Fed Left Rates On Hold; Bonds Rise

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

U.S. stocks traded sideways after existing home sales indicated a fragile state of housing market and the Fed left its key lending rate unchanged. GM is preparing for a public offering that may lower U.S. stake by 20%. Australian Prime Minister Kevin Rudd

[R]4:00 PM New York – U.S. stocks traded sideways after existing home sales indicated a fragile state of housing market and the Fed left its key lending rate unchanged. General Motors is preparing for a public offering that may lower U.S. stake by 20%. Australian Prime Minister Kevin Rudd’s push for mining tax may cost him his job.[/R]

U.S. stocks oscillated after new home sales declined and the Fed kept rates unchanged after two days of rate setting meeting. The policy setting committee said that the developing sovereign debt crisis in Europe may affect the recovery home and said rates are likely to remain low for “an extended period.” Stocks gained, dollar declined and Treasury notes and bonds extended gains.

White House said appeals block on drilling ban. AT&T acquires rural wireless assets from Verizon Wireless. Adobe Systems Inc said second quarter net rises 18%. CarMax, Inc. led gainers in the S&P 500 index with a rise of 7.3%. Red Hat said its first-quarter net income rose 30%. Adobe reported second quarter net increased 18%. CarMax said its quarterly net more than tripled. Rite Aid narrows quarterly loss.

European stocks stumble after new home sales in the U.S. slumped 33% in May. Euro-zone composite PMI falls to three-month low in June. BASF agrees to buy Cognis in $3.8 billion deal.

The UK indexes fall for the second consecutive day after weaker-than-expected U.S. new home sales data. Pound trades higher after the release of Bank of England minutes but the BoE policy makers differ over interest rate. UK banks approve more mortgages for home purchase in May.

Stocks declined in Japan after a report showed sale of existing homes dropped in May. Toyota and Honda halt production after strike extends to other parts facilities in China. Google takes over as favorite job destination for Japanese job seekers. Toyota stays put on price cut.

China stocks declined led by energy and material stocks while stocks in Hong Kong gained marginally. China will cancel export tax rebates in more than 400 items from July 15. Bank of Communications stocks rise after 17 billion yuan rights issue.

Stocks in Mumbai traded marginally higher. India starts a legal process for advice on stake sale totaling $10 billion. Airlines rise on the speculation that foreign airlines maybe permitted to acquire stakes. Shree Renuka lowers the purchase price by 24% for Brazil based Equipav. Shoppers Stop soars nearly 10%.

Prime Minister Kevin Rudd defended his super profit tax plan. Citadel plans to increase its stake in Saudi copper project to 70% from the current 50%. Woodside plans to approach Fair Work for withdrawal of strike by crane and forklift operators at its Pluto project. Aborigines halt talks on Australian gas plant.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 189.19 or 1.87% to 9,923.70, Hang Seng index in Hong Kong increased 37.53 or 0.18% to 20,856.61 and CSI 300 index in China lower 25.22 or 0.91% to 2,758.50. ASX 200 index in Australia decreased 72.24 or 1.58% to 4,486.10. The FTSE Bursa KL Composite index in Malaysia closed higher 6.26 or 0.47% to 1,329.70.

The Kospi Index in South Korea decreased 5.66 or 0.33% to close at 1,725.82. SET index in Thailand closed higher 2.39 or 0.30% to 806.52 and JSE Index in Indonesia decreased 9.80 or 0.33% to 2,924.79. The Sensex index in India increased 6.25 or 0.04% to 17,755.94.

Europe Markets Review

In London FTSE 100 Index traded lower 58.72 or 1.12% to 5,188.26, in Paris CAC 40 Index traded decreased 65.02 or 1.75% to close at 3,640.30, in Frankfurt DAX Index traded lower 59.93 or 0.96% to close at 6,209.11. In Zurich trading SMI Index traded decreased 77.74 or 1.20% to close at 6,385.72.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.231 and fell against the Japanese yen to 89.83.

Crude oil decreased $1.46 to $76.39 a barrel for a front month contract, natural gas edged higher $0.03 cent to $4.79 per mBtu and gasoline decreased 4.80 cent to 208.55 cents.

Gold decreased $6.60 in New York trading to close at $1,234.20 per ounce, silver closed lower $0.44 to $18.51 per ounce and copper for the front month delivery decreased 4.85 cents to $2.96 per pound.

Yields on 10-year U.S. bonds decreased to 3.10% and on 30-year U.S. bonds decreased to 4.05%.