US market halts five-session winning streak

The US market closed lower on Monday, snapping a five-session winning streak after a choppy session that was again dominated by news related to Greece’s debt worries and on S&P’s downgrade of Italy’s credit rating which reinforced concern about Europe’s spreading debt crisis.Meanwhile, President Barack Obama’s $3.6 trillion deficit reduction plan, which the White House stated would allow the country to start reducing its debt level by 2017, provided little support as the Republicans’ reacted coolly to the proposals. The Republican response suggested there will be further bickering in Washington and very little is going to get done. The market was nervous as fears that Greece was heading toward a default drowned the optimism that underscored strong market gains last week. Also, ratings agency Standard & Poor’s has cut its unsolicited long- and short-term sovereign credit ratings by one notch on the Republic of Italy to A/A-1 from A+/A-1+, with a negative outlook on concern that weakening economic growth and a fragile government mean the nation won’t be able to reduce the euro-region’s second-largest debt burden. However, the market did trim the losses after late-day on reports that international lenders were close to an agreement to ensure Athens received the next tranche of its financial aid. The Dow Jones industrial average lost 108.08 points, or 0.94 percent, to 11,401.00. The Standard and Poor’s 500 closed lower by 11.92 points, or 0.98 percent, to 1,204.09, while the Nasdaq composite lost 9.48 points, or 0.36 percent, to 2,612.83. The Indian ADRs closed in red on Monday, Infosys Technologies was down by 1.20%, ICICI Bank was down by 0.88%, Dr. Reddy’s Lab was down by 0.70%, HDFC Bank was down by 0.44% and Tata Motors was down by 0.35%. Source:www.indothai.co.in

US market surges on easing European debt crisis

The US market closed higher on Wednesday for a third day in a row, after German Chancellor Angela Merkel and French President Nicolas Sarkozy reaffirmed their support for Greece, giving temporary relief to concerns about an impending euro-zone default. The market further got a push after the Commerce Department stated retail sales were unchanged in August, following a 0.3 percent gain for July that was smaller than previously estimated. Though, another report from the Commerce Department showed inventories rose a less-than-forecast 0.4 percent in July, indicating companies are bracing for a slowdown in demand.

Caution grips markets as euro zone talks eyed

A rebound in Asian stocks and the euro stalled and gold edged up on Wednesday as investors waited for convincing signs of progress on taming the euro zone debt crisis.

Oil eased after the International Energy Agency revised down its forecast for growth in consumption due to the struggling global economy.

Global markets have been roiled since the end of July by the twin fears of renewed recession in the United States and Europe’s protracted debt woes, which have seen bailouts for Greece, Ireland and Portugal and sparked fears of a new banking crisis.

Bernanke: Fed set to give economy therapy, not shock treatment

The Federal Reserve, facing rising global financial strains and recession fears, is poised to increase downward pressure on longer-term interest rates next week in a bid to accelerate a sputtering U.S. recovery.

With one eye on escalating debt turmoil in Europe and another on a stubbornly high 9.1 percent U.S. unemployment rate, the Fed, whose policy panel meets next Tuesday and Wednesday, looks set to begin shifting the composition of its balance sheet to weight it more heavily with longer-term securities.

US markets edges higher amid volatile trade

The US market closed higher on Tuesday, rising for the second session in a row as French banks dismissed concerns over their access to funds and investors watched for signs of progress in efforts to tame the euro region’s debt crisis. In Europe, German Chancellor Angela Merkel expressed optimism that European leaders would resolve Finland’s objections to rescue measures for Greece. Also, the Labor Department reported that US import prices fell 0.4% in August, mainly on lower energy costs, along with a decline in prices for food and materials. The data showing less inflationary pressure potentially offer the Federal Reserve added space for more stimulus moves to bolster the economy.

Oil rises on weaker dollar after Wall Street rally

Oil tracked equities higher on Tuesday, rising by as much as $1, while a weaker dollar rekindled some of the appeal of commodities as concern about Europe’s deteriorating debt crisis eased temporarily.

