of improvement. In addition, companies are still sorting out the impact of the supply chain disruptions from the disasters in Japan and oil has declined.

In the broader market, financials, consumer staples, utilities and telecommunications shares rose by more than 1 percent.

Article source: