U.S. and European Stocks Struggle; G20 Rhetoric Sharpens

Devan Biswas
08 Nov, 2010
New York City

U.S. traded lower as the rhetoric ahead of G20 meeting heats up after China joined other emerging nations and Germany and resisted further U.S. economic stimulus. The dollar edged higher and gold traded near elevated levels. Amazon.com is in a deal to acquire parent of Diapers.com for $540 million.

[R]10:05 AM New York – U.S. traded lower as the rhetoric ahead of G20 meeting heats up after China joined other emerging nations and Germany and resisted further U.S. economic stimulus. The dollar edged higher and gold traded near elevated levels. Amazon.com is in a deal to acquire parent of Diapers.com that may value the company at $540 million.[/R]

U.S. stocks trade higher after a rally in Asian markets and fractional gains in Europe. Commodities also traded up in Asia and Europe as the prospects of new flood of money washing to Asia rose after the U.S. Fed decided to pump additional $600 billion to the U.S. economy.

Central bankers around the world are increasingly resisting the U.S. plans to revive its economic fortunes with the debasing of its currency, pumping additional money and targeting exports driven economic growth.

China today joined Russia, Brazil, Germany and other smaller member nations of G20 group and voiced its displeasure of the second round of monetary easing from the Federal Reserve.

President Barack Obama at a New Delhi conference in response to China’s concern said, “Fed’s mandate, my mandate is to grow the economy. And that’s not good for the U.S., that’s good for the world as well.”

The euro in Frankfurt and London trading declined on the worries that Ireland may struggle to bridge its soaring budget deficit. The euro declined 0.7% against the dollar to $1.389 and spread between the yields on the Irish debt and German debt soared to 520 basis points.

Ireland last week announced a plan to raise taxes by as much as 6 billion euros and offered several non-essential costs to be trimmed. European Union Economic and Monetary Affairs Commissioner Olli Rehn is visiting Ireland to review the budget and is due to have a press conference with Finance Minister Brian Lenihan later in the day.

European markets edged lower in the early afternoon trading as the euro declined. Germany based Commerzbank fell more than 4% after it reported lower than expected third quarter earnings. Adidas AG rose more than 2% after it made positive comments on the sales and estimated sales in 2015 to cross Nike sales.

Greek bonds rose and the yields on 10-year bonds fell to 11.20% after Greek Prime Minister controlled party was deemed ahead in majority of local and regional elections in Greece. Nearly 325 seats were contested in local elections and only 60% of eligible voters participated in voting. However, the prospect of win of the ruling party lifted Greek benchmark index.

Stock Movers

Amazon.com Inc added 0.05% to $170.55 after the company is in agreement to acquire Quidsi Inc for as much as $540 million. The parent of Soap.com, Diapers.com and BeautyBar.com has been growing by offering free shipping and larger selection of products that drug stores and better customer service.

Ashland Inc gained more than 2% to $51.45 after it agreed to sell its distribution assets to a company controlled by TPG Capital for $930 million.

GT Solar International Inc soared more than 12% to $9.62 after the company lifted its annual guidance and also acquired 26.5 million shares controlled by private equity investors and agreed to take a loan arranged by Credit Suisse Group AG of $200 million.

IDT Corp jumped more than 12% after the company declared dividend of 22 cents a share at the end of its fiscal second quarter in January to shareholders on record of November 15.

Radian Group Inc declined more than 5% after the mortgage insurer said that it received subpoena from the U.S. Department of Housing and Urban Development and the company is also in the process of raising $350 million.