Home' Trinidad and Tobago Guardian : January 18th 2015 Contents JANUARY 18 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOOCKS | SBG9
Asurge in oil and gas
the stock market out
of a five-day slump
on Friday, as the
price of crude swung
Oil prices jumped after the International
Energy Agency predicted drillers would cut
production this year. Exxon Mobil, Chevron
and other energy companies led all 10 sectors
of the Standard & Poor s 500 index to gains,
climbing 3 per cent. Oil s seven-month slide
had cut its price by more than half.
"Lower oil prices on the whole are sup-
portive of economic growth worldwide,"
said Jason Pride, director of investment
strategy at Glenmede Trust. "They re very
helpful for Japan, Europe, China and India.
It s clearly a good thing."
The S&P 500 index gained 26.75 points,
or 1.3 per cent, to finish at 2,019.42.
The Dow Jones industrial average climbed
190.86 points, or 1.1 per cent, to close at
17,511.57, and the Nasdaq rose 63.56 points,
or 1.4 per cent, to 4,634.38.
The rally came at the end of another
rough week for the market. Since the start
of the year, worries about the strength of
the global economy and falling oil prices
have weighed major indexes down. Even
with its strong performance on Friday, the
S&P 500 still lost 1.0 per cent for the week,
its third straight weekly drop.
"There has been a lot of conflicting infor-
mation to digest, recently," said Anastasia
Amoroso, a global market strategist at JP
Morgan Asset Management.
Amoroso said the big question has been
whether the recent slump in oil prices will
lead to other problems, such as deflation,
a downward spiral in prices that could put
companies out of business. "Are low oil
prices a good or a bad thing?" she asked,
rhetorically. "For stocks, deflation is not so
Benchmark US crude jumped US$2.44
on Friday to settle at US$48.69 a barrel in
New York trading. Brent crude, a benchmark
for international oils used by many US
refineries, added 31 cents to US$50.17 in
The economic reports out Friday offered
investors some encouragement. U.S. man-
ufacturers churned out more furniture, com-
puters and clothing in December, according
to the Federal Reserve, as factory production
increased for a fourth straight month in a
row. In a separate report, a gauge of con-
sumer sentiment from the University of
Michigan jumped to its highest level in 11
A fall in trading revenue pulled down
Goldman Sachs s quarterly earnings 10 per
cent. The investment bank s fixed income,
currency and commodities division slumped
29 per cent. Goldman s stock dipped
US$1.26, or 0.7 per cent, to US$177.23.
It was a recurring theme for a week in
which JPMorgan Chase, Bank of America
and other big banks turned in results that
missed analysts forecasts. Overall, analysts
predict that big corporations will post earn-
ings growth of 4 per cent, according to S&P
Capital IQ. Sales are expected to rise just
2.1 per cent, largely the result of falling rev-
enue for oil companies.
Most major markets in Europe closed
with solid gains. Germany s DAX and
France s CAC 40 climbed 1.3 per cent.
Britain s FTSE 100 rose 0.8 per cent.
A move by the Swiss National Bank on
Thursday rippled through currency markets,
after the central bank ditched its policy to
cap the rise of the Swiss franc. Following
the news, the Swiss franc spiked against
both the euro and the dollar. Switzerland s
stock market sank again on Friday, losing
6.0 per cent.
The move in the Swiss franc rocked bro-
kerages that deal in foreign currencies.
FXCM, a New York-based brokerage, said
late Thursday that its big losses may have
put the company in breach of regulatory
requirements. FXCM s stock plunged ahead
of the opening bell before trading in its
shares was suspended.
In the bond market, US Treasury prices
fell, driving the yield on the 10-year Treasury
note to 1.83 per cent.
Precious and industrial metals extended
their recent run. Gold gained US$12.10 to
settle at US$1,276.90 an ounce, while silver
rose 65 cents to US$17.75 an ounce. Copper
inched up 6 cents to US$2.62 a pound.
