Markets remained in limbo this afternoon, as indices spread betting investors attempted to assess the health of the global economy.
Poor US jobs data and a warning from the OECD gave succour to those of a bearish persuasion, but bulls are looking to policy speeches tonight in the US that might offer some hope for the future.
By 3.30pm (London time), the Dow Jones was down 0.07% at 11,406.88, while the S&P 500 was 0.16% lower at 1196.75. In London, the FTSE 100 continued to hover between gains and losses, and was up 0.18% at 5328.19.
US claims stubbornly above 400K
There was yet more bad news from the US this afternoon. Initial jobless claims rose once again, signalling that last week's abysmal non-farm payrolls report was not just a flash in the pan.
First-time claims rose by 2000 to 414,000 for the week to 3 September, while the data for the previous week was revised higher (as most weeks have been of late), from 409,000 to 412,000.
In another gloomy sign, the number of people who have used up all their extended benefit claims and can no longer receive support from the US government rose by 78,000 to nearly two million people.
OECD reduces growth forecast
The global economy remains in a fragile state, a point underlined by the OECD, which cut its growth forecast today. The body now expects quarterly growth of less than 0.2% in the second half of this year, with an annualised rate below 1%.
Furthermore, the OECD changed its stance on higher interest rates, saying that the leading world economies should be prepared to loosen monetary policy if the risks of a recession increased.
Finance ministers and central bank governors from the G7 will meet later this week to discuss the global situation, and hopes have risen that some sort of co-ordinated action will emerge from the summit.
However, that seems unlikely, since the conditions are quite different from 2008, and even if the outlook is bleak, we are not facing Armageddon quite yet.
ECB stands firm on rates
Meanwhile, over in Europe, the European Central Bank undertook its usual monthly meeting and press conference. The bank refrained from any changes to monetary policy, keeping the interest rate at 1.5%, and did not give any indication as to whether it would start to cut rates in the near future.
In his press conference, Mr Trichet became palpably angry when criticism of the bank was suggested. He rounded on his critics by saying that the bank had delivered better price stability in its 13 years of operation than the Bundesbank had done in 40 years.
In a shot across the bows of dallying Eurozone governments, Mr Trichet added that Member States should implement the decisions of the 21 July summit as quickly as possible, in order to get ahead of markets, becoming proactive instead of reactive.
Caution reigns in markets
Still, despite all the ructions afflicting global markets, movements in stock markets were fairly limited. The FTSE was positive for most of the session, and indeed staged quite a strong rally for a time, but began to sag again as the ECB press conference began. The poor US jobs figures added to the cautious air.
Markets remain fundamentally aware of the difficult outlook for the global economy, and today's OECD statement has helped to emphasise the problems at hand.
Gold endured a sell-off in the morning, with December futures dropping back to $1816 per ounce, but then turned around and raced higher, touching $1868 per ounce. Silver also moved higher, going as far as $42.72 per ounce.
There are many issues that still need to be resolved, and investors seem unwilling to go 'all in' on markets ahead of speeches today by Ben Bernanke and President Obama.
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'Silver Spreads Rise as OECD Calls for Looser Monetary Policy', Article by IG Index, last update: 8-Sep-11
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