Stocks rebound, currencies steady
Saturday, February 9, 2008
WORLD stocks edged away from this week's two-week lows yesterday as a recent sell-off attracted investors looking for bargains, while major currencies held steady ahead of a meeting of Group of Seven finance chiefs.
Higher crude oil prices on the back of expectations that cold US weather would boost fuel demand supported energy stocks, while firmer commodity prices including gold and platinum underpinned emerging market assets.
The six-month-old credit crisis has hit balance sheets of major investment banks exposed to the US subprime mortgage sector, threatened to hit corporate profits and drag down the real economy.
Such concerns briefly pushed some sectors of Wall Street this week into a bear market a cycle that starts when an index falls 20 per cent from a recent market peak.
While this presents good buying opportunities from a valuation point of view, investor sentiment remains fragile, putting the focus firmly on a weekend meeting of G7 finance ministers and central bankers in Tokyo which will discuss policy responses to the deteriorating economic climate.
"Ministers have more serious issues to talk about than currency markets this time," said Haruhisa Takagi, head of FX spot trading at Sumitomo Mitsui Bank.
"The market remains concerned about further fallout from the credit market crisis ... euro zone economies seem slowly being dragged down by the US economic downturn."
The FTSEurofirst 300 index was up 1.3 per cent, recouping most of the losses made on Thursday.
MSCI main world equity index was up 0.2 per cent after hitting its weakest since mid-January.
Emerging stocks were up a quarter percent while emerging sovereign spreads widened 1 basis points.
Asian stocks closed mixed in subdued trade with Japanese economic data raising concerns about the health of its economy while regional holidays held most investors in the wings.
A positive finish on Wall Street overnight added a positive tone to early trade in the markets that remained open during the Lunar New Year festivities and this helped Sydney to a gain of 1.1 per cent.
Bangkok rose 1.67 per cent and Manila was 0.6 per cent higher.
However, Tokyo shed 1.44 per cent after the release of disappointing figures for machinery orders with the first annual fall last year, registered for five years also indicating a slowdown in the US could be hitting Asia.
Wellington fell 0.66 per cent and Mumbai was off 0.35 percent.
The US dollar was steady at ¥107.65 while the euro held near Thursday's two-week low against the US currency at US$1.4469.
The euro came under pressure on Thursday after European Central Bank president Jean-Claude Trichet paved the way for lower interest rates this year by stressing downside euro zone growth risks.
The ECB left rates on hold at 4 per cent on Thursday.
"It was more than just opening the door a little bit (for a cut). We think they will cut by 50 bps this year," said Teis Knuthsen, head of FX research at Danske Bank in Copenhagen. "There is a good chance now that it will be brought forward."
Reuters
Higher crude oil prices on the back of expectations that cold US weather would boost fuel demand supported energy stocks, while firmer commodity prices including gold and platinum underpinned emerging market assets.
The six-month-old credit crisis has hit balance sheets of major investment banks exposed to the US subprime mortgage sector, threatened to hit corporate profits and drag down the real economy.
Such concerns briefly pushed some sectors of Wall Street this week into a bear market a cycle that starts when an index falls 20 per cent from a recent market peak.
While this presents good buying opportunities from a valuation point of view, investor sentiment remains fragile, putting the focus firmly on a weekend meeting of G7 finance ministers and central bankers in Tokyo which will discuss policy responses to the deteriorating economic climate.
"Ministers have more serious issues to talk about than currency markets this time," said Haruhisa Takagi, head of FX spot trading at Sumitomo Mitsui Bank.
"The market remains concerned about further fallout from the credit market crisis ... euro zone economies seem slowly being dragged down by the US economic downturn."
The FTSEurofirst 300 index was up 1.3 per cent, recouping most of the losses made on Thursday.
MSCI main world equity index was up 0.2 per cent after hitting its weakest since mid-January.
Emerging stocks were up a quarter percent while emerging sovereign spreads widened 1 basis points.
Asian stocks closed mixed in subdued trade with Japanese economic data raising concerns about the health of its economy while regional holidays held most investors in the wings.
A positive finish on Wall Street overnight added a positive tone to early trade in the markets that remained open during the Lunar New Year festivities and this helped Sydney to a gain of 1.1 per cent.
Bangkok rose 1.67 per cent and Manila was 0.6 per cent higher.
However, Tokyo shed 1.44 per cent after the release of disappointing figures for machinery orders with the first annual fall last year, registered for five years also indicating a slowdown in the US could be hitting Asia.
Wellington fell 0.66 per cent and Mumbai was off 0.35 percent.
The US dollar was steady at ¥107.65 while the euro held near Thursday's two-week low against the US currency at US$1.4469.
The euro came under pressure on Thursday after European Central Bank president Jean-Claude Trichet paved the way for lower interest rates this year by stressing downside euro zone growth risks.
The ECB left rates on hold at 4 per cent on Thursday.
"It was more than just opening the door a little bit (for a cut). We think they will cut by 50 bps this year," said Teis Knuthsen, head of FX research at Danske Bank in Copenhagen. "There is a good chance now that it will be brought forward."
Reuters
Business Besides Oil
