The US stock market has postponed Iraq's problem

/k2kapital, February 19, 03/ - Trades at the US stock market on Tuesday ended with significant increase of major stock exchange's indexes. According to results of the day the index of "blue chips" Dow rose by 132.35 points to 8041.15, or by 1.67%. Index Nasdaq Composite, in which technological companies dominate, rose by 36.37 points to 1346.54 or by 2.78%. Due to this raise index Nasdaq Composite was positive for the period since the beginning of the year. By closing on Tuesday Nasdaq Composite increased in comparison with closing on December 31 of 2002 by 0.8%. Index of the wide market of Standard & Poor's 500 increased by the results of the day by 16.28 points to 851.17, or by 1.95%. Tuesday was the first trade day in the USA after the week-end, which lasted three days in accordance with celebration of the Presidents' day. The end of previous week was notable with the important event, which the market was waiting for much. In the UNO's Security Council there was held speaking of leaders of international inspectors on armaments, who check Iraq's objects in accordance with the Security Council's resolution 1441 about Iraq's disarmament. Report of the head of UNO's commission on monitoring of armaments Hans Blix was mixed in its content and gave arguments both to the USA and Great Britain, supporters of force using against Saddam Hussein's regime, and to supporters of peaceful solution of Iraq's crisis, among which there are three out of five constant members of the Security Council with the right veto - Russia, France and China. Nonetheless, Blix's report was much more softer concerning Iraq that his previous speeches, and aroused the hope the war may be postponed or even avoided. This impression was strengthened by mass antiwar demonstrations, which were held on the week-end all over the world, and statements of leaders of European union's countries, who on Monday gathered together in order to discuss Iraq's crisis and working out of general position on this problem. The leaders in compromising statement stated that Iraq had to disarm "disarm immediately and entirely " and that inspections could not last forever. At the same time, EU's leaders marked the war was the last means of the crisis solution, and did not set limits for duration of inspections period. As the result, financial and commodity exchange, which in previous weeks tormented themselves because of the threat of the coming war and expectation of Blix's report, felt they had received the right for respite. Shares and dollar's rate went upwards, prices for gold and oil - downwards. Though, by the end of Tuesday's trades prices for oil increased again, when the president of the USA George Bush stated he would not be stopped by antiwar protests al over the world - he could not agree with those who doubted that Saddam Hussein posed a threat for the world and security. Press-service of the White house informed that American administration, together with the Government of Great Britain, was preparing a new resolution on Iraq's disarming, which would be presented for examination of the Security Council that week or the next one, i.e. before February 28, when the next report of Blix was to take place. On the reason on February 14, after Blix's last report, the US stet secretary Colin Powell stated that Iraq "has significantly broken" the resolution 1441, the project of the new resolution the USA and Great Britain США,in all probability, will offer to officially resolve that Iraq is under condition of "significant breaking" of the world community's requirements. As is said in the resolution 1441, "significant breaking" causes "serious consequences" for Iraq. The USA and Great Britain unambiguously interpret "serious consequences" as the war strike. On Tuesday the US Department of Defense ordered to send to Persian Gulf's region more 28 thousand soldiers. As a whole, according to Pentagon's plan, American forces in the region are to exceed 200 thousand persons. But only oil market reacted the continued increasing of US forces in the Near East and confirmation of strict position of the White house about Iraq. April futures for oil Brent at International petroleum exchange IPE in London rose on Tuesday by 62 cents to $32.54 per barrel. March futures for oil WTI at New-York mercantile exchange NYMEX rose by 16 cents to $36.96 per barrel. At the same time, dollar's rate by the results of Tuesday's trades increased relative to European currencies, and April futures for gold at COMEX in New-York fell by $7.90 to $344.30 per ounce. US stock indexes, as was said above, showed significant increase. The significant, if not the major factor of stock market's increase on Tuesday was investors' feeling that the market had been strongly over-sold. Since the middle of January till the middle of February the US stock indexes had great losses. Thus, index Dow lost during that period about 1100 points, and major reason of falling was the threat of war and connected with it uncertainty. At the same time, during last weeks there appeared several summaries of good or encouraging economic data, which allowed to assume that American economics was getting out of difficult position, in which it got in autumn, on the thorny path of the way out of recession. Production activity index in the USA, which is calculated by the Institute of management on ISM provision, showed the continued growth of this indicator. Report about employment for January plus weekly data about the number of initial appeals for doles gave reasons to assume there was stabilization at American labor market. Retail sales, excluding volatility sales of cars, rose in January by 1.3%, having allowed to hope that American consumers still were unable to support economics. At last, winter season of corporate quarter reports has given very good results, and though companies are conservative, despondent and hesitating forecasts for the nearest outlook, at least the partial reason of their despondency was uncertainty, which was connected with the threat of war in Iraq. The appeared feeling of market's over-sale was confirmed on Tuesday by the data of the next questioning, which analysts of Merrill Lynch regularly conducted among investments funds' managers. The last questioning has showed that a half of 380 questioned managers is sure the market has been over-sold. A quarter of respondents believes the market has been unappreciated at least by 15%. As the result, falling of nervous tension, which became possible after Blix's report and a dim statement of EU, and feeling of market's over-sale, which investors began to feel, also reacted the market's raise. However there was not mass investors' coming to the market on Tuesday. Turnovers at exchanges were low. Volume of trades at New-York stock exchange NYSE was 1.188 bn shares, and at Nasdaq - 1.320 bn. It was partially concerned with they snowfall, which had covered New-York and suburbs with snow, having kept many market's participants at home. But, taking into account the preserved threat of war and uncertainty about Iraq, one can assume the significant part of investors has remained on waiting positions. [2003-02-19]