U.S. Stocks Decline; Judge Lifts Drilling Ban

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

U.S. stocks traded sideways after existing home sales indicated a fragile state of housing market. Oil drilling rigs providers traded volatile after a judge lifted a ban on drilling in the Gulf of Mexico. Obama administration said it will appeal the decision.

[R]4:10 PM New York – U.S. stocks traded sideways after existing home sales indicated a fragile state of housing market. Oil drilling rigs providers traded volatile after a judge lifted a ban on drilling in the Gulf of Mexico. Obama administration said it will appeal the decision.[/R]

U.S. stocks trade lower after May home sales declined. Existing home sales in the month fell 2.2% to 5.66 million and increased 19.2% from a year ago month. Walgreen Co. third quarter profit declined 11% on higher merger related expenses and lower Medicare payments. Apple Inc surged 2% and closed above $275 after the company sold 3 million iPads in the first eighty days of its introduction.

Fitch downgrades its debt rating on BNP Paribas SA. Ralcorp agreed to buy American Italian Pasta for $1.2 billion.

American Italian Pasta Company led gainers in the S&P 500 index with a rise of 6.7%. Lockheed wins again $5 billion U.S. contract. Jefferies profit up 37%. Commercial Metals said quarterly loss narrowed. Toyota suffers another supplier labor strike.

European markets fell after Fitch downgrades BNP Paribas’ credit rating by a notch and S&P kept its ratings on Spanish banks but increased loan loss reserves. The euro area current account deficit in April was €5.1 billion. German business climate rebounds in June.

The UK indexes traded lower after the interim budget that proposed higher VAT and eliminated nearly one million tax payers with low income and lowered the corporate tax to 24% . The government also cuts growth outlook and public sector pay freeze for two years.

Stocks in Japan decline on the euro-zone worries. Japan releases its fiscal 10-year plan to reduce debt, fight deflation and cap government spending. Japanese parts plants in China resort to mechanization to fight labor problems.

Stocks in China fluctuated but closed marginally higher and in Hong Kong closed lower. Shanghai decides to allow foreign companies to list shares and sell bonds. CCB postponed fundraising plan. ICBC increases loan balance by 8.6%. Jidong Cement raises 1.9 billion yuan.

Stocks in Mumbai traded lower on the worries related to the euro-zone. Rabobank Nederland plans to sell stake in Yes Bank Ltd. Reliance, MTNL are in 3G franchise talks. Cox and Kings India is looking to raise $430 million. Orbit Corp issues a 1-to-1 bonus.

Australia revises it 2011 exports target by 8.3% on higher iron ore and coking coal prices. East Timor is planning a new oil and gas hub on its southern coast. SABMiller commissions new beer plant in Warnervale. Chief executive of Sundance Resources is killed in an air crash.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 125.12 or 1.22% to 10,112.89, Hang Seng index in Hong Kong decreased 93.10 or 0.45% to 20,819.08 and CSI 300 index in China higher 3.06 or 0.11% to 2,783.72. ASX 200 index in Australia decreased 54.30 or 1.18% to 4,558.30. The FTSE Bursa KL Composite index in Malaysia closed lower 11.85 or 0.89% to 1,323.44.

The Kospi Index in South Korea decreased 8.20 or 0.47% to close at 1,731.48. SET index in Thailand closed lower 1.94 or 0.24% to 804.13 and JSE Index in Indonesia decreased 7.31 or 0.25% to 2,934.59. The Sensex index in India decreased 126.86 or 0.71% to 17,749.69.

Europe Markets Review

In London FTSE 100 Index traded lower 57.75 or 1.09% to 5,241.36, in Paris CAC 40 Index traded decreased 35.88 or 0.96% to close at 3,700.27, in Frankfurt DAX Index traded lower 36.13 or 0.57% to close at 6,256.84. In Zurich trading SMI Index traded decreased 67.10 or 1.03% to close at 6,452.47.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.227 and gained against the Japanese yen to 90.47.

Crude oil decreased $0.61 to $77.21 a barrel for a front month contract, natural gas edged lower $0.10 cent to $4.77 per mBtu and gasoline decreased 1.18 cent to 213.10 cents.

Gold decreased $1.70 in New York trading to close at $1,240.10 per ounce, silver closed lower $0.01 to $18.84 per ounce and copper for the front month delivery increased 2.05 cents to $2.98 per pound.

Yields on 10-year U.S. bonds decreased to 3.16% and on 30-year U.S. bonds increased to 4.10%.