Dollar Retreats Amid Unemployment Concerns

LONDON/NEW YORK, 10 September 2003 — The dollar came under pressure yesterday amid concerns the economic recovery taking root in the United States is not halting unemployment trends. The single European currency rose to 1.1215 dollars from 1.1063 late on Monday in New York. The dollar eased to 116.33 yen from 116.81 on Monday.

The dearth of economic data Tuesday and Wednesday left investors concentrating on a disappointing US employment report released on Friday, which reinforced the view that the United States is experiencing a jobless recovery. “The lack of clear direction suggested that the euro would bounce,” said Mitul Kotecha, head of forex strategy at Credit Agricole Indosuez.

Stocks were lower at midday after an uninspiring update from mobile phone giant Nokia helped erode some of the hefty gains racked up during the market’s recent rally. Nokia, the world’s top cell phone-maker, took a hit in US trading after it said brisk consumer demand for handsets might lift its earnings, but added that price competition and a weak dollar would cap any revenue sales growth at its main unit.

Just a day earlier, the tech-packed NASDAQ Composite Index closed at its highest level in 1-1?2 years, and the Standard & Poor’s 500 index posted its highest close in almost 15 months. The Dow Jones industrial average sagged 33.2 points, or 0.35 percent, to 9,553.09, while the broader Standard & Poor’s 500 Index dropped 4.68 points, or 0.45 percent, to 1,026.96. The NASDAQ Composite fell 3.89 points, or 0.21 percent, to 1,884.73.

Japanese stocks continued their positive streak yesterday on economic hopes but some markets in other parts of Asia were hit by fears of a new SARS outbreak after a confirmed new case in Singapore. Tokyo shares rose 2.23 percent, advancing for the seventh time in eight trading sessions after a rebound on Wall Street and on an improving outlook for the Japanese and global economies.

The Tokyo Stock Exchange’s Nikkei-225 index gained 238.28 points to close at 10,922.04, just off the high of 10,927.62. The broader Topix index of all first-section stocks closed up 17.77 points at 1,045.71.

Share prices in Hong Kong closed 1.06 percent lower as renewed fears about Severe Acute Respiratory Syndrome gave some investors a good excuse to take profits on recent gains. The key Hang Seng index lost 118.46 points to close at 11,046.82, off a high of 11,242.15 on turnover of 12.91 billion Hong Kong dollars ($1.66 billion).

Share prices in Singapore closed sharply lower with losses accelerating in late trade after health officials confirmed a local patient had contracted SARS. The Straits Times index closed down 42.14 points or 2.6 percent at 1,580.14, off the day’s low of 1,577.15. The broader All-Singapore Equities index was down 13.04 points at 428.46.

Dealers said the sell-off in response to the news appears to have been a knee-jerk reaction as investors in Europe sold down their holdings as they took the news on board in late afternoon trade. At the same time, they noted the authorities are this time much better prepared to cope with and alert to the dangers of SARS so it is to be hoped that the disease can be kept under control.

South Korean share prices closed 0.95 percent higher, ending four straight days of losses as foreign investors continued to bid Samsung Electronics higher.