USmarket Expecting continuation of FRS rates increase and being under pressure of growing oil prices, stock indexes are down
11:47 02/03/2006

On a background of ambiguous macroeconomic news and the mixed corporate reports shares on Wall Street opened in a minus.

Let's remind that Tyco International profit decreased in the 1 financial quarter because of weak indicators of some divisions besides the company declared about possible profit cut this quarter.

The company is divided into 3 parts now. The net profit of the company made $570 million, or 28 cents per a share against $730 million, or 34 cents per a share a year earlier.

The proceeds went down 1 % to $9.71 billion against the analysts’ forecast of $9.78 billion.

 

And Whirlpool Corp. profit rose in the 4 quarter of 2005 owing to the tax rate decline and rise in the prices.

As a whole, key stock indexes dipped sharply on Thursday on a background of fundamental data and the investors’ fears, connected with them.

So, data about value of labor increase and jobless claims drop sustained fears concerning the further increase of FRS interest rates.

Let's remind that initial jobless claims, were down to 273.000 for a week, ended on January, 28th, 2005, from 284.000 a week earlier.

The average number of new jobless claims went down to 284.250 for four weeks by January, 28th from 289.000. It was originally informed on 288.750 claims. As a result the average number of new jobless claims for four weeks by January, 28th became minimal since June, 10th, 2000.

The total number of jobless in the USA fell up to 2.509 million for January, 21st from 2.573 million a week earlier.

Reuters agency, referring to consulting firm Challenger, Gray and Christmas Inc., informed that the number of the scheduled quits in the American companies went down 4 % in January, 2006 in comparison with December, 2005.

Employers announced in January about the scheduled quits of 103.466 employees against 107.822 in December because of reductions in automobile sector, in particular, in Ford Motor Co. company. Challenger, Gray and Christmas Inc. has informed that employers in January informed on the planned hiring of 13.945 persons.

 

Another factor of pressure became the messages from an undisclosed American official who has confirmed new threats from Al-Kaida against the USA.

Besides some investors, before the key report of the week - the employment review of the USA on Friday, preferred to leave the market, optimizing their positions.

Sam Raman, the manager from Baring Asset Management Inc. commented on a situation: “Data, probably, increase anxieties on how inflationary pressure grows, and it can lead to greater number of rates increase than people expect”.

Decreasing oil quotations could not support key stock indexes. We shall remind that on Thursday the oil price fell at the tenders. A principal cause of the decline was the technical factor, and also investors’ optimism after the publication of growth of oil stocks in the USA.

 

Andy Lebou, Man Financial expert, characterizing a situation in the oil market, noticed: "These are technical sales in a greater degree. There is still a fight between such factors as growth of stocks and geopolitical problems, now growth of stocks has affected the prices more strongly".

 

However, despite this drop experts are inclined to expect the further rise in oil prices. They consider escalation of the conflict around the Iranian nuclear program, and also the cold snap promised by weather forecasters in the USA in February as the reason of growth.

As a result yesterday the oil prices were down almost $2, thus the March future on WTI went down to $64.68 for a barrel. And today trade was in area of $64.75.

 

As a result Dow-Jones index of New York stock exchange has fallen 101.97 points and was closed at a level 10851.98. NASDAQ index dipped on 28.99 points and is at a level 2281.57. S&P 500 index was down 11.62 points and is at a level 1270.84.

Profitability of the US state obligations for 30 years has fallen 0.015 in comparison with the previous closing and makes 4.695.

 

We recommend keeping purchases of Dow-Jones index futures. Despite current index dip, probability of rise renewal is still kept. The purposes of growth also hold good.


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