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Saturday 30 August 2014

Stock markets falter as rally loses steam

Published 20/02/2013 | 11:57

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Italian stock market slump drags down Europe

GLOBAL equity markets faltered on Wednesday as a mixed reading of U.S. housing data took the edge off this year's stock rally, while oil prices fell as the prospect of increased Saudi supply offset optimism spurred by an improving worldwide economy.

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A measure of world shares rose above a peak set in May 2011 to trade at highs last seen 4 1/2 years ago, before paring gains. Investors were cautious with minutes from the Federal Reserve's most recent meeting due for release later in the day.

Global equity markets have surged over the last seven months as major central banks repeatedly delivered monetary support to weak economies.

MSCI's all-country world equity index hit a session high of 359.37 before paring gains to trade at 358.21, 0.04pc higher on the day.

Wall Street was mostly lower and the FTSEurofirst 300 index index of top European shares was down 0.15pc at 1169.96. The benchmark S&P 500 has gained more than 7pc so far this year, giving some investors pause.

U.S. residential construction fell in January but a jump in permits for future home building to a 4-1/2 year high offered hope the housing market recovery remains on track.

"Any sustained recovery will continue to be underpinned by a recovery in housing, and the building permits suggests a slow, grinding recovery. There will be fits and starts, but the general trend is a positive slope, which bodes well for the market," Steven Baffico, chief executive officer at Four Wood Capital Partners in New York.

The Dow Jones industrial average was up 7.22 points, or 0.05pc, at 14,042.89. The Standard & Poor's 500 Index was down 3.25 points, or 0.21pc, at 1,527.69. The Nasdaq Composite Index was down 5.98 points, or 0.19pc at 3,207.62.

The Dow edged higher on gains by Boeing Co, which has found a way to fix battery problems on its grounded 787 Dreamliner jets, a source familiar with the U.S. company's plans told Reuters.

Boeing shares rose 1.8pc to 76.01.

Saudi Arabia, the world's top exporter of crude oil, expects to raise its output in the second quarter to satisfy higher demand from China and drive economic recovery elsewhere, oil industry sources said, but the exact rise in volume was unclear.

April Brent crude futures were 66 cents down at $116.86 a barrel after posting their first gain in four sessions on Tuesday. U.S. crude fell 81 cents to $95.85. The contract expires later on Wednesday.

U.S. Treasury debt prices eased, tracking falls in German bonds after a weak auction, although the market was seen range-bound before the release of minutes of the Federal Reserve's January policy meeting later in the day.

The benchmark 10-year U.S. Treasury note was down 1/32 in price to yield 2.0295pc.

Reuters

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