July 15, 2011 Newsletter
Dear Friends,
“Life is like a game of cards. The hand that is dealt you represents determinism; the way you play it is free will…”
-Jawaharal Nehru
Photo of the Day:
Japan’s players celebrate with the trophy after the victory against the US in the Womans World Cup of Soccer Finale in Frankfurt. (REUTERS- Kai Pfaffenbach)
MARKET COMMENTARY
Canada
(Baystreet.ca)
The Toronto stock market hung onto a small gain late morning Friday amid rising oil prices.
The S&P/TSX Composite Index approached noon ahead 34.83 points to 13,287.75 The Canadian dollar surged 0.64 cents to 104.78 cents U.S.
The energy sector rose as Suncor Energy climbed 34 cents to $37.94 and Canadian Natural Resources was ahead 32 cents to $39.62.
Copper futures were four cents higher $4.42 U.S. a pound and the base metals sector gained. Teck Resources rose 93 cents to $49.63 while Sherritt International declined 18 cents to $6.69.
The gold sector was up as nervous investors pushed bullion prices further into record high territory for a ninth session. Kinross Gold added 12 cents to $16.49.
The financial sector was down as Royal Bank shed 51 cents to $52.84. CIBC said it will acquire a 41% equity interest in American Century Investments for $848 million U.S. Kansas City-based American Century is a major U.S. asset management company with $112 billion U.S. under management. CIBC shares gained 37 cents to $74.99.
On the economic slate, Statistics Canada revealed that manufacturing sales fell by 0.8% in May from April, much worse than expected, with the auto industry not bouncing back yet from an April tumble, lent momentum by the earthquake and tsunami in Japan.
The TSX Venture Exchange extended its gains by 11.34 points to 2,002.29, while the Nasdaq Canada index gained 4.85 points to 556.41.
In Toronto, losing subgroups outnumbered gainers eight to five. Health-care sagged 1%, while consumer discretionaries slipped 0.5% and telecoms fell 0.4%. Energy led the gainers, up 1.3%, metals and mining surged 1.2% and materials gained 0.5%. Utilities were flat at noon hour. Oil for August delivery added $1.51 to $97.20 U.S. a barrel.
Gold futures for August delivery dropped $3.40 to $1,585.90 U.S. an ounce.
US
(Reuters) – Anxiety over the results of European bank stress tests drove down the euro against the dollar on Friday and kept a lid on equities on both sides of the Atlantic, despite strong earnings from Google and Citigroup.
Gold slipped after hitting record highs this week, with some of the recent risk aversion easing. Worries about the persistent euro zone debt woes have weighed on markets, along with the prospect of a U.S. debt default.
The stress tests on European banks are expected to show that as many as 15 lenders need more capital to withstand a prolonged recession, with criticism growing that the tests do not encompass the impact of a Greek default. The results are to be published at about 1600 GMT.
Investors remain deeply concerned by Europe’s inability to find a broader solution to a debt crisis that could eventually lead to a series of sovereign defaults and have wide-ranging implications for public finances and banks worldwide.
“There’s a general sense of nervousness prevailing because of the stress tests,” said Boris Schlossberg, director of FX research at GFT in New York.
The euro edged lower to $1.41251, down 0.1 percent, while on the week, the euro was down 0.6 percent versus the dollar.
The FTSEurofirst 300 index of leading European shares was down 0.1 percent, while the MSCI All-Country World Index rose 0.1 percent.
Wall Street stocks opened higher after both Citigroup and Google reported stronger-than-expected earnings, adding to optimism about corporate results for the second quarter. But the market pared gained on concern over the European bank stress tests and signs of weakness in the U.S. economy.
U.S. consumer sentiment in early July fell to its lowest since March 2009 and manufacturing in New York state contracted unexpectedly, according to data released on Friday. Indexes are down for the week.
The Dow Jones industrial average was up 23.72 points, or 0.19 percent, at 12,460.84. The Standard & Poor’s 500 Index was up 4.41 points, or 0.34 percent, at 1,313.28. The Nasdaq Composite Index was up 17.94 points, or 0.65 percent, at 2,780.61.
Overnight in Asia, Japan’s Nikkei average closed 0.4 percent higher.
The dollar was supported by some safe-haven buying due to the contraction in the New York state’s manufacturing index in July and the drop in a U.S. consumer sentiment index spurred some safe-haven buying of the greenback. The euro and some risk-sensitive currencies such as the Australian and New Zealand dollars fell against the dollar.
But the focus remained squarely on the critical euro zone bank stress tests. They are expected to show that around 10-15 lenders have insufficient capital to withstand a prolonged recession.
Traders, however, cited talk that banks in the euro zone failing the tests could actually be more than 20. “The key number is 15. If the number is higher than 15 banks, then that would create a disturbance in euro/dollar,” said Schlossberg of GFT.
The euro has borne up relatively well against the dollar due to parallel concerns over the United States’ own debt troubles and hints further monetary easing could yet be on the cards there, potentially flooding global markets with dollars.
Worries the euro zone debt crisis was spreading to Italy have driven Italian bond yields up half a percent since last Friday and slashed valuations of financial sector firms across the region.
U.S. Treasury prices rose as worries over the fallout from the prolonged debt crisis in Europe and stalled U.S. budget and deficit talks bolstered the safe-haven appeal of U.S. government debt.
Benchmark 10-year Treasury notes US10YT=RR were trading 8/32 higher in price to yield 2.93 percent, down from 2.96 percent late Thursday.
Spot gold was bid at $1,583.49 a troy ounce from $1,586.75 an ounce late in New York on Thursday when the precious metal hit a record high of $1,594.16.
(Additional reporting by Dominic Lau, Atul Prakash, William
James, Jessica Mortimer and Simon Jessop in London, and Edward
Krudy in New York; Graphics by Scott Barber and Vincent
Flasseur; Editing by Leslie Adler)
As Ever,
Kyle, for Carolann.