U.S. crude climbed 69 cents to $88.88 a barrel by 0212 GMT, off an earlier high of $89.21, while Brent added 57 cents to $112.82 after touching $113.30.

Asian stocks steadied and the euro held above a seven-month low against the dollar on short-covering on Tuesday, after a report that Italy may get financial support from China lifted Wall Street in late trade but did nothing to ease fears that Europe is descending into a banking crisis.

Traders were wary about the modest oil rally as markets remained prone to swings in risk appetite, with policy makers struggling to reassure investors Greece can stay afloat.

“This is a shallow bounce because of Wall Street ending higher, so there is some confidence returning, but I don’t think anybody would be putting any big positions given the global situation,” said Victor Say, an analyst at Informa Global Markets in Singapore.

“You never know what is going to blow up in Europe next.”

U.S. crude futures rose on Monday, propped up by spread trading with Brent crude, which slid on concerns the euro zone debt crisis could weaken Europe’s economy and dent oil demand.

Brent’s premium against U.S. crude benchmark West Texas Intermediate (WTI) narrowed to below $24 on Monday from $25.53 on Friday. It reached a record $27.23 on Sept 6.

POLICY MAKERS ON THE MOVE

U.S. Treasury Secretary Timothy Geithner makes a one-day trip to Poland this week for an unprecedented meeting with euro zone finance ministers as growing fears of a potential Greek debt default rip into Europe’s banking sector.

“The European debt, especially the Greek situation, is not bound to go away so soon. That along with the slowing of the global economy, you will see some shrinking on demand, which will weigh on oil prices,” said Say.

OPEC cut its forecast for global oil demand growth next year because of a worsening economic outlook and said a disappointing economic performance in top consumer the United States could further weigh on fuel use.

The Organization of the Petroleum Exporting Countries also said concerns were easing about a tight oil supply and demand balance and that it expected Libyan oil output to return to full capacity in less than 18 months, more quickly than some estimates.

World oil demand will increase by 1.06 million barrels per day (bpd) in 2011, OPEC said in the report, 150,000 bpd less than expected last month. The growth estimate for next year was lowered by 40,000 bpd to 1.27 million bpd.

INVENTORIES SUPPORT

Oil prices on Tuesday got some support from an expected drop in U.S. crude inventories, which may have fallen about 3 million barrels last week after Tropical Storm Lee disrupted oil production in the Gulf of Mexico, a Reuters poll showed.

Gasoline inventories were expected to have dipped by 400,000 barrels as the U.S. summer driving season ended, while distillate stocks were forecast to have gained 800,000 barrels.

Industry group the American Petroleum Institute will release its weekly report on Tuesday at 2030 GMT, followed by government figures from the Energy Information Administration on Wednesday.

In other news, Russian oil exports will jump and production rise as a result of changes to energy taxes that will help the world’s largest oil producer keep its lead over OPEC heavyweight Saudi Arabia, executives told the Reuters Russia Investment Summit.

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US Stocks Finish With A Gain In Volatile Trade; DJIA Adds 69

NEW YORK (Dow Jones)–U.S. stocks erased a steep loss late in the day Monday amid reports that China may come to the aid of the euro zone.

The Dow Jones Industrial Average closed up 68.99 points, or 0.6%, at 11061.12, its first gain in three days. It was a volatile session in which the measure fell by as much as 167.22 points, before an upward burst of 183.46, or 1.69%, in the final hour of trading. The Standard & Poor’s 500-stock index gained 8.04 points, or 0.70%, to 1162.27. The Nasdaq Composite rose 27.10 points, or 1.1%, to 2495.09.

Traders late in the day cued off a report in The Financial Times that China was in talks with Italy for “significant” purchases of government bonds, which would help one of the most important of Europe’s heavily indebted governments. Earlier in the day, investors had been preoccupied with worries that Greece’s sovereign-debt crisis was coming to a head.

“For the Chinese to come in and back their debt [would be] a vote of confidence at a time when confidence is at a shortfall,” said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management.

