Global stocks, euro trade flat as Spain dents sentiment
GLOBAL stocks and the euro traded near break-even on Friday after an upbeat report on US consumer sentiment offset investors’ concerns about Spain’s deteriorating finances and a possible Greek exit from the euro.
The euro plumbed a fresh 22- month low against the US dollar after the president of Catalonia, Spain’s wealthiest region, said it is running out of options for refinancing more than 13 billion euro in debt that comes due this year.
The euro briefly fell below $1.25 on trading platform EBS but pared losses to last trade down only 0.08 percent at $1.2527.
But European stocks and oil prices rebounded after recent sharp declines. A report that showed US consumer sentiment rising to its highest level in more than four years in May helped buoy sentiment in some quarters, leading US stocks to pare some losses. The broad S&P 500 traded near break-even.
The Thomson Reuters /University of Michigan’s final reading on the overall index on consumer sentiment rose to 79.3 from 76.4 in April, topping forecasts for 77.8 and an initial May reading of the same.
“Unfortunately, consumer confidence is still extremely vulnerable to a reversal, as occurred in the past two years,” survey director Richard Curtin said in a statement.
The Dow Jones industrial average was down 18.80 points, or 0.15 percent, at 12,510.95. The Standard & Poor’s 500 Index was up 1.45 points, or 0.11 percent, at 1,322.13. The Nasdaq Composite Index was down 1.13 points, or 0.04 percent, at 2,838.25.
In Europe, the FTSEurofirst 300 index rebounded, rising 0.2 percent to around 985.
MSCI’s all-country world equity index erased nearly all losses to trade 0.06 lower at 300.70.
News of Catalonia’s troubles came as Spain’s Bankia is set to ask the state for a bailout valued at more than 15 billion euros ($19 billion), marking another rise in the cost of rescuing the country’s fourth-biggest bank.
Markets already were skittish over a possible Greek exit from the eurozone. Bonds prices rose in a bid for safety as investors prepare for what is likely to be volatile trading over the coming month.
“The Catalonia news was a big deal because it implies that the Spanish government may have to take on more debt and it cannot afford to do so,” said Richard Franulovich, senior currency strategist at Westpac Securities in New York.
“For now, it’s all about contagion,” he added.
The US dollar index fell 0.02 percent at 82.329. The benchmark 10-year US Treasury note was up 11/32 in price to yield 1.74 percent.