Sharp Drops in U.S., Europe, Brazil Indexes

Arthi Gupta, Mayank Mehta and Sanjay Barot
04 May, 2010
New York City

Market indexes in New York and Europe dropped more than 2% and the euro fell below $1.30 as investors fear larger bailout for Spain. Fears of wider contagion in Europe rattled stocks, bonds, currencies and commodities. China reported slower increase in manufacturing.

[R]4:30 PM New York – Market indexes in New York and Europe declined more than 2%. The euro dropped below $1.30 as investors fear larger bailout for Spain. Commodities and metals declined after China reported slower increase in manufacturing.[/R]

S&P 500 index dropped 2.4% and the Dow declined 2% on the mounting worries related to euro-zone stability and a decline manufacturing growth rate in China. Commodities led the declines of 3.5% in Brazil index and 2.5% fall in UK and 1.4% in Canada’s index.

Euro declined to $1.30 and Greek bonds fell as investors increasingly asked questions about Spain. Spain’s Prime Minister Jose Luis Zapatero strongly asserted that the nation does not need a bailout and the government is prepared to fight “national interest.”

U.S. auto sales increased in April but at a slower pace than estimated as incentives failed to attract new buyers.

Advanced Micro Devices, Inc led the decliners in the S&P 500 index with a loss of 6%. Principal Financial quarterly earnings surged 69% and Marathon Oil net income gained 62%. MasterCard quarterly net surged 24%. Pfizer net income declined 26%. Emerson second quarter profit rises 8%.

European stocks decline amidst lingering concerns of financial crisis spreading to Spain and Portugal. The producer price index rises 0.9% in March. UBS posts better-than-expected earnings. Adidas Group increases 2010 financial outlook while Lufthansa loss widens.

U.K. stocks trade lower led by declining mining stocks on weak commodities prices and on sharply higher Australian taxes on resource companies. Pearson Plc agrees to IDC for $3.4 billion. Aberdeen Asset Management profits soar. BP Plc starts new well to cap Gulf leak.

Market indexes in Shanghai and Hong Kong declined after investors worried that an increase in bank reserve ratios may not be enough to stem real estate price increase. GD Midea to buy 32.5% stake in Egypt based MIRACO for $57.5 million. Petrochina plans to increase investment in Indonesia for energy exploration.

Stocks in Mumbai traded lower after a rail strike in Mumbai affected trading. 3G wireless license auction is expected to fetch as much as $10 billion ahead of the government target of $8 billion.

Newcrest Mining Limited revised its offer for Papua New Guinea based Lihir Gold Ltd that values the miner at A$9.5 billion. The final offer is 41% premium from the date of first offer price. The merged company will be the fifth largest gold miner in the world.

Reserve Bank of Australia increased key lending rate by 25 basis points to 4.5%. Newcrest Mining revised its offer by 6.4% from the previous offer and 41% higher than the closing price at the time of first offer.

North American Markets

Dow Jones Industrial Average decreased 225.06 or 2% to close at 10,926.77, S&P 500 Index edged lower 28.66 or 2.4% to 1,173.60 and Nasdaq Composite Index declined 74.49 or 3% to close at 2,424.25. Toronto TSX Composite Index fell 165.52 or 1.4% to 12,030.99.

Latin American Markets Indexes

Mexico IPC Index fell 650.41 or 2% to 32,182.04 and Brazil Bovespa Stock Index fell 2,333.53 or 3.5% to 64,785.88.

Europe Markets Review

In London FTSE 100 Index closed lower 137.55 or 2.48% to 5,415.74, in Paris CAC 40 Index decreased 125.47 or 3.28% to close at 3,702.99, in Frankfurt DAX index lower 142.22 or 2.31% to close at 6,024.70. In Zurich trading SMI decreased 115.13 or 1.74% to close at 6,492.58.

Asian Markets Review

Hang Seng index in Hong Kong decreased 48.31 or 0.23% to 20,763.05 and CSI 300 index in China lower 47.92 or 1.56% to 3,019.45. ASX 200 index in Australia decreased 48.40 or 1.01% to 4,737.10. The FTSE Bursa KL Composite index in Malaysia closed lower 4.00 or 0.30% to 1,342.89 and the markets in Japan were closed today.

The Kospi Index in South Korea decreased 2.46 or 0.14% to close at 1,718.75. SET index in Thailand closed higher 33.35 or 4.37% to 796.86 and JSE Index in Indonesia decreased 1.88 or 0.06% to 2,959.02. The Sensex index in India decreased 248.94 or 1.43% to 17,137.14.

Commodities, Metals, and Currencies

Crude oil decreased $3.51 to $82.68 a barrel for a front month contract, natural gas edged up 2 cents to $4.02 per mBtu and gasoline decreased 11.53 cents to 231.98 cents.

Soybean future closed up 0.50 cent to $9.87 a bushel. Wheat futures increased 9.00 cents in Chicago trading to $5.10 a bushel. Sugar closed down 0.47 cents at 14.51 cents per pound.

Gold decreased $10.30 in New York trading to close at $1,173.00 per ounce, silver closed down $0.92 to $17.92 per ounce and copper for the front month delivery decreased 3.52 cent to $3.17 per pound.

Dollar edged higher against euro to $1.30 and gained against the Japanese yen to 94.48.

Yield on 10-year U.S. bonds decreased to 3.60% and with 30-year maturities fell to 4.42%.