World Markets on Hold Ahead of the ECB Decision

Bikram Pandey
05 Sep, 2012
New York City

U.S. and world indexes were on hold ahead of the policy decision from the European Central Bank. Economies of euro zone contracted for the seventh month in a row and Chinese manufacturing is expected to fall to a 3-year low annual rate. Safeway Inc plans to sell its stake in a gift card company.

[R]4:40 PM New York – U.S. and world market indexes were on hold ahead of the policy decision from the European Central Bank. Economies of the euro zone contracted for the seventh month in a row and Chinese manufacturing output is expected to fall to a 3-year low annual rate.[/R]

U.S. indexes closed mixed with little direction ahead of the policy announcement from the European Central Bank tomorrow. Investors have been on hold ahead of the central bank’s decision as evidence mount from around the world of economic slowdown.

In corporate news, FedEx lowered first quarter earnings outlook. General Cable completed the acquisition of the North American portion of Alcan Cable for $151 million.

Conn’s net swung to profit and increased guidance and discount retailer Dollar General net soared and reaffirmed fiscal outlook. FedEx lowered first quarter profit forecast and G-III Apparel net slipped 13% but lifted fiscal view. Pharmacyclics net loss widened.

Across the Atlantic, the economic downturn in the euro zone continued in August, as the output shrank for the seventh month in the euro zone and contracted in Germany, France, Italy and Spain. Swiss consumer prices fell in August and retail sales in the euro zone declined in July.

The European indexes traded sideways mirroring the world market sentiment. Germany sold €3.61 billion of 10-year bonds in an auction today.

The UK indexes drifted lower after shop price inflation rose marginally and service sector activity improved in August. Irish service sector activity rebounded and the UK foreign currency reserves increased in August. BP Plc faces gross negligence charges in the Gulf of Mexico oil spill.

Stocks in Tokyo closed lower for the fifth day in a row and closed at a five-week low after weak manufacturing and construction data in the U.S. confirmed global economic slowdown. Toyota, Honda and Nissan edged lower after missing U.S. auto sales target in August.

Australian GDP growth in the June quarter fell to 0.6% after rising at 1.4% in the previous quarter. The economy is expected to slow further in the second half as the iron price drop to a 3-year low.

Commodities, Bonds and Currencies

The yield on 10-year bond increased to 1.59% and on 30-year bond closed at 2.70%.

The U.S. dollar inched lower to $1.259 to a euro and increased against the Japanese yen to 78.42 yen.

Immediate delivery futures of Texas crude oil increased 22 cents to $95.52 a barrel and Brent crude decreased 98 cents to $113.20, futures of natural gas fell 0.05 cents to $2.79 per mbtu and gasoline price edged down 9 cents to 295.13 cents a gallon.

In metals trading, copper increased 5.20 cents to $3.52 per pound, gold fell.70 cents to $1,695.30 per ounce and silver declined 14 cents to $32.25.