Wall Street Halts Six-Week Rally as Questions Loom on Global Economy

Bikram Pandey
24 Aug, 2012
New York City

World markets completed a tumultuous week of trading on a higher note but for the week indexes on Wall Street declined. Markets halted a six-week long rally as every day economic indicators in the U.S., Europe, China and Australia pointed weakening backdrop.

[R]4:00 PM New York – World markets completed a tumultuous week of trading on a higher note but for the week indexes on Wall Street declined. Markets halted a six-week long rally as every day economic indicators in the U.S., Europe, China and Australia pointed weakening backdrop.[/R]

U.S. markets turned higher in the early afternoon on the renewed speculation that the Federal Reserve may be more inclined than before to provide additional stimulus measures.

In a letter to Darrell Issa, the chairman of the House Oversight and Government Reform Committee, Bernanke highlighted said that there is a scope “for further action by the Federal Reserve to ease financial conditions and strengthen the recovery.”

Despite the rise in the market indexes in Friday’s trading, U.S. market indexes halted a six-week long rally. The latest durable goods orders offered mixed picture of the U.S. economy with business spending waning.

Across the Atlantic, leaders of Germany and Greece sounded conciliatory tone and voiced optimism on the implementation of austerity reforms and Greece said it is committed to honor its agreement.

However, the leaders were short of details and left an impression that a crucial decision to grant more to time to Greece to repay the debt will deferred till the report next month released by international lenders.

In U.S. corporate news, the communications network gear maker Aruba jumped 17% as sales advanced. Autodesk plunged after the software developer lowered outlook. Micros fourth quarter net surged 16%. Salesforce.com loss widened and offered weak guidance. Madison Square, the entertainment complex soared on earnings.

The European indexes were mixed but for the week Germany’s benchmark index soared 12% in otherwise listless trading across the region. Spanish producer price inflation rose in July and the UK economy contracted 0.5% and business investment fell. Aer Lingus urged shareholders to reject the offer from Ryanair.

Stocks in Tokyo traded lower and halted a two-week rally in market indexes as more signals emerge of the global slowdown. Investors took profit in thin trading as the prospects of immediate stimulus in Europe and the U.S. looked remote.

Australian indexes halted a 5-week long rally after the debate about the durability of the mining boom intensified. RBA governor Stevens said mining companies have enough capital and it is too soon to declare the end of the boom. Iron ore prices fell below $100 level for the first time since 2009.

Commodities, Bonds and Currencies

The yield on 10-year bond traded flat at 1.67% and on 30-year bond was unchanged at 2.79%.

The U.S. dollar inched higher to $1.2533 to a euro and increased against the Japanese yen to 78.46 yen.

Immediate delivery futures of Texas crude oil increased 1 cent to $96.28 a barrel and Brent crude fell $1.22 to $113.79, futures of natural gas fell 0.05 cents to $2.73 per mbtu and gasoline price edged down 4.41 cents to 307.17 cents a gallon.

In metals trading, copper decreased 0.75 cents to $3.493 per pound, gold eased 10 cents to $1,673.70 per ounce and silver increased 13 cent to $30.64.