Wall Street Flat as World Markets Turn Cautious

Bikram Pandey
23 Jan, 2012
New York City

U.S. stocks trade flat as the European leaders discuss the plans to merge two ad hoc rescue funds and finalize the plan to make it a permanent fund with

[R]4:00 PM New York – U.S. stocks trade flat as the European leaders discuss the plans to merge two ad hoc rescue funds and finalize the plan to make it a permanent fund with €500 billion. Greece and private lenders fail to agree on details of the bond repayment reduction.[/R]

The U.S. indexes traded flat as earnings season is set to accelerate and European leaders discuss the fate net round of bailouts. The International Monetary Fund’s chief warned that the Europe is facing severe economic risks if governments do work together and chalk out rescue plan for the struggling economies in the region.

In New York trading, investors turned their attention to the earnings releases set for the week after 80% of the companies 54 companies in the S&P 500 index reported better than expected earnings so far.

In corporate news, Apache agreed to acquire Cordillera Energy for $2.85 billion and Research in Motion shuffled top management and replaced its chief executives.

Across the Atlantic, the European markets edged higher ahead of a meeting of the euro zone finance ministers in Brussels today. Germany sold €2.54 billion of new 12-month Bubills at a lower yield and the Bank of Spain estimated that the Spanish economy will contract 1.5% this year.

In economic news, French business sentiment weakened in January and German economic growth at a standstill and Spanish economy contracted in the fourth quarter. Swiss money supply growth increased in December.

The UK indexes traded higher and mortgage lending declined in the UK in December and the household finance index rose in January. UK dividends surged to a record £67.8 billion in 2011.

Stocks in Japan traded flat and construction companies were in focus for the second day in a row. Olympus gained 8% after Tokyo Stock Exchange approved its listing with a management review and Sony gained on the hopes of it taking a stake in the company.

Australian stocks traded lower after wholesale inflation increased 0.3% in the December quarter. Lynas Corp was halted ahead of a financing deal that will avert cash crisis at the company. BHP won a regulatory approval to expand its port facility in the Pilbara region.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond increased to 2.06% and 30-year bond closed up at 3.14%.

The U.S. dollar edged down 0.8% to $1.30 to one euro and traded higher against the Japanese yen to 76.99.

Immediate delivery futures of Texas crude oil increased $1.40 to $99.82 a barrel and futures of natural gas rose 22 cents to $2.56 per mbtu and gasoline price increased 0.1 cents to 278.54 cents a gallon.

In metals trading, copper increased 6.3 cents to $3.80 per pound, gold increased $13.50 to $1,677.50 per ounce and silver increased $0.62 to $32.30.