Proactiveinvestors recommends
Pdf

FTSE 100, Dow Jones, S&P 500 and NASDAQ post weekly gains on positive US data

13th Mar 2010, 11:02 am FTSE 100, Dow Jones, S&P 500 and NASDAQ post weekly gains on positive US data

The FTSE 100 performed well this week as whilst it gained a meagre 0.5%, the blue chip did not retreat after making strong gains last week, which saw the Footsie tack on 4.6% to hit 18 month highs and stop just short of breaking the 5,600 plateau. The milestone was cleared on Monday, when the UK’s blue chip index inched 0.2% higher, strengthened by economic data that came out in the US at the end of the previous week to show the first improvement in consumer borrowing in a year. Shares still were in buying mode following the US non-farm payrolls update, which revealed a loss of just 36,000 jobs for the week, while most surveys projected losses of up to 70,000.

Investors were also encouraged by improvements in the outlook for the European debt crisis after Greece conducted a successful bond issue in the previous week, which was oversubscribed, helping the debt laden country raise €5 billion to cover its near term commitments on top of a fresh package of economic austerity package introduced earlier that week, targeting savings of €4.8 billion.

However, rating agency Fitch said it could cut its current AA stance on another troubled euro zone country Portugal if its fiscal consolidation keeps progressing slowly and proves insufficient. Jitters eased on Wednesday, when Portugal managed to raise US$1.34 billion via a bond issue, which also was oversubscribed.

On Saturday it was reported that the European Union is close to putting together a €9 billion bailout package for Greece to help it finance its deficit. Other economic data that had an impact on stock market movements included Tuesday’s consumer confidence update from Investor’s Business Daily, which said that its Economic Optimism Index fell to its lowest in a year.

Stocks were looking for a direction for the better part of the week amid the lack of major economic data, and were more responsive than usual to movements in the currency and commodity markets. Crude and metals were pushed down by China’s apparent intention to tone down buying gold and another update, which said that inflation increased to an annualised rate of 2.7% in February despite a series of measures to curb lending and slow down the currently rapid economic growth that were introduced in January. This sparked speculation of further monetary policy tightening in the world’s second largest energy consumer, which would subsequently lead to lower demand for oil and metals.

However, the bearish news was balanced out by OPEC (Organisation of Petroleum Exporting Countries) and IEA (International Energy Agency), which both upped their respective oil consumption forecasts for this year to bolster oil prices.

Investors were looking to Friday’s key updates on US consumer sentiment and retail sales for further direction. The data was mixed as while retail sales unexpectedly rose 0.3% instead of an expected decline, yet the University of Michigan consumer sentiment index dropped from 73.6 to 72.5 during the month of February to dent sentiment.

The FTSE 100 closed with a modest 0.15% gain on Friday, while US stocks were mixed as while the Dow Jones Industrial Average added just 0.1%, the broader S&P 500 index and the technology heavy NASDAQ composite posted marginal losses.

The FTSE 100 is currently projected to add nearly 0.3% on Monday, while the Dow Jones Industrial Average is seen 0.1% higher.

No investment advice

The Company is a publisher and is not registered with or authorised by the Financial Services Authority (FSA). You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.