Archive for the ‘Investments’ Category
LONDON: European stock markets closed lower yesterday, reversing earlier gains after data in the US showed that industrial activity contracted in November for the first time in more than three years.
In London the FTSE 100 index dropped 0.45% to close at 6,021.50 points, in Paris the CAC 40 fell by 1.38% to 5,254.05 points while in Frankfurt the Dax fell 1.08% to end the day at 6,241.13.
In morning deals, all three markets had posted gains, but a survey by the Institute of Supply Management showed weak manufacturing activity in the US, undermining sentiment by sparking fears of a sharp slowdown of the world??™s biggest economy.
The DJ Euro Stoxx 50 index of eurozone blue-chip shares tumbled 1.38% to 3,932.09 points.
The major US stock indexes also fell in morning trading with the Dow Jones Industrial Average down 0.22% at 12,195.17 while the Nasdaq composite fell 0.68% to 2,415.23. The broad-market Standard & Poor??™s 500 index fell 0.17% to 1,398.19.
In Paris, shares in EDF surged 5.27% to 50.95 euros after government price caps on bills charged by EDF and Gaz de France were criticised by France??™s Constitutional Council.
CM-CIC Securities raised its EDF target price to 51.7 euros from 49, on the prospect that the company might launch a rival bid for Scottish Power to compete with the agreed offer by Iberdrola.
Earlier this week, Scottish Power accepted a takeover bid worth ??11.6bn ($17.15bn, $22.55bn) from Spain??™s second-biggest power company Iberdrola, a move that is set to create Europe??™s third biggest utility group.
Shares in struggling Italian airline Alitalia closed 11.56% higher at 0.94 euros after the Italian government announced it planned to sell half of its near 50% stake in the loss-making group.
“At first glance this is a radical change for Alitalia and a positive event for its shareholders,” said a Milan-based trader, who asked not to be named.
Elsewhere in Europe, in Madrid the Ibex 35 closed down 1.36% at 13,660.60 points, in Milan the SP/Mib lost 0.80% to 39,949 points and in Brussels the Bel 20 fell 0.62 to 4,114.52.
The Swiss SMI lost 0.76% to 8,420.38 and in Amsterdam the AEX closed 0.91% lower at 473.32 points.
The dollar tumbled further yesterday after a key survey of US manufacturing activity showed a contraction in November, with the euro rising above $1.33 and the pound breaching the $1.98 level.
In late European trading, the euro changed hands for $1.3317 after hitting a fresh 20-month high earlier in the day, compared with $1.3241 in New York late on Thursday.
The dollar stood at ??115.35, from ??115.77 late on Thursday.
The pound rose to $1.9792 from $1.9657 in New York, and hit a 14-year high in intraday trades.
In the US, the Institute for Supply Management??™s index of manufacturing dropped to 49.50 from 51.2 in October, falling below the 50 mark to indicate contraction in the sector for the first time since April 2003.
IDEAGlobal strategist Divyang Shah said the fall below 50 was particularly significant because it could put the lid on lingering hopes that the Federal Reserve would opt for one more interest rate hike.
“The significance of this level comes from the fact that the Fed has never hiked interest rates when the ISM has been below 50.0, and thus dampens significantly concerns over the recent hawkish rhetoric from the Fed,” he said.
The euro surged to fresh 20-month high of $1.3349 in the wake of the data, while the pound hit a new 14-year high of $1.9849.
The dollar had already suffered prior to the ISM data??™s release, owing to a report which suggested the European Central Bank was willing to tolerate sharp gains in the single currency??™s exchange rate.
Analysts cited a report quoting an unnamed ECB official as saying that the eurozone economy could sustain a much sharper rise in the euro??™s rate to $1.40-$1.45, with some suggesting it could go beyond $1.50.
“They (the ECB) are not going to stand in the way, so it??™s all about how we get to higher ground and it??™s speed, as opposed to levels,” Shah said.
Among other currencies, the Australian dollar also hit a 20-month high against the US dollar of 0.7928.
The yen meanwhile edged off lows earlier in the day which had taken the euro to a new all-time high above ??154 following weak inflation data overnight.
The Japanese core consumer price index rose by 0.1% in October from a year earlier, below expectations for a 0.2% rise and supporting the view that the Bank of Japan would raise interest rates later rather than sooner.
The euro was changing hands at $1.3317 against $1.3241 on Thursday, ??153.58 (153.30), ??0.6731 (0.6734) and 1.5907 Swiss francs (1.5862).
The dollar stood at ??115.35 (115.77) and 1.1947 Swiss francs (1.1977). The pound was being traded at $1.9792 (1.9657). On the London Bullion Market, the price of gold firmed to $648.75 per ounce, from $646.70 late on Thursday. ??“ AFP
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The euro was little-changed vis-? -vis the U.S. dollar today as the single currency tested bids around the US$ 1.2690 level and was capped around the $1.2720 level. Technically, today??™s intraday high was right around the 50% retracement of the move from $1.2980 to $1.2460. Traders remain torn between strong inflation and employment measures in the U.S. and the European Central Bank??™s likely continued monetary tightenings. Friday??™s October non-farm payrolls data evidenced a dramatic upward revision in August??™s and September??™s jobs tally, declining unemployment, and strength in average hourly earnings. Coupled with elevated core inflation pressures, the jobs data are keeping the U.S. dollar supported. Absent these factors, the U.S. dollar would likely be lower, especially after ECB President Trichet pledged ???strong vigilance??? on Thursday regarding interest rate expectations. Most traders now expect ECB to tighten rates again in Q1 2007 and by that time, it is likely the Federal Open Market Committee will have definitively ended its long-term tightening cycle ??“ if inflation pulls back from current levels. Traders await comments from Cleveland Fed President Pianalto and Chicago Fed President Moskow later today. In eurozone news, EMU-12 September PPI was off 0.5% m/m and up 4.6% y/y and the EMU-12 October services PMI index receded to 56.5, its lowest showing since November 2005. Also, German manufacturing orders fell 2.5% m/m in September. Euro bids are cited around the $1.2650/ 1.2580 levels.
