Home' Trinidad and Tobago Guardian : August 31st 2014 Contents AUGUST 31 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG9
The Standard & Poor s 500 index
delivered its fourth record high
in five days Friday, ending with
the biggest monthly gain since
The milestone-crushing run capped a week
when the S&P eclipsed the 2,000-point mark
for the first time. And the index ended August
with a gain of 3.8 per cent.
Months of solid job gains, strong company
earnings and a bevy of corporate deals con-
tributed to the rally, part of a bull market that s
been rumbling on for more than five years.
The market appeared ready for a correction
at the end of July, but the downturn didn t
last long. For most of August, stocks have
managed to shake off geopolitical conflicts
from Ukraine to Gaza and Iraq.
"The market has a good underlying tone,"
said Mike Levine, portfolio manager of Oppen-
heimer Equity Income Fund. "People feel like
the economy is gaining some strength and the
job market is getting better and corporate earn-
ings should be pretty good."
Even in a quiet day of trading ahead of the
Labour Day holiday, stocks eked out a gain.
The indexes opened higher, but eased soon
after, as investors got the news that consumer
spending fell and income growth slowed in
Traders also had their eye on the conflict in
Ukraine, as a group of European Union foreign
ministers accused Russia of invading the eastern
region of the country and said Moscow should
be punished with more economic sanctions.
The markets began to recoup some losses
by midmorning, however, when a gauge of
consumer sentiment showed greater optimism
in August, particularly among higher-income
groups. Some better-than-expected company
earnings also lifted stocks.
Overall, the indexes wavered between small
gains and losses throughout the afternoon.
"We re seeing a listless, pre-holiday market,"
said Drew Wilson, an investment analyst at
Fenimore Asset Management.
The S&P 500 index finished up 6.63 points,
or 0.3 per cent, to 2,003.37. It closed above
2,000 for the first time on Tuesday and has
gained 8.4 per cent this year.
The Dow Jones industrial average gained
18.88 points, or 0.1 per cent, to end at 17,098.45
on Friday, while the Nasdaq composite added
22.58 points, or 0.5 per cent, to 4,580.27.
Stocks rose broadly, with all 10 sectors in
the S&P 500 index higher for the day, led by
The gains marked the index s best August
"It s been a good August," said Linda Duessel,
senior equity market strategist at Federated
Investors. "I imagine it s the end of the month
and people closing their books are saying I
better show I m invested, we had a brand-new
high this week. "
Nevertheless, some investors may grow hes-
itant next month. September is widely con-
sidered the stock market s worst.
Since World War II, the S&P 500 index has
ended the month with a loss half of the time.
Recently, however, September has been good
to investors. The S&P 500 has turned in a Sep-
tember loss just twice in the last decade: in
the depths of the financial crisis in 2008 and
following a fight over raising the government s
borrowing limit in 2011.
Last year, investors saw an array of threats
lined up after Labour Day, including a fight
over the federal budget and a possible US attack
on Syria. The result? The S&P 500 gained 3.0
per cent in September.
Elsewhere in financial markets, bond prices
were little changed. The yield on the 10-year
Treasury note held at 2.34 per cent.
In metals trading, gold slipped US$3 to
US$1,287.40 an ounce, silver fell 14 cents to
US$19.40 an ounce and copper rose a penny
to US$3.14 a pound.
The price of oil rose for the fourth day in
a row on concerns about the escalating tensions
between Ukraine and Russia, the biggest oil
exporter outside of OPEC. Benchmark US crude
rose US$1.41 to close at US$95.96 a barrel.
Brent crude, a benchmark for international oils
used by many US refineries, rose 73 cents to
close at US$103.19. Wholesale gasoline rose 3
cents to close at US$2.783 a gallon. Natural
gas rose 2.1 cents to close at US$4.065 per
1,000 cubic feet.
Among stocks making big
• Avago Technologies, which makes semi-
conductors used in smartphones, computer
servers and other devices surged US$5.73, or
7.5 per cent, to US$82.09. The big gain came
after the company reported earnings that beat
analysts estimates. Avago rose the most in the
S&P 500 index and touched an all-time high.
• Splunk soared 19.1 per cent after the data
management software developer reported earn-
ings late Thursday that beat expectations. It
also raised its full-year profit and revenue esti-
mates. The stock gained US$8.64 to US$53.93.
