While you were sleeping: Dollar falls, Ericsson buys Nortel assets

Monday 27th July 2009

The US dollar and the yen slipped against the euro on Friday in New York as investors took heart from better than expected corporate earnings and amid signs the economic slump in Europe may be abating.

Among companies on the Standard & Poor’s 500 that have posted second-quarter earnings, 75% have beaten analyst estimates, according to Bloomberg. The Dow Jones Industrial Average climbed above 9,000 for the first time since January last week. The index rose 0.3% to 9093.24 on Friday and the S&P 500 gained 0.3% to 979.26.

The US economy probably contracted at a 1.5 percent annual rate in the second quarter, after shrinking 5.5 percent in the previous three months, according to the median forecast of 66 economists surveyed by Bloomberg News. The figures are due on July 31.

Markit Economics’ composite index of Europe’s manufacturing and services industries rose more than expected this month to 46.8, edging closer to the 50 mark below which signifies a contraction. The Ifo Institute reported the German business climate rose to a nine-month high of 87.3 in July.

The dollar declined 0.7 percent to $1.4204 per euro on Friday while the yen weakened 1.3% to 134.63 versus the euro. The yen slipped 0.6% to 94.79 against the dollar.

The Nasdaq Composite fell 0.4% to 1965.96, snapping a 12-day rally, after Microsoft reported second-quarter revenue that missed estimates, sending its stock down 8.3% to US$23.45. Amazon.com Inc. fell 7.9% to US$86.49 after sales missed expectations.

The Dow, S&P and Nasdaq all gained at least 4% last week.

Chevron Corp. rose 0.8% to US$68.43 after US crude oil edged up 1.3% to US$68.05 a barrel on the New York Mercantile Exchange. Gains on Wall Street were tempered by the release of the Reuters/University of Michigan Surveys of Consumers, which showed consumer confidence waned late this month to a final reading of 66, down from 70.8 in June.

Democrat senator Charles Schumer asked the Securities and Exchange Commission to ban so-called flash orders for stocks, saying high-speed trades give some investors an unfair advantage. The services offered by Nasdaq OMX Group, Bats Global Markets and Direct Edge Holdings, which combined handle two-thirds of shares traded in the US, give their customers a half-second advantage over traders relying on other platforms.

Schumer, who is a member of the Senate Banking Committee, said he plans to will introduce legislation to ban flash orders if the SEC doesn’t act.

Ericsson AB, the world’s biggest wireless phone network maker, will acquire Nortel Networks Corp.’s wire equipment assets for US$1.13 billion, beating out bids from Nokia Siemens Networks and MatlinPatterson Global Advisers.

The acquisition will lift earnings within a year of the purchased being completed, Ericsson said.

Crude oil topped US$68 a barrel on Friday amid optimism demand for fuel will pick up as the global economic slump abates.

Brent crude rose to US$69.06 a barrel on Friday from USD$68.31.Gold fell in New York on Friday as stocks advanced, reducing the appeal of the precious metal as an alternative investment.

Gold futures for August delivery edged down 0.2% to US$953.10 an ounce in New York.In Europe, the Dow Jones Stoxx 600 fell 0.1% to 219.67.

Among regional benchmarks, the FTSE 100 gained 0.4% to 4576.61, France’s CAC 40 fell 0.2% to 3366.45 and Germany’s DAX 30 fell 0.3% to 5229.36.Ericsson sank 7.7% on its acquisition of the Nortel assets.

Businesswire.co.nz

Comments from our readers

No comments yet