U.S. Stocks Struggle; Commodities Weak

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
17 Jun, 2010
New York City

U.S. stocks and commodities closed lower after unemployment data and regional manufacturing index read. Copper and oil traded lower but gold surged to near record high. Spain completed bond offering that eased market jitters in Europe. BP Plc rallied nearly 7%.

[R]4:15 PM New York – U.S. stocks and commodities closed lower after unemployment data and regional manufacturing index read. Copper and oil traded lower but gold surged to near record high. Spain completed bond offering that eased market jitters in Europe. BP Plc rallied after it eliminated dividend and pledged asset sale to set up $20 billion fund.[/R]

U.S. stocks trade sideways after inflation index declined 0.2% in May and weekly jobless claims increased 12,000. European markets closed lower and Swiss franc traded near record high against the euro. Commodities traded lower on weaker than expected employment data.

BP Plc agrees to set up a $20 billion compensation fund for liabilities attributed to the Gulf oil spill. BP may face additional expenses to fix the leak and may face criminal penalties.

BP Plc Chairman Carl-Henric Svanberg met with the U.S. President Barack Obama. President Obama received a commitment that the British company would set up a $20 billion uncapped compensation fund for liabilities attributed to the Gulf oil spill.

The UK indexes traded sideways on disappointing U.S. economic data. BP Plc announces the suspension of its 2010 dividend and set up a $20 billion compensation fund for liabilities attributed to the Gulf oil spill. The company faces additional liabilities from criminal charges and repairs.

European markets rise after Spain raised €3.5 billion. EU construction falls 0.3% in April. The European Central Bank said structural reforms are crucial to support sustainable recovery in all euro-zone countries. BP Plc sets aside $20 billion to meet claims from the Gulf oil spill and will remain liable for unknown amount for criminal charges and repairs.

Stocks in Japan declined halting five days of rally after a report showed that U.S. housing starts dropped in May. A report by Bank of Japan noted that Japanese companies held back record amounts in cash and deposits.

Stocks in Hong Kong closed higher for the seventh day in a row and closed lower in Shanghai. Henderson Land Development in Hong Kong booked a loss after 20 apartment sales were cancelled. Sino Biopharmaceutical plans to raise $79 million.

Stocks in Mumbai traded higher for the seventh day in a row. The latest read on wholesale inflation showed a decline. Advanced corporate tax collection for the first quarter increased 18% from a year ago.

Australian banks are accessing cheaper debt by selling covered bonds in New Zealand. Liberia reveals BHP ore spending plans. Amadeus Energy Ltd announces commencement of exploration in Texas. Leighton wins A$1.1 billion contract in Indonesia.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 67.75 or 0.67% to 9,999.40, Hang Seng index in Hong Kong increased 76.25 or 0.38% to 20,138.40 and CSI 300 index in China lower 16.13 or 0.58% to 2,742.73. ASX 200 index in Australia decreased 31.70 or 0.70% to 4,527.30. The FTSE Bursa KL Composite index in Malaysia closed higher 1.34 or 0.10% to 1,304.47.

The Kospi Index in South Korea increased 2.59 or 0.15% to close at 1,707.92. SET index in Thailand closed higher 2.70 or 0.34% to 789.34 and JSE Index in Indonesia increased 32.44 or 1.13% to 2,891.10. The Sensex index in India increased 153.82 or 0.88% to 17,616.69.

European Markets Review

In London trading, FTSE 100 Index traded higher 6.27 or 0.12% to 5,244.19, in Paris CAC 40 Index traded decreased 8.86 or 0.24% to close at 3,667.07, in Frankfurt DAX Index traded lower 0.38 or 0.01% to close at 6,190.53. In Zurich trading SMI Index traded decreased 24.62 or 0.38% to close at 6,465.45.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.2368 and decreased against the Japanese yen to 90.82.

Crude oil decreased $1.16 to $76.51 a barrel for a front month contract, natural gas edged higher $0.18 cent to $5.15 per mBtu and gasoline increased 1.78 cents to 216.30 cents.

Gold increased $16.10 in New York trading to close at $1,246.60 per ounce, silver closed higher $0.26 to $18.71 per ounce and copper for the front month delivery decreased 9.30 cents to $2.92 per pound.

Yields on 10-year U.S. bonds increased to 3.19% and on 30-year U.S. bonds traded at 4.13%.