Japanese stocks rose as investors bought utilities amid increasing uncertainty about the strength of the global economic recovery after reports signaled growth is slowing in the U.S. and Europe. “Because the state of affairs abroad is opaque, defensive stocks are rising as they are less risky,” said Yutaka Yoshii, a strategist at Tokyo-based Mito Securities.
WALL STREET retreated to its lowest levels in a month yesterday after commodities slumped amid concern that Europe’s debt crisis is deepening and global economic recovery is losing momentum. Industrial, energy and technology stocks suffered the most amid poor manufacturing figures from Germany and China.
CHINA’S stocks, trading almost 10% below this year’s highs, may extend declines as higher interest rates slow economic growth, according to ICBC Credit Suisse. The Shanghai Composite Index has tumbled 9.9% from a five month high on the 18th April. The gauge slumped the most in four months yesterday, erasing its advance for the year, after data signaled a slowdown in manufacturing. “We remain cautious in the near term and we haven’t seen the bottom yet,” said Hao Kang at ICBC.
MARKETS:
EUROPEAN stocks are set to edge higher today following sharp falls, with commodity stocks are seen giving some support. However, ongoing concerns about the euro zone peripheral debt problems could limit gains. The FTSE 100 is expected to open up between 5 and 13 points, the German DAX to open 0.12% higher and the French CAC40 to open 3-5 points up.
CURRENCIES:
THE EURO weakened for a third day against the yen on speculation that Europe’s sovereign debt crisis is worsening. Europe’s common currency was 0.7% from a nine week low against the dollar before a forecast to show the regions industrial orders fell in March
THE POUND slid against 15 of its 16 major peers after Sky News said Moody’s Investor Services will place 14 British banks and building societies on review for downgrades.
ENERGY:
OIL gained in New York, trimming the biggest loss in more than a week, as speculation that Libyan supply cuts will reduce OPEC’s spare production capacity countered concern Europe’s debt crisis is spreading. Futures climbed as much as 0.7%, reversing earlier declines, after Goldman Sachs and Morgan Stanley increased their oil price as conflict in Libya prolongs the loss of output.
COMMODITIES:
GOLDMAN SACHS which recommended selling commodities last month, told investors to buy oil, copper, and zinc as sustained economic growth will tighten supplies. “We believe that the risk/reward once again favours being long on commodities,” analysts led by Jeffrey Currie said. Copper has lost 13% from its record $10,190 a metric ton in February, Brent Crude has shed 13% from its highest level since April 2008 and zinc has dropped 13% this year.
