Tuesday 20 April 2010

US stocks rebound, Chinese stocks plunge

US stocks rebounded on Monday. Bloomberg reports:

U.S. stocks rose, rebounding from the biggest global slump since February, as Citigroup Inc. beat profit estimates and two people with knowledge of the matter said regulators were split on suing Goldman Sachs Group Inc...

The Standard & Poor’s 500 Index increased 0.5 percent to 1,197.52 at 4 p.m. in New York after falling as much as 0.7 percent. The Dow Jones Industrial Average rose 73.39 points, or 0.7 percent, to 11,092.05...

The S&P 500 tumbled 1.6 percent on April 16, the most since Feb. 4, after the SEC’s suit against Goldman Sachs spurred concern fallout from the financial crisis isn’t over...

A rise in the US leading index in March added to the cheer. Again from Bloomberg:

The index of U.S. leading indicators rose in March by the most in 10 months, a sign the economy will keep growing into the second half of the year.

The 1.4 percent increase in the New York-based Conference Board’s measure of the outlook for three to six months was more than anticipated and followed a revised 0.4 percent gain in February.

There was less cheer in Europe, however.

Greece's debt problem is looking as bad as ever. From Bloomberg:

The cost of insuring Greek sovereign debt against default surged to a record after the travel disruption caused by Iceland’s volcano delayed talks to help resolve the country’s debt crisis.

Credit-default swaps on Greece’s borrowings jumped 34 basis points to 472, according to CMA DataVision. The premium investors demand to buy 10-year Greek government debt over benchmark German bunds rose to the most since before the euro’s debut.

Meanwhile, Europe's economy continues to struggle. From Eurostat:

In the construction sector, seasonally adjusted production fell by 3.3% in the euro area (EA16) and by 2.9% in the EU27 in February 2010, compared with the previous month. In January, production decreased by 0.9% in the euro-area and by 1.1% in the EU27.

Flight disruptions due to volcanic activity are only making things worse.

In Asia, Bloomberg reports that Japanese consumer confidence has risen to the highest level since 2007.

Japan’s household sentiment rose to the highest level in more than two years in March, adding to evidence that households are reaping the benefits of the nation’s export-led rebound.

The confidence index climbed to 40.9 last month from 39.8 in February, the highest since October 2007, the Cabinet Office said today in Tokyo. It was the third consecutive advance.

However, Asian stocks were weighed down by the suit against Goldman Sachs as well as yet another move by Chinese authorities to curb property prices. AFP/CNA reports the latter.

China has moved to further curb real estate speculation by telling banks they will be allowed to refuse additional mortgages to buyers who own two or more properties...

Under the new rules, announced at the weekend, banks can also refuse loans to people who cannot prove they have lived and paid taxes for at least one year in the city where they intend to buy, the State Council, or cabinet, said.

Reuters reports the resulting plunge in Chinese stock prices.

The Shanghai Composite shed 4.8 percent for its biggest-one-day drop in eight months after China ordered local governments to take steps to control speculative buying in real estate, with the property sector index sliding 6.8 percent...

Hong Kong shares extended losses late in the day as China stocks fell further...

The benchmark Hang Seng Index shed 2.1 percent to 21,405 -- a three-week low and the biggest one-day drop in two months.

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