China May Help Out Biggest European Debtors

  Stocks rose yesterday during trading in America, boosting the Standard & Poor’s broad market index even higher for a third day in a row. The Euro also appreciated after the German and French leaders expressed support for Greece to stay in the Euro zone. Speculation also grew around the fact that China may help out the biggest European debtors. Italian and Spanish debt securities grew immediately after Zhang Xiaoqiang, the vice-chairman of the National Committee for Development and Reform, said that China is ready to buy bonds from countries suffering from the debt crisis. The S&P 500 rose 1.4%, closing at 1,188.68. At the same time, December futures on the index slid down less than 0.1% as of 7:21PM in New York. The Stoxx Europe 600 Index rose by 1.5%, while the Euro went up 0.6% to $1,3755. Yields on 10-year treasury bonds fell by one basis point to 1.98%. Oil futures fell 1.4% to reach $88.91 per barrel after fuel reserves and reserves of refined oil products increased. This in turn pulled the S&P GSCI commodities index down 0.6%.

The S&P 500 lost all of its earlier gains fairly quickly, while European stock indices underwent corrections on their earlier gains. The Austrian minister of finance failed to announce that a parliamentary vote on the issue of capitalizing the European financial rescue and stability fund was postponed. The parliament’s financial committee refused to include the matter in its agenda for today’s meeting.

American stock indices rose even after the US Department of Commerce reported that the volume of retail sales in August remained unchanged even after 0.3% growth in July, which turned out to be less than what had been predicted. The average forecast of 83 economists polled by Bloomberg predicted a growth of 0.2%. Another Department of Commerce report that followed showed that inventories grew less than predicted, by 0.4% in July, showing that companies are preparing for a slowdown in demand.  DT Trading analysts, along with most experts, can see that the situation in the US is not offering much optimism. Pessimism about the country’s economy is deepening in Americans’ psyche, and confidence in both US political parties is falling. Only 20% of Americans think that the country is on the right path for development. According to a Bloomberg National poll, only 9% of Americans think that the economy will not slide back into a recession. Yields on 10-year treasury bonds reached a record-low level of 1.877% on September 12. Before that, gold futures jumped to a record high of $1,923.70 per ounce since investors actively bought up assets considered the safest. Gold futures for December delivery dropped 0.2% to $1,826.50 today.

Thirty-year treasury bonds rose in price today after the US sold $13 billion of securities with record-low 3.31% yields on expectations that the Federal Reserve will buy back more bonds. An auction will be the last of three sales this week with a grand total of $66 billion. Yields on already-issued 30-year bonds fell six basis points to 3.27%.

Today at 8:30AM GMT, data on retail sales in the UK will be published. DT Trading experts are predicting a 0.3% drop in the monthly sales figure without taking into account gas station sales; they are expecting a 0.1% drop in annual terms.