Friday, May 10, 2013

Market LookBeck II

(Reuters) - The U.S. dollar rose to its highest against the yen in over four years on Thursday, blasting through the 100-yen level, while shares in major markets slipped from recent record levels.

Investors sold the low-yielding yen as ongoing support from central banks around the world continues to push cash into higher-yielding assets. U.S. stocks fell slightly after recent gains from a rally that has taken the S&P 500 to record closing highs for five straight sessions.

The dollar got support from data showing applications for unemployment insurance in the United States fell to the lowest level in more than five years in the latest week.

"A stampede out of safety and brightening U.S. job prospects helped catapult the dollar over the key triple-digit threshold against the yen," Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, said in a note.

The yen is on track to post its eighth straight month of declines against the greenback, shedding more than 30 percent since its September high near 77. A mega-stimulus program unleashed by the Bank of Japan last month has helped continue the weakening trend in the Japanese currency.

U.S. stocks slipped but the recent uptrend remains intact.

"We've had such a consistent upward move that investors need some real new news to keep the momentum going," said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.

"The jobless claims were a good number, but not enough of 'new news.' Investors want to see something that shows a good pickup in economic activity."

Pull-backs have been short and shallow despite recurring calls for a correction in U.S. equities. Globally, the expectation of continued accommodative monetary policy from central banks has maintained support for stocks.

The Dow Jones industrial average was down 23.66 points, or 0.16 percent, at 15,081.46. The Standard & Poor's 500 Index was down 5.59 points, or 0.34 percent, at 1,627.10. The Nasdaq Composite Index was down 1.16 points, or 0.03 percent, at 3,412.11.

The euro zone's Euro STOXX 50 index dropped 0.4 percent, retreating from a near two-year high but finding support at an upward trendline from lows hit on April 18. The pan-European FTSEurofirst closed flat to stay near five-year highs.

The MSCI world index, which tracks stocks in 45 countries, was down 0.8 percent after earlier hitting its highest level since June 2008.


The U.S. currency strengthened across the board, with the dollar index up 1 percent and above its 14- and 50- day moving averages.

The euro was trading down 0.9 percent at $1.3024 after earlier hitting a high of $1.3177.

The euro was also pressured by slightly softer-than-expected demand at a Spanish debt auction, while Spanish government bond yields rose.

Oil prices dipped on a combination of weaker demand and rising supplies.

U.S. oil lost 69 cents to $95.93 while Brent crude fell 26 cents to $104.08 per barrel. The benchmark has slipped from a one-month high of $105.94 touched on Tuesday after Israeli air strikes on Syria over the weekend stoked supply fears.

"There's too much crude oil production in the world, and when traders become worried about that, they end up selling," said Tim Evans, energy specialist at Citi Futures Perspective.

Saudi Arabia increased crude oil output by 160,000 barrels per day to 9.3 million bpd in April, industry sources said this week, adding to an already well-supplied global market.

Spanish bond yields rose on speculation Madrid may be planning another bond sale after borrowing costs fell at Thursday's auction of just over 4.5 billion euros of new debt.

The country's 10-year bond yields were 8 basis points higher at 4.19 percent, having moved away from the 2-1/2 year lows of 3.95 percent touched last week when the ECB cut rates and said it would consider further policy easing.

The benchmark 10-year U.S. Treasury note yield was above 1.8 percent for the first time in almost a month.

Gold prices fell after the strong U.S. jobs data, with dollar strength weakening the price further. Spot gold was down 1 percent to $1,458.06. The metal gained 1.4 percent in the previous session, its biggest one-day rise in two weeks.