In thin trading in New York Thursday, with markets closed early at 1:00 pm Eastern for today's July 4th holiday weekend, the big focus was on the June employment report on a day when crude oil breached the $145 a barrel level in both New York and London.
US nonfarm payrolls fell for a sixth consecutive month, dropping by 62,000 jobs in June. The month's unemployment rate held at 5.5%, after rising sharply in May. A service-sector report also supported the gloomy outlook.
US lost 62,000 jobs in June - Six straight months of job losses total 438,000
Dr. Peter Morici: Crisis grips US Job Market: Economy sheds 62,000 jobs in June
The Institute of Supply Management said its index of service sector activity fell to a reading of 48.2 in June, below analysts' expectation for a reading of 51.0. Any reading below 50 indicates contraction.
The Dow Jones Industrial Average closed 73.03 points, or 0.7%, at 11288.54, down 14.9% in 2008. Component General Motors rose 1.4%.
GM fell to a 54-year low on Wednesday and the stock closed Thursday at $10.17, down from $18 just a month ago.
Crude oil rose to a record on concern conflict with Iran over its nuclear program would cut Persian Gulf supplies.
Brent North Sea oil for August delivery surged to a life-time peak of $146.34 per barrel in morning trade. In New York, oil touched a new record of $145.85. On the New York Mercantile Exchange, oil closed at $145.29. Brent closed at $146.08.
Alexei Miller, chief executive of Russia's gas giant OAO Gazprom, added fuel to the fire by saying that Europeans would soon have to pay much more for imports of natural gas. Miller, who last month forecast that oil would rise to $250 a barrel in the near future, said Russian gas would be sold in Europe for $500 per thousand cubic meters by the end of the year - about a fifth more than the current price.
On Friday, most Asian stocks fell and Japan's Nikkei 225 Stock Average fell for a 12th day, the longest losing streak in 54 years.
All Asian benchmark indexes fell this week, except Vietnam.
The Nikkei fell 0.21%; India's Sensex 30 Index rose 1.28% and China's CSI 300 fell 0.89%.
In Europe Friday, the Dow Jones 600 has risen 0.1%.
In Dublin, the ISEQ Index has fallen 0.36%.
Glanbia has risen over 1% after issuing a positive trading statement.
UBS AG, the European bank hardest hit by the US subprime crisis, said today it may avoid a loss in the second quarter after about 3 billion Swiss francs ($2.9 billion) in tax credits.
The largest Swiss bank may post results ``at or slightly below break-even,'' the bank said in a statement today.
Writedowns at UBS, which amounted to more than $38 billion in the previous three quarters, led the bank to raise more than $29 billion of capital from investors this year.
UBS' share price jumped 7.8% in Zurich.
UBS Statement:UBS announces that its results for the second quarter ended June 30, 2008, which will be released as planned on August 12, are likely to be at or slightly below break-even.
The results reflect positive contributions from Global Wealth Management & Business Banking and from Global Asset Management, offset by a loss in the Investment Bank.
Further market deterioration led to writedowns and losses on previously disclosed Investment Bank risk positions, in particular credit valuation adjustments on monoline insurance exposures. Write-downs were mitigated by continued exposure reductions and by hedge benefits. In connection with the losses to date, the second quarter results include a tax credit of approximately CHF 3 billion.
Group net new money was negative for the period. This was most pronounced in April but improved in May and June, in particular for Global Wealth Management & Business Banking.
In Europe Thursday, the ECB hiked its key rate to 4.25% and investors took heart from the signal that the rise isn't the first of a series.
Trichet says "no bias" on future rate hikes following ECB rise to 4.25%; Sweden raises benchmark to 4.5%; Iceland keeps rate on hold at 15.5%
ECB Rate Outlook from Irish Bank Economists - Austin Hughes somersaults from 3 interest rate cuts in 2008 to "strong possibility of a further ECB rate rise in September or October"
Rossa White, economist at Davy said today that the ECB gives Irish economy a boost by signalling that rate hike will not be followed up
The beleaguered Irish economy is finally receiving a boost. The European Central Bank yesterday (July 3rd) made it pretty clear that another rate hike is not imminent, following its decision to nudge its refi rate up to 4.25% from 4%. The next move will likely be downwards but not until well into next year.
Ireland's housing market is sensitive to interest rate increases: there are virtually no long-term fixed rate mortgages (five-year plus) available. Because of the leverage in the system, each increase is amplified. Yes, banks are still going to be pushing up mortgage rates due to money market stress, but the alternative – a series of base rate hikes from the ECB – would have been a damaging scenario.
We are not crass enough to rule anything out, but it looks unlikely now that the refi rate will head towards 5%. Our view is that the euro area is now slowing to growth well below trend. Despite a tight labour market, the risk of harmful second-round effects is still low. Workers were not able to push through significant wage increases during the good times of the last couple of years, and the euro area labour market has a history of weakening quickly. Of course if the oil price keeps spiking, it could alter the scenario. But we think that tighter monetary policy globally will bring that price down in the next six months.
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The euro is trading at $1.5704 and at £0.7927.
For live currency updates, check the right-hand column of the Finfacts home page.
The dollar had fallen to $1.6019 per euro on April 22nd - an-all time record.
Crude oil for August delivery is currently trading on the New York Mercantile Exchange (Nymex) at $145.22 per barrel down 7 cents from Thursday's close. In London, Brent for August delivery is trading on the International Commodities Exchange at $146.18 up 10 cents.
Gold spot price
Gold is trading at $934.10 in New York, up 50 cents from Thursday's close.