Home' Trinidad and Tobago Guardian : October 26th 2014 Contents OCTOBER 26 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG9
The euro rose on Friday ahead of
an official report on the health of
the euro zone s main banks as
investors continued a trend of cov-
ering their short-positions leading
to buying of the currency against
the US dollar.
Despite Friday s weakness, the dollar is on track
to close the week with a gain. Concerns about the
first diagnosed case of Ebola in New York City,
which stifled the dollar s rally late Thursday, have
waned, strategists said.
The US Federal Reserve will meet next Tuesday
and Wednesday, and the consensus view is that it
will wrap up asset purchases under its third round
of quantitative easing.
A group of 25 banks have failed European stress
tests, while up to 10 of those continue to have a
capital shortfall, sources familiar with the matter
told Reuters on Friday.
Bloomberg News first reported the results of the
tests, which are due on Sunday. Currency strategists
said this just added more fuel to the short-covering
that has supported the euro s position.
"It is all speculation at this point and the ECB
tried to remind us of that. It just highlights that
this is a risk that is not as negative perhaps as was
priced in," said Camilla Sutton, chief currency
strategist at Scotiabank in Toronto.
The euro zone s 130 biggest banks received the
European Central Bank s final verdict on their
finances on Thursday after a review aimed at draw-
ing a line under persistent doubts about the health
of the region s banking sector. They will not be
made public until 1100 GMT on Sunday.
In late New York trading, the euro was up 0.17
per cent at $1.2666, up from Thursday s two week
low. It traded flat against the Japanese yen at 136.89.
The dollar was off 0.18 per cent to 108.05 yen.
The dollar index, which measures the greenback
against its major trading partners currencies, was
down 0.16 per cent, but on track to end the week
up 0.70 per cent .DXY.
"The dollar rally has paused a bit here and I
think one of the core reasons is a bit of added
uncertainty as to how the Fed will react to the
stronger dollar, and to the renewed worries about
global growth concerns," said Brian Daingerfield,
currency strategist at the Royal Bank of Scotland
in Stamford, Connecticut.
The Fed s statement will be parsed for clues on
how quickly the central bank might start raising
interest rates, now not expected until late 2015.
"For the dollar to appreciate, you need the stock
market to hold up in the face of a clean exit from
QE3 by the Fed," said David Woo, head of global
rates and currency research at Bank of America
Merrill Lynch in New York.
Elsewhere, sterling rose to $1.6087, up 0.37 per
cent. Third quarter gross domestic product data
showed Britain s economy grew by 0.7 per cent,
down from 0.9 per cent the quarter before, but in
line with economists expectations. Reuters
The stock market closed out
its best week in nearly two
years on a positive note Fri-
day, helped by strong quar-
terly earnings from
Microsoft and other big US
After weeks of speculation over the fate
of Europe s economy, Ebola fears and plung-
ing oil prices, investors were able to get back
to basics. Wall Street is in the midst of one
of the busiest times of the year, when com-
panies report their quarterly results. Ulti-
mately what drives stock prices higher is
the potential for a company to earn more,
so higher profits generally mean higher stock
"What matters most to the market are
earnings expectations and corporate fun-
damentals, and so far they re looking pretty
good," said Michael Arone, chief investment
strategist at State Street Global Advisers.
Profits for S&P 500 companies are up 5.6
per cent from a year ago this earnings season,
according to FactSet. That growth is better
than the 4.6 per cent increase the market
Quarterly results from Microsoft and UPS
helped lift stocks Friday, but there have been
other strong reports this week. Caterpillar,
3M, Apple and others have all came in well
Microsoft s sales and profits were well
above analysts expectations. Cloud services,
a business the company has focused on,
also grew. Microsoft rose US$1.11, or 2.5 per
cent, to US$46.13.
UPS also reported strong results and
expects December shipments to rise 11 per
cent from a year ago. Many investors con-
sider UPS a bellwether for how the U.S.
economy is doing, particularly during the
crucial holiday shopping season. UPS rose
11 cents, or 0.1 per cent, to US$100.59.
Investors were able to set aside dismal
third-quarter results from Amazon. The
online retailer s stock took a beating, but
that wasn t enough to drag down the rest
of the market.
The Dow Jones industrial average rose
127.51 points, or 0.8 per cent, to 16,805.41.
The Standard & Poor s 500 index added
13.76 points, or 0.7 per cent, to 1,964.58
and the Nasdaq composite rose 30.92 points,
or 0.7 per cent, to 4,483.72.
The S&P 500 rose 4.1 per cent for the
week, its biggest gain since January 2013.
But volatility can go both ways. Just as the
market jumped sharply this week, it plunged
just as sharply last week. The index is still
down 0.4 per cent for October.
"We ve seen the market sell-off and we
saw people buy on the bounce, and that
looks like it will continue," said Brad McMil-
lan, chief investment officer at Common-
Amazon reported a steeper-than-expected
quarterly loss despite soaring sales. Investors
have grown impatient with the company,
which has been unable to deliver profits
even as it gains ground as one of the world s
largest retail companies.
Amazon fell US$26.12, or 8.0 per cent,
Investors are turning their focus to next
week s Federal Reserve policy meeting for
hints about the future of the central bank s
bond purchases and its short-terms interest
The bond-buying program has kept long-
term rates extremely low to encourage
investment and hiring. Recent mixed signals
about the strength of the U.S. recovery have
prompted speculation that the Fed might
let the program continue for longer than
Investors will also get another large batch
of quarterly results from US companies next
week, when 159 members of the S&P 500
Those companies include Merck, Exxon
Mobil, Chevron and Visa.
The price of oil fell Friday on further evi-
dence of ample supplies and weak demand.
Benchmark U.S. crude fell US$1.08 to close
at US$81.01 a barrel in New York.
Brent crude, a benchmark for international
oils used by many US refineries, fell 70 cents
to close at US$86.13 in London.
In New York, wholesale gasoline fell 2.5
cents to close at US$2.182 a gallon, heating
oil fell 1.7 cents to close at US$2.482 a gallon
and natural gas rose 0.1 cent to close at
US$3.623 per 1,000 cubic feet.
The price of gold rose US$2.70 to
US$1,231.80 an ounce, silver rose two cents
to US$17.18 an ounce and copper was flat
at US$3.04 a pound. AP
Euro rises on
US stock market has best
week in nearly two years
Specialist David Vadala, right, works at his post on the floor of the New York Stock Exchange, before the close Wednesday, October 22,
2014. Stocks fell in late afternoon trading on Wednesday, a day after the Standard & Poor's 500 index had its biggest gain of the year.
That broad index is on track to end four days of gains after a stretch of tumultuous trading in recent weeks. AP
A group of 25 banks
have failed European
stress tests, while up to
10 of those continue to
have a capital shortfall
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