While you were sleeping: Shares, gold, oil decline

Wednesday 9th December 2009

Shares fell around the world overnight, with gold and oil losing ground, amid renewed worry that the global economy might not recover as fast as some investors had been betting in recent months.

At midday, the Dow Jones Industrial Average fell 0.93% to 10,293.15 and the Standard & Poor’s 500 slid 0.85% to 1093.84. The Nasdaq Composite edged 0.44% lower to 2179.87.

Among the biggest movers were GE and Bank of America, down 2.5% and 2.3% respectively. Intel, Pfizer and Cosco were among the most actives.

Shares of 3M fell after the company said its 2010 outlook was unclear and its profit would miss analysts’ expectations.

The catalysts for the decline in equities included Fed Chairman Ben Bernanke’s comments on Monday in Washington that the U.S. economy faced “formidable headwinds” even as it was on a recovery path.

Overnight, Fitch downgraded Greece’s credit rating and German industrial production unexpectedly fell.

The Dow Jones Stoxx 600 Index fell 1.5% to 244.14 in London. Greece’s ASE Index dropped 6%.

National benchmark indexes declined in all 17 western European markets that were open. The U.K.’s FTSE 100 Index shed 1.4% after Moody’s warned that deteriorating British public finances might “test the Aaa boundaries”. Austrian markets were closed for a holiday.

Ireland’s ISEQ Index retreated 2.8% led by Allied Irish Banks. Germany’s DAX Index declined 1.5%.

The German government said industrial production decreased 1.8% in October from September. Economists had forecast a 1% gain, according to the median of 38 estimates in a Bloomberg survey.

Back in North America, oil fell after the U.S. Energy Information Administration lowered its 2010 forecast for world oil demand by 160,000 barrels a day.

U.S. crude for January delivery traded down US$1 at US$72.93 a barrel by 12:17 p.m. EST (1717 GMT), after settling US$1.54 lower on Monday. in London, Brent crude fell 83 cents to US$75.60 a barrel.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.76% to 272.09.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ rose 4.7.% to 23.14.

The U.S. dollar appreciated 0.6% to US$1.4737 per euro at 11:47 a.m. in New York, from US$1.4827 yesterday, and touched US$1.4724, the strongest level since November 4. The yen advanced 1.8% to 130.35 per euro, from 132.71. Japan’s currency gained 1.2% to 88.45 per dollar, from 89.51.

The 0.000% high yield on the U.S. Treasury's four-week bill auction on Tuesday matches the lowest on record for the security, the Treasury's Bureau of the Public Debt said.

The Treasury's auction of US$29 billion in four-week bills at a strong 5.33 bid-to-cover ratio marks only the fourth time that the security was sold at a zero rate, Reuters reported. The other three zero-rate auctions occurred in December 2008, near the height of the financial crisis.

Ten-year U.S. note yields fell five basis points to 3.38% at 12:40 p.m. in New York, according to BGCantor Market Data. The 3.375% security maturing in November 2019 rose 14/32 to 99 31/32.

London interbank offered rates for three-month euros were unchanged at 0.68% on Tuesday, bucking the downward trend in equivalent dollar and yen rates.

Gold futures for February delivery fell US$17.40, or 1.5%, to US$1146.60 an ounce at 10:54 a.m. on the New York Mercantile Exchange’s Comex division. The most-active contract has dropped more than 6% after reaching a record US$1227.50 on December 3.

In London, gold for immediate delivery slid US$12.08, or 1%, to US$1146.02 an ounce. The spot price reached a record $US1226.56 on December 3 and has dropped more than 5% since December 2.

Businesswire.co.nz

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