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Today's Outlook 25 Jun 08
25 June 2008 Caution loomed on Wall Street as investors await outcome of the Federal Reserve's meeting, pushing key indices lower. Asian stocks markets are also likely to be subdued in sideway trading today.
Global markets are now awaiting the U.S. Federal Reserve's statement tonight (Singapore time) with bated breath. While policymakers are widely expected to leave the Fed Funds rates unchanged this time round, what it will say about the broader outlook remains unclear. Financial participants will be scrutinizing the Fed's post-meeting statement for hints, trying to deduce whether U.S. policymakers perceive economic growth or inflation as the bigger threat to their economy, and from there, possible future adjustments in interest rates towards the end of year. Meanwhile, U.S. stocks edged lower on Tuesday as jittery investors sold the most economically sensitive sectors of the market. Concerns about the economy were rekindled after data showed weak consumer confidence and U.S. residential property prices. The U.S. consumer sentiment index for June fell to 50.4, lower than what economists had forecast. At the same time as U.S. consumers face rising food and fuel prices, the value of their home properties is declining. The Standard & Poor's/Case-Shiller Home Price Index of 20 U.S. cities fell 1.4% in April, although it was milder than the 2.2% drop in March. A profit warning from United Parcel Service also exerted further downward pressure on equities. However, bargain-hunting in downtrodden sectors such as homebuilders, airlines and financials helped to keep key indices from further slippage. On Tuesday, the Dow Jones Industrial Average closed 34.93 points, or 0.29%, lower at 11,807.43. The broader Standard & Poor's 500-stock index was down 3.71 points, or 0.28%, at 1,314.29, as a rally in its financial sector managed to offset some of the losses in the industrial and energy categories. The tech-heavy Nasdaq composite index shed 17.46 points, or 0.73%, to finish at 2,368.28, as its losses were kept in check by a 2.8% jump in Internet search giant Yahoo. Crude-oil futures settled up $0.26 to $137 a barrel on the NYMEX as the market prepared for the latest U.S. oil and product inventory data due today. Market players are becoming increasingly fixated on the level of U.S. crude stocks, which have declined for five straight weeks. Analysts expect a 900,000-barrel drop in inventories, according to press reports. In currencies, the dollar was mixed against major rivals on Tuesday. Market players told Dow Jones Newswires that the dollar and euro may trade within narrow ranges until next week, when the European Central Bank (ECB) votes on interest rates. Asian markets ended mixed Tuesday. In Tokyo, the Nikkei 225 Stock Average fell 0.1% to 13849.56 as losses in steel and chemical-maker shares offset gains among insurers and auto stocks. Market analysts in Japan say the Nikkei 225 will probably stay directionless and trade in a wide 13600-14100 range this week. Bargain-hunting in financial companies and property developers lifted China shares on Tuesday, offsetting weakness in steel mills after iron-ore price increases. The Shanghai Composite Index, which tracks both Class A and Class B shares, ended up 1.5%. However, concerns about property developers dragged Hong Kong's index lower. A report in the Wall Street Journal said that Hong Kong is planning a new exchange that will trade fuel-oil contracts, called the Hong Kong Mercantile Exchange (HKMEx), set to open as soon as the first quarter of 2009. The new exchange will sell U.S. dollar-denominated contracts for delivery of fuel oil to mainland China, offering global investors a window into one of the world's largest oil-consuming markets. |
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