Good morning. Equity and Commodity markets experienced heightened volatility on Thursday with the indices closing slightly lower. Renewed fears that the crisis in Libya could impact oil reserves and lead to a regional political readjustment, sent the market lower in morning trade. Pre empting possible unrest in Saudi Arabia, King Abdullah announced a possible reform package that would extend to education, healthcare, and housing. Political Analysts and Economists are watching the impact of the announcement and whether the new reform would be well received in the Kingdom. Energy commodities reacted to the news with Light Crude falling to $96 a barrel. In Europe on Thursday, the Banking sector began preparations for the introduction of new liquidity ratios and capital adequacy requirements. Basel III will focus on tighter regulatory reform and restrictions on borrowing ratios. Major European financials finished lower during the session. New Home Sales data released in the US, painted a grim picture with a 12.6% fall in January. The government was quick to highlight the inconsistency in the sector. Friday will see GDP figures released with the market forecasting 3.3%.
On the equity market front, the S&P500 found some support towards the close with the index finishing 1 point lower. The Nasdaq bucked the overall trend and rose 14 points with buoyant earnings in the tech sector driving gains. Online company WebMD reported better than expected earnings with the company citing a recovery in trading conditions. The stock finished the session 8.7% higher. Hewlett Packard continued to experience selling pressure with the stock weakening 3% intraday. Earnings released earlier in the week, coupled with weaker market conditions have contributed to the movements.
On the currency front, Capital Expenditure and Sentiment figures helped support the Aussie dollar during the session. Trading at 1.00876, the currency pair broke through resistance with capital spending data indicating that the local economy may be on a strong growth pattern. With a 1.3% rise in the last quarter of 2010, speculation by economists and traders over RBA monetary policy movements have held the currency above the key parity level. The market expects the RBA to increase rates by 25 basis points. The Bank of Japan watched the Japanese Yen closely on Thursday as the market reacted to the Oil prices and tensions in Libya. Flight to safety continued to push the greenback lower with traders eyeing the possibility of a contagion effect in the Middle East region. Protests in the largest Oil producer in North Africa, played havoc on valuations and long term economic forecasts. A consistent rise in Light Crude Oil could influence macro economic factors and stall the overall global recovery. The USDJPY traded at 81.74.