World Stocks Volatile; Greece in Chaos and Euro Firm

Bikram Pandey
04 Nov, 2011
New York City

U.S. stocks turned lower after weaker than expected net new jobs additions in October. Unemployment barely budged. Euro was stable as Greek lawmakers look ahead to form a unity party and approve the EU bailout. Groupon Inc closed 30% on the first day of trading and raised $700 million.

[R]4:00 PM New York – U.S. stocks turned lower after weaker than expected net new jobs additions in October. Unemployment barely budged. Euro was stable as Greek lawmakers look ahead to form a unity party and approve the EU bailout. Groupon Inc closed 30% on the first day of trading and raised $700 million.[/R]

U.S. stocks traded lower after unemployment rate declined to 9% in October and employers added 80,000 net new jobs. The slow recovery in the jobs market highlighted the uneven U.S. economic recovery.

Groupon Inc soared on its first day of trading after it priced 35 million shares at $20 a share. The price jump on the first day of trading surprised many traders on the Wall Street after the Internet company is viewed by many with unproven business model and facing rising competition from a host of start ups.

The Internet coupon vendor had originally planned to sell 30 million shares at a price between $16 and $18 a share. The company sold less than 4.8% of its outstanding shares and all proceeds are expected to go to the company.

In earnings news, Abercrombie third quarter net sales soared 21% to $1.1 billion. Chesapeake third quarter net increased to $879 million. LinkedIn reported third quarter net loss of $1.6 million and raise $100 million. Starbucks fourth quarter increased 28.5% to $358.5 million.

Market indexes in Europe declined a day after rate cut and a cautious outlook from the central bank. Indexes were higher in the morning after Greece reversed its earlier decision to seek a referendum on the EU bailout.

Greece remained in the centre stage as lawmakers gathered in parliament to vote and decide the fate of the George Papandreou government. Prime Minister Papandreou and opposition leader Antonis Samaras have agreed on bailout conditions and the formation of a national unity government.

Papandreou is expected to scrape by in the confidence vote today but and has said he will resign after the vote and help two parties to form a new government that will approve the EU bailout conditions and pass more austerity measures.

While the mood on the streets is starkly different and people are voicing their displeasures at the arrangement made by the parliamentarians. Greek people are looking forward to a referendum that may not take place.

Commerzbank reported a loss on Greek bonds write-down and withdrew its current year outlook and added that business conditions for 2012 are subdued.

In Asian markets, Nikkei index in Tokyo gained 1.9% on Friday but for the week lost 2.8%. Sony revised annual loss higher and said it will lose money for the fourth year in a row. Nissan estimated higher profit despite higher yen and Thai floods.

Australian stocks rebounded more than 2% as commodities prices rose and Asian markets closed higher. After a tumultuous day in Greece, prime minister agreed to back away from the referendum after opposition party backed EU deal.

Qantas plans to turn long haul business to Europe profitable in three to five years and its chief executive came under heavy pressure in the Senate hearing. Lawmakers probed in the decision making process and who was informed about the possibility of the fleet grounding last weekend.

Qantas grounded the entire fleet last weekend as workers, pilots and engineers warned passengers to avoid the airline for the Christmas holiday travel and conducted rolling strike that “collapsed the forward bookings” at the airline by 40%.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond closed down to 2.04% and 30-year bond decreased to 3.09%.

The U.S. dollar fell 0.5% at $1.378 to one euro and closed higher against the Japanese yen to 78.21.

Immediate delivery futures of Texas crude oil increased $0.35 to $94.42 a barrel and futures of natural gas increased 1 cent to $3.791 per mbtu and gasoline prices increased 3.5 cents to 267.75 cents a gallon.

In metals trading, copper decreased 2.55 cents to $3.56 per pound, gold increased $5.40 to $1,759.70 per ounce and silver decreased $0.34 to $34.11.