Category: Resources

U.S. stocks fall as GDP trails forecast

Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – Wall Street opened lower Friday after a report showed that the U.S. economy expanded less than forecast..

Just after the opening bell, the Dow Jones Industrial Average was lower by 33 points, the Standard and Poor’s 500 Index was flat and the NASDAQ was up by about 6 points.

Weighing on stocks was a report that showed the U.S. economy expanded at 2.8 percent in the fourth quarter, less than the 3 percent that had been projected.

In Europe the Stoxx Europe 600 Index slipped 0.7 percent as investors await word on developments on the region’s sovereign debt crisis. European Union Economic and Monetary Affairs Commissioner Olli Rehn said authorities are “very close” to reaching an agreement on private-sector involvement in a Greek debt swap.

Despite those words of optimism, the dismal growth of GDP in the U.S. was keeping investors cautious. The health and growth of the U.S. economy is a very important and leading indicator of economic growth worldwide. As analysts like to say, “when the U.S. sneezes, the world catches a cold.”

In corporate news, Ford fell after reporting numbers that missed estimates. Starbucks shares slipped despite reporting better than expected numbers, and Juniper Networks plunged after the second biggest maker of computer networking equipment forecast sales and profits that missed estimates.

In commodities, oil was unchanged at $$99.60 a barrel, gold rose $4.70 to $1,725 a troy ounce and silver was up a few pennies at $33.63.

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Wall Street opens mixed Friday on GE, Google earnings

Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – Wall Street opened mixed to lower Friday morning following earnings reports from General Eclectic and Google that disappointed.

Just after the opening bell, the Dow Jones Industrial Average was flat, the S&P 500 Index was down 3 points and the NASDAQ fell 9 points.

Weighing on stocks was an earnings report from Dow component General Electric. Shares of GE dropped more than 2 percent after the largest U.S. conglomerate reported roughly flat profit from continuing operations, and revenues that missed estimates.

Meanwhile, Internet giant Google tumbled more than 8 percent, or 52.38, to 586.66, after the search engine reported quarterly profit and revenue that missed Wall Street estimates. Google blamed the shortfall on declining search advertising rates.

Microsoft shares rose 3 percent after decent earnings, and IBM rose $4.87 to $185.45 after giving a strong outlook on a strong earnings report.

Investors are still keeping a close eye on developments in Europe regarding the sovereign debt crisis.

Greece and its private bondholders were “converging toward” a long-awaited debt swap deal, with an initial agreement coming as early as Friday that would prevent a default from Greece.

In commodities, oil was trading off $1.19 to $99.20 a barrel, and gold was down $1.20 to $1,652.90 a troy ounce.

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EU to delay oil embargo on Iran for sx months

Windsor Genova – AHN News News Writer

Brussels, Belgium (AHN) – A European Union official said Thursday the 27-nation bloc can start its oil embargo on Iran six months after agreeing to do so as three member countries—Greece, Italy and Spain—need to find alternative sources of oil first.

The official privy to ongoing negotiations of EU foreign ministers on the imposition of the embargo also said the ban on Iranian petrochemical products may start three months after all EU states agree on the oil embargo in their meeting on Jan. 23, the deadline for coming up with a collective decision.

The official added that it is possible that Italy may initially be exempted from imposing the oil embargo as it needs to sell oil imports to pay off its debt to Rome-based oil company Eni SpA.

EU foreign ministers are meeting in Brussels to explore ways to implement the oil embargo, according to Maja Kocijancic, a spokeswoman for the European Commission.

The EU imports 450,000 barrels of Iranian oil per day with Greece, Italy and Spain, accounting for nearly 70 percent of the volume in 2010.

Iran is the second largest oil producer among members of the Organization of Petroleum Exporting Countries. It produces and exports 3.58 million barrels of crude per day.

The oil embargo is the latest sanction imposed on Iran by Western countries, including the U.S., in a bid to force it to stop its nuclear program. The embargo aims to cut Tehran’s earnings from oil exports, where it sources funding for its nuclear program.

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Dow ended final trading day of 2011 down, closed up for the year

Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – Last year was turbulent, trying and tumultuous for global stocks and commodities, And for many investors and traders, 2011 couldn’t end soon enough.

In the final trading day of 2011, the Dow Jones Industrial Average closed down 69 points, but managed to eck out a 5.5 percent gain for the year.

