While you were sleeping: Positive outlook prevails

While you were sleeping: Positive outlook prevails

September 10 (BusinessDesk) - Equities in the U.S. gained as a larger-than-expected fall in jobless claims helped underpin a positive outlook for the economic recovery.

U.S. initial jobless claims declined by 27,000 to 451,000 last week, Labor Department figures showed, compared with the median economist estimate of 470,000 in a Bloomberg News survey.

Further bolstering optimism was Commerce Department data showing the U.S. trade gap narrowed 14%, the most since February 2009, to US$42.8 billion. Exports rose 1.8% to US$153.3 billion, the highest in two years.

In late trading, the Dow Jones Industrial Average gained 0.37%, the Standard & Poor's 500 Index climbed 0.59% and the Nasdaq Composite Index rose 0.42%.

"Perhaps the markets now have come more to terms with the idea that we will have an ongoing recovery, even if at meager rates," Klaus Wiener, head of research at Generali Investments, told Reuters.

"On balance, we can finish the year up compared to where we are today."

Even so, not everyone agrees with the rosy outlook. The Organisation for Economic Co-operation and Development said the global recovery appeared to be slowing more than expected as growth weakens in rich economies, and stimulus should be extended or stepped up if the slowdown endures.

The OECD forecast growth across the G7 group of major economies to average an annualised 1.4% in the third quarter and 1.0% in the fourth, down from 3.2 and 2.5% in the first and second quarters respectively.

The OECD forecast annualised U.S. growth rates of 2.0 and 1.2% in the third and fourth quarters, after 1.6% in the second quarter and 3.7% in the first.

Among the most active on Wall Street were JPMorgan Chase & Co, Adobe Systems Inc and Deutsche Bank AG.

Deutsche Bank has approached investment banks to assess their interest in managing a stock sale to raise as much as 9 billion euros (US$11.4 billion), Bloomberg News reported, citing three people with knowledge of the discussions.

Germany’s biggest bank had yet to decide on the sale, said the people, who declined to be identified because the plans were confidential.

"We might have a little bit of risk aversion going on since those Deutsche Bank headlines came out about the capital raise," David Lutz, managing director of trading, Stifel Nicolaus Capital Markets in Baltimore, told Reuters.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’, fell 0.39% to 23.16.

The Stoxx Europe 600 Index rose 1.1% to 265.09.

Across Europe, the U.K.’s FTSE 100 gained 1.19%, Germany’s DAX rose 0.93% and
France’s CAC 40 climbed 1.22%.

Among the most active stocks in Europe were Daimler AG, ARM Holdings Plc and Barclays Plc.

U.S. Treasuries declined after data bolstering confidence in the economic recovery lowered the appeal of fixed-income securities.

The government’s US$13 billion auction of 30-year debt drew a higher yield than traders forecast.

The yield on the 10-year note climbed 8 basis points to 2.73% at 1.30pm in New York, according to BGCantor Market Data.

The 30-year bond yield gained 9 basis points to 3.82%.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.08% to 82.65.

The yen was near a 15-year high against the greenback as investors took conflicting messages from policymakers as a sign Japanese authorities were not ready to intervene to weaken the currency.

In afternoon trading in New York, the U.S. dollar edged lower to 83.85 yen.

The euro fell against the U.S. dollar and yen on lingering concern about the health of the European banking sector and sovereign debt issues.

Meanwhile, Norway, which has amassed the world’s second-biggest sovereign wealth fund, says Greece won’t default on its debts, Bloomberg reported.

The Nordic nation’s US$450 billion Government Pension Fund Global has stocked up on Greek debt, as well as bonds of Spain, Italy and Portugal.

The euro was last down 0.2% at US$1.2696. Against the yen, the euro shed 0.2% to 106.50.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.39% to 273.19.

Oil prices were down in early afternoon trading. By 1.45pm EDT, crude for October delivery was down 55 cents at US$74.12 a barrel, after earlier rising to US$75.96, the highest since August 18.

ICE October Brent crude fell 83 cents to US$77.34.

U.S. crude stockpiles fell 1.9 million barrels last week, the Energy Information Administration said. That was much less than the 7.3 million drop shown in industry data on Wednesday and against a forecast for a 900,000-barrel increase.

Gold was mixed. Spot gold was bid at US$1,256.05 an ounce by 1928 GMT against US$1,253.10 late in New York on Tuesday.

U.S. gold futures for December delivery edged $US1.80 lower to end at US$1,257.50 an ounce.

U.S. copper futures closed at their lowest levels in more than one week.

Copper for December delivery declined 1.6% to US$3.4435 per pound on the COMEX metals division of the New York Mercantile Exchange.

(BusinessDesk)

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