US markets had started to look up again

US markets had started to look up,after Egyptian Vice-President Omar Suleiman, said that the President Hosni Mubarak has asked him to speak to all political parties. The armed forces in Egypt have also said that they would not fire on peaceful demonstrators.Robert Lutts, president and chief investment officer at Cabot Money Management in Salem, Massachusetts,said: “It's creating a great opportunity to step up and increase exposure to emerging markets and other areas of the international markets. I'm optimistic that this will be resolved and blow over."
The last day of January, markets in Europe rose initially , but later fell as unrest in Egypt kept investors risk averse.Klaus Wiener, chief economist at Generali Investments, said: “People will continue to watch what's happening in Egypt, but I think the market takes this as an excuse after a long rally to
do some profit taking. If we have a correction here, there are a lot of investors still on the sidelines who know that many analysts think that equities will be the best performing asset class in 2011. The global growth momentum is quite solid and that helps companies with the earnings."
Stocks of Nikkei and Hang Seng fell again,as Egyptian political riots have shaken investor trust in risky assets. Mostly foreign investors, who account to about 60% of the trade have been selling their Japanese shares.Yoshinori Nagano, a senior strategist at Daiwa Asset Management, said: “As you can see in pre-market foreign sell orders over the past few days, there have been changes in foreign sentiment
toward Japanese stocks."The benchmark Nikkei 225 ended down 1.2 percent at 10,237.92. The Hang Seng Index fell 0.7 percent to 23,447.34 points.
At a time when investors are not taking risks, the euro emerged as a winner against the dollar after a report showed inflation in Europe rose to a two-year high in January, indicating a rise in interest rates very soon by the policy makers.Michael Woolfolk, senior currency strategist in New York at Bank of New
York Mellon Corp, said: “We’ve not seen food and commodity prices spill over into the core in the US as we’ve seen in Europe.”The yen fell against the euro by 0.7 percent to 112.60. The dollar traded at 82.12 yen. The dollar fell 0.7 percent to $1.3715 per euro.
Oil rose to a record $100 a barrel after concerns grew over oil shipments going past the Suez Canal and also that the unrest in Egypt could spread to other neighbouring oil producing cpuntries in the Middle East. Mike Zarembski, senior commodities analyst for optionsXpress in Chicago, said: "The whole situation
in the Middle East has got traders very nervous even though crude is still coming through the Suez Canal. If the trouble spreads to other oil -exporting countries in the region, it could push prices higher."Oil for for March delivery rose $2.85 to settle at $92.19 a barrel.
US Bonds fell as investors were careful about the Egypt story unravelling and took gains at the right time after the US consumer spending numbers also rose.Michael Pond, co- head of interest-rate strategy in New Yorkat Barclays Plc, said: “The markets do appear to be signaling there’s less concern about what’s going on in Egypt.”Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco, said: “Mostly we are seeing some profit-taking after Friday's safe-haven rally,although there are still a lot of concerns about the instability in Egypt.”Yields on 30-year notes rose four basis points to 4.57 percent.
Bonds in Germany also fell after inflation in the Euro Zone rose, causing speculation that interest rates may be raised by the ECB to counter rising inflation.Richard McGuire, a rates strategist at Rabobank,said: “(The inflation data) is arguably in the price but as it edges further away from the ECB target it
will keep the market focused upon inflation concerns. The market is likely to be a little bit jittery ahead of Thursday's meeting given the recent ratcheting up of ECB rhetoric as regards imported price pressures which should limit any upside at the front end of the curve."Ten-year german bonds didn't change much and ended at 3.156 percent.