Markets retreat on global economic fears
14 Aug 2010
New York: With fear gripping financial markets that global growth may be crimping, investors have dumped stocks and sought shelter in safe haven territory of the dollar, the yen and US Treasuries.
The latest round blood-letting in the markets would certainly have been sparked off of by the policy statement from the US Federal Open Market Committee on Tuesday, which spoke of ''more modest'' growth in the economy. Fed's move to inject some liquidity into the market by re-investing proceeds from its mortgage-backed securities holdings into long-term securities, within a month of offering advice to a Congressional sub-committee that it wasn't inclined to intervene in the markets for the moment, would certainly have spooked investors.
A lumbering US economy apart the news from around the world hasn't helped sentiment either. While China has reported a decline in retail sales, and projections are surfacing indicating a cooling off in growth for this communist country, other countries around the world, in particular Japan, and the UK have also downgraded their economic outlook.
The Dow Jones Industrial Average has nose-dived and so has the Standard & Poor's 500-stock index.
Marking the retreat to safe-haven territory was the fact that the benchmark 10-year Treasury note was up 17/32 pushing the yield down to 2.706%, the lowest since April 2009. The two-year note was up 1/32 to yield 0.505%.
The commodities markets took a hit as well with oil futures sliding after an International Energy Agency warning that oil demand could take a substantial hit with waning global economic growth.
Light, sweet crude for September delivery recently traded $2.08, or 2.6%, lower at $78.18 and slipped further to $76 a barrel on the New York Mercantile Exchange.
Gold prices rallied - always is a sure indicator of troubled times. The most actively traded gold contract, for December delivery, was recently up $9.80, or 0.8%, at $1,207.80 an ounce on the Comex division of the New York Mercantile Exchange.