UK markets ended mixed yesterday. The FTSE 100 advanced, recouping its earlier losses, led by a gain in commodities sector stocks, buoyed by bargain hunting from investors. Further, a solid reading on US service sector for the month of August boosted market sentiment.
Hospitality stock, Whitbread advanced 7.3% and emerged as top gainer in the FTSE 100 index, after its like-for-like sales for the second quarter rose 4.8%.
Vodafone added 1.7%, after UBS added the stock to its key-call list.
Mining stocks, Rio Tinto and Xstrata added 1.7% and 2.2%, respectively.
Precious metal stocks, Randgold Resources and Fresnillo climbed 3.0% and 3.9%, respectively, as Numis Securities upgraded the former to “Hold” from “Reduce” and lifted the latter to “Add” from “Hold”.
Royal Bank of Scotland and Barclays dropped 2.8% and 2.2% respectively, amid lingering worries over Eurozone debt crisis.
FTSE 100 advanced 1.1%, to close at 5,156.8, while FTSE 250 dipped 0.1% to settle at 10,071.2.
European Trading Review
European markets ended lower yesterday, led by losses in banking sector stocks, as a larger-than-expected drop in German factory orders increased concerns about the Eurozone sovereign debt crisis overshadowing better-than-expected growth in US services.
Banking stocks, Credit Agricole, Societe Generale and UniCredit, dropped between 4.2% and 6.5%, amid concerns about economic recovery in the Eurozone.
Bayer slumped 7.5%, after the US FDA asked for more data on its blood thinner drug Xarelto and urged against wider use of the drug.
Fiat Industrial, fell 5.4 %, amid worries over demand prospects in Brazil.
Technology stock, Infineon Technologies, shed 2.3%, after its US peer, Fairchild Semiconductor International, trimmed its 3Q earnings estimates.
FTSEurofirst 300 index declined 0.7% to 903.9. German DAX Xetra 30 dropped 1.0% to 5,194.0. French CAC-40 fell 1.1% to 2,965.6.
US Trading Review
US markets closed lower yesterday, extending their losing streak for the third consecutive day. This was led by a sharp drop in financial sector stocks, as renewed Eurozone debt worries, coupled with fears of a double-dip recession in the US dented market sentiment.
Financial sector stocks, Wells Fargo, Citigroup, JPMorgan Chase and Bank of America retreated between 1.2% and 3.6%, as Nomura slashed its price target on financial stocks.
Goldman Sachs and Morgan Stanley declined 2.3% and 3.9%, respectively, as Credit Suisse slashed its earnings estimates and price targets on the stocks.
Exxon Mobil and Alcoa skidded 1.4% and 2.2%, respectively, amid worries of worsening demand for commodities.
Retailer, Best Buy lost 3.3%, as Piper Jaffray cut its rating on the stock to “Neutral” from “Overweight”.
DJIA fell 0.9% to 11,139.3. NASDAQ dropped 0.3% to 2,473.8. S&P 500 slid 0.7% to 1,165.2.
Forex Trading Review
At 0400 BST today, the GBP is trading 0.2% higher against the USD at $1.5976, marginally lower against the EUR at €1.1382, and 0.1% lower against the JPY at ¥123.58.
The EUR is trading 0.2% higher against the USD at $1.4033, as most Asian equity markets traded higher, reducing the demand for the safe haven currency. The EUR is trading marginally higher against the JPY ¥108.62.
The USD is trading lower against most major currencies ahead of a speech by Chicago Federal Reserve President Charles Evans and the release of the central bank’s Beige Book assessment of economic conditions today.
The JPY traded higher against the USD, after the Bank of Japan kept its key interest rate unchanged, shrugging off speculation that it would intervene the markets to halt currency gains.
The AUD is trading higher against the USD, after Australia’s second quarter gross domestic product expanded 1.2%.
The NZD traded higher against the USD, as Asian equities rose increasing the demand for higher-yielding assets.
The CHF traded lower against the EUR, after the Swiss central bank imposed a ceiling on the currency’s exchange rate yesterday.
Yesterday, the USD closed higher against major currencies, after the US services sector index rose better-than-expected in August.
The EUR closed lower against the USD, as slowing economic growth and concern that Europe’s sovereign-debt crisis is worsening, sapped demand for the currency.
Commodities Trading Review
In Asia, crude oil for October delivery is trading 0.5 % higher at $86.44 per barrel.
Yesterday, crude for October delivery declined 0.5% or $ 0.43 to end at $86.02 per barrel. This came amid speculation that the European debt crisis is spreading to other economies and as the dollar appreciated against major currencies, decreasing the demand for commodities as an alternative investment.
Crude oil ended lower, after the US Energy Department reported that crude inventories held in floating-roof tanks at Cushing rose 850,000 barrels to 35.6 million.
Gold for immediate delivery is trading 0.1% lower today, at $1,874.55 per ounce.
Gold for December delivery declined 0.2% or $3.60, to settle at $1,873.30 per ounce yesterday, as the dollar rose against major currencies, decreasing the demand for the precious metal as a hedge against inflation.
Gold prices declined after US equities recovered following better-than-expected rise in US services index.
Financial Trading News
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'Gold Prices Decline as US Services Index Boosts American Equities' edited by ETX Capital, updated 07-Sep-11
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