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Posted by HY Markets on Wednesday July 14, 2010 3:24 pm
Indices
– Global stocks rose on Friday, recording their best week in
nearly a year, while oil prices climbed on hopes that US companies will
report strong earnings this week. But investors were still cautious in
the run-up to the earnings season, buying US dollars and gold, which
rallied more than 1 percent. The earnings season starts on Monday, when
Alcoa, one of the 30 stocks in the Dow, reports after the closing bell.
Wall Street ended the session near the day's highs, but volume was the
lowest of the year. The three major US stock indexes traded flat to
modestly higher for most of the session, with brief forays into
negative territory as investors remained cautious due to fears of a
double-dip recession. Even with the gains of the last week, the S&P
500 is still down 11.5 percent from its most recent closing high in
late April.
Risk appetite increased after weekly first-time US jobless
claims dropped to their lowest level in two months, offering a ray of
hope for economic recovery. New claims for US unemployment insurance
fell more than expected last week and several top US retail chains
reported June same-store sales that topped estimates, supporting demand
for stocks and other higher-risk assets. Unemployment remains painfully
high and other data on Thursday showed that consumers continue to
struggle. Retailers resorted to discounting to keep sales aloft in
June, and the Federal Reserve reported that US consumer credit dropped
more than expected in May.
Europe named 91 banks taking part in a health test of its banking
system on Wednesday, including many regional banks where markets
suspect most of the sore spots reside, as it seeks to restore
confidence in the sector. European Central Bank President Jean-Claude
Trichet said appropriate action would be taken where needed on bank
balance sheets. He spoke after the ECB bank left interest rates on hold
at a record low 1.0 percent. Trichet said the global economy and
foreign trade may recover more strongly than projected, further
supporting euro zone exports. The area's economy, however, is expected
to grow "at a moderate and still uneven pace in an environment of high
uncertainty," he said.
The International Monetary Fund raised its US growth forecast
slightly to 3.3 percent for 2010 and 2.9 percent for 2011, but said
unemployment would remain above 9 percent for both years and inflation
would remain low. The IMF also sees the dollar depreciating moderately
over the next five years, saying it is "somewhat" overvalued and
greater currency flexibility in some countries will be needed to
support the global economy.
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