The Olympic Games opened in Beijing yesterday but investors in China must have been in no mood to celebrate. Bloomberg reports:
China's stocks tumbled the most in six weeks on disappointment the government refrained from announcing measures to boost the market ahead of the Olympic Games, opening in Beijing today.
China's CSI 300 Index extended its decline this year to 51 percent amid speculation the opening ceremony may be disrupted by security threats. Citic Securities Co., the brokerage unit of the country's biggest investment company, declined after the value of shares traded on China's two principal exchanges slumped yesterday to the lowest level since December 2006...
The CSI 300 Index dropped 128.98, or 4.7 percent, to 2,591.46 at the close, the biggest slump since June 27. The gauge closed at its lowest level since March 7, 2007.
The index fell 6.8 percent this week, the worst drop since the five days to June 13. Central bank efforts to cool inflation have deflated a stocks boom that drove the gauge up sevenfold in the two years through 2007 and drew record investors.
However, stocks in the US went sharply in the opposite direction. From Bloomberg:
U.S. stocks rose, sending the Standard & Poor's 500 Index to the largest weekly gain since April, as retailers, manufacturers and transportation companies rallied on speculation lower commodity prices will boost profits...
The S&P 500 added 30.25 points, or 2.4 percent, to 1,296.32, posting the first back-to-back weekly advance since May. The Dow Jones Industrial Average rose 302.89, or 2.7 percent, to 11,734.32. The Nasdaq Composite Index climbed 58.37, or 2.5 percent, to 2,414.10. Almost four stocks gained for each that fell on the New York Stock Exchange.
A fall in oil prices helped.
Crude oil dropped 4 percent to $115.20 a barrel in New York, completing the fourth decline in five weeks. The national average pump price of regular gasoline, which hit a record $4.114 a gallon on July 17, fell to $3.836 yesterday, the lowest since May 21, according to the American Automobile Association.
The US dollar also saw a nice rally. Reuters reports:
The dollar rallied on Friday, posting its biggest one-day gain versus the euro in 7-1/2 years as the market repriced interest rate views amid signs the U.S. slowdown was spilling over to the global economy.
The greenback traded below $1.50 for the first time since February, with oil prices tumbling below $115 per barrel, adding to the euphoria.
The OECD's composite leading indicators for June suggest that the economic slowdown is indeed spreading.
The US economy has at least managed to sustain productivity growth into the second quarter. Bloomberg reports:
Worker productivity in the U.S. grew in the second quarter as employers trimmed payrolls to weather the economic slump.
Productivity, a measure of employee output per hour, rose at a 2.2 percent annual rate, the Labor Department said today in Washington. The gain, which follows a 2.6 percent increase in the previous three months, was less than anticipated. Labor costs climbed at a 1.3 percent pace, also less than forecast.
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