Technology stocks were a source of relative strength throughout the session. Chip stocks fared especially well after Broadcom agreed to acquire NetLogic Microsystems for $3.7 billion. NetLogic soared 16.21, or 51%, to 48.12, while Broadcom shed 38 cents, or 1.1%, to 33.06. Intel gained 58 cents, or 2.9%, to 20.28, leading the blue-chip Dow. Micron Technology led the S&P 500, rising 34 cents, or 5.3%, to 6.69.

Earlier, U.S. markets reflected the same fears that caused steep drops in European stock indexes. Helping sour sentiment in Europe, a German official said an orderly default for Greece could no longer be ruled out. French bank stocks plunged amid worries that Moody’s Investors Service could downgrade them this week due to their holdings of Greek government debt.

“Many banks, if they truly write down their Greek debt to where it probably should be, may have a capital problem,” said Bernard Horn, president of Polaris Capital Management in Boston.

Bank of America Chief Executive Brian Moynihan said the company would save billions through cost cuts in the coming years. The news provided a respite from the drumbeat of negatives on bank stocks. The shares close with a gain of 7 cents, or 1%, at 7.05.

NYSE Euronext fell 25 cents, or 1%, to 25.42, after a senior company executive said no private deal has been struck among European regulators to bless the exchange operator’s planned combination with Deutsche Boerse AG.

Global Industries leapt 2.63, or 51%, to 7.78, after France’s Technip said it was buying the construction and undersea services company in a deal valued at $1.07 billion.

McGraw-Hill said it planned to separate its markets and education businesses into two public companies and accelerate its share repurchases. The stock rose 1.54, or 4%, to 40.26.

Tenet Healthcare said it now expects 2011 adjusted earnings before interest, taxes, depreciation and amortization to be at the lower end of its previous forecast. Shares fell 50 cents, or 10%, to 4.52.

Online-dating company FriendFinder Networks added 15 cents, or 5.5%, to 2.86. The company plans to pay up to $65 million to acquire BDM Global Ventures in a move that will give it ownership of BDM’s JigoCity deals site.

M&F Worldwide jumped 3.88, or 19%, to 24.25. The company agreed to be acquired by closely held MacAndrews & Forbes Holdings.

Darling International lost 40 cents, or 2.6%, to 15.15. Goldman Sachs analysts downgraded their stock-investment rating on the rendering and food recycling company to neutral from buy, citing a lack of near-term catalysts for the stock.

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Gold Drops in wall street as Investors Sell to Cover Stock Losses

Gold declined in New York as some investors sold the metal to cover losses in equities that dropped on concerns that the European debt crisis is worsening.

European and Asian stocks slumped on speculation German Chancellor Angela Merkel is preparing for a Greek default. The dollar was little changed after earlier today climbing to the highest level in more than six months against six major currencies. Gold touched an all-time high $1,923.70 an ounce on Sept. 6 and today set records priced in euros and Swiss francs.

“The margin clerks will be sharpening their knives today and will take dead aim even upon gold if that is where they think they can find liquidity,” Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, said in his daily report. Some investors “will argue that gold will prove valuable and will hold its value even as stock prices plunge, and in the long run they may well be right.”

Gold for December delivery fell $16.70, or 0.9 percent, to $1,842.80 an ounce by 8 a.m. on the Comex in New York. Immediate-delivery gold was 0.9 percent lower at $1,839.68 in London.

Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up 30 percent this year, outperforming global stocks, commodities and Treasuries.

Germany’s Banks

Officials in Merkel’s government are debating how to shore up German banks in the event that Greece fails to meet the budget-cutting terms of its aid package and is unable to get a bailout-loan payment, three coalition officials said on Sept. 9. Merkel is due to hold talks on the debt crisis with European Commission President Jose Manuel Barroso today.

BNP Paribas SA, Societe Generale SA and Credit Agricole SA, France’s largest banks by market value, may have their credit ratings cut by Moody’s Investors Service as soon as this week because of their Greek holdings, two people with knowledge of the matter said.

