While you were sleeping: Bargain prices attract

While you were sleeping: Bargain prices attract

(BusinessDesk) June 8 - The pullback in global equities may not yet be over but investors are dipping their toes back into the market.

Most major markets across Europe and the three key benchmarks on Wall Street found positive territory, albeit without great conviction, after several doom and gloom trading sessions.

“The market's reaction to the pessimist tone on economic data in the past few days was some heavy selling, but investors are starting to trim their short positions here as things start to stabilize,” Joseph Greco, managing director at Meridian Equity Partners in New York, told Reuters.

On Wall Street, the S&P 500 index was up 8.97 points, or 0.7%, to 1,295.14 in late afternoon trading. The index had shed near 5 per cent since the start of May.

The Dow Jones industrial average was up 81.74 points, or 0.6%, at 12,171.70. The Nasdaq Composite Index was up 17.63 points, or 0.65%, at 2,720.19.

Earlier in the day, the FTSE 100 eked out a 0.1% gain, France’s CAC 40 edged 0.2% higher and Germany’s DAX advanced 0.3%.

“Investors have probably overestimated risk in the last few days,” Matthias Jasper, the head of equities at WGZ Bank AG in Dusseldorf, told Bloomberg. “The overall picture for equities is still good, though we can expect more volatility in the coming weeks.”

While there was no fresh data on the U.S. economy, factory orders in Germany rebounded in April.

Investors are hoping for a bit of economic insight from U.S. Federal Reserve Chairman Ben Bernanke who is set to speak later today and from Jean-Claude Trichet, president of the European Central Bank, later this week.

In particular, clarity is being sought on the outlook for interest rates and any switch in positioning as happened with yesterday’s Reserve Bank of Australia commentary - the RBA is viewed as having moved to a more dovish position.

The slowing growth in the U.S. is taking a toll. Eighty-nine per cent of Americans say the economy is in bad shape; 57% say the recovery has not started and 66% said the United States was seriously on the wrong track, according to a Washington Post-ABC News survey.

Separately, investors are positioning themselves on crude oil ahead of this week’s OPEC meeting, where a decision on output is expected.

The forecast OPEC increase is likely to come from actual production, according to the note by Societe Generale analysts, Bloomberg says. Morgan Stanley said the gain to production will probably be announced either tomorrow or at a later date this summer.

In trading today, Brent crude for July delivery rose US$1.09 to US$115.57 a barrel by 1.33pm New York time, having recovered from an earlier low of US$113.80.

U.S. July crude fell 61 cents to US$98.40 barrel, seesawing between US$97.74 and US$99.30 and staying below front-month crude's 100-day moving average of US$99.73 and the 20-day MA of US$99.67.

(BusinessDesk)

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