World Markets Fear Further Declines in Dollar

Bikram Pandey
06 Oct, 2010
New York City

U.S. stocks closed mixed in a volatile trading but the Nasdaq declined. The U.S. dollar fell to an 8-month low and gold and silver reached new highs. European investors are increasingly worried that the sustained rise in the euro will affect exports. China voiced its concern on the rise in the yuan.

[R]4:30 PM New York – U.S. stocks traded mixed in a volatile trading but the tech heavy Nasdaq declined. The U.S. dollar declined to 8-month low and gold and silver reached new high. European investors are increasingly worried that the sudden rise in the euro will affect exports. China voiced its concern on the rise in the yuan.[/R]

U.S. stocks traded sideways after private sector employment unexpectedly fell in September and the IMF lowered the outlook for the U.S. economy. The market staged a comeback after hitting the low at 1:00 pm but struggled after the dollar sold off. The dollar declined to 8-month low against the euro and gold and silver closed at new records.

Data centric services providers fell sharply after the Internet hosting data center manager Equinix, Inc lowered its revenues outlook. Citrix Systems, Rackspace Hosting Inc, Terremark Worldwide Inc and Akamai Technologies Inc dropped in sympathy.

Johnson & Johnson agreed to buy rest of Crucell for $2.4 billion and GE agreed to acquire Dresser for $3 billion. Costco Wholesale Corp said fourth quarter net rose 15.5%. Diamond Foods, Inc fourth quarter sales increased 55% and net soared 60%. Monsanto Co quarterly net loss narrowed 39%.

The European indexes gained after German factory orders accelerated in August and construction PMI rose in September. Euro-zone GDP growth confirmed at 1% for the second quarter. The IMF estimated euro area growth around 1.7% this year.

The UK indexes rose on hopes of global economic recovery. Fitch downgraded Irish debt ratings with negative outlook. Irish consumer confidence fell in September. The UK shop price inflation rose to 5-month high. GE 750 pence a share takeover bid rejected by Wellstream Holdings.

Stocks in Japan rallied for a second day and rose 1.8% to reach a two-month high led by financial and property stocks. Sale of imported cars rises in the first half by 35% to cross 100,000 units. Toyo acquires Canada based Tri Ocean Engineering.

In a broad rally, the benchmark index in Mumbai gained 0.7%. Vedanta secures enough bauxite form Gujarat for its refinery in Orissa. Handicrafts exports in August jumped 22%. Coal India public offering will not need anchor investor. India approves disinvestment of 10% stake in Shipping Corp of India.

Australian shares soared today pushing the benchmark index to its five-month high led by miners and bankers. There were more overseas travelers in the year to August helped by the stronger dollar. Queensland premier plans to push for import of hydrocarbons from Papua New Guinea next week.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.39 and gain against the Japanese yen to 82.19. One UK pound fetched $1.588.

Crude oil increased $0.36 to $83.18 a barrel for a front month contract, natural gas edged higher 0.11 cent to $3.86 per mBtu and gasoline increased 2.99 cents to 215.54 cents.

Gold increased $8.80 in New York trading to close at $1,349.10 per ounce, silver added $0.43 to $23.17 per ounce and copper for the front month delivery increased 3.10 cents to $3.75 per pound.

Yields on 10-year U.S. bond yield decreased to 2.40% and on 30-year U.S. bond yield increased to 3.67%.