Growth and earnings jitters hit markets (ISFM) (25-01-2011)

World stock were moving in different directions for different reasons today, starting with the Asian markets where Australian stocks gained by news of lower-than-expected inflation, while Chinese and Hong Kong shares declined as investors were focusing on any indication that Beijing may be raising interest rates soon.

In the rest of the region, Indonesian and Philippine stocks recovered after days of declines, while Indian shares were affected by financial issues, which fell after the central bank raised interest rates by an expected 0.25 points, to address inflationary tendencies.

Among currencies, the euro was having a bad day beginning with a drop as the euro zone rescue fund's first offer of debt attracted strong demand as expected, while it later extended its losses versus the dollar, after data showed U.S. single-family home prices fell less than expected in November. The European common currency slipped to $1.3588 from about $1.3607 before the report's release. The British pound dropped after the release of data that showed the U.K. economy unexpectedly shrunk in the last quarter of 2010.

Stocks in Europe were hit by news that Britain’s economy unexpectedly shrank in the fourth quarter, while banks dropped sharply as plans to strengthen Spanish lenders failed to calm investors. The sovereign-debt crisis continues to create volatility and according to some will continue to do so throughout the year.

On Wall Street, U.S. stocks opened lower as investors were eyeing the week’s coming political and economic events, and as a a number of blue-chip earnings did nothing to lift sentiment in the market.

Source: ISFM