The interregnum between Christmas and New Year can be a peculiar time for the financial markets, when many traders are still taking a break, meaning volumes are light.
By Peter Martin
Wednesday, December 31, 2014
But there is, of course, no suspension in geopolitical events, such as yesterday’s news from Greece.
The Greek government failed to find the backing it needed in parliament to elect its nominee for head of state, prompting a snap election for late next month and raising concerns that the anti-austerity opposition party might gain power and clash with the country’s creditors. While that news rocked the Greek stock market yesterday, wider repercussions are being seen more today, with sharp falls in European bourses and a rise in safe-haven instruments.
The UK’s FTSE 100 Index and the German DAX both finished down more than 1%, with the thin volumes perhaps magnifying the moves, while spot gold climbed 1.5% to $1200 a troy ounce and the Japanese yen strengthened strongly against both the euro and the dollar: USD/JPY fell 0.95% to 119.52, having earlier dropped below 119.00.
Losses in New York were more moderate than those seen across the Atlantic, with some encouraging domestic news helping to constrain the declines. By mid-afternoon on Wall Street, the Dow Jones was down 54 points or 0.30% at 17,984, while the S&P 500 Index fell 10.2 points or 0.49% to 2080.5, with the utility and financial sectors performing the worst.
Consumer confidence up
Consumer Confidence was the big economic release of the day and the news was good. The Conference Board’s Consumer Confidence Index rose to 92.6 this month, advancing from November’s upwardly-revised level of 91.0 (originally reported as 88.7). Strength was contained within the present situation sub- index, which climbed to 98.6 from 93.7, while the expectations index showed some weakness, slipping from 89.3 to 88.5. The present situation index now stands at its highest level in more than six years, and despite the decline in expectations, consumers still appear more confident about the future than they were as the year began.
In a separate report, house prices climbed sharply in October on a seasonally-adjusted basis, according to data recorded by Case-Shiller. The 20-city home price index rose 0.8%, beating the consensus estimate of 0.6%, following September’s downwardly-revised 0.2% increase. Looking at prices on a year-to-year, unadjusted basis, things look a little less rosy, though, up 4.5% in October, compared to 4.8% in the month prior. There is more housing data tomorrow in the form of the pending home sales index for November. The consensus estimate is for a 0.5% increase.
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