“While gold is capable of rallying in the face of a strong dollar, an extended upward move in the dollar does put some obstacles in its path,” Edel Tully, a London-based analyst at UBS AG, wrote in a report. Still, “gold should benefit from the scaling back of risk appetite on what appear to be rising fears of a Greek default, contagion to the rest of the periphery, and the impact on banks.”

Gold exchange-traded-product holdings rose on Sept. 9 for the first time since Aug. 30, gaining 11.8 metric tons to 2,149.8 tons, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8.

Silver for December delivery in New York slipped 1.5 percent to $40.995 an ounce. Platinum for October delivery was down 1.2 percent at $1,816.10 an ounce. Palladium for December delivery dropped as much as 2.5 percent to $720.15 an ounce, the lowest price since Aug. 9, and was last at $725.05.

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Global stocks retreat on default, recession fears

Stocks plunged and the euro fell on Monday as signs of German impatience with Greek debt woes and fears over French banks compounded worries that the world is set for another recession, analysts said.

Wall Street opened down, following sharp falls in Europe. Tokyo struck its lowest close in 29 months after the G7 group of rich nations admitted that current economic problems were so complex that a unified response was impossible.

French banking shares dived around 10 percent on concerns that Moody’s credit rating agency might downgrade their ratings because of the amount of Greek debt bonds they hold.

“The market’s perception of events unfolding in Europe is moving from bad to worse amid a swirl of reports with worrisome undertones,” Patrick O’Hare, an analyst  in New York said.

In the first 15 minutes of trading on Wall Street, the Dow Jones Industrial Average sank 0.79 percent, the broader S&P 500 fell 0.66 percent, while the tech-heavy Nasdaq Composite dropped 0.38 percent.

In afternoon trade in Europe, the Paris stock market slumped 4.26 percent, Frankfurt 2.66 percent, London 2.05 percent, Madrid 3.17 percent and Milan 2.95 percent.

The euro slid to 103.90 yen — the lowest level since 2001. It later pulled back to 105.40 yen, which compared with 105.91 yen on Friday.

Lee Hardman, currency economist at The Bank of Tokyo-Mitsubishi UFJ said the intensifying sell-off in both the euro and risk assets in general reflected “heightened investor fear that Greece is on the verge of defaulting which could plunge the weak global economy back into another Lehman-esque recession.”

“Hopes for coordinated action from the G7 finance ministers over the weekend to restore confidence to financial system predictably fell short of expectations.”

Europe’s single currency dropped as low as $1.3495 — the lowest point since February — before recovering to $1.3670.

The flight to safety drove down the yields on 10-year bonds issued by Germany and the United States to historic low levels. Borrowing prices fell for France as well.

At ING Debt Strategy, analyst Alessandro Giansanti also noted the shock to sentiment of the shock announcement on Friday that the chief economist at the European Central Bank, Juergen Stark would step down early.

Giansanti, noting that this was rumoured to be because of “personal disappointment with the ECB purchasing of Italian and Spanish bonds,” said it had sparked heavy selling of bonds issued by eurozone countries in trouble.

Bank watchers suggested his exit showed that the ECB was deeply split over its approach to handling the sovereign debt crisis.

Greece announced on Sunday two billion euros ($2.7 billion) in budget cuts demanded by the EU and the IMF to unlock more funds under its 110-billion euro rescue package to avoid a default.

EU Economy Commissioner Olli Rehn welcomed the move, but European finance ministers are split over how to deal with obstacles holding up a second 160-billion-euro bailout for Greece, agreed in principle in July.

With Athens having difficulty meeting its commitments to receive further rescue funding, on Saturday, Der Spiegel magazine reported that the German government was preparing two contingency plans in the event of a Greek default.

Germany’s Economy Minister Philipp Roesler said in a column published on Monday that Europe could no longer rule out an “orderly default” for Greece

“It’s very clear to us that this situation in Europe is not going to end well and the now plummeting euro is trying to tell you that some sort of Greek default and subsequent European bank recapitalisation programme is imminent,” said Bell Potter managing director Charlie Aitken in Sydney.

The Tokyo stock market tumbled 2.31 percent on Monday to close at its lowest level for almost 2.5 years, with exporters again feeling the most pain as the euro sank against the yen.

