U.S. Consumer Debt Decline Drags Sentiment

123jump.com Staff
07 Apr, 2010
New York City

U.S. stocks declined after consumer credit dropped in March. Household spending, the main driver of the economy is not likely to recover immediately as unemployment remains high. The dollar edged higher but commodities trade near recent highs.

[R]5:05 PM New York – U.S. stocks declined after consumer credit dropped in March. Household spending, the main driver of the economy is not likely to recover immediately as unemployment remains high. The dollar edged higher but commodities trade near recent highs.[/R]

U.S. and European markets traded lower after consumer credit declined and stocks face stretched valuations. The benchmark indexes declined the most since mid-February.

U.S. Treasury completed its $21 billion 10-year notes offering that yielded lower than expected 3.9% on higher than expected demand.

Consumer credit declined by $11.5 billion in February after gains in January was revised by $10.6 billion. The credit declined in twelve of the last thirteen months.

Revolving debt that includes short term loans and credit card loans dropped $9.4 billion in the month and loans for cars and mobile homes declined $2.1 billion according to the latest data released by the U.S. Fed.

The dollar strengthened against the euro as talks of Greek bonds default gained momentum. China plans to issue 3-year bills for the first time since June 2008.

Family Dollar Stores, Inc guides above estimates. AMB Property Corp to offer 12 million shares of common stock. Family Dollar net up and outlook exceeds estimates. Massey Energy drops for the second day after an explosion that killed 25 workers at a mine that has faced several safety violations.

Daimler and Renault-Nissan alliance agreed to form a partnership to develop better engines, cut production costs and develop small car technologies. Two companies will take 1.2 billion euros stake in each other.

European indexes traded lower and the benchmark index in Athens dropped 3%. Greek bond yields rose to 11-year high after Greece revised its 2009 deficit higher to 12.9%. Daimler and Renault-Nissan alliance signed a partnership to develop new technologies and build small cars.

UK stocks traded lower after commodities prices declined. The pound declined after a seven day rally. The UK auction of five-year bonds worth £4.5 billion attracted 1.88 bid-to-cover ratio compared to 2.33 in the auction a year ago.

Bank of Japan left its key lending rate unchanged at 0.1% in an unanimous vote and cited improving economic conditions in international economies. Foreign exchange reserves in February declined $8.4 to $1.04 trillion.

The benchmark stock index in Mumbai closed higher ahead of earnings season. International investors increased their net holdings of stocks in India by $5.1 billion in the year. Godrej Consumer acquires Indonesia based insecticide maker.

North American Markets

Dow Jones Industrial Average decreased 72.47 or 0.6% to close at 10,897.52, S&P 500 Index edged lower 6.99 or 0.6% to 1,182.45 and Nasdaq Composite Index declined 5.65 or 0.2% to close at 2,431.16. Toronto TSX Composite Index decreased 45.81 or 0.4% to 12,110.90.

Latin American Markets Indexes

Mexico Bolsa Index decreased 168.86 or 0.5% to 33,632.35 and Brazil Bovespa Stock Index decreased 302.71 or 0.4% to 70,792.94.

Europe Markets Review

In London FTSE 100 Index closed lower 9.31 or 0.16% to 5,771.04, in Paris CAC 40 Index decreased 20.09 or 0.50% to close at 4,033.84, in Frankfurt DAX index lower 18.83 or 0.30% to close at 6,233.38. In Zurich trading SMI decreased 26.58 or 0.39% to close at 6,859.63.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 10.51 or 0.09% to 11,292.83, and Hang Seng index in Hong Kong increased 391.77 or 1.82% to 21,928.77, and CSI 300 index in China lower 18.20 or 0.53% to 3,386.95. ASX 200 index in Australia increased 7.20 or 0.15% to 4,960.90 and the FTSE Bursa KL Composite index in Malaysia was higher 0.72 or 0.05% to 1,345.09.

The Kospi Index in South Korea increased 0.51 or 0.03% to close at 1,726.60. SET index in Thailand closed higher 4.48 or 0.55% to 812.63. JSE Index in Indonesia increased 17.61 or 0.61% to 2,898.58. The Sensex index in India increased 28.65 or 0.16% to 17,970.02.

Commodities, Metals, and Currencies

Crude oil decreased $1.11 to $85.73 a barrel for a front month contract, natural gas edged down 8 cents to $4.02 per mBtu and gasoline decreased 3.54 cents to 231.29 cents.

Soybean future closed up 8.00 cent to $9.52 a bushel. Wheat futures increased 11.50 cents in Chicago trading to $4.88 a bushel. Sugar closed up 0.27 cents at 16.16 cents per pound.

Gold increased $13.20 in New York trading to close at $1,149.20 per ounce, silver closed up $0.21 to $18.15 per ounce and copper for the front month delivery decreased 3.50 cents to $3.58 per pound.

Dollar edged higher against euro to $1.334 and decreased against the Japanese yen to 93.34.

Yield on 10-year U.S. bonds closed lower at 3.86% and with 30-year maturities decreased at 4.75%.