Wall Street has opened with a sharp drop this afternoon, on the expectation of slowing construction, industrial production and PPI data.
In a busy day for US economic data, the markets have already seen producer prices fall 0.3% last month, narrowly beating expectations, and a 10% year-on-year drop in housing starts – almost double the 5.2% drop analysts predicted. Reports on capacity utilisation and industrial production have also come out, showing improvements of 1% and 1.2% for May and April respectively.
The result of this mixed bag of results has been expectedly indecisive, with the Wall Street spread regaining approximately half of its opening 72-point (0.69%) drop – but promptly losing those gains a second time to dip below 10,340 by around 3pm (London time).
Q4 results from FedEx delivered on expectations, but the postal giant’s share price lost 2% after the company’s less than optimistic forecast for the next quarter, warning that higher costs would limit potential earnings.
Back in the Old World, European indices remained positive as they tracked yesterday’s US rises, but confidence remains shaky in the face of the seemingly never-ending debt problems of the eurozone’s outlying members.
Those nervous of a European economic domino effect can take heart, however, in a flurry of surprise trading agreements between Greece and China.
Despite yesterday’s downgrade from Moody’s of the Greek debt to ‘junk’ status raising warning flags, China has proceeded apparently unfazed with its investment in Greece, doing much to boost confidence in the flagging Greek economy and partially suppressing at least one of the fires threatening the stability of the eurozone.
Confidence in the sovereign debt of other peripheral eurozone countries, however, remains shaky. The yield on Spanish government bonds hit a record high against German bunds today, and rumours abound that Europe might be considering a Greek-style rescue package for its Iberian peer.
In the UK, the FTSE 100 has traded sideways most of the day and coming into the close looks likely to finish around 0.2% up on the open. Water supplier Severn Trent is shoring up the bottom of the index with a 4.14% drop after going ex-dividend, with communications company Inmarsat close behind on a second day of falling prices. Shire was the day’s biggest winner, up 2.31% after a ratings boost from Deutsche Bank.
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'Spread Betting News 16 Jun 2010', Article by IG Index, last update: 16-Jun-10
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