U.S. stock futures and world markets plunged sharply on fears about the impact the naked short selling ban imposed by Germany will have on the global markets. U.S. consumer price index falls 0.1% in April. Hewlett-Packard, Analog Devices, Deere net rises.
10:00 AM New York – U.S. stock futures and world markets plunged sharply on fears about the impact the naked short selling ban imposed by Germany will have on the global markets. U.S. consumer price index falls 0.1% in April. Hewlett-Packard, Analog Devices, Deere net rises.
U.S. stocks and world markets declined sharply as traders expressed fears about the impact the naked short selling ban imposed by Germany will have on the global markets.
The sharp decline in commodity and oil prices coupled with a weaker euro also impacted market sentiment. U.S. consumer price index falls 0.1% in April. Hewlett-Packard, Analog Devices, Deere net rises.
Germany''s BaFin financial-services regulator temporarily banned naked short selling and naked credit-default swaps of euro-area government bonds. The ban also applies to naked short selling in shares of ten banks and insurers that will last until March 31, 2011, BaFin said yesterday in a statement.
BaFin said it was taking the step because of ""exceptional volatility"" in euro-area bonds. ""Massive"" short-selling was leading to excessive price movements which ""could endanger the stability of the entire financial system.""
Michael Barnier, the EU commissioner for the internal market and financial regulation, said Germany''s actions would be ""more efficient if they are coordinated at European level.""
The commission already has a task force looking into issues including naked selling, Barnier added.
The markets in Europe are also trading weaker as the euro''s weakness continues to haunt the market. The euro hit a four-year low against the dollar. It fell to below $1.215 before recovering to $1.219.
German Chancellor Angela Merkel said that the ""current crisis"" facing the euro was ""the biggest test Europe has faced in decades.""
The U.S. dollar is presently gaining against the euro and the pound, but it is trading weaker against the Japanese yen.
Consumer prices unexpectedly showed a modest decrease in the month of April, according to a report released by the Labor Department on Wednesday, with the unexpected drop in prices reflecting a notable decline in energy prices.
The index of consumer prices decreased 0.1% in April from March and increased 2.2% from a year ago month. The energy index fell 1.4%.
Hewlett-Packard Co. said that its second quarter profit jumped 28% from last year, as revenue increased and margins improved amid strong demand for its server and personal computers as well as printers.
Chip maker Analog Devices Inc. said that its second-quarter profit more than tripled over last year, driven essentially by strong revenue growth in most segments, as well as higher margins. The company also boosted its quarterly dividend by 10%.
Farm machine maker Deere & Co. posted a 16% growth in its second-quarter profit driven by strong demand for large farm machinery and higher shipments in construction and forestry.
Commodities, Currencies and Yields
Dollar edged higher against euro to $1.2183 and decreased against the Japanese yen to 91.18.
Crude oil decreased $1.24 to $68.17 a barrel for a front month contract, natural gas edged lower $0.02 cent to $4.33 per mBtu and gasoline decreased 2.070 cents to 202.24 cents.
Gold decreased $9.20 in New York trading to close at $1,205.40 per ounce, silver closed lower $0.329 to $18.55 per ounce and copper for the front month delivery decreased 9.250 cents to $2.93 per pound.
Yields on 10-year U.S. bonds increased to 3.34% and on 30-year U.S. bonds traded at 4.23%.
