Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

While you were sleeping: Euro worry deepens

While you were sleeping: Euro worry deepens

December 1 (BusinessDesk) - Concern about Europe’s fiscal crisis was at the forefront of investors’ minds today again as they sold equities, the euro and the government debt of Belgium, Hungary, Italy and Spain.

The weekend bailout of Ireland and its banks has done nothing to ease the threat of contagion, in fact it appears to have had the opposite effect.

"We are starting to see many warning signs of global contagion, including lower U.S. stock prices," Zach Pandl, economist at Nomura Securities International in New York, told Reuters.

In morning trading, the Dow Jones Industrial Average slid 0.44%, the Standard & Poor’s 500 Index declined 0.62% and the Nasdaq Composite dropped 1.11%.

The CBOE Volatility index, Wall Street's so-called fear gauge, jumped 5.76% to 22.77.

"The idea of a contagion is being taken more seriously both in the European Union and how it might affect [U.S.] markets," David Katz, principal & senior portfolio strategist at Weiser Capital Management LLC, told Reuters.

The 85 billion euro emergency loan package for Ireland and plans for a permanent system to resolve debt crises announced on Sunday seems only to have renewed investors’ focus on how deeply in debt some European governments are.

In Europe, the Stoxx 600 ended the session 0.1% lower. Two stocks fell for each one that rose.

The euro fell 0.7% to US$1.3035, a fresh two-month low with more losses forecast.

As a sign of the increasing premium investors are demanding to hold European debt, the difference in yield between Italian 10-year bonds and German bunds widened to as much as 212 basis points.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.38% to 81.15. The greenback is rising in a safe-haven bid and it received an added boost overnight from a report confirming a rebound in U.S. consumer confidence, as the holiday shopping season gets into full swing.

European Central Bank President Jean-Claude Trichet said investors were underestimating policy makers’ determination to bolster the euro zone’s stability.

“I don’t believe that financial stability in the euro zone could really be called into question,” Trichet told lawmakers in Brussels today. Observers “are tending to underestimate the determination of governments.”

The deepening worry about Europe’s spreading fiscal problems drew investors to the relative safety of U.S. Treasuries, pushing 30-year bond yields to their lowest in three weeks.

Today, the U.S. Federal Reserve bought US$6.8 billion of notes due from 2014 to 2016 after purchasing US$9.4 billion of debt yesterday. The central bank is buying Treasuries every day this week as part of its efforts to continue to bolster the world’s biggest economy.

The iTraxx SovX index of Western European credit default swap prices rose to an all-time high.

"Credit markets dismissed news of a definite bailout for Dublin, with the broader market still reluctant to turn positive on the monetary union," said VTB Capital in a note.

Spot gold was trading at US$1,385.50 an ounce at 1643 GMT against US$1,368.09 late in New York on Monday. U.S. gold futures for December delivery advanced US$20.70 an ounce to US$1,386.70.

"Even the strong U.S. dollar could not push gold in dollar terms lower," Eugen Weinberg, an analyst at Commerzbank, told Reuters. "This suggests that the U.S. dollar is not perceived as the primary safe haven right now, but rather gold."

Spot gold was heading for a fourth consecutive month of gains, matching a similar winning run from November 2008. Bullion is up around 26.4% in the year to date.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>

ALSO:

Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>

ALSO:

Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Fonterra: Farmers Taking Another Step Towards New Zealand’s Low Emissions Food Production

They’re hot off the press and intended to help take the heat out of climate change. Fonterra farmers are already among the world’s most sustainable producers of milk and now have an additional tool in their sustainability toolbox. Over the last few ... More>>

ALSO:

Electricity: New Zealand Remains In Top 10 For Energy Balance

The World Energy Council’s Energy Trilemma Index has become part of the energy dialogue both globally and in New Zealand. The Index illustrates the need for countries to balance energy security, energy equity and environmental sustainability. New Zealand ... More>>

ALSO:


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>

ALSO:

Dairy: Fonterra Sells China Farms

Fonterra has agreed to sell its China farms for a total of $555 million (RMB 2.5 billion*1), after successfully developing the farms alongside local partners. Inner Mongolia Natural Dairy Co., Ltd, a subsidiary of China Youran Dairy Group Limited ... More>>

ALSO: