U.S. Stocks Soar; BP Settles 50% Claims

Arthi Gupta, Mayank Mehta and Sanjay Barot
06 Jul, 2010
New York City

U.S. stocks trade higher on economic optimism and gains in world markets. Reserve Bank of Australia keeps cash rate flat at 4.50%. The Gulf of Mexico oil spill disaster costs BP more than $3 billion that includes settlement of more than 50% of compensation claims.

[R]9:35 AM New York – U.S. stocks trade higher on economic optimism and gains in world markets. Reserve Bank of Australia keeps cash rate flat at 4.50%. The Gulf of Mexico oil spill disaster costs BP more than $3 billion that includes settlement of more than 50% of compensation claims.[/R]

U.S. and world markets gained as buyers return and search for bargains. In Shanghai trading the benchmark index climbed nearly 2% and the Agricultural Bank of China public offering gained traction among investors.

The Reserve Bank of Australia kept its overnight cash rate unchanged at 4.50% citing recent weakness in household consumption and cooling real estate market.

Israeli Prime Minister Benjamin Netanyahu arrived in Washington for crucial talks with U.S. President Barack Obama. The two leaders will discuss Iran''s nuclear program, illegal settlements and growing pressure on Israel to disclose its nuclear arsenal and capability.

Despite being the main recipient of U.S. foreign aid of $2.4 billion a year, Israel had rejected the demand by the U.S. to scrap its new settlement construction plans in East Jerusalem.

The Obama administration has been working with the Israeli government to enable passage of goods to tens of thousands of Palestinians in misery, without compromising Israeli security.

In an update on developments in its response to the worst oil slick in U.S. history, the company said the 76-day-old oil spill has so far cost it a total of $3.12 billion.

The costs include containment costs, relief well drilling, grants to the Gulf coast states, claims paid and federal costs.

The company managed to capture and flare about 22,750 barrels of oil a day through two containment systems placed over the wellhead last month. The British firm had earlier said that it can raise the capture rate to at least 40,000 barrels by early July and could handle a flow between 60,000 and 80,000 barrels a day by mid-July.

Commodities, Currencies and Yields

Dollar decreased against euro to $1.2579 and increased against the Japanese yen to 87.91.

Crude oil increased $0.69 to $72.83 a barrel for a front month contract, natural gas edged higher $0.12 cents to $4.81 per mBtu and gasoline increased 2.440 cents to 200.21 cents.

Gold increased $4.70 in New York trading to close at $1,211.40 per ounce, silver closed higher $0.166 to $17.88 per ounce and copper for the front month delivery increased 5.450 cents to $2.97.

Yields on 10-year U.S. bonds increased to 2.98% and on 30-year U.S. bonds traded at 3.94%.

Stock Movers

Aeropostale, Inc. rose 0.7% after the clothing retailer may rise to as high as $50 as it gains market share by focusing on preteen kids, Barron’s reported.

Brown & Brown, Inc. added 0.3% after the insurer said the subsidiary of Brown & Brown has acquired assets of the Meridian Group of New York.

Coventry Health Care, Inc. fell 1.5% after the managed health-care company may rise as it expands through acquisitions and raises prices on its policies, Barron’s reported.

Leap Wireless International, Inc. rose 0.1% after the provider of mobile wireless services said a U.S. district court approved a proposed settlement of two shareholder derivatives suits, according to a filing with the U.S. Securities and Exchange Commission.

Par Pharmaceutical Companies, Inc. rose 0.6% after the company today announced that it began shipping the 20mg/1100mg and 40mg/1100mg strengths of omeprazole and sodium bicarbonate capsules to the trade.

Petroleo Brasileiro S.A rose 1.4% after the American depositary receipts of Brazil’s state-controlled oil producer was the subject of media speculation.

Earnings Review

Christopher & Banks Corporation ((CBK)) surged 17.9% or $1.11 to $7.30 after the women’s clothing retailer reported first-quarter profit excluding some items of 18 cents a share.

Flow International Corporation ((FLOW)), the maker of industrial waterjet machines for cutting and cleaning said fourth quarter sales rose 11% to $48.6 million from $43.7 million a year ago. Net income in the quarter was $112,000 or breakeven per diluted share compared to net loss of $4.5 million or 12 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 71.26 or 0.77% to 9,338.04, Hang Seng index in Hong Kong increased 241.92 or 1.22% to 20,084.12 and CSI 300 index in China higher 50.25 or 2.00% to 2,562.90. ASX 200 index in Australia increased 54.00 or 1.28% to 4,276.10. The FTSE Bursa KL Composite index in Malaysia closed higher 7.58 or 0.58% to 1,307.08.

The Kospi Index in South Korea increased 9.57 or 0.57% to close at 1,684.94. SET index in Thailand closed higher 11.49 or 1.43% to 815.52 and JSE Index in Indonesia increased 33.34 or 1.16% to 2,910.65. The Sensex index in India increased 173.04 or 0.99% to 17,614.48.

Europe Markets Review

In London FTSE 100 Index traded higher 104.05 or 2.16% to 4,927.58, in Paris CAC 40 Index increased 99.28 or 2.98% to 3,431.74 and in Frankfurt DAX index traded higher 120.63 or 2.07% to 5,936.83. In Zurich trading SMI increased 96.94 or 1.63% to 6,039.19.