Empire Global FX ECN Broker: Trading research & Money Management Center

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  1. #11
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    Post Empire Global FX: Gold to clear $2,000 in 2012 as rally cools: LBMA poll

    Empire Global FX ECN Broker: Trading research & Money Management Center
    (Reuters) - Gold's rally will extend beyond $2,000 an ounce in the next year, but won't match the record-breaking 50 percent surge of the last 12 months, according to an annual survey of gold investors and analysts at the world's biggest bullion traders event.

    With no let up seen in the financial markets uncertainty that fanned the safe-haven investment spree, bullion is expected to rise to $2,019 an ounce by November 2012, according to an anonymous survey of delegates at the conclusion of the London Bullion Market Association's (LBMA) annual conference on Tuesday. That is about 12 percent above current levels.

    If history is any guide, the consensus view from the biggest gathering of gold market traders, experts and users may prove too conservative -- for the past three years, prices have outpaced the survey. A year ago delegates predicted gold would rise to $1,450 in 12 months; on Tuesday it hit $1,800.

    Most were optimistic on the outlook in spite of the past month's extraordinary volatility, which has caused some traders to question gold's credentials as a haven of stability. But few expect a repeat of the past year's torrid rally.

    "We've heard so much about the perfect storm that has driven gold to where it is now, that the odds of it increasing a similar amount have to be a lot less," Robin Bhar, an analyst at Credit Agricole, told Reuters at the conference.

    "There are good reasons why gold has been taken to where it has, but can we really assume that those factors are going to remain, for it to power on to $3,000, $4,000? We are assuming global GDP will grow and the fear factors will lessen, so there will be less reason to be owning gold."

    Well over 500 analysts, traders, fund managers, refiners and miners, as well as official sector and wider industry delegates, attended the meeting, one of the most significant in the precious metals calendar.

    Attendance at the meeting has swelled as gold has become an increasingly sought-after asset in recent years, with prices hitting a record $1,920.30 an ounce on September 6. They have since retreated, however, and are down 2.5 percent so far this month after a period of intense volatility.

    The view was largely similar at a simultaneous conference of major gold miners halfway across the continent, in Colorado Springs, where executives from the likes of Newmont Mining Corp (NMC.TO) (NEM.N) and AngloGold Ashanti Limited (ANGJ.J) saw prices rising to $2,200 an ounce and beyond.

    "I'm a big believer that all of the ingredients for a higher gold price are there: geopolitical risk, economic uncertainty, inflation," Yamana Gold (YRI.TO) Chief Executive Peter Marrone said on Monday. "It just seems natural to me for gold prices to go to substantially higher levels."

    STRETCHED, BUT NOT TO BREAKING POINT

    Analysts have suggested this volatility pointed to overstretched conditions, but delegates disputed that it marked the start of a deeper correction.

    "The higher levels of volatility is a function of increased economic uncertainty... but it doesn't portend a reversal of the gold market," HSBC analyst Jim Steel, who has a 2012 gold forecast of $2,025 an ounce, said on the sidelines of the conference.

    "The macroeconomic climate remains positive for gold. The fact that there's a high level of volatility in the market doesn't take away from its safe-haven status. You've got to look at it over time compared to paper assets. If it were treated as a currency, it would have outperformed every other currency in the last 12 months."

    John Fallon, president of hedge fund Pia Capital Management, said gold is "in an orbit by itself" among commodities and remains his favorite investment in the sector, due to its high liquidity and the support offered by solid physical demand.

    "Gold still has our undivided interest," he told Reuters at the conference. "We favor both the (gold) ETFs and the actual spot OTC market."

    There were few outright bearish views.

    Christoph Eibl, CEO and founding partner of the $2 billion Swiss commodity hedge fund Tiberius Group, was a rare voice of stern caution, warning that gold could fall back below $1,000 an ounce in line with production costs for miners.

    But even Eibl, who considers himself a converted contrarian after years as an unabashed gold bug, wasn't prepared to bet big against bullion's newfound popularity.

    "We know it's too dangerous to stand in front of a truck that may run you over," he said.

