A dull debut for Facebook, one of the most heavily anticipated public offerings in years, crowned another down week for US markets as eurozone instability kept fear levels high among investors.
Facebook’s US$16 billion IPO on Friday very nearly turned into a flop, with underwriters reportedly forced to prop the shares up to keep them from going below the US$38 subscription price.
However, with fears of an unavoidable march in Greece toward a eurozone pullout and Spain looking like it needs a rescue, buyers generally fled the market for the safety of cash and US and German bonds.
For the week the blue chip-focused Dow Jones Industrial Average was down 3.5 percent to 12,369.38. The broad-based S&P 500 lost 5.3 percent to 1,295.22, while the NASDAQ, the exchange that listed Facebook, gave up 4.3 percent to 2,778.79.
For all the hype that was the Facebook IPO, valuing the eight-year-old company at more than US$100 billion, it was the political stalemate that forced Greece to call elections for the second time in weeks and the sharp deterioration of Spain’s banks that drove the market.
“Market confidence continued to erode this week due to events in Europe, including capital flight from Greece and the downgrade of several Spanish banks,” IHS Global Insight economists Paul Edelstein and Nigel Gault said.
Since the beginning of this month, the S&P 500 has lost 8.8 percent and the NASDAQ 7.3 percent, and all three indices were lower than they were a year ago.
Analysts pointed to more weak — though not decisively so — data on the economy and minutes from the US Federal Reserve’s recent policy meeting that showed the central bankers still worried about anemic growth.
Corporate reports were mixed, but many lowered their expectations for the rest of the year, casting a pall on the optimists.
“Looking ahead, global stock markets are likely to continue to struggle in the near term as the eurozone casts a new dark shadow on markets,” John Praveen of Prudential International Investments Advisers said.
“A European recession and fiscal restraint in the US keep the overall risks tilted decisively to the downside,” Nomura Securities analysts said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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