Global Market Overview

Last updated: March 4, 2013 9:38 pm

Wall Street stages late rebound

Monday 21:15 GMT. Stocks on Wall Street staged a late rebound, pushing blue chip stocks to their highest close since 2007, as investors saw value in growth assets after recent declines.

Earlier in the day, a sharp fall for Chinese stocks triggered selling across global bourses after attempts by Beijing to cool the country’s property market raised fears of another headwind for global growth.

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Global Market Overview

However, European stocks came off their worst levels of the session and US benchmark indices rebounded – partly the result of comments by investor Warren Buffett telling CNBC he thought stocks were still relatively good value.

The rebound also helped reduce initial demand for havens and gave a bounce to some commodities.

The dollar index ended the session slightly lower after earlier hovering near a six-month high and core fixed income prices were in retreat, pushing 10-year Treasury and Bund yields up 3 basis points to 1.87 per cent and 1bp higher to 1.42 per cent, respectively.

Gold fell $3 to traded at $1,572 an ounce.

The FTSE All-World equity index erased an earlier loss to finish little changed on the day as the FTSE Eurofirst 300 ended only a fraction lower. The S&P 500 shrugged off most of its opening-bell slide to rise 0.5 per cent at 1,525.

Another Wall Street stock barometer, the Dow Jones Industrial Average, closed on Friday within 0.5 per cent of a record high, with investors seemingly able to absorb concerns about political and budget tensions in the US and Europe. They were preferring instead to focus on improving US housing data along with continuing central bank support.

The measure of blue-chip stocks ended yesterday’s session at 14,127 points, within sight of an all-time record at 14,165 points.

However, the new week brought a fresh concern, the prospect of waning activity in the world’s second-biggest economy, and this kept a lid on any further gains for now.

The Shanghai Composite slumped 3.7 per cent, its biggest daily loss since November 2010 according to Reuters, after the authorities introduced measures to cool the country’s property sector, which included higher down payments and mortgage rates as well as a tightening of enforcement of a 20 per cent capital gains tax on transactions.

Banks and developers plunged on the news, with some property stocks trading down by their 10 per cent daily limit.

Compounding the gloom were data released on Sunday that showed the country’s service sector expanded at the slowest pace in five months, which in turn followed a government manufacturing purchasing managers’ index released last week that also missed estimates.

“It is increasingly clear that Chinese growth will slow from the second quarter onwards, and this will limit potential for recovery in Asia,” analysts at Crédit Agricole said in a research note.

The FTSE Asia Pacific index (excluding Japan) shed 1.6 per cent after most of the region took the China news on the chin.

Many industrial commodities saw early losses, but more buyers emerged as the session progressed. Copper rose 0.1 per cent at $3.49 a pound, but still near its cheapest since November. Brent crude reversed earlier gains to trade at $110.12 a barrel, down 0.2 per cent on the day.

So-called commodity currencies remained on the back foot, with the Australian dollar down 0.4 per cent and its Canadian namesake off 0.1 per cent versus the buck.

The euro was little changed at $1.3020 as worries about the political impasse in Rome kept the single currency near two-month lows. The Sentix survey of eurozone sentiment snapped a six-month uptrend in March, falling back as the inconclusive Italian election in February sapped confidence. Italy’s 10-year implied borrowing costs rose 6bp to 4.84 per cent.

Another currency flirting with multi-month lows relative to the greenback was sterling. Weak construction and bank lending data briefly forced the pound below $1.50, its lowest since July 2010. Cable, as the cross is known, rebounded to trade up 0.4 per cent at $1.5104.

One notable standout from the Asian bearishness was Japanese stocks. The Nikkei 225 rallied 0.4 per cent after Haruhiko Kuroda, the nominee for Bank of Japan governor, expressed his commitment to fighting deflation, boosting exporters by raising expectations of further weakness in the yen.

Additional reporting by Jamie Chisholm in London

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