    Unsurprisingly, delegates expected leading gold consumers China and India to remain main demand drivers for the yellow metal, with the World Gold Council estimating that Chinese demand could grow 10 percent this year.

    Chinese consumers are willing to spend more on gold jeweler as product quality and disposable income increase, and due to the investment function of gold, Wai-Chan Chan, a partner at China's OC&C Strategy Consultants, said.

    PLATINUM FAVORED

    Among other precious metals, delegates forecast a platinum price of $2,163 an ounce in November next year, giving it a touch more upside than gold from its current price near $1,770 an ounce. Palladium was forecast at $826 an ounce, compared to its current $710.

    Platinum group metals prices will have to rise, or the rand to weaken, to ease pressure on South African platinum miners, Aquarius Platinum chief executive Stuart Murray argued in a well-received presentation on Monday.

    Once tax, royalties, costs and investments were taken care of, he said, shareholders and capital providers were seeing a return of less than 3 percent.

    "The reality is that for us, for the risks that are taken, for the effort that goes into mining an ounce of platinum, returns greater than 3 or 4 percent are needed," he said.

    Delegates forecast silver prices at $47 an ounce next year.

    Silver was favored by Claymore Investments president Som Seif, who argued in a presentation on Monday that rising demand from the industrial and investment sectors and supply constraints argued for higher prices.

    However, analysts said investors were likely to remain wary of silver after its sharp correction from record highs earlier this year. Prices lost a third of their value in the six trading sessions after they peaked near $50 an ounce in April.

    Nonetheless, the Royal Canadian Mint said its silver bullion sales were on track for a 30 percent rise this year, taking them to 25 million ounces.

  2. #12
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    Post Empire Global FX: Nikkei drops 2 percent after Fed; Softbank plunges

    (Reuters) - The Nikkei stock average lost more than 2 percent on Thursday after the Federal Reserve cited significant risks to the U.S. economy, while Softbank Corp (9984.T) plunged to its lowest since July 2010 on a report it would lose exclusive rights to sell the iPhone in Japan.

    Some strategists said selling could intensify after September 27, which is the last day for investors to buy many Japanese stocks and still get dividends on them for the April-September half year.

    "Once the dividend-buying factor is no longer supporting the market next week, we could see a tough situation, and the Nikkei could break below 8,500," said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities.

    Market participants said Tokyo's losses were also due in part to domestic position adjustments ahead of the end of the April-September half-year this month, when investors often lock in profits.

    But market players say attractive valuations still support the Tokyo market. The Nikkei has lost more than 15 percent since early July, when it last traded above 10,000, while the Standard & Poor's 500 Index markets/index?symbol=us%21spx">.SPX lost about 13 percent in the same period.

    The Nikkei finance/markets/index?symbol=jp%21n225">.N225 ended down 2.1 percent at 8,560.26. It was trading below its 25-day moving average of 8,756, but remained above support at its September 14 low of 8,499.34, which was its lowest intraday level since March.

    The broader Topix index .TOPX slipped 1.7 percent to 744.54.

    Also weighing on Japanese shares on Thursday were reports from China that suggested the world's No. 2 economy may not be able to pick up the slack from flagging U.S. and European growth.

    A preliminary survey showed China's manufacturing sector contracted for a third consecutive month in September, while separate indicator showed inflation picked up.

    "The China data just adds to negative factors already on everyone's mind, such as U.S. economic worries, the yen's strength against the dollar and the euro, as well as Europe's debt problems and whether Greece will default," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

    U.S. WOES

    The decline in the Nikkei was, however, more moderate than Wall Street, which slid 3 percent for its worst drop in a month after the Fed's announcement, with selling accelerating as volume spiked in the last hour of trading.

    The Fed said there were significant risks to an already weak U.S. economy, including strains on global financial markets, even as it launched a new plan to lower long-term borrowing costs and bolster the battered housing market.

    The U.S. central bank said it would sell $400 billion of short-term Treasury bonds to buy the same amount of longer-term U.S. government debt.

    Shares of Softbank, which has long been the sole provider of Apple Inc's (AAPL.O) iPhone in Japan, plunged 12.3 percent to 2,282 yen. It earlier sank as low as 2,271 yen, its lowest point in 14 months, on a report that rival KDDI Corp (9433.T) will start selling the iPhone 5 in November.

