European, US markets up despite Asian jitters
European, US markets up despite Asian jitters as investors await Fed statement
Pan Pylas, AP Business Writer
On Wednesday August 12, 2009, 12:26 pm EDT
Buzz up! 0 Print.Companies:Nordstrom Inc.Macy's, Inc.Wal-Mart Stores Inc.
Topics:InternationalServices Sector
LONDON (AP) -- European and U.S. stock markets rose Wednesday ahead of a key policy statement from the U.S. Federal Reserve -- and despite jitters earlier in Asia after Wall Street suffered Tuesday its biggest drop in five weeks.
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JWN 29.42 +0.02
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{"s" : "jwn,m,wmt","k" : "c10,l10,p20,t10","o" : "","j" : ""} The FTSE 100 index of leading British shares closed up 45.42 points, or 1 percent, at 4,716.76 while Germany's DAX rose 64.28 points, or 1.2 percent, at 5,350.09. The CAC-40 in France was 51.06 points, or 1.5 percent, higher at 3,507.24.
On Wall Street, the Dow Jones industrial average was up 127.41 points, or 1.4 percent, at 9,368.86 around midday New York time while the broader Standard & Poor's 500 index rose 13.07 points, or 1.3 percent, to 1,007.42.
The gains in Europe and the U.S. came despite big losses in Asia, where investors were spooked by Tuesday's losses on Wall Street. Chinese shares were the worst hit after the Dow and the S&P fell by their biggest amounts in weeks.
Analysts said it was important to keep things in perspective, especially as trading volumes are particularly light at the moment -- low volumes often lead to greater volatility.
"It's important to remember that the Dow is up over 40 percent in five months so it's only natural to have pullbacks but if we are to see the index break through the 10,000 barrier, there needs to be more signs of economic recovery," said Ian Horsley, a financial trader at Spreadex.
Signs of recovery in the world's largest economy emerged with the news that the U.S. trade deficit edged up slightly in June as imports rose for the first time in 11 months -- a sign that consumers are getting more confident again.
The state of U.S. retailing is under the microscope this week. As well as official government retail sales data, investors will have earnings from the likes of Wal-Mart Stores Inc., Nordstrom Inc. and JC Penney Corp.
Department store chain Macy's Inc. kicked off the retailing results season with better than expected second-quarter earnings after a big cost-cutting exercise -- helping the stock to rally 3 percent.
Investors are fully aware that without the support of the U.S. consumer, which accounts for around 70 percent of the U.S. economy and 20 percent of the global economy, any recovery will soon fizzle out.
Attention later will be on the Fed's policy statement when it concludes its two-day meeting later.
It is widely expected that the U.S. central bank will hold interest rates steady at near zero when it ends its meeting. However, investors will be looking to see if the Fed sounds a note of cautious optimism in its accompanying statement and whether it has plans to expand its asset-purchasing program now that funds are running dry.
Hopes that the U.S. economy will recover sooner than anticipated from its deepest recession since World War 2 has helped stocks around the world rally hard over the last month or so, sending major indexes to 2009 highs. Stocks usually rally around six months before actual recovery emerges in the official data.
With recent gains so sizable, analysts said profit-taking could resume during the U.S. session.
"Stock markets look fragile and some further pullback could continue in the near term," said Neil Mackinnon, chief economist at ECU Group.
Earlier in Asia, Tokyo's Nikkei 225 stock average, retreated from a 10-month high, losing 150.46 points, or 1.4 percent, to close at 10,435.00.
Hong Kong's Hang Seng Index fell 638.97, or 3 percent, to 20,435.24 on heavy selling of shares in big mainland Chinese companies and weakness in mainland-traded shares, while Shanghai's main composite index tumbled 4.7 percent to 3,112.72.
Australia's benchmark S&P/ASX 200 index edged up 0.3 percent to 4,343.10, but shares fell in South Korea, Taiwan and the Philippines.
Oil prices bounced back after an unexpected fall in U.S. stocks. Benchmark crude for September delivery was up $1.28 to $70.73 a barrel in electronic trading on the New York Mercantile Exchange.
The dollar was up 0.3 percent at 96.19 yen while the rose 0.6 percent to $1.4228.
AP Business Writer Elaine Kurtenbach in Shanghai contributed to this report.
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