U.S. and Global Markets Sideways; Gold Down 4%

Bikram Pandey
29 Feb, 2012
New York City

World markets focused on the second instalment of cheap loans from the European Central Bank allowing politicians to find ways to stimulate growth. Asian markets gained after Japan and South Korea reported manufacturing advances and growth in India faltered. Gold and silver dropped more than 4%.

[R]4:00 PM New York – World markets focused on the second instalment of cheap loans from the European Central Bank allowing politicians to find ways to stimulate growth. Asian markets gained after Japan and South Korea reported manufacturing advances and growth in India faltered. Gold and silver dropped more than 4%.[/R]

U.S. stocks failed to follow on the lift after the estimate of economic growth in the fourth quarter was revised higher. The latest revision in the data also indicated smaller decline in imports and smaller rise in exports. However, commercial construction investment and real final retail sales were revised higher.

However, gold plunged 3.5% and silver dropped 5% after Fed Chairman Bernanke said job market is far from normal despite the recent drop in unemployment rate and said pace of economic recovery is modest and uneven.

European Central Bank second liquidity operation attracted €530 billion loan demand from 800 banks increasing the total liquidity in the financial system by more than €1 trillion.

The cheap loans are offered for three years and can be repaid at any time after one year and do not have conditions in how they are used. For now, most banks are using to buy government bonds and not increasing lending to consumers and businesses as requested by the central bank.

Stocks in Tokyo lost most of the gains of the session and industrial production surged to the highest level in January since last March. Manufacturers expect output to continue to rise for the next two months.

India reported economic growth in the final quarter to December declined to 6.1%, slowest pace in more than two years as high inflation and net fund out flows from the country weighed on the economy.

The fiscal third quarter growth was smaller than the increase of 6.9% in the quarter to September and the government still held out the growth outlook of 6.9% in the fiscal year ending in March from the previous year’s growth of 8.4%.

Australian stocks lost steam in late trading after retail sales in January increased 0.3% and personal credit growth was weak and construction spending fell in the last quarter. In earnings, WorleyParsons and Harvey Norman reported weaker than expected results.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond rose to 1.99% and 30-year bond edged higher to 3.10%.

The U.S. dollar traded up 0.6% to $1.337 to one euro and edged up against the Japanese yen at 81.05.

Immediate delivery futures of Texas crude oil decreased 66 cents to $105.89 a barrel and Brent crude rose 13 cents to $121.68.

Futures of natural gas added 3 cents to $2.54 per mbtu and gasoline price decreased 5.7 cent to 303.44 cents a gallon in New York trading.

In metals trading, copper decreased 4.40 cents to $3.87 per pound, gold decreased $62.90 to $1,725.50 per ounce and silver decreased $2.02 to $35.18.