10/01/2011 15:40
Monday 12:45 GMT. Stocks are losing ground as investors become disheartened by disappointing US jobs data on Friday, the eurozone’s lingering sovereign debt problems and inflation concerns.
The FTSE All-World index is off 0.6 per cent and industrial metals are mostly lower, though oil is higher because the trans-Alaska pipeline remains closed.
US stock futures point to Wall Street, which closed on Friday just shy of 27-month highs, losing 0.4 per cent at the open, despite another burst of Monday M&A, including Duke Energy’s $13.7bn purchase of Progress Energy.
The euro is near four-month lows versus the dollar, with traders nervously awaiting an auction on Wednesday of Portuguese sovereign debt amid reports that Lisbon is facing pressure from Paris and Berlin to accept a bail-out. The cost of insuring a basket of European sovereign debt has hit a record high.
But despite heightened eurozone anxieties, core bonds are receiving little haven flows and yields are higher as burgeoning inflation concerns appear to outweigh those fiscal worries.
Factors to Watch – It’s a quiet start to the week in terms of premier league economic data, so corporate and technical market catalysts may carry greater influence. The US fourth-quarter earnings season kicks off when Alcoa, the aluminium producer, reveals its numbers after the closing bell. Meanwhile, dollar bulls will be waiting to see whether the buck can break above 81.50 on a trade-weighted basis. This would take the dollar index to a four-month high and might have negative implications for commodities, particularly gold.
Asia-Pacific – The FTSE Asia-Pacific index excluding Japan is down 0.9 per cent, with banking shares declining in Shanghai on concerns Beijing could tighten policy to address inflation. Markets in Japan were shut for a holiday.
The main mover in the region was Indonesia’s Jakarta Composite index, which has tumbled 4.2 per cent on expectations that accelerating inflation will prompt interest rate rises. Morgan Stanley forecasts that the central bank may raise its benchmark interest rate by a cumulative 100 basis points starting in February to tame inflation, which in December picked up to 6.96 per cent, above the central bank’s target of 6.5 per cent. India’s Sensex fell 2.4 per cent on similar concerns.
South Korea’s Kospi Composite was off 0.3 per cent, with the market losing momentum after gaining 1.7 per cent in the first week of the year. China’s Shanghai Composite fell 1.7 per cent, weighed down by concerns about the pace of China’s economic growth following weaker exports data than expected. December exports were up 17.9 per cent from a year ago versus November’s 34.9 per cent increase.
Higher oil prices initially buoyed shares of energy producers in Hong Kong, but the Hang Seng succumbed to the broader malaise to close down 0.7 per cent.
Australia’s S&P/ASX 200 recovered from an initial decline to close up 0.2 per cent after retailers bounced following some upbeat sales data.
Europe – Bourses are under pressure, pulling back from two-year highs, as previously strong sectors such as miners and banks see selling, the latter on concerns about sovereign debt exposure. Defensives, such as health and food producers, are in demand.
The FTSE Eurofirst 300 is down 0.7 per cent, while London’s FTSE 100 is off 0.4 per cent. Lisbon is down 1.7 per cent, where banks are under the cosh.
Forex – The euro is weaker at $1.2892, just above four-month lows, as worries about the bloc’s fiscal difficulties continue to weigh on sentiment. The dollar index, which tracks the buck against a basket of its peers, is up 0.1 per cent at 81.24. Sterling is a fraction weaker versus the dollar at $1.5504 after a a survey of UK house prices registered a 1.3 per cent fall in December.
Rates – The eurozone peripheral debt market is again unloved with investors remaining wary about potential restructurings or defaults as countries struggle to fund their budget deficits. Yields on Portugal and Spain’s benchmark 10-year bonds are at euro-era records, up 7 basis points to 7.17 per cent and up 6 basis points to 5.57 per cent, respectively.
The Markit iTraxx SovX Western Europe index of credit default swaps – a form of debt insurance – is up 5 basis points to a record 223 basis points.
US 10-year benchmark yields are up 1 basis points to 3.33 per cent. It would normally be the case that softer equities and concerns about the eurozone would provide downward pressure on the yields of such highly-rated debt. But perhaps it is worries about inflation that are the focus in early trade. German Bund yields are up 2 basis points to 2.88 per cent.
Commodities – US-traded oil is up 1 per cent to $88.94 a barrel as investors try to calculate the effect of the closure of an important north American pipeline. Industrial metals are mainly lower but gold is flat at $1,368 an ounce as an early boost from the broader market’s inflation concerns starts to fade.