    KDDI initially rose, but then gains unraveled and its shares fell 0.8 percent to 624,000 yen. Softbank and KDDI were the heaviest-traded shares by turnover.

    Financial shares fell after a slide in their U.S. counterparts, after Moody's Investors Service lowered debt ratings for Bank of America Corp (BAC.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N) on Wednesday, saying the U.S. government is getting less comfortable with bailing out large troubled lenders.

    Sumitomo Mitsui Financial Group (8316.T), the fifth-most traded issue by turnover, fell 1.8 percent to 2,089 yen, while Mitsubishi UFJ Financial Group (8306.T) shed 1.5 percent to 332 yen. Nomura Holdings (8604.T) lost 4.8 percent to 281 yen.

    Volume was slightly below recent daily averages, with about 1.70 billion shares trading on the Tokyo Stock Exchange's main board. That fell short of last week's average of 1.75 billion shares, but topped Wednesday's volume of about 1.44 billion.

  3. #13
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    Post Greece sees possibility of 50 percent haircut on debt: reports

    (Reuters) - Greece's finance minister has told lawmakers he sees three scenarios to resolve the debt crisis, including one involving an orderly default with a 50 percent haircut for bondholders, two Greek newspapers reported on Friday.

    A government spokesman dismissed the reports, which said the other scenarios would be a disorderly default or the implementation of a second, 109 billion euro ($146 billion) bailout plan agreed between Greece and its lenders on July 21.

    Newspaper Ta Nea, citing a person who heard a speech by Finance Minister Evangelos Venizelos to ruling Socialist party lawmakers, quoted him as saying "it would be dangerous to request" the 50 percent haircut.

    He also said: "This would require an agreed and coordinated effort by many," the paper reported.

    A finance ministry spokeswoman said she could not comment on the reports, but deputy government spokesman Angelos Tolkas said the government would stick to the bailout plan agreed between Greece and its lenders two months ago.

    "What we are choosing is (for Greece) to stay in the heart of Europe by implementing the July 21 decisions," he said. "The big challenge is to avoid any default or collapse."

    Two Socialist deputies who said they were present at the speech in which Venizelos tried to rally support among the ruling party for a new wave of austerity measures, denied that he had floated the 50 percent haircut scenario.

    "I categorically deny it. There is no such scenario," lawmaker Theodora Tzakri told Reuters.

    Venizelos is traveling to Washington for a weekend meeting with inspectors from Greece's lenders, the International Monetary Fund and the European Union.

    The reports came as Moody's Investors Service cut the credit ratings of eight Greek banks. It cited a struggling domestic economy and falling deposits among reasons for the move, which markets had expected.

    Moody's said the outlooks for all the ratings remained negative. The downgrade concluded a review begun on July 25.

    Some European banks in July agreed to contribute to a rescue plan for Greece by taking a 21 percent loss on bonds maturing before 2020.

    The deal, which involves banks swapping debt for longer maturity bonds of 15 or 30 years, prompted banks to take a loss on their bonds in second-quarter results.

    The European sovereign debt crisis has kept banks hostage to market worries about their capital strength and access to funding.

    Earlier this month, Deutsche Bank (DBKGn.DE) Chief Executive Josef Ackermann said many European banks could go under if they had to accept a haircut at current market valuations on their entire sovereign debt holdings instead of the 21 percent writedown that has been proposed on Greek sovereign debt.

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    Post Silver, gold tumble as recession fear grips markets

    (Reuters) - Gold and silver prices tumbled on Monday, led by a nearly 10 percent drop in spot silver prices, as investors liquidated their positions on fears of an impending recession.

    Spot gold fell more than 3 percent to $1,604.29 an ounce, wiping off gains over the past two months.

    U.S. gold dropped 2 percent to $1,607.2, tracking the weakness in spot prices.

    U.S. silver shed 6.6 percent to $28.10.

  5. #15
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    Post World stocks fall on doubts over EU plans

    (Reuters) - World stocks fell toward the previous week's 14-month low on Monday and the euro hit a 10-year low against the yen as doubts grew over how effective Europe's latest crisis-battling steps would be in containing the continent's sovereign debt problems.

