>>Where'd you see this? The IMF is now meddling in US domestic economic policy? What a revolting development!<<
Wake-Up Call: Stocks Look Tepid
After Weakness in Europe, Rate
Hike Talk
By Justin Lahart
Staff Reporter
5/5/98 9:12 AM ET
With some weakness in the bond market, stocks look like
they're going to take back some of their recent gains.
Treasuries are under some pressure after International
Monetary Fund Managing Director Michel Camdessus,
speaking in Melbourne, suggested that the Federal
Reserve will need to raise rates. "No doubt the
Americans will have to move sooner rather than later,"
said Camdessus. "The question is to know when." Also
weighing on Treasuries: fears that a series of rate
hikes in Europe may be in the offing. At 9 a.m. EDT, the
long bond is off 10/32 at 102 9/32, lifting the yield to
5.96%. The S&P 500 futures are off 3.10, indicating a
negative open for stocks.
But despite the downtick in bonds, things still look
good for the stock market in the near term, says Bill
Meehan, market analyst at Cantor Fitzgerald.
"There's a pretty good chance that the yield on the bond
could trade back at the lower end of the range, so I
don't see the 5% to 10% correction that some people have
been calling for," he says. "The speculative nature of
this market is very troublesome. Given the volume [of
stocks like EntreMed (ENMD:Nasdaq) yesterday], it's much
more than wild and crazy individual investors. In the
near term this market can be driven much higher. I
suspect we'll see even more signs of irrational
exuberance."
The Japanese stock market is closed for Boys' Day, the
last of the Golden Week holidays.
With the gloom over the Hong Kong economy unabated, and
whispers of recession becoming more frequent in the
marketplace, stocks there fell again. The Hang Seng fell
285.76 to 10,153.66.
German stocks are lower, partly because they went up so
darn much yesterday, and partly because of rate hike
fears. There is some concern in the market that the
Bundesbank, angered by the European Central Bank
compromise in Brussels this weekend, will raise rates a
bit earlier than expected. Along the same vein, there
were rumors, swiftly denied, that German central banker
Hans Tietmeyer would resign. It all seems rather petty,
and unlikely. With bonds under pressure, the Dax fell
82.63 to 5232.02. Tietmeyer speaks at 2 p.m. EDT today.
A surprise rate hike in Denmark is hurting European
stocks across the board. The nationwide strike,
involving 20% of the workforce, has weakened the krone,
forcing Denmark to buy the currency with its reserves --
hence the aggressive 0.5% hike. (Increases in consumer
spending also played a part here.) Effects of the strike
are beginning to spill over into bordering countries, so
there's some concern that other Scandinavian countries
may need to raise rates.
U.K. stocks are off in thin volume. The negative close
in Hong Kong, the pressure across Europe and
expectations of a weak open on Wall Street are all
weighing on the London stock market. The FTSE is off
13.20 at 5997.10.
....
|
