Fed Minutes Drag Sentiment, Indexes Near 4-Year Highs

Bikram Pandey
03 Apr, 2012
New York City

U.S. stocks declined, bond yield rose and the dollar gained after the latest Fed minutes of meeting showed no commitment for new monetary stimulus. Chrysler led March auto sales as small cars drive the industry sales rebound.

[R]4:00 PM New York – U.S. stocks declined, bond yield rose and the dollar gained after the latest Fed minutes of meeting showed no commitment for new monetary stimulus. Chrysler led March auto sales as small cars drive the industry sales rebound.[/R]

U.S. indexes declined after factory orders rose less than estimated in February and Fed minutes of meeting dashed the expectations of monetary stimulus.

Market indexes traded down after the Dow and the S&P 500 indexes jumped to a four-year high at close yesterday.

U.S. factory orders rose 1.3% in February after a revised 1.1% decrease in January and investors have factored stronger economic growth already in stock prices. But the lack of concrete discussion about how to revive the economic growth through any new monetary stimulus kept traders away.

Auto industry is likely to increase its annual sales target of 14 million in the year after March sales were ahead of expectations on stronger sales of smaller cars. General Motors sales rose 12%, Ford Motor sales jumped 5% but Chrysler sales soared 34% in March. Nissan sales gained 13%.

However, in Europe, new car registrations declined 27% in Italy and 24% in France according to the data released this week.

In merger news, Molson Coors agreed to buy Eastern Europe focused StarBev L.P for $3.54 billion. Royal Bank of Canada acquired remaining 50% stake of RBC Dexia Investor Services for C$1.1 billion in cash.

Across Atlantic, European markets pared gains on concerns of global economic growth. Spain struggles to contain public debt as jobless rate increased in March. OECD area inflation remained stable but euro area industrial producer prices rose in February.

The UK indexes edged lower and construction sector activity rose to a 21-month high in March. Cairn Energy agreed to buy Norway-based Agora Oil & Gas AS for $450 million.

Stocks in Tokyo edged lower and declined in six of the last ten sessions. The yen strengthened to a 3-week high as Japanese multinationals repatriate profits to rebuild domestic operations.

Australian stocks inched higher in a directionless trading after the central bank left its key lending rate on hold for the fifth month in a row but held out a possible rate cut at its next meeting in a month. Retail sales in February grew at anemic rate highlighting weak consumer spending.

Commodities, Bonds and Currencies

The yields on 10-year U.S. bond increased to 2.27% and 30-year U.S. bond edged higher to 3.40%.

The U.S. dollar edged down to $1.323 to one euro and inched higher against the Japanese yen to 82.95 yen in New York trading after trading at a three-week low.

Immediate delivery futures of Texas crude oil decreased $1.25 to $103.98 a barrel and Brent crude futures fell 59 cents to $124.84. Futures of natural gas increased 0.02 cents to $2.17 per mbtu and gasoline price rose 1.22 cents to 339.44 cents a gallon.

In metals trading, copper fell 3.3 cents to $3.88 per pound, gold dropped $35.60 to $1,644.10 per ounce and silver declined 48 cents to $32.62.