In other trading on the New York Mer-
--- Wholesale gasoline rose 6 cents to close
at US$1.359 a gallon.
--- Heating oil rose 4.3 cents to close at
US$1.666 a gallon.
--- Natural gas fell 3.1 cents to close at
US$3.127 per 1,000 cubic feet. AP
Asian stocks were
sharply lower Friday
after a surprise move by
the Swiss National Bank
to abandon its efforts to
keep its currency
shocked the market.
Japan's Nikkei 225
dropped 2.8 per cent to
16,628.06 while South
Korea's Kospi fell 1.2 per
cent to 1,891.04. The
dollar fell to 115.983 yen
from 116.207 yen while
the euro rose to
The Reserve Bank of India cut its key
interest rate Thursday by a quarter
per centage point in a surprise move
that adds impetus to government
efforts to revive Asia s third-biggest
The decision to lower the rate to 7.75 per cent,
announced more than two weeks before the central
bank s planned monetary policy review on February
3, follows several months of declines in India s stub-
bornly high inflation.
India s short-term lending rate has been held at
8.0 per cent since January 2014 to counter inflation,
which hit double digits last year.
But helped by lower oil prices, "both near-term
and longer-term inflation expectations have eased
to single digits for the first time since September
2009," the bank s governor, Raghuram Rajan, said in
a statement. In December, inflation was 5.0 per cent.
The rate cut signals a "victory over the inflation
dragon," fund manager Tushar Pradhan at HSBC
Global Asset Management said in a statement.
The rate cut adds to optimism that India is recov-
ering from the economic malaise that helped catapult
Prime Minister Narendra Modi into office in May.
A UN report on Wednesday predicted the country s
economy would grow by 6.4 per cent during this
fiscal year, up from 4.7 per cent in the fiscal year
ended March 2014. The Finance Ministry has predicted
growth in the current fiscal year of about 5.5 per
The central bank governor also noted "the gov-
ernment has reiterated its commitment to adhering
to its fiscal deficit target" of 4.1 per cent of gross
domestic product this year, as it prepares next year s
budget for presentation in February.
The news boosted India s currency and stock mar-
ket. The Sensex stock index was up 2.7 per cent and
the dollar fell to 61.63 rupees from 62.16 rupees
Finance Minister Arun Jaitley, who was pressing
the bank to lower interest rates, said the move would
"lead to more money in the hands of the consumer
for greater spending" and "will certainly help in
reviving the investment cycle the government is trying
Industry groups and analysts were also enthused,
even while noting one rate cut was too marginal to
have much impact on the economy.
The rate cut signals the government and the RBI
are "acting in concert to harness demand and take
the economy to a higher orbit of growth," said Chan-
drajit Banerjee, director general of the Confederation
of Indian Industry.
The central bank said that as it considers further
rate cuts, it will want to be sure that inflation continues
to decline and that supply bottlenecks are cleared in
the electricity, mining and infrastructure industries.
Bank of America fell 5 per cent after it re-
ported an 11 per cent slide in fourth-quarter
net income, hurt by a slowdown in trading
The Dow Jones industrial average
dropped 106.38 points, or 0.6 per cent, to
The Standard & Poor's 500 index fell
18.60, or 0.9 per cent, to 1,992.67.
The Nasdaq composite fell 68.50, or 1.5
per cent, to 4,570.82.
For the week:
The Dow is down 416.66 points, or 2.4 per
The S&P 500 is down 52.14 points, or 2.6
The Nasdaq is down 133.24 points, or 2.8
For the year:
The Dow is down 502.36 points, or 2.8
The S&P 500 is down 66.23 points, or 3.2
The Nasdaq is down 165.23 points, or 3.5
India's central bank
cuts key interest rate
by quarter point
Trader Kevin Lodewick, right, works on the floor of the New York Stock Exchange
Wednesday, January 14, 2015, in New York. Stocks are falling and bond prices are rising
following some discouraging news on the US economy and a weaker forecast of global
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