Global Markets Rally; U.S. Auto Sales Drop

Marcus Jacob
01 Sep, 2010
New York City

World stocks rallied after the surprise increase in U.S. manufacturing index and China manufacturing edged up and Australia

[R]4:00 PM New York – World stocks rallied after the surprise increase in U.S. manufacturing index and China manufacturing edged up and Australia’s economy expanded. Euro-zone manufacturing dropped 6-month low. U.S. auto sales dropped sharply in August from a year ago.[/R]

U.S. stocks surged after manufacturing index showed a surprise growth and small but still an expansion in China. Commodities linked Australian economy registered 1.2% growth. Investors are awaiting monthly jobless data and rate report on Friday.

Market indexes in the U.S. gained between 2.4% and 3%, Brazil gained 2.5% and indexes and Toronto and Mexico added more than 0.75%.

European markets rallied between 2.7% and 3.8% and indexes in Australia, India, Japan, Indonesia, Singapore and Hong Kong between 1% and 2%. However, indexes in China declined at least 0.7%.

U.S. auto sales declined in August sharply. GM sales fell 25% from a year ago when cash for clunkers program sustained sales, Ford sales declined 11% and Toyota Motor Co dropped 31%.

Honda sales declined 33% and Nissan sales dropped 27%. However, Chrysler Group LLC sales rose 7%.

Brown Forman Corp dropped 6% after the maker of spirits and vodka reported lower than expected earnings. G-III Apparel Group Ltd reported higher than expected earnings. Netflix Inc soared 5%. Burger King Holdings Inc soared 10%.

European stocks rose after euro-zone manufacturing fell to six-month low in August. German retail sales drop in July and manufacturing growth declined in August. Greek manufacturing slid in August. French manufacturing index surged.

Vinci SA said first half net rose 1.9%. Vivendi SA second quarter rose 6.2% and net decreased 3.7%. Bouygues SA second quarter profit fell 10%. Danaos Corp second quarter net loss decreased.

The UK indexes traded higher after positive global economic data. The UK manufacturing growth plunged to nine-month low in August. Irish live register of total unemployment rose for the sixth month in a row to August, manufacturing slackened in August and retail sales fell in July.

Stocks in China fell while those in Hong Kong rallied. New home sales are set to begin in September, the traditional high season for purchases. First-half income of mainland listed companies jump 41%.

A better-than-expected Chinese manufacturing and GDP expansion in Australia helped the benchmark index in Tokyo. The two-week leadership race for the ruling party began today. Car subsidies may end earlier than the deadline set by the government.

Stocks in Mumbai traded sharply higher after exports increased 13.2% and trade deficit expanded 42%. Rupee gained. Manufacturing index showed a smaller than expected growth. Nalco looks for investment in Indonesia.

Stocks in Australia rallied after the GDP expanded at the fastest pace in three years at 1.2%. Exports rose 5.6% in the quarter and added 1.1 percentage point to the expansion. Manufacturing index increased at a slower pace in August. Paladin targets uranium exports to China. Algae Tech plans to list in September.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.28 and fell against the Japanese yen to 84.01.

Crude oil decreased $2.97 to $71.73 a barrel for a front month contract, natural gas edged lower 0.06 cent to $3.71 per mBtu and gasoline decreased 3.34 cents to 189.08 cents.

Gold decreased $3.30 in New York trading to close at $1,247.00 per ounce, silver decreased $0.04 to $19.38 per ounce and copper for the front month delivery increased 10.05 cents to $3.47 per pound.

Yields on 10-year U.S. bonds increased to 2.59% and on 30-year U.S. bonds yields edged up 3.67%.