• Tesla Motors and a state-owned Chinese
phone carrier announced plans Friday to build
400 charging stations for electric cars in a bid
to promote adoption of the technology in China.
Tesla increased US$5.84, or 2.2 per cent, to
US financial markets will be closed Monday
for Labour Day. AP
European shares eked out small
gains in thin, choppy trade on
Friday, helping one key euro
zone index of blue chips
record its biggest monthly rise
Most European bourses closed off their
morning highs, however, after euro zone infla-
tion data slightly cooled market speculation
about fresh monetary stimulus by the Euro-
pean Central bank, a key driver behind the
market bounce over the past three weeks.
Euro zone inflation dropped as expected
to a fresh five-year low in August, data
showed on Friday, but it was not likely to
force the ECB into immediate policy inter-
vention next week.
Dovish comments by ECB President Mario
Draghi last week had fuelled market bets that
the central bank was preparing to pump more
into the system, possibly via purchases of
government or corporate bonds, a measure
known as quantitative easing (QE).
"I think what people realise is that for the
ECB to engage in public-sector QE..., the
ECB has to see the whites of the eyes of
deflation," Wouter Sturkenboom, investment
strategist at Russell Investments, said.
"As the numbers come through, those con-
ditions are not being met so...they have to
reassess their case."
Sturkenboom still expected the ECB to be
ready to act if needed but argued that the
central bank would first wait to see the impact
of its new long-term loan programme, which
is due to start in September and aims to give
banks an incentive to lend more to the real
The FTSEurofirst 300 index of top Euro-
pean shares closed 0.3 per cent higher at
1,373.82 points, having traded as high as
1,376.58 points before the euro zone inflation
The euro zone blue-chip Euro STOXX 50
also rose 0.3 per cent, helping it to a third
straight weekly rise and leaving it up 1.8 per
cent for August, its biggest monthly gain
Price action was volatile and volume on
the index was 25 per cent lower than its aver-
age for the past three months.
Speculation about the ECB s next move
had temporarily diverted the market s focus
from events in eastern Ukraine, where at least
2,593 people have been killed in fighting
between government forces and pro-Russian
rebels since mid-April, according to a senior
UN human rights official.
Yet the Ukrainian crisis remained a major
headwind for European equities. Ukraine
called on Friday for full membership in NATO,
its strongest plea yet for Western military
help after accusing Russia of sending in
armoured columns that have driven back its
forces on behalf of separatist fighters.
Shares in Britain s biggest retailer Tesco
dropped 6.6 per cent after it cut its profit
forecast for the third time in three years and
slashed its interim dividend by 75 per cent.
The warning hit the shares of other UK
supermarket chains, with Sainsbury down
4.3 per cent and Morrisons down 5 per cent.
European airline shares retreated after a
small eruption occurred north of Iceland s
Bardarbunga volcano. That prompted the
Icelandic Met to raise the warning code for
aviation to red, the highest level, for a few
hours before returning it to orange based on
an assessment that no threat to aircraft exist-
ed.In 2010, an ash cloud from Iceland s Eyjaf-
jallajokull volcano closed much of Europe s
air space for six days.
Meanwhile, Japan s Nikkei share average
fell on Friday as tensions in the Ukraine con-
flict flared up again, but hopes that domestic
investors will start buying large-cap stocks
The Nikkei dropped 0.2 per cent to
15,424.59. For the week, the Nikkei fell 0.7
per cent and it declined 1.3 per cent for the
The broader Topix dropped 0.2 per cent
to 1,277.97 after briefly flirting with positive
territory earlier; spurring speculation of index-
buying by domestic investors.
The new JPX-Nikkei Index 400 dropped
0.3 per cent to 11,594.65. Reuters
Stocks end higher following
strong run in August
Euro zone shares record
biggest monthly gain
People walk by an electronic stock board of a securities firm in Tokyo Monday, August 25, 2014.
Asian stock markets were muted Monday after Federal Reserve Chair Janet Yellen's speech
left investors guessing about the central bank's next move on interest rates. Japan's
benchmark Nikkei 225 added 0.48 per cent, or 74.06 points to 15,613.25. AP
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