Market Review June 13 2012

Jun 13 • Market Reviews • 2981 Views • Comments Off on Market Review June 13 2012

Warren Buffett‟s Berkshire Hathaway Inc. jumped into the slumping private-jet market again with a record order valued at USD9.6bn, betting on a rebound later this decade with a third plane purchase in less than two years.

US stocks rose on speculation policy makers will do more to stimulate the economy. Commodities dropped for a fourth day and Spanish bonds fell.

The advance in US stocks indicated the S&P 500 will rebound following last few days’ biggest decline in more than a week. The Fed is scheduled to meet next week and announce its rate decision on June 20.

European stocks rose for the first time in three days on speculation that the Federal Reserve will opt for more stimuli and as Lafarge SA targeted cost savings.

Italy plans to auction at least €9.5 bn of debt this week, while an election on June 17 may determine whether Greece remains in the euro.

Spanish bonds slumped for a second day after a European rescue of its banks was announced and Fitch Ratings said the government will miss its budget-deficit targets, casting doubt on Prime Minister Mariano Rajoy’s plan to stabilize the economy.

Japanese stocks fell as surging bond yields stoked concern a bailout of Spain’s banks won’t ease Europe’s debt crisis. Shares pared losses as the yen halted gains after the International Monetary Fund said the currency is overvalued and urged further monetary easing.

China’s stocks fell for the fourth time in five days as concern Spain’s bailout plan won’t be enough to tame Europe’s debt crisis overshadowed higher-than- estimated new Chinese bank loans.


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Euro Dollar:

EURUSD (1.2482) The euro eased against other major currencies in Asian trade on Wednesday as traders await eurozone economic data later in the day, after Spanish borrowing rates soared to record highs.

The euro bought $1.2482 and 99.34 yen in Tokyo morning trade, down from $1.2502 and 99.44 yen in New York late Tuesday.

The dollar edged up to 79.63 yen from 79.52 yen in New York.

The Great British Pound

GBPUSD (1.5556) Sterling rose to its highest in nearly two weeks against the euro on Tuesday as investors sought alternatives to the common currency on concerns about Spain and worries ahead of this weekend’s Greek elections.

Buoyed by its gains against the euro, the pound also rose against the dollar, recovering some of its recent falls, but analysts said it remained vulnerable due to the growing risk of the Bank of England opting for more monetary easing.

Data showed UK manufacturing output posted a surprise 0.7 percent fall during April, raising concerns the economy may have contracted again in the second quarter. The euro was down 0.3 percent at 80.295 pence , its weakest since June 1.

Asian –Pacific Currency

USDJPY (79.53) Against the yen the euro rose 0.2 percent to 99.55 yen . Traders said Japanese exporters were likely to cap any gains in the currency around 100 yen.

Concerns over the outcome of Greek elections, where parties opposing and supporting harsh austerity measures imposed by the country’s international lenders are neck and neck in public opinion polls, caused many investors to remain on the sidelines.

As a worst-case scenario if Athens leave the euro, European officials have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing euro zone capital controls.

Rome faces a test on Thursday, when it plans to offer up to 4.5 billion euros of fixed-rate bonds at its mid-month auction.

The dollar was flat against the yen at 79.53 yen, hovering below this week’s high at 79.92 yen. Crucial support was seen at 77.65 yen hit on June 1.


Gold (1613.80) has held above $US1,600 an ounce, as a weaker US dollar and talk of further monetary easing drew investors seeking safety into the gold market.

The most actively traded contract, for August delivery, gained 1.1 per cent, or $US17, to settle at $US1,613.80 per troy ounce on the Comex division of the New York Mercantile Exchange.

Federal Reserve Bank of Chicago President Charles Evans voiced support for monetary easing in an interview with Bloomberg Television aired Tuesday.

While Evans isn’t a voting member of the Fed’s policy-setting committee, his remarks stoked hopes among some investors that additional easing could be announced at the Federal Reserve meeting June 19-20.

Crude Oil

Crude Oil (83.32) prices have closed mixed amid rising speculation over OPEC’s likely action on production quotas when it meets in Vienna this week.

Meanwhile, the US Energy Department slashed its average price forecast for West Texas Intermediate crude, the US benchmark, by $US11 a barrel from May’s estimate to $US95 for the rest of the year, citing slow US and global economic growth.

New York’s main contract, light sweet crude for delivery in July, which hit an eight-month low of $US81.07 a barrel in earlier Asian trading, on Tuesday settled at $US83.32 a barrel, up 62 US cents from Monday’s closing level.

In London trade, Brent North Sea crude for July however shed 86 US cents to stand at $US97.14 a barrel.

And some of the price gain was due to the market “paying attention” to a call within OPEC (Organization of the Petroleum Exporting Countries) for lower production, Williams added.

OPEC’s ministerial meeting on Thursday could set the scene for further declines in oil prices as Saudi Arabia looks set to push through its plan to raise output quotas.

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