Global shares, oil prices rebound on US budget talk
New York, January 19, 2013
World equity and oil prices rebounded on Friday after Republican leaders of the US House of Representatives said they would seek to break a budget impasse next week, while the yen hit a 31-month low against the dollar ahead of potential asset purchases by the Bank of Japan.
On Wall Street, the Dow and the S&P 500 posted five-year closing highs after Republicans said the House will consider a bill to raise the U.S. debt ceiling enough to allow the country to pay its bills for another three months. The strategy would buy time for the Democratic-controlled Senate to pass a budget plan that shrinks the federal deficit.
The Nasdaq finished slightly lower, pulled down by a weak earnings outlook by Intel Corp (INTC.O), the world's leading chip maker.
"It could be a big positive for the markets if we come up with a plan of spending cuts that isn't too awfully hard on the economy," said Bryant Evans, investment adviser and portfolio manager at Cozad Asset Management, in Champaign, Illinois.
Earlier, stocks had faltered after a survey that showed U.S. consumer sentiment fell to its lowest level this month since December 2011.
The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment came in at 71.3, down from 72.9 the month before.
Omer Esiner, a chief market analyst at Commonwealth Foreign Exchange in Washington, said the consumer confidence numbers would be closely scrutinized going forward, given the still-uncertain impact of higher payroll taxes on U.S. consumers.
"This is a big miss and could mark the beginning of a downward trend in sentiment and in spending," Esiner said.
Shares of Intel slumped 6.3 percent to $21.25 a day after the company forecast quarterly revenue below analysts' estimates and announced plans for increased capital spending amid slow demand for personal computers.
The Dow Jones industrial average closed up 53.68 points, or 0.39 per cent, at 13,649.70. The Standard & Poor's 500 Index rose 5.04 points, or 0.34 per cent, at 1,485.98. The Nasdaq Composite Index fell 1.30 points, or 0.04 per cent, at 3,134.71.
For the week, the Dow gained 1.2 per cent, the S&P 0.9 per cent and the Nasdaq 0.3 per cent.
Anxiety about the economy undercut optimism from upbeat U.S. housing data earlier this week, reviving some safe-haven bids for government debt.
The U.S. benchmark 10-year Treasury note ticked up 12/32 in price to yield 1.8416 percent.-Reuters