News Column

Relatively Calm, U.S. Markets Rise

Aug. 12, 2011
Computer with down/up arrow

U.S. markets rose Friday after four days in which the Dow Jones industrial average logged 400-point or better swings.

It was the first time in history the Dow has been on that wild a romp -- a week so volatile France, Belgium, Italy and Spain joined Turkey and Greece with temporary bans on short selling, deals in which a trader borrows, sells, then buys back stock, making money if the value goes down.

Experts said they weren't sure whether the ban would do much to restore order and confidence in the markets.

"In the short term it will help calm things down, but if you look at what happened at Lehman during the crisis, it didn't do much," Ion-Marc Valahu, who helps run fund management firm ClairInvest in Geneva, told the BBC.

Western countries imposed a ban on short selling in 2008 when Lehman Brothers' collapse prompted the United States and Britain to ban the practice.

On Wall Street in early afternoon trading, the DJIA gained 163.70 points, or 1.47 percent, to 11,307.01. The Standard & Poor's 500 index added 11.72 points, 1 percent, to 1,184.36. The Nasdaq composite index was ahead 20.23 points, or 0.81 percent, to 2,512.91.

The benchmark 10-year treasury note rose 24/32, pushing yields lower to 2.264 percent.

In currency shifts, the euro rose to $1.4241 from Thursday's $1.4239. Against the yen, the dollar rose to 76.87 yen from Thursday's 76.84 yen, offering some relief to export-driven Japan, which has seen the yen steadily strengthen this week.

European stocks rose early Friday and Asian stock prices closed mixed, ending a week of ferocious turbulence and huge paper losses.

London's FTSE 100 closed up 3.04 percent, which was on the low side for Europe for the day. The Parisian CAC 40 index added 4.02 percent, while the DAX 30 in Frankfurt, Germany, rose 3.45 percent.

In Belgium, the Bel-20 index added 5.5 percent. In Sweden, the OMX index rose 2.42 percent.

Tokyo's Nikkei-225 index, which after going over 9,000 points during the day, fell back below that psychological mark, ending down 18 points, or 0.2 percent, to 8,964 points.

On Friday, the Japanese government, citing devastation from the March earthquake and tsunami, cut its growth forecast for this fiscal year to 0.5 percent from its earlier 1.5 percent, but added the gross domestic product in fiscal 2012 is expected to grow more than 2.5 percent as domestic demand rises with post-quake reconstruction picking up.

In other Asian markets, Hong Kong's Hang Seng Index also gave up early gains, slipping 25 points, or 0.13 percent, to end the day at 19,620 points.

The Shanghai Composite index, however, closed 11 points higher, or 0.45 percent, at 2,593 points. Investors' concerns remained about China's rising inflation that hit 6.5 percent in July.

State media reported the yuan hit a record high of 6.3972 against the U.S. dollar Friday on the China Foreign Exchange Trading system.

Australia's All Ordinaries gained 34 points, or 0.82 percent, with a closing of 4,238 points.

South Korea and Taiwan closed down for the day. Markets in India also closed lower.

"Investors are looking for any signs that the United States will be able to avert a double-dip recession," Mark Luschini, chief investment strategist at Janney Montgomery Scott, told CNN.

Source: Copyright United Press International 2011

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