Stocks tempered by Argentina default, Portugal
August 5, 2014, 12:00 am TWN
BEIJING/HONG KONG--World stock markets were mostly higher Monday after a sixth month of healthy employment growth in the U.S., but gains were tempered by jitters over Argentina's debt default and a Portuguese bank bailout.
In morning trading, France's CAC-40 rose 0.3 percent to 4,216.11 while Germany's DAX declined 0.1 percent to 9,201.09. Britain's FTSE 100 rose 0.1 percent to 6,688.28. Futures suggested a Wall Street rebound from last week's declines. The futures for the Standard & Poor's 500 and the Dow Jones Industrial Average were both up 0.2 percent.
July employment data on Friday showed the United States added more than 200,000 jobs for a sixth straight month. That was slightly below expectations but added to signs an economic recovery is gaining traction. At the same time, most economists don't think the pace of job growth is enough to cause the Federal Reserve to speed up its timetable for raising interest rates. Most still think the Fed will start raising rates to ward off inflation around mid-2015.
The International Swaps and Derivatives Association ruled on Friday that Argentina had defaulted on its bonds for the second time in 13 years. The ruling came in the midst of a high-profile court dispute with a handful of creditors that has complicated Argentina's repayment plan. The default triggers payments to holders of credit insurance.
As a result of Argentina's default, “we get skittish investors preferring to stay out of the market,” said analyst Desmond Chua of CMC Markets in a report.
Portugal's central bank announced late Sunday it will provide 4.9 billion euros (US$6.6 billion) in an emergency rescue to prevent the collapse of ailing bank Banco Espirito Santo, one of the country's biggest financial institutions. Banco Espirito Santo's share price plunged by 75 percent last week after the bank reported a half-year loss of 3.6 billion euros following an audit that revealed previously undisclosed debts.
Asian shares were mixed Monday with China buoyed by recent data indicating recovery, but other markets were unsettled by drops on Wall Street and the bailout of a crisis-hit Portuguese bank.
Tokyo's Nikkei fell 0.31 percent or 48.61 points, closing at 15,474.50, Sydney dipped 15.5 points, or 0.28 percent, to finish at 5,540.9, and Seoul rose 0.35 percent, or 7.32 points, to end at 2,080.42.
Hong Kong rose 0.28 percent or 67.65 points to close at 24,600.08, while Shanghai jumped 1.74 percent, or 38.03 points, finishing at 2,223.33. Shenzhen gained 1.40 percent, or 16.03 points, to 1,164.32.
In China, heavyweight blue-chip stocks led the gains, after an official survey Friday showed manufacturing rose at its fastest rate for more than two years in July.
In the United States, the Dow Jones Industrial Average lost 0.42 percent despite a solid U.S. jobs report and generally good corporate earnings.