29/12/2010
Stocks up slightly, dollar down
Global stocks edged higher on Tuesday on expectations the US economy is on track for recovery while the dollar slipped as commodity prices surged.
The dollar fell against major currencies, with the US Dollar Index down 0.11 percent as a rise in oil and gold prices kept the dollar pressured.
US crude oil futures rose above $91 a barrel and were near a 26-month high, boosted by demand for heating oil after a storm hit in the US East Coast and by a weaker dollar. US Treasury prices fell before a $35 billion auction of five-year notes.
Trading volumes in all markets were light due to the Christmas holiday and as the northeastern United States dug itself out from the winter storm that disrupted travel.
"Data in recent weeks have been supportive of the stocks and commodity markets globally. The US will avoid a double-dip. The Asian region, including Japan, looks a little bit better, with its industrial production finally showing an increase," said David Cohen, director of Asian Economic Forecasting at Action Economics.
The MSCI All Country World index rose 0.15 percent while the Thomson Reuters global stock index gained 0.02 percent.
But investors were reluctant to take large new positions after weaker-than-expected US data on consumer confidence and home prices.
The S&P/Case Shiller home prices indexes showed prices of US single-family homes fell almost double the expected pace in October, while confidence unexpectedly deteriorated in December over increasing worries about jobs.
While the data were a negative surprise, "it's not impacting the market so much due to the light volume and lack of activity," Peter Cardillo, chief market economist at Avalon Partners in New York, said.
The Dow Jones Industrial Average was up 2.91 points, or 0.03 percent, at 11,557.94. The Standard & Poor's 500 Index was down 0.68 point, or 0.05 percent, at 1,256.86. The Nasdaq Composite Index was down 7.87 points, or 0.30 percent, at 2,659.40.
The pan-European FTSEurofirst 300 index of top shares closed up 0.3 percent at 1,140.44 points. Volume was extremely low at just one-quarter of the 30-day average. Many traders closed their books for the year, while a holiday in Britain and bad weather in the US Northeast thinned trading floors. The UK market will reopen on Wednesday.
Shares in Japan and China eased on Tuesday on concerns further Chinese monetary tightening will cool the engine of world economic growth. Those worries overshadowed Japanese data that pointed to improving demand.
Japan's Nikkei closed down 0.6 percent.
The euro was down 0.24 percent at $1.3126 after climbing as high as $1.3274 overnight.
The dollar also hit an all-time low against the Swiss franc at around 0.9435 francs on year-end buying by Swiss corporates.
The yen rallied against the dollar after data showed Japanese factory output rose for the first time in six months in November. Against the Japanese yen, the dollar was down 0.72 percent at 82.190.
Crude oil prices rose 0.43 percent to $91.38 a barrel, just shy of the $91.88 reached on Monday — the highest since October 2008.
Spot gold prices rose $20.24, or 1.46 percent, to $1,403.80 an ounce as the dollar fell.
US government bonds were mixed in thin volume before the auction of new five-year notes.
The benchmark 10-year US Treasury note was down 23/32, with the yield at 3.4168 percent. The 2-year US Treasury note was up 3/32, with the yield at 0.7196 percent. The 30-year US Treasury bond was down 46/32, with the yield at 4.4865 percent.
