While you were sleeping: Stocks extend gains

Friday 19th February 2010

Investors pushed stocks higher in Europe and the US on continued optimism that the global economy was healing and corporate profits would improve.

The Dow Jones Stoxx 600 rose 0.6% to 249.14. In the UK the FTSE 100 increased 0.9%, Germany’s DAX was up 0.6% and France’s CAC 40 also advanced 0.6%.

The gains were powered by ABB Ltd, Swiss Reinsurance Co, BAE Systems and VT Group. On the downside was Daimler, which cancelled its dividend, and Societe Generale, which cut its dividend.

Western European companies that have reported earnings since January 11 have beaten analysts’ forecasts for net income by an average of 2.5 percent, according to Bloomberg data.

In the US in early afternoon trading, the Dow Jones Industrial Average was up 0.21%, the Standard & Poor’s 500 Index was up 0.12% and the Nasdaq Composite Index had gained 0.11%.

There were some mixed reports in the US with Hewlett-Packard Co increasing its sales forecast and two reports showing that the world’s biggest economy was expanding. The index of leading indicators rose for a 10th month in a row in January and the Fed Philly report showed manufacturing improved for a sixth month.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ fell 0.09% to 21.70.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.25% to 80.57.

The euro was down 0.24% at US$1.3573 from a previous session close of $1.3605. Against the Japanese yen, the dollar was down 0.10 percent at 91.27 from a previous session close of 91.360.

"Deficit concerns are not going to dissipate any time soon, so it's just a question of when (the euro) break out of this US$1.35-US$1.38 range," Brian Dolan, chief currency strategist at Forex.com, in Bedminster, New Jersey, told Reuters.

A break in the euro below US$1.35 could pave the way for a further drop to the US$1.32-US$1.33 area, Dolan said.

Bond investors got a wake-up call when the U.S. government said it would sell a record US$126 billion of securities next week, including 30-year Treasury Inflation Protected Securities.

Though the supply figures were in line with expectations, Reuters said the news of the sale still weighed on the market.

"The US government is going to continue to have refunding needs, so if you don't like the price now, wait until next month or whenever; we will see more concessions going forward," Michael Skinner, a bond trader at Wall Street Access in New York, told Reuters.

The benchmark 10-year note was last down 17/32 in price, yielding 3.80% versus Wednesday's close of 3.73%.

The 30-year long bond was down nearly a point in price, last trading 28/32 lower on the day, yielding 4.76%.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, rose 0.68% 275.69.

U.S. crude oil futures rose 95 cents , or about 1.2%, to US$78.28 a barrel by 11.32am ET, after falling to as low as US$76.32 earlier. Brent crude gained 90 cents to US$77.17 a barrel.

Inventories of middle distillates, including heating oil, in the United States fell 2.9 million barrels last week, a report from the U.S. Energy Information Administration (EIA) showed. That was nearly double analysts' forecasts for a 1.5 million barrel drop ahead of the release of the data.

Spot gold was bid at US$1120.55 an ounce at 1604 GMT. After New York opened persistent buying pushed the precious metal up to a session high of US$1123.30 an ounce from an earlier low of US$1097.80 seen as the market reacted to the IMF saying it would sell the precious metal on the open market.

The IMF said it would sell 191.3 tonnes of gold to the open market under a programme approved last year to boost its resources for lending, a move that has called into question demand for bullion from official sector buyers.

Businesswire.co.nz

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