The FTSE All-World index is off 0.6 per cent and industrial metals are mostly lower, though oil is higher because the trans-Alaska pipeline remains closed.
US stock futures point to Wall Street, which closed on Friday just shy of 27-month highs, losing 0.4 per cent at the open, despite another burst of Monday M&A, including Duke Energy’s $13.7bn purchase of Progress Energy.
The euro is near four-month lows versus the dollar, with traders nervously awaiting an auction on Wednesday of Portuguese sovereign debt amid reports that Lisbon is facing pressure from Paris and Berlin to accept a bail-out. The cost of insuring a basket of European sovereign debt has hit a record high.
But despite heightened eurozone anxieties, core bonds are receiving little haven flows and yields are higher as burgeoning inflation concerns appear to outweigh those fiscal worries.
Factors to Watch – It’s a quiet start to the week in terms of premier league economic data, so corporate and technical market catalysts may carry greater influence. The US fourth-quarter earnings season kicks off when Alcoa, the aluminium producer, reveals its numbers after the closing bell. Meanwhile, dollar bulls will be waiting to see whether the buck can break above 81.50 on a trade-weighted basis. This would take the dollar index to a four-month high and might have negative implications for commodities, particularly gold.
Asia-Pacific – The FTSE Asia-Pacific index excluding Japan is down 0.9 per cent, with banking shares declining in Shanghai on concerns Beijing could tighten policy to address inflation. Markets in Japan were shut for a holiday.
The main mover in the region was Indonesia’s Jakarta Composite index, which has tumbled 4.2 per cent on expectations that accelerating inflation will prompt interest rate rises. Morgan Stanley forecasts that the central bank may raise its benchmark interest rate by a cumulative 100 basis points starting in February to tame inflation, which in December picked up to 6.96 per cent, above the central bank’s target of 6.5 per cent. India’s Sensex fell 2.4 per cent on similar concerns.
South Korea’s Kospi Composite was off 0.3 per cent, with the market losing momentum after gaining 1.7 per cent in the first week of the year. China’s Shanghai Composite fell 1.7 per cent, weighed down by concerns about the pace of China’s economic growth following weaker exports data than expected. December exports were up 17.9 per cent from a year ago versus November’s 34.9 per cent increase.
Higher oil prices initially buoyed shares of energy producers in Hong Kong, but the Hang Seng succumbed to the broader malaise to close down 0.7 per cent.
Australia’s S&P/ASX 200 recovered from an initial decline to close up 0.2 per cent after retailers bounced following some upbeat sales data.
Europe – Bourses are under pressure, pulling back from two-year highs, as previously strong sectors such as miners and banks see selling, the latter on concerns about sovereign debt exposure. Defensives, such as health and food producers, are in demand.
The FTSE Eurofirst 300 is down 0.7 per cent, while London’s FTSE 100 is off 0.4 per cent. Lisbon is down 1.7 per cent, where banks are under the cosh.
Forex – The euro is weaker at $1.2892, just above four-month lows, as worries about the bloc’s fiscal difficulties continue to weigh on sentiment. The dollar index, which tracks the buck against a basket of its peers, is up 0.1 per cent at 81.24. Sterling is a fraction weaker versus the dollar at $1.5504 after a a survey of UK house prices registered a 1.3 per cent fall in December.
Rates – The eurozone peripheral debt market is again unloved with investors remaining wary about potential restructurings or defaults as countries struggle to fund their budget deficits. Yields on Portugal and Spain’s benchmark 10-year bonds are at euro-era records, up 7 basis points to 7.17 per cent and up 6 basis points to 5.57 per cent, respectively.
The Markit iTraxx SovX Western Europe index of credit default swaps – a form of debt insurance – is up 5 basis points to a record 223 basis points.
US 10-year benchmark yields are up 1 basis points to 3.33 per cent. It would normally be the case that softer equities and concerns about the eurozone would provide downward pressure on the yields of such highly-rated debt. But perhaps it is worries about inflation that are the focus in early trade. German Bund yields are up 2 basis points to 2.88 per cent.
Commodities – US-traded oil is up 1 per cent to $88.94 a barrel as investors try to calculate the effect of the closure of an important north American pipeline. Industrial metals are mainly lower but gold is flat at $1,368 an ounce as an early boost from the broader market’s inflation concerns starts to fade.
Related Articles