    European policymakers began working on new ways to stop fallout from Greece's near default, focusing on ways to beef up their existing 440-billion-euro rescue fund.

    But deep differences remained over whether the European Central Bank should commit more of its massive resources to shoring up Europe's banks and help struggling euro zone member countries.

    Concerns over the potential effect from Greece's possible default, especially on the banking sector, and worries over a U.S. economic slowdown have been weighing on world stocks, fanning safety-seeking flows into top-rated government bonds.

    "Overall it's still an inconclusive situation -- no tangible action plan coming out of the weekend gathering so the net result will still be risk aversion," said Rainer Guntermann, strategist at Commerzbank.

    MSCI world equity index fell 1.1 percent, having hit its lowest since July 2010 on Friday. The index has fallen more than 23 percent since hitting a three-year high in May and is also down 17 percent since January.

    European stocks lost 0.8 percent while emerging stocks hit their weakest since September 2009.

    "The lurch lower in risk appetite can only reflect a growing fear that policymakers will be incapable of acting in time or with sufficient potency to turn things around," said Herv Goulletquer, analyst at Credit Agricole.

    U.S. crude oil dropped 1.8 percent to $78.40 a barrel.

    Bund futures were up nine ticks before trimming gains.

    The dollar was steady against a basket of major currencies.

    The euro fell as low as 101.90 yen and hit an eight-month low of $1.3361.

  6. #16
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    Post Stocks rise, euro steady on European hopes


    (Reuters) - Global equities rose and bond prices fell on Monday on hopes that Europe was tackling Greece's debt woes.


    Wall Street stocks recovered from early declines but European shares pared gains of more than 2 percent as concerns about Europe's ability to contain the crisis persisted. Markets have whipsawed for months over fears of European debt contagion and hopes that officials will finally contain the long-simmering crisis.

    Still, European shares closed higher and broad indexes on Wall Street climbed more than 1 percent after a weekend meeting of European policymakers buoyed hopes for a larger bailout fund and the injection of money into weaker banks.

    But euro zone officials played down reports of nascent plans to halve Greece's debts and recapitalize European banks, saying no such plan is yet on the table.

    "Europe is a day-to-day story, it seems like we flip-flop back and forth over whether Greece is going to get the bailout they want and how concerned the markets are about Greece," said James Newman, head of Treasury and Agency trading at Keefe, Bruyette and Woods in New York.

    "I don't see that ending any time soon," he said.

    The euro extended losses and damped risk appetite after data showed U.S. new home sales fell 2.3 percent in August to a six-month low, a fresh sign of the struggling housing market -- a pillar of the U.S. economy.

    The euro rebounded at midday to trade near break-even at $1.3507.

    MSCI's all-country world equity index .MIWD00000PUS was little changed, down 0.01 percent.

    The FTSEurofirst 300 markets/index?symbol=gb%21FTPP">.FTEU3 added 1.7 percent, following a 0.8 percent gain on Friday.

    A broad measure of the U.S. stock market, the S&P 500 index, climbed into positive territory after an early loss, as did the tech-rich Nasdaq, while the Dow traded higher.

    After three hours of trading, the Dow Jones industrial average finance/markets/index?symbol=us%21dji">.DJI was up 143.42 points, or 1.33 percent, at 10,914.90. The Standard & Poor's 500 Index .SPX was up 9.96 points, or 0.88 percent, at 1,146.39. The Nasdaq Composite Index .IXIC was up 1.00 points, or 0.04 percent, at 2,484.23.

    Government debt prices on both sides of the Atlantic fell on reports the European Union was looking at boosting the region's 440 billion euro rescue fund and other ways to avert a Greek debt default.

    The benchmark 10-year U.S. Treasury note was down 18/32 in price to yield 1.89 percent. The December Bund future shed 72 ticks to 137.40.

    Brent and U.S. crude oil futures turned positive in volatile trading as the U.S. dollar weakened against a basket of currencies, improving investors' risk appetite.

