Oil prices have pulled back a bit in recent trade, but the market has made no real reaction to the commodity's turn lower. Oil prices, though still up 0.7% for the session, now trade at $105.15 per barrel.
With stocks stuck at session lows amid steady pressure, volatility has continued to climb. The Volatility Index is now up 13% amid the widespread weakness.
The euro’s two-month rally against the dollar is running into renewed rifts over Europe’s sovereign debt crisis just as optimism about the U.S. economy increases.
Bolstered by the prospect of higher European Central Bank interest rates as soon as next month, the euro has appreciated almost 9% against the dollar from this year’s low. Bets by futures traders on more strength are at levels that indicated reversals in the past.
Moody’s Investors Service today cut Greece’s government bond ratings by three steps to B1 from Ba1, and assigned them a negative outlook, meaning they are more likely to be downgraded further than be raised them or kept unchanged.
Portuguese bond yields have risen to levels that preceded last year’s bailouts of Ireland and Greece, both of which are trying to renegotiate terms of their rescues.
“The European crisis isn’t over,” said Andrew Balls, the London-based head of European portfolio management at Pacific Investment Management Co., which runs the $237 billion Total Return Fund, the world’s biggest bond fund. “The euro-dollar exchange rate has been driven more by relative interest-rate outlooks, but the public statements ahead of the forthcoming meetings suggest that hopes for a grand bargain may be overdone.”
Strength in the euro has focused on the dollar as Fed Chairman Ben S. Bernanke shows no signs of raising borrowing costs even though the economy is strengthening.
Growth in the U.S. will total 3.2% this year. The European Commission raised its growth forecast to 1.7% last week and said higher oil and commodity prices may keep inflation above the ECB’s 2% limit for most of the year.
A day later, Commerzbank AG strategist Ulrich Leuchtmann in Frankfurt said the currency’s gains may end amid investor pessimism that the EU’s leaders will solve the region’s debt crisis. Last week’s rally isn’t the beginning of an “uptrend,” Bilal Hafeez, London-based head of foreign-exchange strategy at Deutsche Bank AG, wrote in an investor note March 4.
Speculators have become so bullish on the euro that past trading trends suggest they may start reversing those bets. The number of contracts that hedge funds and other large speculators hold at the Chicago Mercantile Exchange anticipating a gain in the single currency jumped to 51,308 as of March 4, according to the Washington-based Commodity Futures Trading Commission.
The last time so-called net longs exceeded 45,000 contracts was in October. The following month the euro weakened 6.9% against the dollar. They also topped the 45,000 mark a year earlier, just before the currency began about a six-month, 21% decline.
The euro’s two-month rally against the dollar is running into renewed rifts over Europe’s sovereign debt crisis just as optimism about the U.S. economy increases.
Bolstered by the prospect of higher European Central Bank interest rates as soon as next month, the euro has appreciated almost 9% against the dollar from this year’s low. Bets by futures traders on more strength are at levels that indicated reversals in the past.
Moody’s Investors Service today cut Greece’s government bond ratings by three steps to B1 from Ba1, and assigned them a negative outlook, meaning they are more likely to be downgraded further than be raised them or kept unchanged.
Portuguese bond yields have risen to levels that preceded last year’s bailouts of Ireland and Greece, both of which are trying to renegotiate terms of their rescues.
“The European crisis isn’t over,” said Andrew Balls, the London-based head of European portfolio management at Pacific Investment Management Co., which runs the $237 billion Total Return Fund, the world’s biggest bond fund. “The euro-dollar exchange rate has been driven more by relative interest-rate outlooks, but the public statements ahead of the forthcoming meetings suggest that hopes for a grand bargain may be overdone.”
Strength in the euro has focused on the dollar as Fed Chairman Ben S. Bernanke shows no signs of raising borrowing costs even though the economy is strengthening.
Growth in the U.S. will total 3.2% this year. The European Commission raised its growth forecast to 1.7% last week and said higher oil and commodity prices may keep inflation above the ECB’s 2% limit for most of the year.