??/ CNY
The yen depreciated vis-? -vis the U.S. dollar today as the greenback tested offers around the ??118.45 level and was supported around the ??117.80 level. Technically, today??™s intraday high was right around the 76.4% retracement of the move from ??121.40 to ??109.00. Traders are again monitoring the situation in North Korea where that country has agreed to return to nuclear talks but does not want Japan to participate. The main issue on traders??™ minds now remains Bank of Japan??™s monetary policy and when the central bank will raise rates. Most dealers believe BoJ will raise rates in Q1 2007 by 25bps to 0.50%. The yen has been dented for several months by carry trades in which the yen is borrowed and sold as a financing vehicle to invest in higher-yielding currencies. The Nikkei 225 stock index gained 0.09% to close at ??16,364.76. Dollar bids are cited around the ??117.35 level. The euro gained ground vis-? -vis the yen as the single currency tested offers around the ??150.50 level and was supported around the ??149.85 level. The British pound and Swiss franc gained ground vis-? -vis the yen as the crosses tested offers around the ??224.65 and ??94.25 levels, respectively. The Chinese yuan depreciated vis-? -vis the U.S. dollar as the greenback closed at CNY 7.8811 in the over-the-counter market, up from CNY 7.8716, and at CNY 7.8801 in the exchange-traded market. The big news in China today was a report that China??™s foreign exchange reserves have officially topped the psychologically-important US$ 1 trillion level. Japan, by comparison, has about US$ 881.27 billion in reserves.
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The British pound depreciated vis-? -vis the U.S. dollar today as cable tested bids around the US$ 1.8945 level and was capped around the $1.9025 level. Stops were hit below the $1.8990 level, representing the 23.6% retracement of the move from $1.8515 to $1.9135. Most traders expect Bank of England??™s Monetary Policy Committee to tighten its repo rate by +25bps to 5.00% on Thursday. Data released in the U.K. today saw September manufacturing output unchanged m/m with its annual rate at its highest level since June 2004, while September industrial production was up 0.2% m/m. Cable bids are cited around the US$ 1.8895 level. The euro moved higher vis-? -vis the British pound as the single currency tested offers around the ?‚¤0.6700 figure and was supported around the ?‚¤0.6680 level.
CHF
The Swiss franc weakened vis-? -vis the U.S. dollar today as the greenback tested offers around the CHF 1.2575 level and was supported around the CHF 1.2525 level. Technically, today??™s intraday high was right around the 50% retracement of the move from CHF 1.3235 to CHF 1.1920. Swiss October unemployment will be released tomorrow. Dollar bids are cited around the CHF 1.2425 level. The euro and British pound moved higher vis-? -vis the Swiss franc as the crosses tested offers around the CHF 1.5970 and CHF 2.3850 level, respectively.
AUD
The Australian dollar came off vis-? -vis the U.S. dollar today as the Aussie tested bids around the US$ 0.7670 level and was capped around the $0.7710 level. Data released in Australia today saw October job advertisements up 5.8% m/m and 25.3% y/y. Australian dollar bids are cited around the US$ 0.7615 level.
CAD
The Canadian dollar came off vis-? -vis the U.S. dollar today as the U.S. dollar tested offers around the C$ 1.1360 level and was supported around the C$ 1.1285 level. Technically, today??™s intraday low was right around the 76.4% retracement of the move from C$ 1.1455 to C$ 1.1030. Data released in Canada today saw the value of building permits fall 2.5% to C$ 5.7 billion. U.S. dollar bids are cited around the C$ 1.1245 level.
NZD
The New Zealand dollar came off vis-? -vis the U.S. dollar today as the kiwi tested bids around the US$ 0.6650 level and was capped around the $0.6700 figure. New Zealand dollar offers are cited around the US$ 0.6870 level.
Gold/ Silver
Gold came off vis-? -vis the U.S. dollar today as the yellow metal tested bids around the US$ 622.90 level and was capped around the $ 623.00 figure. The stronger U.S. dollar and weaker crude oil prices contributed to the pair??™s intraday losses. Anecdotal evidence from CBOT and COMEX suggest traders are speculating that gold prices will increase. Silver moved higher vis-? -vis the U.S. dollar as the pair tested offers around the US$ 12.71 level and was supported around the $ 12.46 level.
Crude Oil
Crude oil appreciated vis-? -vis the U.S. dollar today as light, sweet NYMEX crude oil futures for December delivery tested offers around the US$ 59.79 level and was supported around the $58.45 level. News of a new attack on Nigerian oil facilities pushed the pair higher, as did comments from OPEC President Daukoru who suggest more reductions in output may take place next month.