    Brent crude oil slipped below $104 a barrel as investors worried European governments and banks would be unable to resolve the euro zone debt crisis and avert wider financial contagion.

    Brent futures for November rose 62 cents to $104.59.

    U.S. light sweet crude oil rose 52 cent to $80.37 a barrel.

    "These are very critical days and weeks ahead, reminiscent very much of the touch-and-go situation we were in back in 2008," said Edward Meir, senior commodities analyst at brokers MF Global. "The key difference this time around is that it is countries and not companies that are in danger of going bust."

    Gold futures fell, on course for their largest monthly slide in three years as investors scrambled for cash in the face of mounting fear over the impact of a potential Greek default.

    Spot gold prices fell $55.30 to $1,599.90.

  7. #17
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    Post European shares climb on euro zone debt plan hopes

    (Reuters) - European shares climbed to their highest in nearly a week on Tuesday on renewed hope that European policymakers will act to contain Greece's debt problems and resolve a regional debt crisis threatening to derail the world economy.

    Financials, previously hard hit because of their exposure to peripheral euro zone economies, were among the top gainers, with the STOXX Europe 600 banking index .SX7P up 3.6 percent and insurers .SXIP up 4 percent. The indexes are still down 32 percent and 19 percent, respectively, in 2011.

    "Given so much uncertainty at the moment, there is room for both pessimism and optimism. The optimists have taken the forefront on hopes that we could see European politicians getting to grips with the current situation over the coming weeks," said Keith Bowman, analyst at Hargreaves Lansdown.

    "But there are still a lot of concerns. Investors remain skeptical about the success of the measures being planned to resolve the euro zone credit crisis."

    Thomson Reuters Datastream data also highlighted weak investor sentiment, with the ratio of put/call open interest on the Euro STOXX 50 markets/index?symbol=de%21SX5E">.STOXX50E -- down to 1.1139 to hover near a 10-month low -- showing that investors still have little faith in the rebound.

    However, the FTSEurofirst 300 finance/markets/index?symbol=gb%21FTPP">.FTEU3 was up 2.3 percent at 918.57 at 0859 GMT, after hitting 921.63, the highest since September 21. It gained 1.8 percent on Monday on talk policymakers were drawing up plans to boost the size of the regional bailout fund, halve Greece's debts and recapitalize banks.

    Despite the rally, the 30-day implied volatility for many European indexes rose, indicating investors' wariness of the situation.

    The market awaited a policy meeting of the European Central Bank next week, with ECB officials saying on Monday they were keeping their options for a rate cut open. There were signals the bank could start offering 12-month, limit-free loans to banks again.

    Auto shares rose on hopes a solution for the euro zone crisis could bring the global economy back on track and improve demand for vehicles. The sector index .SXAP rose 4.3 percent, while Daimler (DAIGn.DE) gained 5.1 percent after Credit Suisse upgraded its stock to "outperform" from "neutral."

    KEY TECHNICAL LEVELS

    The Euro STOXX 50 .STOXX50E, the euro zone's blue-chip index, was up 2.9 percent at 2,142.57 points, after climbing to its highest in more than a week earlier in the session.

    Analysts said the index was likely to stay in a 2,000-2,200 range in the coming session. If the price stays above 2,098 -- a gap on the daily candlestick chart -- on a sustained basis, the index could test 2,200.

    "It is worth noting a possible double-bottom formation on the daily chart should the price recover above 2,200, which has the measuring targets at 2,343 and 2,436. It is important to watch the next three closes," Dmytro Bondar, technical analyst at RBS, said.

    Charts indicated that if the index closed below 2,000 in coming days, the move could suggest a drop to 1,810.

    Equity investors face two major headwinds -- the European sovereign debt crisis which undermines the banking sector, and the threat of a global economic slowdown, with the former affecting the banking sector and the latter hurting miners.

    "While the European problem has a lower probability of materializing but a massive tail risk, the potential for a premature end to this global expansionary cycle is much more probable," said Lothar Mentel, chief investment officer at Octopus Investments, which manages nearly $4 billion.

    "Long-term investors should not get too stressed by mistiming concerns, given risk assets are much, much cheaper than they have been, which is what counts rather than miraculously hitting the absolute low of markets in this cycle," Mentel said.

