Markets Bay For Budget

Fundamental Analysis EUR European stocks returned to growth, despite services and manufacturing purchasing managers indices across Europe and German business confidence shrank more than expected. The Stoxx Europe 600 Index added 1.0 percent to 241.81. Cable & Wireless Communications Plc soared 19 percent. Sonova Holding AG gained 2.5 percent. Bayer AG declined 1.1 percent. U.S. futures and Asian stock little changed. S&P 500 futures gained 0.3 percent, MSCI Asia Pacific index added 0.1 percent. USD The US Dollar followed bullish trend on Thursday as Germany disapproves issuance of Eurobonds that may help to ease Greek debt burden. Traders are also cautions ahead of Euro Zone's manufacturing data release due later today. The US Dollar index, which tracks the greenback's performance ...

The last 24 hours have heaped even more pressure on Madrid. First there was Standard & Poor's two notch rating downgrade for Spain from A to BBB+ with a negative outlook. Second, was a further deterioration in the unemployment rate in the first quarter. S&P's rationale for the downgrade was down to 1, the possibility that the government will need to provide further fiscal support to the banking sector and 2, the deterioration in the budget deficit trajectory for 2011-2015. S&P also mentioned the significant risks to Spain's economic growth, which could weigh on the country's creditworthiness. Spain now has the same rating as Ireland after S&P affirmed Ireland's rating at BBB+ with a negative outlook. It sounded fairly impressed with the Irish government's 'proactive and substantive' ...

(Reuters) - Gold dropped around 3 percent on Monday, its largest one-day drop in nearly three months, as doubts over a deal for European economic integration triggered a technical breakdown. Bullion's decline dwarfed losses in the equity and commodity markets after a European summit agreement failed to restore market confidence and borrowing costs in Italy and Spain rose. Gold futures investors turned to put options to hedge downside risks, as heavy sell-stops below $1,700 an ounce sent the metal to its lowest level since late October. On charts, a bearish technical pattern could lead to another $100 loss from current levels, traders said. Spot gold dropped 2.7 percent to $1,663.86 an ounce by 2:19 p.m. EST, having touched a near two-month low of $1,657.04. "In the near term, we ...

(Reuters) - Gold tumbled 3 percent on Monday, headed for its largest one-day drop in nearly three months, as a dollar surge amid doubts over the euro zone triggered a technical breakdown. A bout of heavy sell-stops below $1,700 an ounce sent the metal to its lowest level since late October -- as equity investors liquidated gold positions to cover equity and commodity losses, after a European summit failed to restore market confidence and borrowing costs in Italy and Spain rose. Jittery gold investors have been busy buying put options and put spreads to hedge downside risks. On charts, a bearish technical pattern could lead to another $100 loss from current levels, traders said. "In the near term, we believe gold will push lower at least down to the $1,615 area but possibly more," said ...

(Reuters) - Gold recovered strongly on Tuesday as buyers from China saw value in lower prices and as panic over western world debt subsided in the wider financial markets, lessening the need to sell gold to raise dollar funding. But the respite was seen as temporary, with investors rattled by the continuing stress on euro zone debt markets, and also by the apparent inability of U.S. officials to come to grips with debt in their own economy.? A bipartisan U.S. deficit-reduction committee abandoned on Monday a three-month effort to find $1.2 trillion in budget cuts, although rating agencies were holding off taking immediate action on the U.S. rating. On the other side of the Atlantic, Spain's Treasury paid the highest yields in 14 years to issue short-term bills while German bunds ...

(Reuters) - The dollar hit a six-week high versus a currency basket on Monday after U.S. leaders failed to agree deficit-cutting measures, darkening the fiscal outlook and prompting a shift from riskier currencies into the safety of the U.S. currency. The dollar index .DXY rose to 78.477, its highest since October 10 as debt problems deteriorated on both sides of the Atlantic due to ongoing worries that wrangling between European leaders will protract the bloc's debt crisis. Investors sought growing yield premiums to hold Italian and Spanish bonds versus benchmark German debt, pushing the euro to the day's low versus the dollar. An overwhelming Spanish vote in favor of a new government failed to instill optimism about Madrid's ability to deal with its economic problems. The ...

The odds on a new recession are shortening, but don't expect governments to swap the hair shirt of fiscal austerity for something more comfortable. Financial markets, worried though they are about anemic growth, simply will not let them -- even if the outcome is an even slower rate of expansion that risks driving debt-to-GDP levels higher, prompting more anxiety that, in a vicious circle, further undermines growth. "At the moment, the markets have priced in a very slow growth environment for the foreseeable future but have not yet priced in recession," said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh. "They would welcome measures that even moderately raised that slow growth path for the next few years. But markets would react very poorly if they ...

(Reuters) - Gold prices hit a record high of more than $1,625 an ounce on Wednesday and Asian stock markets were largely flat as news out of Washington indicated politicians were making little progress in ending a deadlock over raising the U.S. debt ceiling. Republicans had to delay bringing a plan to a vote in the U.S. House of Representatives because it was being rewritten, while an analyst at Standard & Poor's told CNBC that prioritizing debt payments to avoid a default would be "deeply disruptive" to the economy. Debt and inflation were globally the main focuses of investors. The Australian dollar jumped to a post-float high above $1.1060 after second quarter inflation figures were higher than forecast, squeezing investors who had recently increased bets that the Australian central ...

Weekly Economic and Financial Commentary U.S. Review Weak Jobs, a One-off or a Trend? This week's employment report is a challenge to our view that the economy is leaving the spring slowdown behind and moving into a period of trend-like growth of 3 percent with moderate job growth as well. Yet, the longer-term problems of a generation of overpromising and underfunding challenges both public and private decision makers. Federal and state policymakers have consistently failed to adequately fund entitlement spending. Meanwhile, households have underfunded their retirement ambitions. The adjustments in both areas are still ahead of us. Weak Jobs, a One-off or a Trend? This week's employment report challenges our view that the economy is leaving the spring slowdown behind and moving ...