The closely tracked Standard & Poor’s 500 Index closed virtually flat, ending 2011 down 0.43 percent, while the tech heavy NASDAQ said good-bye to 2011 off 1.80 percent.

Commodities fared much better. Oil gained 8.15 percent in 2011, and gold was the sole double digit finisher bidding the year adieu with a stellar 10.23 percent gain.

The top three performers in the Dow were McDonalds, IBM and Pfizer. Laggards included Bank of American, Alcoa and Hewlett-Packard.

Leading gainers in the S&P were Cabot Oil & Gas, El Paso and Intuitive Surgical. Drags on the index were First Solar, Monster Worldwide, and Alpha Natural Resources.

Intuitive Surgical led the NASDAQ-100, followed by Alexion Pharmaceutics and Hansen Natural. The biggest loser in the index was Blackberry maker Research in Motion with First Solar and Netflix close behind.

Natural gas finished out the year at 2.989 per mil BTUs, its lowest level since 2009.

Gold, which closed 2011 up 10.23 percent, took a beating in December, falling as much as 10.5 percent in the final month of the year. The yellow metal peaked in August with a 33 percent rise.

While high unemployment, a nationwide ailing housing market and government gridlocks all weighed heavily on U.S. stocks, the European sovereign debt crisis was the biggest factor in equities gains and losses during 2011.

Markets were closed Jan. 2 in observance of New Year’s. Exchanges will start 2012 on Jan. 3 with normal trading hours, but volume and volatility is expected to be anything but normal.

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White House prepares third U.S. debt ceiling hike

Matthew Borghese – AHN News Contributor

Washington, D.C., United States (AHN) – President Barack Obama’s administration is preparing to ask Congress to raise the national debt ceiling by $1.2 trillion.

Congress is expected to approve the measure, having reached a hard-fought deal in summer to extend the debt ceiling and fund the government.

Overall, the United States debt ceiling will rise to $16.39 trillion, a record high.

Both houses of Congress are currently in recess, and House lawmakers won’t return to regular session until January 17, 2012. The U.S. Senate isn’t scheduled to meet again this year, and will return January 23, 2012.

If the White House and Treasury Department announce plans to raise the debt ceiling before New Year’s Eve, Congress will need to call an emergency session in order to pass a resolution barring the increase.

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Treasury sells 30-year bonds at record lows

Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – The U.S. Treasury Department sold $13 billion in 30-year bonds Wednesday at a record low yield of 2.925 percent.

Despite the debt security having the lowest yield on record, investors in the U.S. and around the world still have a hearty appetite for the long bond.

Bidders offered to buy 3.05 times the amount of debt sold, compared to an average of 2.81 times at the last four comparable auctions.

Indirect bidders, those that include global central banks, bought 32.5 percent of the sale, compared to 36.1 percent on average.

Direct bidders–domestic money managers–purchased another 21.2 percent, versus an average of 19.5 percent.

Following the oversubscribed and highly successful auction, the broader bond market continued the rally.

Yields on 10-year notes, which move in the opposite direction to prices, fell 5 basis points to 1.92 percent.

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Moody’s downgrades top three French banks

Linda Young – AHN News Writer

Paris, France (AHN) – Moody’s announced Friday it was downgrading the credit rating of all three of France’s top banks because of the difficulty they have borrowing money.

Credit Agricole and BNP Paribas went down one notch from a Aa2 rating to Aa3, which is the fourth-highest investment grade rating. Societe Generale fell from Aa3 to A1, the fifth-highest rating. The best rating a bank can get is AAA.

BNP is the largest bank, Societe Generale is second and Credit Agricole is third.

The credit rating agency also gave each of the three a negative outlook and warned that it might downgrade them again.

Moody’s said that not only had liquidity and funding conditions deteriorated at each of the banks, but that it was likely the situation would become worse because of further funding pressures from the European debt crisis, which has deteriorated.

The ratings cuts for these three banks follow Moody’s previous downgrades in September of Credit Agricole and Societe Generale.

Part of the problem with liquidity comes from the fact that many money market funds in the United States have refused to lend to European banks since the summer. That has made it difficult for eurozone banks to maintain borrowing in U.S. dollars.

The European Central Bank on Thursday announced new measures to make sure that eurozone banks do not run out of cash.

During the past few months, both BNP and Societe Generale announced asset sales aimed at reducing their reliance on short-term wholesale funding.

However, Moody’s cautioned that if too many European banks try to sell assets at the same time it would depress their value and result in selling them at a loss.

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U.S. stocks up on shortened Friday trading session

Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – U.S. stock markets will close at 1 p.m. on Friday having many investors joking they have only a half a day to lose half as much money.

Just after the opening bell, the Dow Jones Industrial Average rose 58 points, the Standard & Poor’s 500 Index was up 7 points and the NASDAQ was better by 11 points.

Oil was down 21 cents at $95.84 a barrel, and gold was trading lower by $17 at $1,679.10 a troy ounce.

Weighing on markets were continued fears about the eurozone debt crisis. Yields on Italy’s debt neared recent highs and spooked world markets, sparking a sell-off overseas. Italy paid a record 6.5 percent to borrow money over six months on Friday. Longer term funding costs in the Italian nation soared well above levels seen as sustainable for public finances.

Investors all over the globe are frightened that economic ills in Italy, Spain, Greece and France will spill over into Germany, regarded as the most financially stable eurozone country.

With little on the economic calendar in the shortened trading session, investors were buoyed by signs that Black Friday deals will help retailers post strong profits over the Thanksgiving weekend.

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Europe’s lust for gold continues

Diane Alter – AHN News Reporter

New York, NY, United States (AHN) – Despite rising and record prices, gold continues to shine, especially overseas. The European sovereign debt crisis has spurred a gold rush across the continent. The World Gold Council reported Thursday that investors in Europe purchased a record $6.2 billion in gold bars and coins in the third quarter.

While not a record in terms of weight, Europe’s demand for about 118 metric tons of the yellow metal in the third quarter amounts to nearly a third of all the investment grade gold demand around the world for the period. It is also a 135 percent increase in demand from Europe from the same period a year ago.

Worldwide, demand for gold bars and coins was up 29 percent from a year earlier.

The increase in demand was not deterred by record high gold prices. Prices for the precious metal surged 20 percent in July and August, and topped record highs above the $1,900 an ounce mark. It has since fallen back a bit.

While inflation worries, hedges, diversification and geopolitical factors are main drivers of gold, economic uncertainties and looming defaults of European nations were the main push behind the recent rush to gold.

And it wasn’t just investors who were paying for gold. Even foreign central banks increased their buying, adding 148.4 tons of the yellow metal in the quarter, up from 22.6 billion tons a year ago.

Some analysts question gold’s stellar run and wonder if the precious metal will continue to shine. Global demand for jewelry, which typically accounts for about two-thirds of all gold demand, fell 10 percent year-over-year and is sitting near its lowest level in 25 years. And gold supply is increasing.

But those figures don’t sway die-hard gold bugs who say the sky is the limit for gold.

On Thursday, in afternoon trading, the gold was down $47 to $1,716 a troy ounce in what some traders were calling profit taking.

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Italian debt reaches unsustainable level

Vittorio Hernandez – AHN News

Rome, Italy (AHN) – When Italy’s debt ballooned to over $1.5 trillion, some leaders are now asking if the country has reached a point of being beyond rescue. The offer by Italian Prime Minister Silvio Berlusconi to resign from his post had failed to slow down the financial turmoil.

Another indicator that Italy’s debt has reached unsustainable level is that the interest rate on Italian bonds hit 7 percent which is the same rate that smaller eurozone economies such as Ireland, Portugal and Greece reached and needed a rescue. At one point, the rate even reached 7.5 percent.

Because of the impact of the problematic eurozone members on the whole single currency area, instead of kicking out Greece and eventually Italy from the zone, Germany and France reportedly are scouting for ways to leave the currency.

Even non-eurozone members such as Britain are affected by the debt crisis that the United Kingdom faces a threat of a double dip recession before the end of 2011. Because of the impact of the Greek and Italian debt crisis on Britain, British Prime Minister David Cameron urged the leaders of the two nations to get on top of their countries’ debts and deficits.

Cameron also suggested putting in place the largest possible firewall, which is what the European Financial Stability Facility was supposed to be. However, lack of interest failed among the markets failed to boost the fund’s firepower.

Amid the political and financial turmoil besetting Italy, the Italian stock market lost 4 percent of its value, the FTSE 100 index closed 106.96 points down at 5460.38 and the Dow Jones closed 389 points down at 11,780.94.

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