    Europe's STOXX 600 index currently trades at 8.4 times its expected earnings, below a 10-year average of 13.2, according to Datastream. This compares with a price-to-earnings ratio of 11 for U.S. S&P 500 index .SPX.

  8. #18
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    Post Barroso comments lifts euro, risk appetite shaky

    (Reuters) - The euro edged up against the dollar on Wednesday after a top EU official indicated more would be done to resolve the debt crisis but was vulnerable to selling in the absence of concrete steps to beef up region's rescue fund.

    In his State of the Union address European Commission President Jose Manuel Barroso said he expected the European Central Bank would ensure the stability of the euro area and indicated Greek banks could receive more help.

    He also said the euro zone could issue jointly underwritten bonds once there was deeper integration.

    The single currency rose to last trade up 0.2 percent on the day at $1.3623, and off a low of $1.3541. It pared some of the previous day's gains when it hit a high of $1.3668.

    But market players warned the lift from Barroso's comments and a bounce the previous day on talk of proposals to leverage up the 440 billion euros European Financial Stability Facility, could just be temporary.

    "Barroso sounded very optimistic but I don't think he will be able to give much lasting impetus to the FX market," said Lutz Karpowitz, currency analyst at Commerzbank.

    "The recovery in euro/dollar and in equity markets amid speculation we might see leveraging of the EFSF was overdone. I cannot see how that proposal will work and there is likely to be some disappointment ahead in the market."

    Event risk remains high for the euro this week, with the Finnish parliament voting on proposals to enlarge the EFSF as agreed back in July later on Wednesday, while Germany's parliament votes on Thursday.

    Technical charts showed as long as the euro remained stuck below resistance at $1.3670/1.3710 the risk was for a break of $1.3540 support. A move below $1.3470 would open the door to new lows in the $1.3250/00 area.

    YEN STRENGTH

    Meanwhile, the yen rose, buoyed by Japanese fund repatriation and buying by Japanese exporters ahead of the quarter-end and the end of Japan's financial half-year.

    The dollar slipped 0.5 percent to 76.42 yen, not far from a record low of 75.941 yen hit in August on trading platform EBS. Traders cited heavy system fund stops layered under 75.90 yen and real money stops under 75.70 yen.

    The euro fell 0.3 percent to 104.13 yen paring some of the previous day's gains, when it climbed 1.1 percent. The euro had hit a decade-low versus the yen near 101.95 earlier in the week.

    Some market players had been speculating Japan could intervene this week ahead of its financial half-year end, to offer some relief to Japanese exporters, which have been stung by the dollar's 5.9 percent drop versus the yen so far in 2011.

    Tsutomu Soma, senior manager at Okasan Securities' foreign securities department in Tokyo said that while yen-selling intervention may be a possibility, it would probably only happen if moves in the yen turned particularly violent.

    "If the dollar falls below its record low near 75.95 yen, triggers some stops and the move becomes volatile, I think there is the possibility of another one-off intervention," he said.

    The Australian dollar edged 0.1 percent higher to $0.9911, although selling by model funds weighed on the currency, traders said. It struck a 10-month trough of $0.9622 earlier in the week.

    The dollar index firmed slightly, up 0.15 percent at 77.618 as risk sentiment remained fragile.

    Federal Reserve Chairman Ben Bernanke gives a speech at 2100 GMT and might offer some reaction to the market's mostly negative response to last week's Operation Twist. Any hint that even more easing is possible could help underpin risk appetite.

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    Post Wall Street drops, led by commodities on economic fear

    (Reuters) - Commodity-related stocks drove Wall Street lower on Wednesday as stiff declines in energy and metals prices underscored investor concerns about global economic weakness and Europe's raging debt crisis.

    A sharp 7 percent dive in the price of copper, seen as a leading indicator for the economy, rattled investors and led to a drop of 4.5 percent in the S&P materials index. Freeport-McMoRan Copper & Gold Inc fell 7.3 percent to $32.29.

    Investors were on a knife edge as inspectors from the EU and IMF headed to Greece to scrutinize austerity plans while German Chancellor Angela Merkel worked to defuse a revolt within her government ahead of a vote to expand Europe's bailout fund on Thursday.

