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Broadgate: Market News 21/8

21 August 2012

Stocks were flat on Monday on signs of fatigue after a six-week run of gains as the European Central Bank quelled speculation about the form of market intervention that may be taken to stem the region’s debt crisis.

Despite the lethargic trading, Apple Inc shares hit a new high, becoming the most valuable public company of all time, with the combined value of its shares exceeding a previous record set by Microsoft. Shares closed up 2.6 percent to $665.15.

The S&P 500 remains close to a four-year high, rising nearly 5 percent in the past six weeks. Investors had been waiting for the ECB to take steps to control the euro crisis in September. Last week, the index broke away from the 1,400 level where it had stalled for much of August.

German magazine Der Spiegel said over the weekend the ECB is considering setting interest rate thresholds for any purchases of a struggling euro zone country’s bonds. A bank spokesman said it was misleading to report on decisions that still had not been taken.

Germany’s central bank, the Bundesbank, also reiterated its opposition to bond purchases. A spokesman for the German Finance Ministry said it was not aware of any plans for the ECB to target bond spreads.

The slight losses on U.S. exchanges compared with much steeper declines in Europe and a fall in the Shanghai index to its lowest level since 2009.

“Over there, the crisis is clearly much more real for them,” said Ken Polcari, managing director at ICAP Equities in New York.

“For us, we are still sitting and waiting and people are almost numb to the headlines now so they are not going to make those quick reactions like they did – they are going to be much more patient,” said Polcari.

Facebook Inc shares briefly fell more than 50 percent from its issue price to hit a new low of $18.75.

The Dow Jones industrial average shed 3.48 points, or 0.03 percent, to 13,271.72. The Standard & Poor’s 500 Index dipped 0.07 points, or 0.00 percent, to 1,418.09. The Nasdaq Composite Index lost 0.38 points, or 0.01 percent, to 3,076.21.

The healthcare sector was a bright spot after Aetna Inc said it would buy Coventry Health Care Inc for $5.6 billion. The Morgan Stanley healthcare payor index climbed 1.6 percent.

Coventry shares jumped more than 20.3 percent to $42.04 after Aetna said it will pay $41.10 per share for the company, putting the deal at about a 20 percent premium to the stock’s Friday closing price. The deal is the latest in a string of multibillion-dollar acquisitions in the U.S. healthcare sector.

Aetna shares rose 5.6 percent to $40.18.

Lowe’s Cos Inc slumped 5.8 percent to $26.26 after the company reported weaker-than-expected quarterly results and cut its profit outlook for the fiscal year as the world’s second-largest home improvement chain lost market share to larger rival Home Depot Inc.

Struggling retailer Best Buy Co Inc said its founder, Richard Schulze, has turned down an offer from the board to conduct due diligence in connection with his proposal to take the company private at a valuation of more than $8 billion. The shares fell 7.9 percent to $18.67.

The global economic outlook is more uncertain now than at the start of the financial crisis in late 2008, Doug Oberhelman, chief executive of Caterpillar, the world’s largest maker of construction equipment, said on Monday. Caterpillar’s shares edged up 0.5 percent to $90.44.

Volume was weak in one of the lightest traded sessions of the year with about 4.83 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, well below the daily average of 6.64 billion.

Declining stocks outnumbered advancing ones on the NYSE by 1,680 to 1,267, while on the Nasdaq, decliners beat advancers 1,432 to 999.

Commodities

Brent crude inched up on Tuesday, but prices stayed near $114 a barrel as investors sought clarity on policies to help the euro zone after the European Central Bank squashed speculation about further steps to contain the debt crisis.

Brent crude for October delivery rose 29 cents to $113.99 per barrel at 0233 GMT, after swinging in an almost two-dollar range on Monday.

U.S. crude added 8 cents to $96.05 per barrel.

Platinum edged down on Tuesday, sliding from a two-month peak hit in the previous session on heightened supply worries in top producer South Africa, while expectations for easing monetary policy supported gold.

Spot platinum inched down 0.3 percent to $1,480.50 on Tuesday, off a two-month high of $1,492.99 marked the day before.

Spot gold was little changed at $1,620.74 an ounce by 0325 GMT on Tuesday, after four straight sessions of gains.     The U.S. gold futures contract for December delivery  was trading nearly flat at $1,623.40.

Currencies

The euro trod water on Tuesday but appeared increasingly vulnerable to a reverse amid festering doubts over whether policymakers can reach an accord for action next month to lift some pressure off debt stricken euro zone countries.

The euro stood little changed in early Asian-Pacific trade at $1.2350, off its peak of $1.2440 hit on August 6, just after European Central Bank President Mario Draghi signaled the bank would revive its bond buying scheme to lower borrowing costs of Italy and Spain.

The dollar moved little against the yen, trading at 79.41 yen, off a five-week high of 79.66 yen hit on Monday.

On the other hand, the Australian dollar gained a tad after the minutes of the central bank’s latest meeting gave no hint of further easing.

That helped the Aussie stay above a key channel line support just above $1.04.

It was changing hands at $1.0475, up 0.3 percent on the day, and up further from its three-week low of $1.0411 hit last Friday.

Source:  Reuters.com

The information set out herein has been obtained from various public sources and is by way of information only. Broadgate Financial can accept no liability of any sort in relation thereto and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.

Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments.

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