U.S. Stocks Soar on Europe Worries Recede

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

Stocks in New York and Europe soared on positive news on earnings and economic austerity measures. Spain won parliament approval to cut spending and Italy prepares to eliminate $30 billion in spending. China rejected media speculation that may divest or shift away from euro-zone debt.

[R]6:15 PM New York – Stocks in New York and Europe soared on positive news on earnings and economic austerity measures. Spain won parliament approval to cut spending and Italy prepares to eliminate $30 billion in spending. China rejected media speculation that may divest or shift away from euro-zone debt.[/R]

U.S. stocks tracked gains in Asia and Europe on positive earnings momentum and after China refuted media speculation that it is likely to shift away from the euro-zone sovereign debt. The first quarter estimate of the U.S. GDP was lowered to a gain of 3% and weekly jobless claims declined 14,000 to 460,000.

Heinz fourth quarter net up 10% and sales up 8.3%. Big Lots quarterly profits rise. Costco third quarter net up 46% and comp sales up 10%. Jo-Ann Stores doubles profit.

European indices surged between 2% and 3% as China denied media speculation on its foreign debt holdings. Inflation in Germany increased 1.2% in May and French consumer confidence continued its downward trend in the month. Spain’s Prime Minister won approval from parliament to cut spending.

Italian hourly wages increased 0.3% in April and Italian prime minister is preparing to propose $30.4 billion in budget cuts.

UK stocks surged tracking gains in Europe and the U.S. after China denied media speculation that it may cut its holdings of European government bonds. U.K. retailers expect sales to fall in June. Weir Group, Mitsubishi Heavy Industries sign cooperation agreement.

Stocks in Japan closed higher after China rejected the media speculation of shift in stance for the euro-zone debt. Exports in April rose 40% and imports increased 24% and Japan recorded trade surplus of 742 billion yen in the month.

China stepped up its efforts to deny latest media speculation that it may lower its holdings of euro-zone debt. The strong denial from the central bank lifted market indexes in China region and in Asia. Separately, China was forced to offer higher interest rate at its short-term debt auction.

Stocks in Mumbai tracked gains in Asian markets and positive earnings from Colgate Palmolive India, Bharat Petroleum and Godrej Industries. The NSE plans to permit short stock sale in the near future. Reserve Bank of India eased liquidity for banks and corporations.

Stocks in Australia rebounded after the government showed willingness to negotiate on the proposed mining industry super tax of 40%. The flexibility from the government on the tax issue and improving sentiment in regional trading supported gains in resource stocks. Australia’s capital expenditure declined 0.2% in quarter ending in March.

North American Markets

Dow Jones Industrial Average surged 284.54 or 2.9% to close at 10,258.99, S&P 500 Index gained 35.11 or 3.3% to 1,103.06 and Nasdaq Composite Index added 81.80 or 3.7% to close at 2,277.68. Toronto TSX Composite Index added 205.22 or 1.8% to 11,749.12.

Latin American Markets Indexes

Mexico IPC Index surged 727.67 or 2.3% to 32,056.16 and Brazil Bovespa Stock Index soared 1,901.41 or 3.1% to 62,091.77.

Europe Markets Review

In London FTSE 100 Index traded higher 157.09 or 3.1% to 5,195.17, in Paris CAC 40 Index increased 116.72 or 3.4% to close at 3,525.31, in Frankfurt DAX index higher 179.12 or 3.1% to close at 5,937.14. In Zurich trading SMI increased 137.65 or 2.2% to close at 6,305.18.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 117.06 or 1.23% to 9,639.72, Hang Seng index in Hong Kong increased 234.92 or 1.22% to 19,431.37 and CSI 300 index in China higher 46.04 or 1.64% to 2,859.98. ASX 200 index in Australia increased 72.00 or 1.67% to 4,379.20. The FTSE Bursa KL Composite index in Malaysia closed higher 20.22 or 1.62% to 1,269.16.

The Kospi Index in South Korea increased 25.38 or 1.60% to close at 1,607.50. SET index in Thailand closed higher 8.34 or 1.14% to 737.28 and JSE Index in Indonesia increased 17.14 or 0.64% to 2,713.92. The Sensex index in India increased 278.56 or 1.70% to 16,666.40.

Commodities, Metals, and Currencies

Crude oil increased $3.04 to $74.55 a barrel for a front month contract, natural gas edged up 12 cent to $4.29 per mBtu and gasoline increased 6.85 cents to 203.89 cents.

Soybean future closed up 13.75 cent to $9.51 a bushel. Wheat futures increased 6.00 cents in Chicago trading to $4.67 a bushel. Sugar closed down 0.44 cents at 14.92 cents a pound.

Gold decreased $0.90 in New York trading to close at $1,214.40 an ounce, silver closed up $0.16 to $18.49 per ounce and copper for the front month delivery increased 7.80 cent to $3.15 per pound.

Dollar edged lower against the euro to $1.236 and gained against the Japanese yen to 91.05.

Yield on 10-year U.S. bonds increased to 3.36% and with 30-year maturities closed higher to 4.26%.