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Bernanke: Keen on strong growth, mum on measures

Federal Reserve Chairman Ben Bernanke said on Thursday the US central bank would spare no effort to boost disappointingly weak growth and reduce unemployment, while downplaying concerns about inflation.

While the Fed chairman did little to change expectations of a further easing of monetary policy when officials meet on Sept. 20-21, he offered no details of steps the Fed might take.

“The Federal Reserve will do all it can to help restore high rates of growth and employment in a context of price stability,” Bernanke told the Economic Club of Minnesota.

In what could be taken as a bid to quell concerns among some of his colleagues that further easing could spark inflation, Bernanke said a rise in consumer prices this year would likely to be transitory.

“We see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy,” he said.

US stocks fell as investors registered disappointment that Bernanke did not lay out a plan of action for the central bank’s policy-setting Federal Open Market Committee. The dollar extended gains against the euro, while Treasury debt prices rose.

“Although the speech was lacking in any specifics about potential policy options, we see the relatively downbeat nature of the chairman’s comments on the growth outlook as confirming our view that the FOMC is inclined to take further accommodative steps at its September meeting,” said Michael Gapen, an economist at Barclays Capital in New York.

A widening debt crisis in Europe and collapse in consumer and business confidence in the United States has raised concern the US and global economies could slide back into recession.

So stark is the recent deterioration in the global economic recovery that the political debate in Washington has veered in only six weeks from a preoccupation with how to cut US debt to a renewed urgency on lowering unemployment.

President Barack Obama is scheduled to lay out a jobs package worth more than USD 300 billion later on Thursday, and job creation was a key theme for Republican presidential hopefuls at a debate on Wednesday.

Few new clues on easing

Other than offering a bit more detail on the outlook for inflation and emphasizing that sluggish growth is not enough to satisfy the Fed, Bernanke offered few fresh insights into thinking at the central bank on measures to aid the recovery.

He largely reiterated remarks he made two weeks ago, repeating that the Fed has a range of tools to provide additional stimulus and is prepared to use them.

The Fed cut benchmark rates to near zero almost three years ago to pull the economy out of a sharp recession. It then bought USD 2.3 trillion worth of longer-term securities in two installments ending in June to boost growth.

But with confidence crumbling, the Fed on Aug. 9 eased monetary policy further by expanding on an earlier promise to hold rates at rock-bottom levels for an extended period, saying it expected to keep them low at least through mid-2013, a decision that drew three dissents on the FOMC.

Bernanke may have decided to keep his cards close to his vest on Thursday in order not to pre-empt the debate later this month among members of the Fed’s fractious policy panel.

“With the FOMC clearly split, Bernanke probably didn’t want to antagonize the hawks who voted against the decision at August’s meeting,” said Paul Ashworth, chief US economist for Capital Economics.

Many analysts expect the Fed’s next move to be a shift in its USD 2.8 trillion balance sheet to holdings of more longer-term securities. The point of such a move would be to “twist” down interest rates for longer maturities, potentially spurring mortgage refinancing and other activity that depends on longer-term interest rates.

The Fed is considering selling shorter-term securities and buying longer-term bonds, as well as simply replacing maturing securities with longer-dated issues.

One Fed official, Chicago Federal Reserve Bank President Charles Evans, has called for pledging to maintain ultra-loose monetary policy until unemployment comes down to a more acceptable — and specified — level.

A more modest step under consideration would be for the central bank to encourage lending by lowering the rate it pays banks for excess reserves they hold at the Fed.

Bernanke said unusually weak household spending and persistent financial strains spurred by worry over Europe’s sovereign debt crisis and the loss of Washington’s top-tier credit rating continue to hold back the recovery.

He also repeated a warning that overzealous belt-tightening by the US government in the near term could also slow down the “erratic” recovery.

In response to an audience question, the Fed chairman said a bitterly polarized debate this summer on raising the US debt ceiling had roiled financial markets

“We need a better process so that we don’t have the same consequences that we saw with the (ratings) downgrade and with some of the financial volatility that was associated with the process,” he said.

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