Home' Trinidad and Tobago Guardian : July 13th 2014 Contents JULY 13 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
Major global equi-
edged higher and
the yen stabilised
against the US
dollar on Friday
as worries about Portugal s biggest bank
ebbed, while oil prices dropped on eas-
ing concern about supply losses in the
MSCI s All-World Index, however,
was still down 1.4 per cent for the week,
while the Standard & Poor s 500 index
posted its worst week since April.
Early US earnings reports sparked
some caution for US stock investors,
with Well Fargo s shares down 0.62 per
cent after the bank for the first time
since 2009 did not increase its earn-
ings-per-share from the preceding
Portugal s PSI 20 index rose 0.62 per
cent after the country s largest bank,
Banco Espirito Santo, said late on
Thursday that loan losses that hit its
founding family would not put the bank
at risk of running short of capital.
Shares in Portugal s largest listed
lender fell 36 per cent this week, its
worst week on record.
The calmer market enabled Italy to
sell 7.5 billion euros of bonds, the top
of its targeted range, in an auction that
sharply contrasted with Greece s three-
year bond sale on Thursday, in which
demand was hurt by fallout from Por-
"Issues within Portugal s banking
system... will be minimized and con-
tained within their system and the glob-
al economy is in a much better position
to handle such risks," said Bryan Novak,
director of trading at Astor Investment
Management in Chicago.
The Dow Jones industrial average
closed up 28.74 points, or 0.17 per
cent, at 16,943.81. The Standard &
Poor s 500 Index was up 2.89
points, or 0.15 per cent, at 1,967.57.
The Nasdaq Composite Index was
up 19.29 points, or 0.44 per cent,
at 4,415.49. The S&P 500 fell 0.9
per cent for the week.
"Wells came in a little light, and while
there was nothing really wrong with
the quarter, it is one of the few banks
that can be counted on to beat profit
expectations and that didn t happen,"
said Matthew Kaufler, portfolio manager
at Federated Investors in Rochester,
The MSCI world equity index
rose 0.06 per cent, while the pan-
European FTSEurofirst 300 index
closed up 0.16 per cent.
Currency markets were mostly steady,
with the dollar 0.02 per cent lower
against the yen at 101.31. The euro was
unchanged against the dollar at
US Treasury bond prices rose on
safe-haven demand stemming partly
from lingering worries about Portugal.
Appetite for Treasuries was also stoked
by the minutes of the U.S. Federal
Reserve s June policy meeting released
on Wednesday, which hinted that the
central bank is likely to cling to its near-
zero interest rate policy until the second
half of 2015.
Benchmark 10-year Treasuries were
up 4/32 in price to yield 2.518 per cent.
As tensions in the Middle East
showed little sign of abating, Brent
crude oil was off $2.17 at $106.53 a bar-
rel in late trading. US crude lost US$2.21
to US$100.72 per barrel.
US stocks stabilised and ended with
a small gain Friday, but it wasn t
enough to prevent the market s
biggest weekly drop since April.
Investors became more cautious this week as cor-
porate earnings for the April-June period began trickling
in. Worrisome news about a Portuguese bank also
revived fears about the European debt crisis. That
weighed on stocks, which had closed out the previous
week at record highs.
Investors are now mulling whether the stock s
market valuations are justified by the outlook for
company earnings, or whether they have risen too
far, too fast.
As investors try to make sense of the market, "we
could be in a holding pattern," said Kristina Hooper,
US Investment Strategist at Allianz Global Investors.
The Standard & Poor s 500 index rose 2.89 points,
or 0.2 per cent, to 1,967.57 on Friday. Its weekly decline
of 0.9 per cent was the biggest since April 11.
The Dow Jones industrial average climbed
28.74 points, or 0.2 per cent, to 16,943.81. The
Nasdaq composite rose 19.29 points, or 0.4 per
cent, to 4,415.49.
On Friday, investors absorbed corporate news and
Lorillard, whose cigarette brands include Newport,
Old Gold and Kent, rose $2.92, or 4.6 per cent, to
$66.01. Lorillard and rival Reynolds American con-
firmed they are in talks to combine --- a deal that
would create a formidable rival to Altria Group Inc,
owner of Philip Morris USA.
Investors also pored over company earnings.
Fastenal, a maker of industrial fasteners, fell
the most in the S&P 500. Its stock dropped
$2.01, or 4.2 per cent, to $46.15 after reporting
sales that missed analysts expectations.
As US companies start to report second-quarter
results, investors expect more growth in profits. Earn-
ings for S&P 500 companies are forecast to climb by
6.4 per cent. That rise would be bigger than the 3.4
per cent increase in the first quarter and the 4.9 per
cent in the same period a year earlier, according to
data from S&P Capital IQ.
While earnings are rising, stock valuations have
The price-earnings ratio for S&P 500 companies,
which measures a company s stock price compared
to next year s forecast earnings, has edged higher to
15.7 from 15.1 at the start of this year and 12.6 at the
start of 2013.
"With valuations where they are ... we are pleasantly
surprised at the resilience of the market," said Colleen
Supran, a principal at Bingham, Osborn & Scarborough,
an investment management company. "Investors still
seem to be able to find reasons not to panic."
That was evident Friday, and even Thursday, when
the US stock market opened with a plunge as investors
worried about the financial health of a holding com-
pany linked to Portugal s biggest bank.
The market regained much of its early loss Thursday
afternoon. On Friday, it held steady.
In government bond trading Friday, prices rose.
The yield on the 10-year Treasury note, which moves
in the opposite direction to its price, dropped to 2.52
per cent from 2.54 per cent.
Oil had its biggest one-day drop since April, as
Libyan oil appears poised to return to the market
while global demand looks to be muted. Oil fell $2.23,
or 2.2 per cent, to $100.70. AP
Global stock indexes up slightly as
Portugal fears ebb; oil down sharply
but end down
for the week
Pedestrians are reflected on an electronic stock board of a securities firm in
Tokyo, on Wednesday, July 9. Asian stock markets fell for a third day Wednesday
as caution spread ahead of corporate earnings and after record highs on Wall
Specialist Charles Solomon works at his post on the floor of the New York Stock Exchange, on Thursday, July
3, 2014. The Dow Jones industrial average topped 17,000 for the first time Thursday, the index's first big
1,000-point milestone this year, following news that hiring in the US accelerated last month. (AP)
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