A day later, Commerzbank AG strategist Ulrich Leuchtmann in Frankfurt said the currency’s gains may end amid investor pessimism that the EU’s leaders will solve the region’s debt crisis. Last week’s rally isn’t the beginning of an “uptrend,” Bilal Hafeez, London-based head of foreign-exchange strategy at Deutsche Bank AG, wrote in an investor note March 4.
Speculators have become so bullish on the euro that past trading trends suggest they may start reversing those bets. The number of contracts that hedge funds and other large speculators hold at the Chicago Mercantile Exchange anticipating a gain in the single currency jumped to 51,308 as of March 4, according to the Washington-based Commodity Futures Trading Commission.
The last time so-called net longs exceeded 45,000 contracts was in October. The following month the euro weakened 6.9% against the dollar. They also topped the 45,000 mark a year earlier, just before the currency began about a six-month, 21% decline.
Recent selling pressure has stoked volatility, such that the Volatility Index is up 7%. It is still shy of the levels that it reached amid last week's volatile action, though.
Semiconductor stocks have sunk deeper into the red so that the sector is now down 3.0%, but Ciena (CIEN 25.92, -2.89) is the worst performing name among tech issues. The stock's 10% slump follows the company's downside guidance, which has completely overshadowed news of better-than-expected earnings for the latest quarter.
Energy stocks have moved out in front of the broader market. The sector is now up 1.0% as Newfield Exploration (NFX 73.36, +1.35), Occidental Petroleum (OXY 104.88, +1.73), and Peabody Energy (BTU 70.48, +1.13) provide leadership.
Energy stocks have also provided support to overseas markets. More specifically, Total (TOT 62.24, +0.65) has helped France's CAC climb to a 0.7% gain after it had wavered earlier today. BP Plc (BP 49.07, +0.51) has been a leader in Britain's FTSE, which is presently up 0.8%. PetroChina (PTR 141.23, +1.98) led China's Shanghai Composite to an overnight gain of 1.8%.
Advancing Sectors: Energy (+1.0%), Utilities (+0.9%), Materials (+0.5%), Industrials (+0.5%), Consumer Staples (+0.4%), Consumer Discretionary (+0.3%), Financial (+0.3%), Telecom (+0.3%)
Unchanged: Tech
Declining Sectors: Health Care (-0.1%)
"Friday's employment data were, if anything, stronger than the headline numbers suggested. In the establishment survey, the seasonal adjustment process restrained the overall increase in payrolls, perhaps excessively. We think the underlying details of the February report set the stage for the possibility of a 300K increase in payrolls next month. Trends in the household measure of employment (adjusted for year-end distortions) are even more robust.
April Nymex WTI down sharply off the early highs of $106.91 in reaction to some press reports that Libyan sources have told the Pan-Arab newspaper al-Sharq al-Awsat that Gaddafi has turned to the Rebel transitional National Council to secure his departure from the country in return for a guarantee of safe passage for himself and his family in exchange for a handover of power. Crude has dropped to $104.54 on the news.
U.S. stocks were headed for a flat open Monday, with trading expected to be volatile as oil prices above $106 a barrel and gold prices at a new intraday record will likely keep investors on edge.
U.S. stocks fell sharply Friday, as investors dismissed the jobs data and focused on oil prices surging over $104 a barrel. Stocks still managed to scratch out gains for the week, with the Dow rising 0.3%, and the S&P and Nasdaq rising 0.1% each.
Oil prices will remain in focus Monday, with crude rising above $106 a barrel in electronic trading.
Companies: Western Digital's (WDC) stock rose 5% in premarket trading after the company agreed to acquire Hitachi's hard disk drive business. The stock and cash transaction is valued at $4.3 billion.
World markets:
Analysts at Moody's slashed Greece's credit rating three notches Monday to B1. The ratings agency also issued a negative outlook for the nation, which has struggled to implement austerity measures aimed at reducing a massive debt load.
Gold for April delivery gained $16.40 to a new intraday record of $1,445 an ounce before slipping to $1,444.70.
But the precious metal remains miles away from its true peak, when adjusted for inflation. Gold hit its real record on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation from 1980 dollars to 2011, that translates to an all-time record of $2,206.24 an ounce.
The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 3.52% from 3.55% late Friday.
The metals at all time and 31 year highs respectively, as the dollar continues to weaken.
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