Market Review By TraderXP:
The yen rose against all 16 major peers as Asian stocks fell, and the struggle between U.S. lawmakers to reach budgetconsensus boosted demand for safer assets.
Japan's currency advanced to a week high against the dollar after the U.S. Senate majority leader Harry Reid said he was "disappointed" at the lack of progress in discussions to avoid the so-called financial cliff.
"Lengthy negotiations on the financial rocks create a risk-off environment," said Daisaku Ueno, senior currency and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. "The yen is bought against the dollar in this situation. Terms of economic fundamentals, the euro is likely to edge down."
Market News
Wall Street falls, victims of "financial cliff" Reid comments
Stocks slid on Tuesday in a volatile session, losing ground in the last hour before closing after Senate Majority Leader Harry Reid expressed disappointment that there has been "little progress" toward "fiscal cliff."
The market was flat for most of the session, but fell sharply after the comments Reid, a sign that investors remain skittish about the debate in Washington. Volatility Index CBOE, or VIX, rose to Reed.
"It may be that the market feels good will before (last week) Thanksgiving develops greater political intransigence," said Quincy Krosby, market strategist at Prudential Financial in Newark.
"The clock is ticking on Wall Street, with respect to the basis for the (political) consensus," she said.
Arefocused markets on Congress and the White House can agree on how to avoid some of the $ 600 billion in automatic spending cuts and tax increases, which have to hit at the beginning of next year.
The budget negotiations are delayed, Las Vegas Sands and Supertex added their names to the growing list ofcompanies declaring special dividends aimed at helping investors to avoid possibly higher tax burden in the next year.
Higher dividends and capital gains taxes are part of the talks in Washington, and may rise even if the transaction is processed.
Las Vegas Sands jumped 5.3 percent to $ 46.36. Supertex rose 6.9 percent to $ 18.
S & P500 modest losses on Tuesday marked its worst day in eight sessions - indicating traders are unwilling to sell aggressively, as the transaction is likely to cause a rally. Test S & P 500 again closed below 1,400, a key psychological level that he released last week, it rose by nearly 4 percent.
VIX soared 2.7 percent to 15.92 at the close. Between 2 pm and 3 pm in New York, VIX rose by 3.9 percent.
Index Dow Jones Industrial Average fell 89.24 points, or 0.69 percent, to 12,878.13 at the close. S & P 500dropped 7,35 points, or 0.52 percent, to end at 1,398.94. Nasdaq Composite lost 8.99 points, or 0.30 percent, to end at 2,967.79.
Transactions inWashington closed strong economic indicators, including an increase in planned spending business and consumer confidence hit its highest level in morethan four years.
Strengthening the case for sustainable recovery in housing, single-family home prices rose for the eighth consecutive month in September. Shares of M / I Homes gained 2.1 percent to $ 22.36. KB Home added 1.1 percent to $ 14.61.
"As long as you have interest rates as low as they are now, housing is definitely back," said Brian Amidei, managing director of HighTower Advisors in Palm Desert, California.
In another good sign for consumer demand, Corning Inc shares rose 6.9 percent to $ 12.13 after the specialty glass maker said it expects full-year sales of its Gorilla Glass, used in smartphones and tablets, close to 1 billion dollars.
Food maker Ralcorp Holdings shares jumped 26.4 percent to $ 88.80 after a long groom ConAgra Foods sealed a deal to buy $ 5 billion. ConAgra shares gained 4.7 percent to $ 29.63.
McMoRan Exploration Co shares fell 15.2 percent to $ 8.18 on the day after the oil and gas driller gave a disappointing outlook upgrade key gas in the Gulf of Mexico well.
About 5.9 billion shares changed hands on the New York Stock Exchange, NYSE, Nasdaq and MKT, below the daily average this year of about 6.5 billion shares.
On the NYSE, about five issues fell for every four that rose. On the Nasdaq, six stocks fell for every five that rose Reuters.com
Currencies
Ian jumps, euro fall on U.S. financial fear Greece debt doubts
The yen rose and the euro went from a month previous session high against the dollar in Asian trading on Wednesday as investors relief on new debt target for Greece turned to concern for the impending U.S. financial crisis.
U.S. Congress to push for a compromise on Tuesday to "financial cliff" tax increases and spending cuts to go into effect early next year, but the agreement still appeared elusive, despite mounting pressure from American business interests to act.
Comments byU.S. Senate Majority Leader Harry Reid said on Tuesday at the lack of progress of democratic and Republican lawmakers also hyping the problem.
Investors unwound long dollar positions against the euro and the Japanese currency. The yen lost about 4 percent against the dollar in the past two weeks, as investors began to price in a possible shift in monetary policy in Japan after December 16 elections. Shinzo Abe, is likely to become the next leader of the country, hascalled for more aggressive easing.
"Worries about the U.S. financial cliff increased, while the effect of" Abe trade "disappeared at the moment," said Masashi Murata, a senior strategist at Forex Brown Brothers Harriman. "The market wants to see that the Bank of Japan in fact" he said.
Disappointment at the lack of detail in the transaction added pressure on Greece euro.While international creditors agreed on a plan to reduce Greece's debt, which will allow the country to provide more financial aid and avoid a chaotic default market skepticism grew over lack of detail about how Athens will implement reforms needed to meet its new goals.
"The purpose of the meeting was supposed to be not just give Greece additional financing, but also to consider the evidence that Greece deserves to get additional funding," said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo.
"This appointment was not fulfilled, so buying euros stopped," he said.
Europe "muddle-through approach" to Greece threatens to strengthen the result of the U.S. financial negotiations on the euro, Barclays strategists wrote in a note to clients on Wednesday.
"If they go well, the relief on the peripheral assets could have legs, including the euro. If it goes bad, even France may get questioned the uncertainty of the market, and we expect the euro to suffer," they said.
The euro has been an upward trend against the dollar last week, as investors' hopes rose that a deal for Greece will be achieved, and that the U.S. lawmakers to make progress on the financial impasse. The single currency rose to $ 1.3010 on Tuesday on trading platform EBS, its highest level since late October.
The euro fell about 0.2 percent in Asia at $ 1.2920, after earlier break below support at its 55-day moving average at $ 1.2918. Support was also cited in 38.2percent retracement of the recent rally at $ 1.2877.
European unit also skidded 0.6 percent to 105.69 yen, moving away from the seven monthhigh of 107.135 yen set on Monday. Stop-loss is said to have been placed around 105.50 yen.
The dollar fell about 0.4 percent to 81.81 yen, moving away from 7-1/2 month high of 82.84 yen hit last Thursday.
The dollar got no help from the sharply divergent reports on the U.S. Fed officials on Tuesday. Charles Evans, president of the Chicago Federal Reserve and one of the most outspoken doves Fed said interest rates should remain near zero until the unemployment rate falls to at least 6.5 percent.
But Dallas Fed President Richard Fisher said the U.S. central bank should not set limit on the number of assets that it wants to buy. Reuters.com
