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Oil Up and Stocks Fall on Missile Worries
Cat : Miscellaneous
Date : 2006-07-06 09:59:30                      Reader : 265
The claimed international war on terrorism by US alone, the threat to what US calls axe of evil, monopole policy of US, the marginalization of United Nations, the fierce wars in Iraq, Palestine, and Afghanistan , all lead to disability and threat of world peace and security due to which oil prices are continuing rising perhaps to 100 D/ B.

googlenews 6/7/2006

Oil Up and Stocks Fall on Missile Worries

 

By JEREMY W. PETERS and MARTIN FACKLER

Oil prices closed at a record high yesterday in New York as political tensions over the missile tests by North Korea shook equity and commodities markets around the world.


In an already rattled oil market, North Korea’s test of at least seven missiles, including one with long-range ability, gave traders another reason to push prices past $75 a barrel. After hitting $75.40 a barrel in intraday trading on the New York Mercantile Exchange, the price settled at $75.19, a jump of 1.7 percent, or $1.26 from Friday.
"It’s more of the same," said Ric Navy, vice president of the BNP Paribas bank. "Regardless of the fundamentals being adequate, the psychology of the market is telling you otherwise. There’s a lot of nervousness."
That was enough to batter Japanese stocks again this morning, after falling 0.7 percent yesterday. The benchmark Nikkei 225 fell 1.5 percent to 15,284.78 at the end of morning trading. South Korea’s Kospi stock index was also down.
Anxiety over North Korea spread to Wall Street where stocks weakened. In a further sign of concern of political instability, investors turned to safe alternatives, and the price of gold and silver shot up.
Reports about the missile tests came as investors also weighed a jobs report from Automatic Data Processing showing that nonfarm employment surged by 368,000 jobs in June.
Analysts said the new employment numbers, which came in at more than double what economists expected, were a sign the economy was still growing at a strong pace. Investors remained concerned that the Federal Reserve would raise interest rates again in August.
The Standard & Poor’s 500-stock index fell 9.28 points yesterday, or 0.72 percent, to 1,270.91. The Dow Jones industrial average declined 76.20 points, or 0.68 percent, to 11,151.82, , and the Nasdaq composite index lost 37.09 points, or 1.69 percent, to 2,153.34.
Markets in Asia and Europe closed modestly lower while the dollar gained against many foreign currencies. The main South Korean index declined less than 0.5 percent. In Europe, stock indexes in Britain, France and Germany all dropped at least 1 percent.
Investors bid the Japanese yen, the South Korean won and the Taiwan dollar down against the euro and the American dollar. Gold rose nearly $14 an ounce, reaching $629.70. The price of silver jumped 4.5 percent, to close at $11.415 an ounce.
Concerns that Japan would postpone a long-awaited increase in short-term interest rates because of the diplomatic tensions with North Korea helped drive those moves, analysts said. The missile crisis could undermine regional growth rates if investors shift large amounts of capital to safe-haven investments like gold and if consumers decide to put off big purchases, the analysts said.
Noting that the missile firings were timed to coincide with Independence Day in America, Masuhisa Kobayashi, chief strategist in the Tokyo office of Barclays, said, "The United States government is clearly being provoked, and all eyes are now on its response."
Many Asian markets started the trading day off sharply lower, but rebounded as the day wore on and investors appeared to conclude that a military confrontation was not imminent. For example, the South Korean benchmark index, known as the Kospi, was off by as much as 2.1 percent in early trading, but retraced more than three-quarters of the loss before the close.
While most of the missiles appeared to fall harmlessly into the sea, the test launching of so many at once was widely seen as an act of defiance by the isolated Communist government, especially after repeated public warnings from the United States, Japan, China and other nations not to go through with a test.
Japan immediately responded by announcing fresh economic sanctions against Pyongyang, including the turning back of a North Korean ferry as it tried to enter a Japanese port. The United Nations Security Council met in an emergency session to consider a resolution threatening sanctions. Despite support from the United States, Japan and Britain, China and Russia resisted the measure.
Economic sanctions would probably have little direct effect on regional trade and investment because North Korea’s economy is already tiny and impoverished, with very limited economic contacts with the outside world. Economists estimate the country’s gross domestic product at just $40 billion.
The larger danger for now would seem to be any chilling of investor and consumer sentiment, analysts said. The timing is unfortunate for Japan, whose $4.6 trillion economy is finally showing signs of returning to normal after a decade-long funk.
A series of reports of strong economic statistics have many people believing that the Bank of Japan will raise its short-term interest rates to 0.25 percent from effectively zero, perhaps as soon as next week. But an extended crisis over the missile tests may lead it to delay action, analysts warned.
In the Treasury markets, bonds dropped again yesterday. The price of the 10-year note fell 18/32, to 998/32. The yield edged up to 5.22 percent, from 5.15 percent on Monday.


 
 
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