U.S. Stocks, European Bonds Drop

Bikram Pandey
07 Sep, 2010
New York City

U.S. stocks and sovereign bonds of peripheral European nations dropped. Resurgent economic worries in the U.S. and Europe drove the trading sentiment. Gold edged higher 0.7% and oil added 0.8%. Resource stocks in Australia fell after Labor government inched closer to form a minority government.

[R]4:00 PM New York – U.S. stocks declined and sovereign bonds of peripheral European nations dropped. Resurgent economic worries in the U.S. and Europe drove the trading sentiment. Gold edged higher 0.7% and crude oil added 0.8%. Resource stocks in Australia declined after Labor government inched closer to form a minority government.[/R]

U.S. stocks declined on global economic worries. Obama proposed $50 billion plan to stimulate the economy that included transportation system spending and business tax relief. Airgas board considering revised $65.50 per share bid of Air Products. ResCare to be acquired by Onex Partners for $13.25 per share.

Oracle Corp surged more than 5% after the company hired ex-CEO of Hewlett Packard. Casey’s General Stores increased 8%. China Sky One Medical Inc plunged 25% on lowered annual outlook.

The European indexes fell after German factory orders slid in July. Ten largest German banks may need to raise as much as €105 billion in capital to meet revised Tier 1 capital ratios. Swiss unemployment rate was flat at 3.6% in August. Czech current account deficit widened in the second quarter.

The UK indexes slipped after banks and mining stocks fell. Retail sales were boosted by back to school shopping in August. HSBC Chairman agreed to step down to become UK Trade Minister. Sports Direct International plc soared 3.6% after quarterly sales increased 8.8%.

Stocks in Japan declined after rising for four days in a row as Bank of Japan left its key lending rate at 0.1%.The rates are on hold since December 2008. Foreign exchange reserves rise in August to $1.07 trillion, third month of increase and to the second highest on record.

Stocks in China rallied led by steel makers after the government ordered the closure of energy inefficient mills. Home buying momentum rebounds after effects of property curbs wear off. China is set to become the world’s largest LCD market.

Stocks in Mumbai extended gains for the second day. Oilex of Australia strikes large reserves of gas in Gujarat. Indian Oil to expand its refinery production by 25% in North India. UAE based Etisalat may invest in Idea Cellular.

Stocks in Australia stayed little changed after the central bank extended its interest rate pause. Prime Minister Julia Gillard gets the support needed to form a minority government. Construction activity remained weak in August.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.269 and fell against the Japanese yen to 83.81.

Crude oil decreased $0.83 to $73.77 a barrel for a front month contract, natural gas edged lower 0.07 cent to $3.87 per mBtu and gasoline increased 0.71 cents to 192.66 cents.

Gold increased $7.70 in New York trading to close at $1,258.00 per ounce, silver decreased $0.06 to $19.90 per ounce and copper for the front month delivery decreased 4.10 cents to $3.45 per pound.

Yields on 10-year U.S. bonds decreased to 2.60% and on 30-year U.S. bonds yields edged up 3.67%.