While you were sleeping: Investors find value
(BusinessDesk) August 12 - Today’s a good day to buy a few stocks, at least that’s what most investors on Wall Street
and in Europe decided.
No doubt that encouraging results from Cisco Systems Inc helped - the stock was up more than 16% today. And a
better-than-expected U.S. jobs report didn’t hurt either, with claims for U.S. unemployment benefits unexpectedly
declining last week to the lowest level in four months.
Investors are desperate for some good news after the roller coaster they’ve been on in the past couple of weeks amid
debt crises in the U.S. and Europe. And stocks are relatively cheap after the slide most have experienced amid the
In late trading, the Dow Jones industrial average soared 3.48%, the Standard & Poor's 500 Index jumped 4.10% while the Nasdaq Composite Index did the same, up 4.10%.
Even in Europe, where concern about government budget deficits remains on the forefront of everyone’s mind, investors
found reason to pick up some bargains. The Stoxx Europe 600 Index ended the session with a 3.2% gain.
“Shares look cheap,” Henrik Drusebjerg, a senior strategist at Nordea Bank AB in Copenhagen, told Bloomberg News.
“There’s no news out there suggesting investors should worry any more or less than yesterday.”
On the currency front, the Swiss franc plunged against the euro amid talk of temporary peg between the two. Swiss
National Bank Vice President Thomas Jordan said that a temporary peg was a potential way to curb the strength of the
franc, which has set records against the euro and the U.S. dollar as investors like its safe-haven appeal.
The franc shed as much as 6% to 1.0921 per euro. It last traded at 1.0840. Against the greenback, the franc dropped
Also plunging were 30-year U.S. Treasuries amid concern that inflation would pick up speed, and erode the value of
The 30-year bond yield soared 23 basis points to 3.75% at 2.23pm in New York, according to Bloomberg Bond Trader prices.
Consequently, today’s auction of US$16 billion of 30-year debt drew only tepid demand.
“The players that play in the long end don’t feel comfortable with all of the uncertainty that has to be factored in,”
Jason Rogan, director of U.S. government trading at Guggenheim Partners LLC, a New York-based brokerage for
institutional investors, told Bloomberg.
“No one is worried about short-term inflation, but with all the printing that has been done and with the possibility of
more stimulus needed there is an expectation for a lot more cash that will be added to the system, and at some point
that means an inflation problem,” he said.