    Wednesday's declines put the S&P 500 on course for its worst quarter since the high noon of the financial crisis in the fourth quarter of 2008. The drop also illustrates how sensitive the market has become to news on Europe's troubles.

    "There is certainly a lot of headline risk and a lot of weak hands that hold stocks after this big rally we've had in the last three days," said Robert Francello, head of equity trading for Apex Capital, a hedge fund in San Francisco.

    "Traders who have either gotten long during the rally or covered their shorts are probably going just to flatten themselves out, either taking profits or getting out of the market," he said.

    Brent crude resumed its downward trend, falling more than $3 in afternoon trade, sending an S&P index of energy stocks down 3 percent. Chevron fell 1.9 percent to $91.74.

    News early in the afternoon that bans on short-selling stocks in France, Italy and Spain have been extended highlighted the regulatory risk faced by investors and increased selling pressure.

    The Dow Jones industrial average dropped 179.79 points, or 1.61 percent, to 11,010.90. The Standard & Poor's 500 Index dropped 24.32 points, or 2.07 percent, to 1,151.06. The Nasdaq Composite Index dropped 55.25 points, or 2.17 percent, to 2,491.58.

    Traders said volume would likely be light and market movements accentuated during the rest of the quarter due to the Jewish New Year holiday of Rosh Hashanah.

    So far, the S&P 500 has fallen 12.8 percent this quarter, its worst decline since the fourth quarter of 2008 when it fell 22.6 percent.

    In the commodities sector, Cliffs Natural Resources Inc sank 8.4 percent to $55.66. Gold prices fell more than 2 percent.

    "It's fear of a global slowdown," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. "It's a pure flight to safety into the dollar here, and that's killing commodities."

    A push to solidify a euro-zone rescue fund and alleviate the region's sovereign debt crisis lifted stocks on Tuesday for a third consecutive session, following four straight days of losses for the benchmark S&P 500. The S&P gained more than 4 percent over that three-day period.

    Amazon.com Inc gained 2.5 percent to $229.71 after it unveiled a new tablet computer with a $199 price tag. Apple Inc, which makes the popular iPad tablet, fell 0.6 percent to $397.01.

    Microsoft Corp dipped 0.4 percent to $25.58 after Samsung Electronics Co Ltd unveiled software pacts with the company.

    In earnings news, Jabil Circuit Inc advanced 8.2 percent to $18.81 a day after reporting fourth-quarter earnings that beat expectations, while Family Dollar Stores Inc fell 1.6 percent to $53.31 after its results.

    In economic news, orders for long-lasting U.S. manufactured goods slipped in August on weak demand for motor vehicles, but a rebound in a gauge of business spending suggested the economy would avoid another recession.

    About five stocks fell for every one that rose on both the New York Stock Exchange and the Nasdaq. About 7.96 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, in line with this year's average.

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    Post Greece to face inspectors, Merkel hints at bailout

    in ro ham eslah kon:
    (Reuters) - EU and IMF inspectors will return to Greece on Thursday to decide whether Athens has done enough to secure a new batch of aid vital to avoid bankruptcy, while Germany suggested a new bailout may have to be renegotiated.

    Facing a wave of strikes and protests, Greece's Socialist government is accelerating budget measures to meet the terms of an International Monetary Fund and European Union rescue deal so it can receive a new loan next month.

    The "troika" team of inspectors, which had threatened to cut off aid if Athens did not move faster, will hold talks on a plan to deepen budget cuts and raise taxes which has driven protesters back onto the streets for the first time since June.

    "I can confirm the Eurogroup (of euro zone ministers) will hold an additional meeting as soon as possible, still in October, to discuss the situation of Greece and consider the disbursement of the next tranche," a European Commission spokesman said in Brussels, announcing the troika's return.

    German Chancellor Angela Merkel suggested that parts of a planned new 109-billion-euro ($148.6 billion) rescue for the debt-laden country could be reopened, depending on the outcome of the troika's audit.

    "We have to wait and see what the troika ... finds and what it will tell us (whether) we will have to renegotiate or not," she told Greek state television NET, without elaborating.

