US equities pressed forward in early trading, despite a drop in both US house prices and consumer confidence, although volumes remained low as the end of the first quarter neared.
Worries about the eurozone were reignited by a downgrade of Greece and Portugal by Standard & Poor's.
Home prices in the US dropped by 3.1% year-on-year in January, the largest decline since December 2009, as the moribund housing market continues to act as a drag on the American economic recovery. The January decline was in line with the 3.2% predicted by a Bloomberg survey, and Standard Chartered commented that house prices were likely to drop further this year, with a turnaround only occurring when consumers felt that housing had become 'genuinely cheap' and when the employment market has sufficiently recovered.
US consumer confidence took a knock in March, according to data from the Conference Board. Surging fuel and food costs put the wind up American consumers, and the figure fell to a three-month low of 63.4 from February's reading of 72. Although the reading shows how much US consumers are worried by rising inflation (which should be noted by policymakers in Washington, with their emphasis on core inflation that strips out food and fuel), commentators said that Americans are now less worried that they will lose their jobs and there was a general perception that the economic recovery was on a more solid footing now.
Eurozone news
Portuguese 10-year bond yields remain close to the highs seen yesterday, at around 8.14%, as the country moves towards emergency elections following the fall last Wednesday of the socialist government led by Prime Minister Jose Socrates. The rise in the bond yield may have paused for now, but the upward trend is likely to resume as markets begin to anticipate a bailout like that given to Greece and Ireland. Of course, it is the very fact of rising bond yields that makes a bailout more likely, since higher yields make Portugal's debt burden more unsustainable.
Meanwhile, ratings agency Standard & Poor's added fuel to the fire by cutting its debt ratings for Portugal and Greece. Portugal found itself downgraded from BB+ to BB-, while Greece's bonds, which are already considered 'junk' status (i.e. they are low-quality and cannot be held by pension funds and other more cautious investors) were cut to BBB- from BBB. Both countries remain on a negative outlook.
US markets - Halliburton
By 3.30pm (London time), the Dow Jones was 28.91 points (0.24%) higher at 12,226.79 and the S&P 500 was 1.10 points (0.08%) up at 1314.90. The Nasdaq 100 was lifted 10.68 points (0.46%) to 2313.78.
US oil giant Halliburton said that the ongoing conflicts in Africa and the Middle East will reduce earnings for its first quarter. Earnings will be 3 to 4 cents lower as a result of the crises in Libya, Bahrain and elsewhere, while bad weather will cut profit by 5 to 8 cents per share. The figures are in line with rival Schlumberger, which said yesterday that 8 to 10 cents would be knocked off earnings due to the difficult global situation. A Reuters poll predicted first quarter earnings for Halliburton of 61 cents per share. Halliburton shares were 1.17% higher at $48.43.
UK afternoon trading - Hochschild Mining, Supergroup, Mouchel, CPP
The FTSE 100 had recovered all its earlier losses by 3.30pm (London time), but it struggled to make any headway into positive territory. It crawled forward 0.02% to 5905.73, with the banking sector remaining stubbornly lower as a result of the downgrade of Portugal and Greece.
Hochschild Mining reaped the benefit of soaring metal prices in 2010, with net income jumping 79% to $95 million and revenue surging 39% to $752 million. The Latin American gold and silver producer continued to lift production, to 26.4 million ounces, and has a 2011 of 22.5 million ounces. Hochschild shares fell 3% to 627.5p, hurt by today's general retreat in commodity prices.
Fashion retailer Supergroup dropped 2% to 1473p after it announced the departure of its chief operating officer, Diane Savory, for personal reasons. Supergroup, which listed in March last year at 563p, reached a peak of 1820p in mid-February but has steadily lost ground since.
Shares in support services company Mouchel fell off a cliff this morning, down 31% to 101.2p, in the wake of news that it had spurned takeover offers from Interserve and Costain. Mouchel said that the offers undervalued the business and posed a high level of uncertainty and disruption for the business. In addition, underlying profit slumped 73% for the six months to 31 January, while the company added that although it expected full-year results to be in line with expectations it had not yet seen any improvement in trading.
Today's other blow-up is credit card insurer CPP, which announced yesterday (after the market close) that the Financial Services Authority had been investigating the company's identity protection products. CPP said that it would suspend all sales of such products, which would result in lower than expected earnings. CPP shares nosedived 50% to 144.7p.
