Abayomi Azikiwe, editor of the Pan-African News Wire, on right, with the MECAWI solidarity team which supported the UAW strike against American Axle. This photo was taken on Sunday, March 16, 2008. (Photo: Alan Pollock)., a photo by Pan-African News Wire File Photos on Flickr.
Manufacturing slump erases debt agreement rally
finance reporter Rebecca Hyam
Posted August 02, 2011 08:01:29
It was a volatile session on Wall Street overnight, with the market posting strong early gains in response to the debt limit agreement before retreating sharply because of some weaker-than-expected manufacturing data.
Stocks then rebounded in late trading, on hopes the debt agreement will be approved in Congress.
The manufacturing figures came from the Institute for Supply Management's factory index, which slumped to its lowest level since July 2009.
New orders shrank for the first time in two years, suggesting production and economic growth could be limited.
Several other manufacturing reports - released either yesterday or overnight from Asia to Europe - also declined, indicating a global slowdown.
But late in the US session, Republican leaders and the Obama administration voiced optimism that Congress will pass a compromise plan to raise the US debt limit by at least $US2.1 trillion and slash federal spending.
That helped to limit Wall Street's overall losses.
The Dow Jones Industrial Average closed down 10.75 points to 12,132.49, the S&P 500 eased 5.34 points to 1,286.94 and the Nasdaq fell 11.77 points to 2,744.61.
It was a similar story in the UK, with early strong gains fuelled by relief over the US debt deal wiped out by that weak manufacturing data.
Of the British banks, Lloyds and Royal Bank of Scotland fell quite sharply.
But Europe's biggest bank, HSBC, jumped 4.8 per cent, after revealing a solid first-half pre-tax profit and announcing it would cut 30,000 jobs, or roughly 10 per cent of its global workforce.
At one point London's FTSE 100 got back above the 5,900 level, but by the close it was down 40.76 points to 5,774.43.
Local shares are expected to fall when the market opens later this morning and in futures trading, the ASX Share Price Index 200 is down 73 points to 4,397.
The Australian dollar has fallen from last night's local close and at 7.10am (AEST) it was buying 109.7 US cents.
On the cross rates, it was worth 84.73 Japanese yen, 77 euro cents, 67.32 British pence and $1.25 in New Zealand.
Spot gold had slipped to $US1,620.04 an ounce.
West Texas Crude oil had eased to $US94.88 a barrel and Tapis was higher at $US127.18.
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