August 7, 2022

Wall Street Edges Higher, Helping European Stocks Recover

The New York opening helped improve the performance of European shares, which had fallen more than 1 percent earlier in the day.

In early trading, the Dow Jones industrial average was up 51.16 points, or 0.4 percent, at 12,055.52. The Standard Poor’s 500-stock index rose 3.42 points, or 0.3 percent, at 1,274.92. The Nasdaq composite was 2.86 points, or 0.1 percent, higher at 2,619.34.

Banking stocks, which have been declining since February, were among the worst performers after the ministers said Greece would need to introduce harsh austerity measures before it received a 12 billion euro ($17.07 billion) loan tranche.

Moody’s threat that it might cut Italy’s credit ratings intensified fears that the problems of the euro zone’s peripheral countries would spread. Moody’s said it was concerned about Italy’s increased borrowing costs as a result of the Greek crisis.

Italy’s benchmark index dropped 2.4 percent, significantly underperforming markets in countries most affected by the debt issue; Spain’s IBEX 35 was down 1 percent, and Portugal’s PSI 20 was 1.3 percent lower.

Italian banks were among the worst performers, with Banca Popolare di Milano down 6.5 percent. Banca Monte dei Paschi di Siena, which was also affected by the first day of trading of its rights issue, fell 4.9 percent.

In afternoon trading in Europe, markets were off their lows for the day. the FTSEurofirst 300 index of top shares was down 0.4 percent, recovering some losses in early trading after Euronext opened late after a technical glitch. London’s FTSE 100 was down 0.3 percent, while Frankfurt’s DAX index was 0.2 percent lower. The CAC 40 in Paris was down 0.6 percent.

Investors were also awaiting a confidence vote on Tuesday called for by Greece’s prime minister, George Papandreou, in a bid to push through the reforms.

“They want to make sure Greece is adhering to the package. It is going to be quite a close call if they get the money in time before the country needs funding,” said Richard Batty, global investment strategist at Standard Life Investments, which has £157 billion of assets under management.

Nomura analysts said in a note the market could be ripe for a rally, with a potential upside of 18 percent for the rest of the year if Greece avoided a near-term default and if the recent soft patch of economic data failed to translate into earnings downgrades.

United States stock index futures fell Monday after the delay in emergency loans to Greece and a possible downgrade of Italy’s credit rating.

Article source: http://feeds.nytimes.com/click.phdo?i=416669f0e425b273eea6d2504cdf2412

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