Fed Measures Awaited, Greece in Focus

Bikram Pandey
10 Sep, 2012
New York City

Investors were on the sideline after the market surge last week and ahead of the Fed meeting mid-week. Markets have built up expectations of another round of stimulus. Greece regained focus after coalition members failed to agree on spending cuts demanded by lenders.

[R]4:00 PM New York – Investors were on the sideline after the market surge last week and ahead of the Fed meeting mid-week. Markets have built up expectations of another round of stimulus. Greece regained focus after coalition members failed to agree on spending cuts demanded by lenders.[/R]

U.S. indexes traded lackluster ahead of the Federal Reserve Bank meeting this week and Greece regained focus.

Markets are increasingly factoring higher probably of another round of stimulus from the Fed as early as this week when the 2-day meeting ends on September 13. The unemployment rate has hovered above 8% for more than three years as private sector continues to add jobs and government at all level trim employment to meet the bi-partisan pledge to cut expenses.

On the merger front, BP agreed to sell its non-strategic Gulf of Mexico assets to Plains Exploration for $5.55 billion. Garda agreed to be acquired by consortium for C$1.1 billion. U.S. Treasury plans to lower its stake to a minority in American Insurance Group. Infosys agreed to acquire a Zurich based Lodestone $349 million in cash. Transocean agreed to sell 38 shallow water drilling rigs to Shelf Drilling for $1.1 billion.

The European markets declined and Germany sold 6-month treasury bills at negative yields but Italian and Spanish yields rose. Glencore confirmed its sweetened offer for Xstrata Plc is final.

Investor confidence in the euro area strengthened in September. Greek production fell in July and Italian economy contracted 0.8% in the second quarter.

The UK indexes slid after business confidence plummeted to a 20-year low in August. Shell agreed to sell its 50% working interest in the Holstein Field to Plains Exploration for $560 million. Marks & Spencer Group gained 3% on deal speculation.

Stocks in Tokyo trading were on the defensive after China reported weak economic data and U.S. employment rebound was less than expected. Electronic chip-equipment makers declined after Intel lowered its annual view.

Australian stocks were directionless in trading after China reported monthly imports declined. Xstrata and BHP Billiton announce job cuts totaling 900 positions. Qantas made a case for its international alliance with Dubai based Emirates.

Commodities, Bonds and Currencies

The yield on 10-year bond increased to 1.68% and on 30-year bond closed up at 2.84%.

The U.S. dollar inched lower to $1.276 to a euro and decreased against the Japanese yen to 78.28 yen.

Immediate delivery futures of Texas crude oil increased 3 cents to $96.45 a barrel and Brent crude added 49 cents to $114.73, futures of natural gas added 0.14 cents to $2.81 per mbtu and gasoline price edged up 0.4 cents to 302.30 cents a gallon.

In metals trading, copper increased 3.40 cents to $3.67 per pound, gold fell $9.30 to $1,736.70 per ounce and silver decreased 11 cents to $33.58.