Markets recovered their poise yesterday, though trading remained subdued as Wall Street remained closed for a second day because of the superstorm that’s ravaging the East Coast of the US.
New York state governor Andrew Cuomo said Wall Street will likely reopen today. “I spoke with (US Treasury Secretary) Tim Geithner about accelerating the return of Wall Street and we are cautiously optimistic that Wall Street will be back online tomorrow,” he said.
The New York Stock Exchange’s decision to remain shut marks the first time weather has stopped trading for two straight days since 1888.
Though the impact on the US economy could be hefty, the global financial markets that are open have largely remained calm. Monday’s losses in Europe have been more than recovered yesterday.
“Markets have put in a robust performance with equity prices appearing to have held up despite the damage that has been inflicted on the North East coast by hurricane Sandy,” Fawad Razaqzada, market strategist at GFT Markets, told The Associated Press.
The FTSEurofirst 300 index of top European shares was up 0.75 percent at 1,101.75 points and, after gains earlier in Asia, the MSCI world equity index had risen 0.3 percent to 328.86 points.
US stock index futures, which kept trading in Europe, edged lower, but volumes were very light. “We’re a bit lost without Wall Street, frankly,” Alexandre Tixier, technical analyst at TradingSat, in Paris, told Reuters.
Across European stock markets, attention was on corporate earnings, with results from well known names like Germany’s Deutsche Bank, Swiss banking giant UBS and oil major BP lifting prices. UBS shares leapt over four percent as it confirmed a plan to cut 10,000 jobs.
Britain’s FTSE 100 index was up 0.75 percent, Germany’s DAX index up 0.9 percent and Switzerland’s SMI index up 0.5 percent.
In the currency markets, which remained open, the dollar lost ground against a resurgent yen after the Bank of Japan eased policy less aggressively than had been hoped for at its regular policy setting meeting.
The dollar hit a one-week low of 79.25 yen and was down 0.3 percent against a basket of major currencies at 79.67 points.
The weaker dollar helped the European common currency climb 0.4 percent to $ 1.2958, while news the Spanish economy had shrunk slightly less than expected in the third quarter and Italy’s borrowing costs had fallen also supported the euro.
But gains for the single currency are expected to be limited by continuing questions over whether Greece can agree a deal with its creditors, and when Spain might request financial aid.
Spain’s economy contracted for a fifth straight quarter between July and September, and prices rose, according to new data, keeping pressure on the government to take some action as the prospect of further civil unrest grows.
“Spain’s economy is suffering terribly, which will continue to hit government revenues, and a modest decline in bond yields will not solve the problem,” said Kit Juckes, strategist at Societe Generale.
Prime Minister Mariano Rajoy has maintained an ambivalent stance toward applying for a politically embarrassing rescue that would kickstart an ECB bond-buying program and ease financing costs.
Investors, too, seem willing to wait; 10-year Spanish bond yields were little changed at 5.67 percent.
German government bonds, the benchmark of European fixed-income markets, were also mostly flat.
Italy was even able to sell 7 billion euros of new five- and 10-year government bonds at its lowest cost since May 2011.
Italian 10-year yields dipped 1 basis point lower on the day to 5 percent, having risen about 25 basis points in the last two weeks.