Traders sit out the calm before the storm
By Michael Morgan
July 8 2004
World stock markets adopted a holding pattern yesterday, but the inaction may prove no more than the calm before the storm of imminent second-quarter earnings.
US markets scored mild gains by mid-session ahead of results from Alcoa and Yahoo later in the day. The Dow Jones Industrial Average put on 0.3 per cent at 10,250.32 while the Nasdaq Composite edged up 0.4 per cent to 1,971.91.
Rick Bensignor at Morgan Stanley offered food for thought with a warning that the US market was potentially poised for its most significant sell-off since the high point of the market was reached earlier this year.
If the S&P 500 closed the week below 1,136.47, the first confirmed weekly sell signal since the March 2003 low would be in place, he said. The same was true for the Nasdaq Composite, should it close the week under 1,999.
European equities made valiant efforts to call a halt to their six-session slide but the effort proved too great. By the close, the FTSE Eurotop 300 index was 0.1 per cent easier at another one-month low of 981.68.
In Asia, a weak showing in the technology sector, mirroring the performance of US peers, dragged Tokyo to a three-week closing low. Other regional markets were mixed.
In currency markets, the dollar fell to three-month lows against the euro and sterling on the view that recent economic data indicated the Federal Reserve would not need to move aggressively to raise US interest rates.
Mark McFarland at UBS said US interest rate fears and rising US bond yields had been important factors in supporting the dollar since the end of the first quarter.
"However, weaker-than-expected US data since early June have damped expectations of aggressive Fed hikes and economic data have continued to surprise the market on the downside in July," said Mr McFarland.
Among key commodities, the strength of the euro sent gold $10 higher to $402 an ounce during morning trade in New York.
Nymex crude oil futures fell in New York trade after Saudi Arabia's oil minister said Opec would press ahead with an additional production boost planned for August.
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