Stockmarkets will have more of the same to contend with this week: Japan, Libya, oil prices, gyrating currencies and volatile sentiment.
The expansion of the conflict in Libya over the weekend will heighten tensions in the region and make traders more cautious about believing that the markets can again rise after last week’s sell-off because of the triple disasters in Japan.
On Wall Street, the Dow was up 83.93 points, or 0.7%, at 11,858.52 at the close on Saturday morning, our time.
The Standard & Poor’s 500 Index was up 5.49 points, or 0.4%, at 1279.21 and the Nasdaq Composite Index was up 7.62 points, or 0.3%, at 2643.67.
The Dow fell 1.5 % in the week while the S&P was off 1.9% and the Nasdaq dropped 2.6% for the 4th week in a row.
US tech stocks have started drifting lower now as some investors believe the big rally has run its course and corporates will start cutting spending.
The Japanese tragedies have cut the flow of some important components to a slew of hi-tech giants including Sony, Apple and Texas Instruments.
The S&P and Dow ended lower for the second straight week as volatility jumped after the three Japanese disasters.
The Bank of Japan bought billions of dollars to stop the yen from appreciating, with buying also coming from US and European central banks.
In Australia our market will open flat to slightly lower this morning, depending on what is happening in Japan and Libya.
The Share Price Index futures contract was down 18 points at the close early Saturday, a bit of a contrast to the up tone on Wall Street.
The Australian dollar ended at 99.59 USc, up from 99.36 USc in late local trade on Friday and a recovery that came off the back of the intervention against the yen by the Group of Seven major economies.
On Friday, the ASX200 index ended up 71.4 points, or 1.6%, to 4626.4, its best showing since December 2.
The All Ordinaries index ended up 77.4 points, or 1.7%, at 4715.8.
The ASX200 lost 0.4% over the week, a good outcome given the big swings in sentiment here and offshore.
Helping push the US market higher was the mostly favourable decision from the US Federal Reserve on bank dividends and buybacks.
So bank shares jumped after the Fed announced it will allow some US banks to boost or restart dividend payments.
Not all 19 banks (or their owners) were allowed to boost payouts: Citigroup and Bank of America didn’t join the announcements, while Morgan Stanley indicated it had other uses for its capital.
Several banks reacted quickly: JPMorgan Chase led the way with a dividend hike and others came from some of the strongest banks through the crisis, including BB&T, Wells Fargo and US Bancorp. Wells Fargo also announced a share buyback.
While there was no news from Citigroup and Bank of America, the Fed said it was still discussing the reviews with banks and it would finish issuing its decisions by tonight, our time.
American Express said it had Fed approval for a buyback program, but did not announce its dividend plans.
Goldman Sachs announced that it was buying back the $US5 billion worth of preference shares held by Warren Buffett’s Berkshire Hathaway for $US5.6 billion.
Goldman said it plans to step up stock buybacks and may raise its quarterly common stock dividend. Goldman shares rose 3%.
Wells Fargo shares rose 1.5%. And JPMorgan’s jumped 2.6%.
US banks look like being kept to a 30% payout, down from the 50% profits that was the norm before the crash.
In Asia, Tokyo’s Nikkei was up 2.7% on Friday.
That came off the back of news about the intervention, but the index still ended the week off 10%.
Today’s trading will depend heavily on sentiment from the news flow about the reactors and Libya over the weekend.
The discovery of radiation in milk, drinking water and some vegetables from in and outside the exclusion zone won’t raise confidence levels.
Last week’s fall was the biggest weekly fall since October 2008 in the wake of the Lehman Brothers failure.
Hong Kong’s Hang Seng Index was little changed; South Korea’s Kospi Index added 1.1% and Australia’s ASX/200 Index rose 1.6%.
Shanghai’s Composite added 0.3% to 2,906.89, and Taiwan’s Taiex climbed 1.4% to 8,394.75.
Among other markets, New Zealand’s NZX 50 rose 0.3% and Philippine shares gained 0.6%.
The Indian market fell 1.5% on Friday and 1.6% for the week as inflation again rose and the Reserve Bank of India lifted its key interest rate by 0.25% to 6.75%.
The central bank forecast inflation to return to 8% in coming months thanks to higher oil prices.
In London the FTSE 100 Index climbed 31.85, or 0.6%, on Friday, but still ended the week down 1.7%.
Germany’s DAX edged up 7.5%, or 0.1%, to end the week off 4.5%.
