Thursday 25 November 2010

Stocks rally amid mixed data

Markets rebounded on Wednesday but investors remained concerned about European sovereign debt. Bloomberg reports:

Stocks rallied, driving the MSCI World Index up from a five-week low, after U.S. jobless claims declined to the fewest since 2008 and German business confidence improved. Yields on Treasuries and Irish bonds increased and oil surged.

The MSCI World advanced 0.8 percent at 4 p.m. in New York. The Standard & Poor’s 500 Index added 1.5 percent to 1,198.35, ending a two-day slump. Irish 10-year yields soared 45 basis points to 8.86 percent, while those on Treasuries of similar maturity jumped to the highest in four days. Oil surged the most in four months...

The difference in yield, or spread, between Ireland’s 10- year debt and bunds widened 29 basis points to 615 basis points, according to Bloomberg generic data. Portugal’s 10-year yield increased 11 basis points to 7.00 percent.

Economic data released on Wednesday were mixed.

In Germany, Bloomberg reports that business confidence surged to a record high in November.

The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, rose to 109.3 from 107.7 in October. That’s the highest since records for a reunified Germany began in 1991. Economists predicted a decline to 107.5, according to the median of 42 forecasts in Bloomberg News survey.

However, industrial orders in the euro area were down in September, according to another Bloomberg report.

European industrial orders slumped the most in almost two years in September, suggesting weaker global growth and a stronger euro are starting to hurt exports.

Orders in the 16-nation euro area dropped 3.8 percent from August, when they rose 5.1 percent, the European Union’s statistics office in Luxembourg said today. That’s the biggest plunge since December 2008 and sharper than the 2.5 percent drop forecast by economists in a Bloomberg News survey. Orders rose 14 percent from September 2009.

The data from the US were also mixed. Again from Bloomberg:

Americans increased spending for a fifth month in October and filed the fewest unemployment claims in more than two years last week, pointing to strength in the largest part of the economy as the fourth quarter began.

Household purchases advanced 0.4 percent after a 0.3 percent gain in September that was larger than previously estimated, the Commerce Department reported today in Washington. Incomes climbed 0.5 percent. Jobless claims fell by 34,000 to 407,000 in the week ended Nov. 20, Labor Department figures showed...

The Thomson Reuters/University of Michigan final index of November consumer sentiment increased to 71.6, the highest since June, from 67.7 a month earlier. The preliminary November figure was 69.3. Economists projected a reading of 69.5...

Demand for so-called durable goods dropped 3.3 percent after a revised 5 percent jump in September that was larger than previously estimated. Purchases of new homes decreased 8.1 percent to a 283,000 annual rate. Sales reached a 275,000 pace in August, the lowest since data collection began in 1963.

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