Global markets mostly firmer, volatility ebbs

By Staff Reporter
AFP Global Edition

Aug 17, 2011 17:34 EDT

Global stock markets were mostly firmer in quiet trade Wednesday, calming down after recent turmoil even as investors showed little reaction to a Franco-German summit on the eurozone debt crisis.

Volume was low going into the last two weeks of the summer holiday in US markets but trade remained cautious after the turbulence of the first two weeks of the month.

US stocks picked up at the opening on the back of strong corporate results, especially in the retail sector, but then gave back most gains.

The Dow Jones Industrial Average closed up just 0.04 percent and the broad-market S&P 500 added 0.09 percent while the tech-heavy Nasdaq Composite shed 0.47 percent.

The tech sector was pulled lower by Dell (down 10.1 percent) and Hewlett-Packard (down 3.7 percent) on expectations that their markets could be slow in the coming quarters.

"It's a quiet market, we are back to the dog days of August," said Scott Marcouiller of Wells Fargo Advisors.

"There is a very light volume, there is a little bit of exhaustion both from buyers and sellers, trying to regain their sea legs after the volatility we've had."

In Europe, trade was also slow for the height of the holiday season.

London's FTSE 100 index closed down 0.49 percent; in Frankfurt, the DAX shed 0.77 percent; and Paris's CAC 40 gained 0.73 percent.

In Asian trade, Tokyo lost 0.55 percent but Hong Kong edged up 0.38 percent and Sydney added 1.32 percent with confidence high on Australian corporate earnings coming in mostly in line with expectations.

Dealers in Europe said brushed off Tuesday's meeting on the eurozone crisis between French President Nicolas Sarkozy and German Chancellor Angela Merkel as having produced little of value.

Tuesday's statements "will do little to calm market nerves on the region, as the major issues remain the same," said Dermot O'Leary, an analyst at Goodbody Stockbrokers in Dublin.

The summit's results "are rather disappointing and are unlikely to support the euro much," Commerzbank analysts said.

Traders also dismissed a proposal for a Europe-wide tax on financial transactions as old hat, likely to be ineffective at best and at worst, to drive business out of Europe into other centers.

UBS analyst Arnaud Giblat noted that a similar tax in Sweden in the 1990s resulted in an 85 percent fall in transactions while Britain pointed out that such a levy could only effectively be introduced on a global basis.

The news hit stock market operators such as Deutsche Boerse and NYSE Euronext, which plan to merge, especially hard.

Gold prices pushed up to $1,794.90 an ounce before dropping back to around $1,790.

In forex markets, the euro pushed up to $1.4428 at 2100 GMT, from $1.4406 late Tuesday.

The Swiss franc rebounded slightly despite the Swiss central bank announcing a third round of liquidity measures in two weeks to cool its appreciation.

It said it would expand sight deposits, or funds that commercial banks can withdraw without notice, from 120 billion to 200 billion francs.

Around 2100 GMT, the euro bought 1.1400 francs compared to 1.1434 late Tuesday, the dollar was at 0.7897 francs (0.7935 francs).

The dollar fell to 76.54 yen from 76.75 yen; the pound continued its week-long rise to $1.6545 from $1.6457.

Source: AFP Global Edition

 

Related Stories