    Several hundred activists affiliated with the Greek Communists converged on the finance ministry on Wednesday waving a banner saying "We won't pay!." They burned bills for a new one-off income tax introduced this summer, while Athens and other parts of the country were hit by transport strikes.

    If deemed adequate by the inspectors, the new austerity drive will secure an 8-billion-euro loan Greece needs to pay bills and salaries in October and bring it closer to moving on to a second bailout agreed in July.

    As a condition of the visit and to resolve the row with the lenders, the Greek government had promised to send a written assurance outlining its new plan to meet its bailout targets. Its contents have not been made public.

    "Instead of coming and going, the troika should spend a month with a pensioner, a family-man and then tell us whether these measures are human," said 50-year-old aviation worker, Costas Papalambros, a father of two.

    "The next tranche will just be an aspirin, it won't cure the patient. What we need is growth and I don't see it happening They need to change policies," he told Reuters.

    Even Deputy Prime Minister Theodoros Pangalos, who said he faced selling real estate to pay a new property tax, admitted Greeks' pain threshold was being tested.

    "I think that the tax-paying limits of Greek society have been exhausted. I would say they have been exhausted for some time now," he told Mega TV. "But I think that we should act on the other side of the problem which is spending."

    Germany has repeatedly said negotiations about the details of the second rescue deal can begin only when the troika says Greece has qualified to receive the tranche expected in October, the sixth under a first bailout agreed in 2010.

    At the same time, leaders from around the world have urged euro zone capitals to end a tortuous debate and create a safety net big enough to prevent Greece's problems from spreading to other euro members and triggering a fresh global downturn.

    DEBT SWAP DEBATE DEEPENS

    The second bailout aims to ease Greece's debt burden by imposing a 21 percent loss on private Greek bondholders.

    After intensifying debate among economists and policymakers that only a 50 percent loss would make the country's debt viable, more investors have signed up to the bond exchange plan, Greek financial daily Naftemporiki reported.

    Citing an unidentified finance ministry official, it said Greece's weeks-long struggle to lure private bondholders into the rescue plan had ended with it reaching the 90 percent participation target.

    The finance ministry declined to comment on the report.

    There is no agreement yet among euro zone governments on whether a renegotiation is needed, including more pain for Greece's bank creditors, or on a U.S.-sponsored plan to leverage the bloc's rescue fund to give it more firepower.

    Germany's Bundestag (lower house) will vote on Thursday on widening the scope of the European Financial Stability Facility bailout fund, as agreed by the EU leaders on July 21.

    Merkel faces a revolt within her conservative camp and may have to rely on support from the opposition Social Democrats and Greens to get the measure approved, damaging her authority.

    STRIKES GRIP GREECE

    Late on Tuesday, police dispersed about 1,000 anti-austerity protesters with tear gas in Athens' Syntagma Square, the epicentre of anti-austerity protests.

    Taxi drivers, bus and tram operators staged strikes on Wednesday, causing long traffic jams leading into the ancient city center and forcing luggage-hauling tourists scrambling to find rides to the airport.

    Other trades ranging from craftsmen, printers and tax officials also staged stoppages and activists planned marches on

    parliament and the port of Piraeus later in the day.

    "I've been trying to find a job for a year now and it's impossible," said Maria Kappa, a graduate of the School of Philosophy in Athens. "I don't see the rich people hurt by this austerity, it's always the poor who have to pay."

    Lawmakers opened the way to the troika visit on Tuesday by passing a property tax bill. That piles the pressure on Greeks suffering from several waves of belt-tightening and deepens an economic downturn heading into its fourth year.

    Prime Minister George Papandreou's 154 Socialist deputies forced the measure through in the 300-seat parliament.

    In the accelerated strategy, the government will cut the 730,000 public workforce by a fifth, reduce the public wage bill by 20 percent, as well as lower overall pensions by 4 percent in addition to a 10 percent cut already agreed in previous plans.

    It will also now extend the new real estate tax until 2014, two years longer than originally planned, after the troika judged Greece's estimate that it would raise 2 billion euros a year to be too high.

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